The Commercial General Liability policy provides the insurance protection needed to pay damages for bodily injury or property damages for which the insured is legally responsible. The policy provides coverage for liability arising from personal injury and advertising injury. Coverage for medical expense is also provided. The policy also covers accidents occurring on the premises or away from the premises. Coverage is provided for injury or damages arising out of goods or products made or sold by the named insured. The insured is the named insured and the employees of the named insured. However, several individuals and organizations, other than the named insured, may be covered, depending upon certain circumstances specified in the policy. In addition to the limits, the policy provides supplemental payments for attorney fees, court costs and other expenses associated with a claim or the defense of a liability suit.
There are two commercial general liability coverage forms available, the occurrence form and the claims-made form. Both forms are somewhat identical in the coverage offered. The main difference is in the way the claims are handled under the two forms. The occurrence form covers bodily injury or property damage claims that occur during the policy term, regardless of when the claim is reported. The claims-made policy form only covers claims made against the insured during the policy term. A claim made after the policy expires is not covered by a claims-made policy unless the claim is covered by an extended reporting period. The claims-made policy will only have the extended reporting period. The following reflect both forms.
The General Aggregate Limit is the most money the insurer will pay under a certain coverage for all claims occurring during the policy term.
Coverage is provided for damages arising out of ownership or occupancy of the insured premises when not maintained in a reasonable manner. This also covers damages arising out of operations performed by the insured’s business.
Products coverage is provided for damages arising out of products manufactured, sold, handled or distributed by the insured. Completed Operations covers damages occurring after operations have been completed or abandoned, or after an item is installed or built and released for its intended purpose.
Medical payments coverage pays medical expenses resulting from bodily injury caused by an accident on premises owned or rented by the insured, or locations next to such property, or when caused by the insured’s operations. These payments are made without regard to the liability of the insured.
The fire damage limit provides coverage for fire damage caused by negligence on the part of the insured to premises rented to the named insured. If a fire occurs because of negligence of the insured and causes damage to property not rented to the insured, coverage would be provided under the occurrence limit.
Personal injury means injury other than bodily injury. Coverage is provided for injury resulting from offenses such as false arrest, malicious prosecution, detention or imprisonment, the wrongful entry into, wrongful eviction from and other acts of invasion, or rights of private occupancy of a room. Coverage for libel and slander is also provided in the policy.
This coverage pays for damages done in the course of oral or written advertisement that disparages, libels or slanders a person’s or organization’s goods, products or services. Coverage for these offenses is provided under advertising injury coverage only if they occur during the course of advertising the named insured’s own goods, products or services.
Each occurrence is considered to be an accident, which could include continuous or repeated exposure to the same harmful conditions. An occurrence can also be a sudden event, or a result of a long term series of events.
Basic Extended Reporting Period (Basic Tail)
This coverage is provided automatically without an additional premium charge if coverage is canceled, not renewed, or the insurer renews with a later retroactive date. The basic extended reporting period starts at the end of the policy period and lasts for five years for claims made against the insured within the five year period and reported to the insurer within 60 days after the end of the policy period.
The supplemental extended reporting period is available under the same circumstances as the basic one. However, it becomes effective only if the named insured makes a written request within 60 days after the termination of the policy period and the additional premium is paid. The supplemental extended reporting period begins when the basic one ends, and it continues forever. It cannot be canceled by the insured or the insurer. The supplemental tail endorsement would provide coverage for claims reported to the insurer within sixty days after the end of the policy period but did not result in a claim being made against the insured until after the end of the five year policy period.
Other types of occurrence or offenses that are unknown by the insured and therefore not reported within the sixty days after the end of the policy period could also be covered by the supplemental tail. When the tail is purchased the policies general aggregate limit and the products/completed operations aggregate limit is reinstated.
The retroactive date shown in the policy declarations is the same as the inception date, or the retroactive date can be a date prior to the inception date. A policy can also be written with no retroactive date.
The liability coverage of the business auto policy provides protection against legal liability arising out of the ownership, maintenance, or use of any insured automobile. The insuring agreement agrees to pay damages for bodily injury or property damage for which the insured is legally responsible because of an automobile accident resulting from the ownership, maintenance, or use of a covered auto. The insuring agreement also states that in addition to the payment of damages for which the insured is legally liable, the insurer also agrees to defend the insured for all legal defense cost. The defense cost is in addition to the policy limits. Medical Payments Coverage The insuring agreement states that the insurer will pay all reasonable and necessary medical and funeral expenses incurred by an insured because of bodily injury caused by an accident. The insured is the named insured, the insured’s employees and guests, and any other person occupying a covered auto. hese payments are made without regard to fault. Uninsured/Underinsured Motorist Coverage
This insuring agreement pays for bodily injury to an insured who is injured by an uninsured motorist, a hit-and-run driver, or a driver whose insurer becomes insolvent. These benefits are paid under the named insured’s policy.
This coverage is added to supplement the Uninsured Motorist Coverage, the coverage applies only when the other driver has liability limits at the time of an accident, but the liability limits carried may be insufficient to pay for damages for which the driver is responsible. This is when the insured’s underinsured motorist’s coverage would apply and payment for the difference could be made. The two coverages are mutually exclusive and do not overlap or duplicate each other.
Coverage is provided for any auto, including autos owned by the insured, autos the named insured hires or borrows from others, and other non-owned autos used in the insured’s business. Owned Automobile Coverage is provided for all autos owned by the named insured. The owned auto symbol is used for liability insurance only.
Coverage is provided only for autos not owned, leased, hired, or borrowed by the named insured. Coverage includes autos owned by the insured’s employees or members of their households, but only while used in the named insured’s business or personal affairs.
Coverage is provided only for autos leased, hired, rented, or borrowed for use in the named insured’s business.
This coverage provides protection against loss or damage to a covered auto or a non-owned auto resulting from the impact with another vehicle or object. Collision losses are paid regardless of fault.
Comprehensive coverage provides protection against loss or damage to a covered auto resulting from loss other than a collision or upset. This coverage also provides for supplemental payments for transportation expenses in the event of total theft of a covered auto or a non-owned auto. Coverage begins forty-eight hours after the theft.
This provides coverage against loss from fire, lightning, or explosion; theft; windstorm, hail, or earthquake; flood; mischief or vandalism; and sinking, burning, collision or derailment of a conveyance transporting the covered auto.
The business auto policy provides a coverage extension if an auto is insured for comprehensive or specified cause of loss coverage which insures against loss of use of a covered auto only if the auto is a private passenger type auto and is stolen. The coverage extension pays up to a daily limit of $10 and a maximum limit of $300. Payments begin 48 hours after the theft and ends when the insured auto is returned or when the insurer has paid the insured for the auto. However, for broader coverage the insured can pay an additional premium for rental reimbursement coverage. Rental reimbursement pays the cost of renting a substitute auto for replacement of any covered auto that has suffered a covered loss. The daily and maximum limit for this coverage varies among insurers.
When this coverage is added, the insurer pays for towing and labor costs each time a covered auto or non-owned auto is isabled, up to a stated amount.
Personal Injury Protection (PIP) is an endorsement that adds no-fault benefits. No-Fault means that in the event of an automobile accident, each party collects from his or her own insurer regardless of fault. The PIP endorsement is only available in certain states with No-Fault Laws. The endorsement applies only to bodily injury and not to property damage. (The state of Michigan is the exception to property damage.) No-Fault Laws vary widely from state to state.
Property insurance is any type of insurance that indemnifies an insured party who suffers a financial loss because property has been damaged or destroyed. Property is considered to be any item that has a value. Property can be classified as real property or personal property. Real property is land and the attachments to the land, such as buildings. Personal property is all property that is not real property. The Building and Personal Property coverage form is the form used to insure almost all types of commercial property. The insuring agreement in the Building and Personal Property coverage form promises to pay for direct physical loss or damage to covered property at the premises described in the policy when caused by or resulting from a covered cause of loss. The following is a brief outline of coverage and how they are used within the Commercial Building and Personal Property coverage form.
Coverage for the building includes the building and structures, completed additions to covered buildings, outdoor fixtures, permanently installed fixtures, machinery and equipment. The building material used to maintain and service the insured’s premises is also insured. Business Personal Property owned by the insured and used in the insured’s business is covered for direct loss or damage. The coverage includes furniture and fixtures, stock, and several other similar business property items when not specifically excluded from coverage. The policy is also designed to protect the insured against loss or damage to the personal property of others while in the insured’s care, custody or control.
In addition to the limits stated in the Building and Personal Property coverage form, the policy has a coverage extensions section and an additional coverage section. The coverage extensions section provides limited coverage for newly acquired or constructed property, property of others, certain outdoor property, and the cost to research and reconstruct information on destroyed records. When coverage is placed on the all risk form, two additional extensions are added for property in transit and coverage for certain repair costs related to damage caused by water. The two additional extensions are covered by certain perils only. The additional coverage section provides coverage for indirect losses that result from a direct loss. The coverage applies to removal of debris, preservation of property, fire department service charges and pollutant cleanup and removal. The coverage extensions and the additional coverage have limitations and are subject to certain conditions.
The most the insurer will pay for a loss or damage in any one occurrence is the limit of insurance stated in the policy declarations
The standard deductible is $250. However, other deductible amounts are available and the deductible applies only once per loss.
The term peril is used when discussing losses. A peril is a cause of loss. Basic property insurance policies are written to cover the perils of fire, lightning, explosion, windstorm, hail, smoke, aircraft or vehicle damage, riot or civil commotion, vandalism, sprinkler leakage, sinkhole collapse, and volcanic action. Other property insurance policies, often referred to as the broad form policy, add coverage for water damage, weight of snow, ice or sleet, breakage of glass and coverage for falling objects. The broadest coverage is the special form, which is best known as the all risk form. All risk covers all causes of loss, except those specifically excluded from coverage. It is possible for a commercial property policy to have more than one cause of loss form.
Property can be valued in several different ways. Insurance companies commonly use two approaches to determine value, which also determines how a loss will be paid; the replacement cost method and the actual cash value method. Insurers consider replacement cost of a property item to be the cost to replace it with property of like kind. Actual cash value is replacement cost minus the accumulated depreciation for age and condition.
When the agreed value option is used the coinsurance requirement is removed and the insurer agrees to cover losses for its agreed value. When this option is used the insured and the insurance company agree on the value of the property before the policy is issued. As an example, the insured has property insured for $100,000 and the agreed value is also $100,000, if a loss occurs, any loss up to $100,000 is covered at 100%. This option is usually assigned to one-of-a-kind property.
The success of any Commercial Property program is measured by its effectiveness following an insured loss. Thus, in establishing adequate coverage, one must have firsthand information as to the insurable values at risk. Book values do not fulfill this purpose. Insurable values are present day replacement cost with proper allowance for depreciation. Since replacement costs fluctuate, it is necessary to keep a constant check on insurable values.
Most building and business personal property policies have a coinsurance clause which requires the insured to carry insurance equal to at least a specified percentage of the actual cash value of the property. If a loss occurs, and it is determined that the amount of insurance carried is less than the amount required a penalty could be placed on the insured. The insurance applying in the following example is subject to the 90% Coinsurance Clause. Under the terms in this clause, you should insure the property at risk to the stipulated percentage of value. If you fail to do so, you will not be fully reimbursed for any loss that may occur. The manner in which the Coinsurance Clause would operate in the event of a partial loss is illustrated below and is merely a hypothetical example:
Insurable Interest Insurance Carried Insurance Required (90%) Amount of Loss Policy Pays Insured Pays $100,000 $60,000 $90,000 $10,000 $6,667 $3,333
The computation formula is ‘did over should.’ The insured carried $60,000, but should have carried $90,000. Therefore the insured carried two-thirds of what he should have carried and will receive payment for only two-thirds of his $10,000 partial loss in spite of the fact the face amount of the policy was $60,000.
The above is merely to show how Coinsurance works. If at any time you should substantially increase building values or contents values, you should notify us immediately to increase your coverage to avoid any Coinsurance penalties.
An insured can insure a building for its full value at the beginning of the policy year, but, at the end of the year, it might not be covered for its full value. This problem can be corrected by adding inflation guard coverage. With inflation guard, the policy limit increases gradually during the policy term so that the total increase amounts to the desired percentage increase at the end of the policy term.
This endorsement extends your causes of loss to include damage that results directly from an earthquake. Coverage is provided for replacement of buildings only. All earthquakes shocks that occur within a 168 hour period (one week) are considered to be a single occurrence. A separate deductible applies and is determined by the value of the insured property.
Debris Removal, Fire Department Service Charges, Preservation of Property, Pollutant Cleanup and Removal, Newly Acquired Buildings, Newly Acquired Personal Property, Personal Property of Others/Employees, Valuable Papers – Cost of Research, Property Off Premises, Outdoor Property – Trees, Shrubs and Plants, Property In Transit (Special Form Only)
Umbrella liability insurance provides excess liability coverage over several of the insured’s primary liability policies. Most umbrella liability policies provide coverage that is broader than the insured’s primary policies. An excess liability policy may be what is called a following form policy, which means it is subject to the same term as the underlying policies; it may be a self-contained policy, which means it is subject to its own terms only; or it may be a combination of these two types of excess policies. Umbrella policies have three functions: (1) To provide additional limits above the each occurrence limit of the insured’s primary policies; (2) To take the place of primary insurance when primary aggregate limits are reduced or exhausted; and (3) To provide broader coverage for some claims that would not be covered by the insured’s primary insurance policies, which would be subject to the policy retention. Most umbrella liability policies contain one comprehensive insuring agreement. The agreement usually states it will pay the ultimate net loss, which is the total amount in excess of the primary limit for which the insured becomes legally obligated to pay for damages of bodily injury, property damage, personal injury, and advertising injury.
All umbrella liability policies contain an each occurrence limit of insurance. Some umbrella liability policies may have a separate limit that applies to all personal and advertising injury for one person or for the organization. Also, some policies are written with aggregate limits for only one type of loss. Other policies may have one or more aggregates for all losses. Umbrella policies can be written with several different variations of the aggregate limits. There are no standard umbrella policies.
This is an insuring agreement used in some umbrella policies. The agreement promises to make direct payment on behalf of the insured for those sums of money the insured becomes legally obligated to pay because of liability imposed upon the insured by law, or assumed under contract.
This is the insuring agreement clause found in most umbrella policies as opposed to the pay on behalf agreement. When the indemnity insuring clause is used, the insurer will indemnify or reimburse the insured for those sums of money the insured becomes obligated to pay by reason of liability imposed upon the insured by law, or assumed under contract.
The self insured retention is the amount of the loss an insured must pay before the umbrella policy would be required to respond. The self insured retention would only apply when a loss is excluded from coverage under the primary policy, but not excluded under the umbrella policy.
Required Underlying Limits is a requirement of the insurer. It requires the insured to have certain types and amounts of primary insurance before the umbrella policy can be written.
This coverage agreement obligates the insurer to pay all compensation and other benefits required of the insured by the workers compensation law or occupational disease law of any state listed in the policy. The coverage applies to bodily injury by accident and by disease.
Coverage (A) shows no dollar limit for the benefits provided since any applicable limits would be those established within the law. Benefits under coverage (A) are paid to the employee without regard to fault.
This coverage protects employers for their legal liability for bodily injury by accident or disease to an employee arising out of and in the course of the employee’s employment when not covered under the workers compensation law. Before benefits are paid under this coverage, the employee must prove the employer is liable for the injury.
This amount is the most an insurer will pay under coverage (B) for all claims arising from any one accident, regardless of how many employees are involved in the accident. The standard limit is $100,000 for any one accident, which can be increased.
This is the aggregate limit the insurer will pay under coverage (B) for all claims sustaining bodily injury by disease during the policy period. The standard policy limit is $500,000, which can be increased.
This amount is the most an insurer will pay under coverage (B) for damages due to bodily injury by disease to any one employee. The standard limit of liability for each employee is $100,000, which can be increased.
This provides workers compensation coverages if the insured expands operations into other states not declared at the time the policy is issued or renewed. If the insured elects this coverage and operations begin in a state listed in other states, the insurer provides the same coverage as if the state was declared in the policy at the time of policy issuance.
Workers compensation laws of most states exempt some type of employment from workers compensation benefits. This endorsement amends the standard policy to provide coverage for employees with exempted occupations from the workers compensation act. When the endorsement is added it does not make employees subject to the workers compensation law
This is a federal act which is similar to the state workers compensation act. The federal act was designed to provide workers compensation benefits to employees who work in maritime employment upon the navigable waters of the United States and who are usually considered outside the scope of state workers compensation laws. When the USL&HWA endorsement is added to the standard policy it applies to work done in the states scheduled on the policy and extends the definition of the workers compensation law to include the USL&HWCA.
In some states, workers compensation law allows an insured to include or exclude Executive Officers and Partners, or both, from coverage. Adding this endorsement can designate the individuals not covered under the policy.
This is a factor that deals with the rating of the policy. The Experience Modification figure is insured’s loss experience. The factor is used to increase or decrease the manual rates of insurance.
There are six states that require all workers compensation insurance to be placed with their state fund. No private insurer is allowed to write Workers Compensation Coverage in the six states. The states are: Nevada, North Dakota, Ohio, Washington, Wyoming and West Virginia.
A modification is applied based on the loss experience for the past four (4) years. The Experience Modification used in preparing this quote was: TOTPREMEXPMERTMODFACT
In, the Worker Compensation Act allows an insured to include or exclude employees/owners and their family from coverage. Below you will find the persons that are eligible for exclusion by legal entity:
Corporation Executive Officer may elect exclusion if corporation has ten (10) or fewer stockholders and the executive officer owns at least 10% of the stock. A corporate board resolution authorizing exclusion is required to be executed. Real estate salespersons and associate real estate brokers may be excluded in all corporations subject to (418.199).
By implementing various programs in your business, you may be able to reduce your premiums. Below are several for which you may qualify:
– Accurate functional job description provided to the doctor at the workers first visit. – A program to keep in contact with workers who are at home to recover. – Transitional employment. – A demonstrated willingness to provide modified duty to return injured workers to the workplace in a modified capacity as defined by the treating physician. – A written return to work policy statement is posted where all employees may see it.
– Have a written program to assist employees with personal issues that adversely affect job performance and worker’s compensation costs. Issue may include stress, depression, drug addiction, marital problems, alcohol abuse, compulsive gambling, eating disorders, domestic violence, sexual harassment, financial problems, dependent care needs, and workplace violence. – Utilize case management that includes a comprehensive assessment of the employee’s problems by trained Employee Assistance Program counselors, development of an action plan for the employee with goals set, monitoring of the employee’s progress and follow up. – Where appropriate, the Employee Assistance Program case manager will refer employees to external service providers or specialists. – The Employee Assistance Program managers are to be involved in the evaluation of multiple workers’ compensation claims filed by an employee or claims where substance abuse or other personal issues may have contributed to the accident. Where appropriate the Employee Assistance Program manager should contact the at-risk employee for consultation. – The Employee Assistance Program should include critical incident stress debriefing. – A written Employee Assistance Program statement is posted where all employees may see it.
Must require all applicants to submit to a post-offer, pre-employment screening to detect the illegal use of drugs.
This insuring agreement protects the named insured against “theft” of “money,” “securities” and “other property” committed by an employee (or employees) within the described territory or while an employee is temporarily out of the territory for up to 90 days. It is a blanket coverage that is applicable to all employees, whether or not identified by name or position. An employee includes temporary employees, leased employees, former employees retained as consultants and student interns. In addition, an employee will continue to be covered for 30 days after his or her termination. Employees who are known to have committed a dishonest act are not covered. Any business with employees can benefit from this insurance.
This act is sometimes called the “pension reform act.” One of the purposes of this act is to force employers to protect the assets of the business that have been designated as employee pension benefits.
Forgery is generating a document or signature that is not genuine.Alteration is changing a document in a manner that is neither authorized nor intended.
This form insures against loss caused by the forgery or alteration of a covered item drawn against the insured’s accounts. A covered item might be a check, draft, promissory note, bill of exchange or similar instrument.
This insuring agreement protects the named insured against “theft,” disappearance and destruction of “money” and “securities” while located inside the insured’s premises or bank within the defined territory. In addition, damages caused by a thief to the exterior of the building (but not fire or vandalism) and to a locked safe inside the premises (but not vandalism) are covered. Any business that routinely collects and deposits significant amounts of “money” and “securities” can benefit from this insurance.
This insuring agreement protects the named insured against loss to “other property” due to “robbery” of a custodian (someone having the custody of the property) and “safe burglary” inside the premises within the defined territory. In addition, damages caused by a thief to the exterior of the building (but not fire or vandalism) and to a locked safe inside the premises (but not vandalism) are covered. Any business that keeps valuable property on the premises that is easily carried away can benefit from this insurance, assuming it does not already have this protection as Special Forms perils (which includes theft) on a property policy. However, there is a $5,000 limit on jewelry, furs, manuscripts, drawings and records.
This insuring agreement protects the named insured against “theft,” disappearance and destruction of “money” and “securities” while in the custody of a messenger or an armored vehicle company away from the premises, but within the defined territory. It also covers the named insured for “robbery” of “other property” while in the custody of a messenger or an armored motor vehicle company away from the premises, but within the defined territory. Like insuring agreement No. 4, there is a $5,000 “other property” limit on jewelry, furs, manuscripts, drawings and records. Any business that takes valuable property off the premises can benefit from this insurance.
Computer fraud is a specialized kind of theft where a computer is used to steal property from it’s rightful owner. This form covers money and securities and property other than money and securities.
This insuring agreement protects the named insured against loss resulting from a “fraudulent instruction” directing a financial institution within the defined territory to transfer “money” and “securities” out of the insured’s transfer account. Any business having a transfer account can benefit from this insurance.
This insuring agreement protects the named insured against loss resulting from the acceptance in good faith within the defined territory of unpaid money orders issued by a post office, express company or bank and of counterfeit paper currency acquired in the course of business operations. Any business regularly receiving cash or money orders can benefit from this insurance.