Running a firearm business involves unique risks and responsibilities. Understanding the key insurance terms and concepts relevant to your industry is crucial for securing the right coverage to protect your assets and operations. This glossary provides clear definitions of essential insurance terminology for firearm businesses, helping you make informed decisions and ensure comprehensive protection.

Actual Cash Value (ACV): The value of your property (such as inventory or equipment) at the time of a loss, accounting for depreciation. ACV is calculated by subtracting depreciation from the replacement cost.

Additional Insured: A person or entity added to your insurance policy who is also covered by the policy's terms. This can include business partners, vendors, or clients.

Binder: A temporary insurance contract that provides coverage until a permanent policy is issued.

Broker: An insurance professional who helps you find and purchase insurance coverage from various insurers. Brokers work on your behalf to secure the best policy for your needs.

Cancellation: The termination of an insurance policy before its expiration date. This can be initiated by either the insurer or the policyholder.

Claim: A formal request to an insurance company for compensation for a covered loss or damage.

Coverage: The amount and extent of protection provided under an insurance policy. This can include property, liability, and business interruption coverage.

Deductible: The amount you must pay out of pocket before your insurance coverage kicks in. A higher deductible typically results in lower premiums.

Depreciation: The decrease in the value of your property over time due to wear and tear or obsolescence.

Endorsement: A modification to an existing insurance policy that adds, removes, or alters coverage. Endorsements can be used to tailor policies to the specific needs of a firearm business.

Exclusion: Specific conditions or circumstances that are not covered by an insurance policy.

First-Party Coverage: Insurance that provides protection to the policyholder for their own losses, such as damage to their property or inventory.

Floater Policy: A type of insurance policy that provides coverage for movable property, such as firearms and equipment, regardless of where they are located.

General Liability Insurance: Coverage that protects your business from claims of bodily injury, property damage, and personal injury arising from your operations.

Grace Period: The additional time period allowed for payment of an insurance premium after the due date without penalty or cancellation of the policy.

Hazard: A condition that increases the likelihood or severity of a loss. Hazards can be physical, such as fire, or operational, such as handling firearms.

Indemnity: Compensation for a loss or damage, intended to restore the policyholder to their financial position before the loss.

Insurable Interest: The policyholder's financial stake in the insured property or operations, which must exist at the time of the loss.

Insurance Rider: An additional provision added to an insurance policy to provide extra coverage or modify the standard terms. Riders can be used to cover specific risks unique to firearm businesses.

Liability Coverage: Insurance that protects against claims resulting from injuries or damage to other people or property caused by your business operations.

Loss: The damage or destruction of property or injury that results in a claim. Losses can also refer to financial setbacks due to business interruption.

Market Value: The price that a buyer would pay for a firearm or business property in the current market.

Moral Hazard: The increased likelihood of a loss occurring due to the policyholder's behavior, knowing they are insured.

Named Perils: Specific risks or causes of loss explicitly covered by an insurance policy. For firearm businesses, this can include theft, fire, and vandalism.

Peril: A specific cause of loss or damage, such as fire, theft, or flood.

Policy: A written contract between the insurer and the policyholder detailing the terms, coverage, exclusions, and conditions of the insurance.

Premium: The amount paid by the policyholder to the insurance company for coverage.

Product Liability Insurance: Coverage that protects your business from claims related to defects in the products you sell, such as firearms or accessories.

Replacement Cost: The cost to replace a damaged or lost property with a new one of similar kind and quality, without accounting for depreciation.

Risk Management: The process of identifying, assessing, and mitigating risks to reduce the potential for loss.

Scheduled Property: Specific items listed and insured separately within a policy, often for high-value or unique items like collectible firearms.

Subrogation: The insurer's right to pursue a third party that caused a loss to the insured, seeking recovery of the amount paid to the policyholder.

Third-Party Coverage: Insurance that provides protection against claims made by others for damages or injuries caused by the policyholder's business operations.

Total Loss: A situation where the cost of repairing or replacing damaged property exceeds its value.

Underwriting: The process by which an insurer evaluates the risk of insuring a policyholder and determines the terms and premium for coverage.

Valuation: The process of determining the value of insured property, such as firearms, inventory, or business equipment, for the purposes of coverage and claims.

Waiver: The voluntary relinquishment of a known right, such as an insurer's decision not to enforce a policy condition.

Workers' Compensation Insurance: Coverage that provides benefits to employees who suffer work-related injuries or illnesses.

By familiarizing yourself with these terms, you can better navigate the complexities of insurance for firearm businesses and ensure your operations are adequately protected. For personalized assistance and to explore the best insurance options for your business, consider consulting with a specialized insurance broker.