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Insurance glossary for property managers

Insurance has a jargon problem. Here's every term you'll see in your policies, explained in plain language by people who actually work in property management insurance.

A

Actual cash value (ACV)
The replacement cost of damaged property minus depreciation. If a five-year-old couch is destroyed, ACV pays what a five-year-old couch is worth today — not what a new one costs. Compare with replacement cost.
Additional insured
A person or company added to your policy who gets some of your coverage benefits. Property managers often add homeowners as additional insureds so the owner is protected under the PM's liability policy.
Aggregate limit
The maximum total amount your policy will pay across all claims during the policy period (usually one year). Once you hit the aggregate, no more claims are covered until the policy renews.

B

Business interruption insurance
Coverage that replaces lost revenue when a covered event (fire, storm, major damage) takes a property offline. For property managers, this means the rental income you lose while a property is being repaired. Learn more about business interruption coverage.
Business owner's policy (BOP)
A bundled policy that combines general liability and commercial property insurance for your business (your office, equipment, and operations) — not the rental properties you manage. It's coverage for your company, not your portfolio. Learn more about BOPs for property managers.

C

Certificate of insurance (COI)
A document that proves you have active insurance coverage. Homeowners, HOAs, and municipalities often require COIs from property managers. With Velaris, COIs are generated from your dashboard — no waiting on your broker. Learn more about COIs.
Claims-made policy
A policy that covers claims only if the incident and the claim are both reported during the active policy period. If your policy lapses and someone files a claim for something that happened while you were covered, a claims-made policy won't pay. Compare with occurrence-based policy.
Commercial general liability (CGL)
The foundation of business liability coverage. CGL protects against third-party bodily injury, property damage, and personal/advertising injury claims. For property managers, this is what covers you when a guest slips on a wet deck or a vendor damages a neighbor's fence. Learn more about general liability.

D

Damage Control
A Velaris product. Damage Control is a per-reservation damage protection program where guests pay a fee at booking. The fee covers guest-caused property damage, and property managers keep the majority of the revenue. Learn more about Damage Control.
Damage waiver
A fee charged to guests that waives their responsibility for accidental damage up to a certain amount. Unlike a security deposit, the guest doesn't get it back. Damage waivers are a revenue tool for property managers and are the foundation of Velaris Damage Control.
Declarations page
The first page of your insurance policy. It lists your name, policy number, coverage limits, deductibles, premium, and policy period. When someone asks "what does your policy cover?" — start here.
Deductible
The amount you pay out of pocket before insurance kicks in. A $1,000 deductible on a $5,000 claim means you pay $1,000 and the insurer pays $4,000. Higher deductibles usually mean lower premiums.

E

Endorsement
An amendment to your insurance policy that adds, removes, or modifies coverage. For example, adding pet damage coverage or extending liability to a new property. Also called a rider.
Errors and omissions (E&O)
Professional liability insurance that covers claims arising from mistakes or failures in your professional services. If a homeowner sues you for failing to maintain adequate insurance on their property, E&O responds.
Exclusion
Something your policy specifically does not cover. Common exclusions include flood, earthquake, intentional damage, and wear and tear. Always read the exclusions section — it tells you more than the coverage section.

G

General liability
Coverage for third-party bodily injury and property damage claims. If a guest trips on a loose step and breaks their arm, general liability covers the medical bills and any lawsuit. Learn more about general liability for property managers.

H

Homeowner's policy
Standard residential insurance designed for owner-occupied homes. Most homeowner's policies exclude commercial activity, which means they won't cover claims related to short-term rentals. This is one of the biggest coverage gaps in the vacation rental industry.

I

Indemnity
The principle of restoring you to the financial position you were in before a loss. Insurance doesn't make you better off — it makes you whole. This is why you can't insure a $200,000 property for $500,000.

L

Liability
Legal responsibility for injury or damage. If a guest is hurt at your property and you're found liable, you're responsible for their medical costs, legal fees, and any settlement or judgment.
Liability Control
A Velaris product. Liability Control is a comprehensive liability program for property managers that covers general liability, professional liability, and contractual obligations — all in one program. Learn more about Liability Control.
Loss ratio
The percentage of premiums an insurer pays out in claims. A loss ratio of 60% means the insurer pays $0.60 in claims for every $1.00 in premium collected. Property managers with low loss ratios may qualify for better rates at renewal.

M

Medical payments coverage (MedPay)
A sub-limit within your liability policy that pays small medical bills for injured guests regardless of who's at fault. If a guest cuts their hand on a broken glass, MedPay covers the ER visit without a lawsuit.

N

Named insured
The person or company specifically listed on the policy as the primary policyholder. The named insured has full policy rights, including the ability to file claims, add endorsements, and cancel coverage.

O

Occurrence-based policy
A policy that covers any incident that occurs during the policy period, regardless of when the claim is filed. If damage happens in January and the claim is filed in June (even after the policy expires), an occurrence-based policy still covers it.

P

Per-occurrence limit
The maximum amount your policy will pay for a single claim or incident. A $1,000,000 per-occurrence limit means no single claim can exceed $1,000,000, even if your aggregate limit is higher.
Premium
The amount you pay for your insurance coverage. Premiums can be paid monthly, quarterly, or annually. For Velaris Damage Control, the guest pays the premium equivalent as a protection fee at booking.

R

Replacement cost
The cost to replace damaged property with a new item of similar kind and quality, without deducting for depreciation. Replacement cost coverage pays more than actual cash value but usually carries a higher premium.

S

Security deposit
Guest money held by the property manager or platform to cover potential damage. Unlike insurance, security deposits cap your recovery at the amount collected, create booking friction, and often lead to chargeback disputes.
Self-insured retention (SIR)
Similar to a deductible, but you handle the claim yourself up to the SIR amount before the insurer gets involved. With a deductible, the insurer manages the claim from the start. With an SIR, you manage it until you hit the threshold.
Short-term rental insurance
Insurance designed specifically for properties rented on a nightly or weekly basis through platforms like Airbnb, Vrbo, or direct booking. Standard homeowner's and landlord policies typically exclude short-term rental activity. Learn more about STR insurance.
Subrogation
The process where your insurer recovers money from the party responsible for a loss after paying your claim. If a vendor causes damage and your insurer pays the claim, the insurer may pursue the vendor to recover what they paid.
Surplus lines
Insurance placed with carriers that aren't licensed in your state but are approved to write coverage for risks that standard (admitted) carriers won't cover. Many STR-specific products are written on surplus lines because the standard market hasn't caught up.

U

Umbrella policy
An extra layer of liability coverage that kicks in when your underlying policy limits are exhausted. If your general liability pays its $1,000,000 limit and a lawsuit demands $1,500,000, an umbrella policy covers the remaining $500,000.
Underwriting
The process an insurer uses to evaluate your risk and decide whether to offer coverage (and at what price). Underwriters look at your portfolio size, location, claims history, property types, and risk management practices.

W

Workers' compensation
Insurance that covers medical expenses and lost wages for employees injured on the job. If your housekeeping staff or maintenance team is hurt while working, workers' comp covers them. Required in most states if you have employees.

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