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Frequently Asked Questions

Business Insurance General

Business Property Insurance

Business General Liability

What is fire legal coverage?

Fire legal coverage provides coverage to for you if you rent a business space and are held responsible for fire damages to that rented space. It does not apply to all business risks.

What is the difference between Replacement Cost (RC) and Actual Cash Value (ACV)?

Replacement Cost is the current cost to replace property. Actual Cash Value is the replacement cost less depreciation.

What does 80% co-insurance mean?

Insurance carriers require that an insured party pay 80% of the replacement cost in order to collect a partial loss in full. This is the way the insurance company encourages all insureds to adequately insure their property in relation to other insureds.

Does my policy cover physical damage to a vehicle I rent?

This damage will be covered only if that type of coverage is purchased.

Can other people drive my business vehicle?

Other people may drive your vehicle with your permission. It is important that they be listed on your policy if they are regular drivers of the vehicle.

How does an audit work?

At the end of the policy term, the insurance company will review the policy and either charge or credit the policyholder based upon an audit of estimated figures. Examples of estimated auditable items include sales and payroll. Audits can be performed onsite by an auditor or via mail or telephone. A premium is charged for audit estimations.

Why do I need certificates of insurance from sub-contractors?

An audit may require you to show proof that sub-contractors had their own insurance coverage. The sub-contractors' certificates of insurance will prevent you from being charged for their exposure.

What is General Liability?

General Liability provides coverage for other individuals who are on your property and/or exposed to your operations.

What does Products/Completed Operations mean?

Products/Completed Operations refers to the liability coverage for damages caused by your operation or products after the point at which you no longer have control of them.

What is Business Interruption/Extra Expense coverage?

Business Interruption/Extra Expense coverage provides coverage for income loss and the expense of establishing a temporary site during repairs due to damages related to a fire or compensable loss.

What is the difference between "Named Insured", "First Named Insured" and "Additional Insured?"

Named Insureds are those listed by name in the relevant block of the policy's declaration page. Although the named insured is commonly one person, partnership, corporation or other entity with insurable interests, multiple named insureds may be included.

The First Named Insured is the first "named insured" listed on the policy declarations (front page of the policy). This insured acts as the legal agent for all named insureds in initiating cancellation, requesting policy changes or accepting any return premiums. The first named insured may also be responsible for payment of the premiums.

An additional insured is an entity to which a policy's coverage is extended. An additional insured must be added to the policy prior to a claim being paid. There must be a tied to relationship between the additional insured and named insured. Being an additional insured on another's policy does not eliminate the need for someone to have his/her own Commercial General Liability policy.


What is a peril?

A peril is the cause of a possible loss (examples include fires or windstorms).

What is Business Income Coverage (Time Element)?

Business Income Coverage provides coverage for loss of earnings and ongoing expenses when operations are curtailed or suspended due to property damage resulting from a covered cause of loss.

Should I purchase special coverage for my computer equipment?

Electronic Data Processing (EDP) equipment can be covered as unscheduled business personal property in "commercial property" forms such as the building and personal property coverage. An EDP equipment floater can provide added benefits. Many EDP floaters cover special perils such as mechanical or electrical breakdown and typically cover property in transit.

What is co-insurance?

In property insurance, co-insurance is a clause under which the insured shares in losses to the extent that he/she is underinsured at the time of a loss. You may have heard of co-insurance relative to health insurance; this is a provision in which the insured and the insurance company will share covered losses in an agreed proportion.


What is a third party claim?

A third party claim is a claim brought against you by someone other than an insured.

Does my General Liability Policy provide coverage if my company is sued for pollution?

This insurance does not apply to bodily injury, property damage, advertising injury or personal injury arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of pollution.

Does my General Liability Policy provide Liquor Liability Coverage?

Yes, your General Liability policy provides liquor liability coverage unless you are in the business of manufacturing, distributing, selling, serving or furnishing alcoholic beverages. These types of businesses need to purchase additional coverage specific to liquor liability coverage.

What is Fire Legal Liability coverage?

Fire Legal Liability provides coverage against liability for fire damage to premises rented to the named insured or temporarily occupied by the named insured with the owner's permission. Most Commercial General Liability policies provide a separate limit of $50,000 to cover this exposure.

Will my liability insurance cover me if I am sued in another country?

Most liability policies provide coverage for lawsuits only if they are brought in the United States, its territories and Canada.

What is the difference between Employee Benefits Liability Coverage and a Fiduciary Bond?

The Employee Benefits Liability policy was designed primarily for a variety of benefit plans to provide coverage for administrative errors and omissions. The Fiduciary Bond policy was designed to cover a fiduciary's ERISA (Employee Retirement Income Security Act) exposures that are caused by a "wrongful act." Fiduciary coverage responds to claims for damages arising out of improper investments as well as plan and employee advice.

What is an Umbrella Policy?

An umbrella policy provides additional limits of insurance over and above underlying coverages found on a General Liability, Automobile or Workers' Compensation policy. If there is a claim, the underlying policy will pay its limits of liability and the umbrella policy coverage would then be activated.

When do I need to purchase Workers' Compensation Insurance?

Most states require an employer to purchase workers' compensation insurance as soon as they have employees. These states also consider a corporate entity to have employees from the moment the corporation is formed.

Workers' compensation insurance will provide medical expense and disability income for injured employees as required by the laws of each state.

In addition, the insurer will defend any claim proceeding or suit against the insured for benefits payable under the policy.

Premium shall be computed on the basis of the total remuneration (payroll) paid or payable by the insured for services covered by the policy.

What should be included in the remuneration?

In addition to ordinary wages or salaries, remuneration includes several other types of compensation. These include:

  • Bonuses
  • Extra pay for overtime work except as provided in Rule V-E
  • Pay for holidays, vacations or periods of sickness
  • Payment by an employer of amounts otherwise required by law to be paid by employees to statutory insurance or pension plans
  • Payment to employees on any basis other than time worked, such as piece work, profit sharing or incentive plans
  • Payment or allowance for hand tools or power tools used by hand and provided by employees and used in their work operations for the insured
  • The rental value of an apartment or house provided for an employee based on comparable accommodations
  • The value of lodging received by employees as part of their pay
  • The value of meals received by employees as part of their pay to the extent shown in the insured's records
  • The value of store certificates, merchandise, credits or any other substitute for money received by employees as part of their pay

Items not included are:

  • Tips and other gratuities received by employees
  • Payments by an employer to group insurance or group pension plans for employees other than payment covered by Rule V-B.2e
  • The value of special rewards for individual invention or discovery
  • Dismissal or severance payments except for the time worked or accrued vacations