Cutting Through the Jargon. A Simple Guide to Commercial Insurance Broking
Commercial insurance should be clear and accessible. Yet the insurance industry often relies on language that feels too technical or confusing.
This article aims to remove that barrier and help you to understand key commercial insurance broking terms, what they really mean and why they matter.
Key insurance terms explained
Aggregate Limit
What it means: The maximum total amount an insurer will pay for all claims during a policy period.
Why it matters: Once this limit is reached, no further claims will be paid until the policy renews.
Example: A contractor with a £2m public liability aggregate limit faces several claims in a year. Once £2m has been paid out, any further claims fall back on the business.
Broker of Record
What it means: The broker officially appointed to represent you with insurers.
Why it matters: Insurers can only act on instructions from your broker of record.
Example: If you change broker, a Broker of Record letter is signed so insurers know who now advises and represents your business.
Business Interruption
What it means: Insurance that helps protect your income if your business is disrupted by an insured event.
Why it matters: BI cover replaces lost revenue and helps with ongoing costs while you recover.
Example: A restaurant closes for three months after a fire. BI insurance helps cover lost income, staff wages and increased costs while repairs are carried out.
Endorsement
What it means: A formal change to your insurance policy.
Why it matters: Endorsements ensure your cover reflects changes to your business.
Example: You purchase new machinery mid‑policy term. An endorsement is issued to include it under your cover.
Excess
What it means: The amount you must pay towards a claim (also known as a deductible).
Why it matters: Higher excesses can reduce premiums, but must be affordable if a loss occurs.
Example: With a £10,000 excess on a £40,000 claim, the insurer pays £30,000.
Indemnity Period
What it means: The length of time Business Interruption cover will pay for losses following an insured event.
Why it matters: If the period is too short, your cover may stop before your business has fully recovered.
Example: A business selects a 12‑month indemnity period but takes 18 months to reopen after a major fire. The final six months of lost income are uninsured.
Material Fact
What it means: Any information that could influence an insurer’s decision or pricing.
Why it matters: Failing to disclose material facts can result in claims being reduced or declined.
Example: Not disclosing previous claims or changes to operations could invalidate cover.
Underinsurance
What it means: When sums insured are set too low.
Why it matters: Claims may be reduced proportionally, even for partial losses.
Example: A building insured for £500,000 but with a true rebuild cost of £1m may only receive 50% of any claim payout.
Why It Matters
Insurance should enable confident decision‑making, not complicate it. Understanding insurance terminology allows you to better assess your risks, your cover, and your options.
At MAC Insurance Brokers Limited, we focus on clear explanations, transparent advice and insurance that works in practice.
Most businesses we review are either underinsured or paying for cover they don’t need. A short review can often reduce costs or improve protection – and often both.
If you’d like a jargon‑free review of your current policies, please contact us, our team is here to help.
