Commercial Insurance
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Business Owners Policy
Product Summary
Many small business owners buy a type of insurance coverage called a Business Owner's Policy. This is a package policy that covers major property and liability
exposures as well as a loss of income if your business cannot operate for a period of time.
For example, if your accounting firm's roof is damaged during a thunderstorm, causing your office to flood and your business to close for two months, a BOP would
provide coverage in several ways.
The policy would cover the cost of repairing the roof, cleaning up water damage and repairing or replacing your furniture, computers and supplies. A BOP also would
cover your payroll and taxes for the two months the business was closed. And if one of your clients was in your office during the storm and was injured by falling debris, a BOP would cover your
customer's medical bills.
Buying a BOP can be a good deal for a business owner. The policies often provide more complete coverage at a lower price than separate policies would for each kind of
coverage.
What's Covered?
A BOP covers major property exposures, liability exposures and business interruption.
Property coverage generally includes owned or leased buildings; the contents of buildings, such as furniture, supplies, fixtures, machinery, equipment, inventory and
building improvements; glass and signs; and some property off of the premises.
Property insurance can be bought based on the property's actual cash value (its replacement cost minus depreciation), its current replacement cost or another
agreed-upon amount, such as an appraisal.
Liability insurance covers your business if it is sued for something the business did or failed to do that caused injury or property damage to someone else. Liability
insurance covers damages and settlements stemming from a lawsuit, up to the policy limits. Many liability policies also cover attorneys' fees and other costs associated with defending against a
lawsuit.
Business interruption coverage can pay for your business' fixed costs, such as rent, payroll and taxes, if your enterprise suffers a property loss that
causes it to close or slow down for a period of time while repairs are made.
What Isn't Covered?
Usually a BOP doesn't cover damage due to earthquakes or floods; workers' compensation; group health, life or disability insurance; insurance for
company-owned vehicles; and specialized liability risks such as professional liability, director's and officers, employment practices and malpractice.
What Affects the Cost of the Policy?
How to save money on your policy
Insurers use rating formulas to determine the policy premium. For a BOP, insurers consider several factors, including the type and location of the business; the
building's age, construction material and security features such as alarms and sprinklers; the business' claims history; and the business' financial stability and management team. Rates also vary
depending on a policy's coverage limit.
Commercial Package Policy
Product Summary
A Commercial Package Policy ("CPP") is a customized package of two or more coverage forms. The package policy is comprised of the same coverage forms that are used
when separate (monoline) policies are written. A premium discount is generally granted when separate coverage parts are purchased as part of a Commercial Package policy. The most common coverage
forms include commercial property, commercial general liability, inland marine, crime, equipment breakdown, and commercial auto.
A CPP differs from a Business Owners' Policy (BOP). A BOP is also a "package" of coverages, but a BOP automatically includes various standard coverages, such as
general liability, property, business income, money and securities, valuable papers, accounts receivable, and employee dishonesty.
A Commercial Package policy provides only the coverages selected by the policyholder. A CPP can consist of only general liability and building and/or contents property
coverage, or can also include several other coverage forms.
All coverage forms on a Commercial Package policy must be selected and tailored to the particular risk.
What's Covered?
A CPP covers various property and/or liability exposures, depending on which coverage forms are selected.
The property form covers buildings, personal property, signs, property off premises, valuable papers, newly acquired properties, and personal property of others. Some
of the coverages are subject to sublimits that can be increased for an additional premium. Property insurance can be bought on replacement cost or actual cash value basis. A coinsurance provision
generally applies.
There are separate coverage forms available for business income and extra expense, equipment breakdown, accounts receivable, crime, and others.
Liability insurance covers the business if it is sued for something the business did or failed to do that caused injury or property damage to someone else. Liability
insurance covers damages and settlements stemming from a lawsuit, up to the policy limits. Many liability policies also cover attorneys' fees and other costs associated with defending against a
lawsuit.
Specialized property, business income and liability coverage extension forms can be added to a CPP for certain types of businesses.
What Isn't Covered?
Workers' Compensation is generally not included as a part of a Commercial Package Policy. Health, life and disability insurance are written separately. Specialized
coverages such as Directors' and Officers' Liability and Fiduciary Liability are written independently from a CPP.
What Affects the Cost of the Policy?
The premium is based on a variety of factors, depending on the types of coverage forms included in the package. For property insurance, the age, construction, and
value of the building will greatly impact the premium. For liability coverage, the inherent risk of the insured’s operations and products will affect the premium.
Workers' Compensation
Product Summary
Workers' compensation insurance pays for medical care and rehabilitation for employees who are injured on the job or contract a work-related illness. Workers'
compensation also covers a portion of an employee's lost wages, disability benefits and death benefits for the dependents of employees killed in work-related accidents.
Workers' compensation covers all of the employees of a business except independent contractors. Special provisions must be made if employees work out-of-state.
Workers' compensation is a no-fault system. This means that injured employees do not have to sue their employers to receive compensation. Compensation is automatic for
covered benefits. Except in cases of extreme negligence, employers are generally protected from liability due to work-related injuries and illnesses.
For example, if an employee is hurt on the job, the injury is immediately reported to the workers' compensation insurer. The employee receives whatever medical care is
needed and the insurer pays the bills.
If the employee cannot work for a limited period of time because of the injury, the insurer pays the employee a portion of his or her lost wages. If the employee
cannot return to work because of a permanent injury, the insurer pays to train the employee for another job. If the employee dies because of the injury, the insurer pays death benefits to the
worker's dependents.
Who Needs Workers' Compensation?
Employers in all states except Texas and New Jersey are required by law to have workers' compensation insurance. And in New Jersey, employers that do not
have workers' compensation coverage can suffer penalties so severe that the obligation is optional in theory only.
Each state sets its own benefit levels, so coverage does not differ among various workers' compensation insurers within a state.
In North Dakota, Washington, Wyoming and Ohio only the state can sell workers' compensation coverage.
Several states operate a worker's compensation fund that serves as a workers' compensation insurance company for employers in the state. These funds are available to
ensure that workers' compensation insurance is available to all employers in the state, even those that may have difficulty buying coverage from a commercial carrier.
What Affects the Cost of the Policy?
A company's payroll is one of the factors used to calculate an employer's premium. The higher your payroll, the higher your premium will be.
The kind of work your employees do also affects your premium cost. Employers must report to a workers' compensation insurer the job classification of each of their
employees. Generally, premiums are more costly for employees with jobs that involve a greater amount of risk.
For example, the premium for a construction worker would usually be higher than the premium for an administrative assistant
Commercial
Automobile Insurance
Product Summary
Commercial auto insurance provides coverage for company-owned vehicles in the event of an accident that causes bodily injury or physical damage. Coverage can be for
company-owned cars, trucks, buses and other types of vehicles.
A common endorsement to commercial auto coverage is non-owned and hired auto liability insurance. This endorsement covers vehicles your employees use or that you rent
or borrow but the business doesn't own.
What's Covered?
Commercial auto insurance covers physical damage to a company-owned vehicle if it hits another object, overturns, burns or is damaged as a result of vandalism or
theft.
A commercial auto policy also covers medical expenses for those involved in an accident, regardless of who caused it.
If your company is sued because of an automobile accident, the coverage generally includes attorney fees, court costs and payment to the injured person up to the
policy limit.
For example, if one of your employees is driving a company-owned car to a business lunch and gets into a car wreck, commercial auto insurance will pay for the costs of
repairing all vehicles involved in the wreck. The policy also will pay for medical bills for anyone injured in the accident.
Some commercial auto policies also pay for the cost of renting a replacement vehicle while the damaged one is being repaired.
What Affects the Cost of the Policy?
Insurers use many factors to determine the policy premium. The number and kind of vehicles insured and the location of the business are key factors.
Insurance rates vary by state and region. For example, costs tend to be lowest in rural communities and highest in cities where there is more traffic.
Also, some cars are more expensive to insure than others. Vehicles with expensive repair costs and those that are more attractive to thieves are costlier to
insure.
Umbrella Liability
Product Summary
Umbrella insurance is also known as “excess liability” insurance. Umbrella Liability applies excess over primary liability policies and provides additional limits of
liability in a cost effective fashion. The primary policies are called “underlying” policies and are specifically scheduled, along with their limits, on the Umbrella policy.
The underlying policies are typically the primary General Liability and Auto Liability policies. The Employer’s Liability section of the Workers’ Compensation policy
is also a common underlying coverage.
Primary General and Auto Liability policies commonly have limits ranging from $500,000 to $2,000,000. In the litigious climate of the U.S., those limits are often
insufficient to adequately protect a business from a serious premises claim, product liability lawsuit, or auto accident.
What's Covered?
Umbrella policies are intended to cover a variety of liability losses that are also covered by the primary policies. The Umbrella coverage attaches at a predetermined
level of liability limit, i.e., when a covered loss exhausts the primary policy’s per occurrence limit.
For example, assume the primary General Liability per occurrence limit is $1,000,000 and the Umbrella liability policy limit is $5,000,000 excess $1,000,000. There is
a covered loss of $3,000,000. The primary General Liability policy will pay the first $1,000,000 (the policy limit) and the Umbrella policy will pay the remaining $2,000,000.
Some Umbrella policies will also “drop down” and apply on a primary basis, excess of a Retained Limit (deductible), for claims not covered by the primary policies.
This is called Coverage B on the Umbrella policy. However, generally speaking, most Umbrellas will respond only to claims that are covered by the primary policies.
What Isn't Covered?
An Umbrella policy is strictly third-party liability coverage; it does not apply excess of property, crime, or other first-party coverages. Most Umbrella policies will
exclude Employment Practices Liability, Professional Liability, Product Recall, Asbestos, Pollution, War and Terrorism. All Umbrella policies exclude Workers’ Compensation.
What Affects the Cost of the Policy?
Underwriting for Umbrella Liability insurance is customized for each individual policyholder. As with primary General Liability, the more hazardous the Insured’s
operations, the higher the Umbrella premium will be.
General Liability
Product Summary
Commercial General Liability (GL) coverage can be either a stand-alone “monoline” policy or combined with other coverages to form a Business Owners Policy (BOP) or a
Commercial Package Policy. The basic areas covered by a General Liability policy are premises liability, Products and Completed Operations Liability, Personal and Advertising Injury, Fire Legal
Liability and Medical Expenses.
What's Covered?
A GL policy covers occurrences of bodily injury and property damages that the insured is legally obligated to pay. Liability insurance covers the business if it is
sued for something the business did or failed to do that caused injury or property damage to someone else. Liability insurance covers damages and settlements stemming from a lawsuit, up to the
policy limits. General Liability policies also cover attorneys' fees and other costs associated with defending against a lawsuit.
GL policies generally cover the insured's ownership or use of the premises, operations, contractual agreements, products made, sold or distributed, completed
operations, personal and advertising injury and medical payments. Medical Payments cover reasonable medical expenses, regardless of fault, for bodily injury.
What Isn't Covered?
Workers' Compensation is not included in a GL policy. Liability resulting from manufacturing, selling, distributing or serving liquor is excluded. The GL policy covers
Host Liquor Liability for insureds who are not in the business of manufacturing, selling, distributing or serving liquor. Other common exclusions on GL policies include pollution, aircraft,
automobiles, watercraft and product recall.
What Affects the Cost of the Policy?
The premium is based on a variety of factors, depending on the types of coverage forms included in the policy. The size of the insured's operations and the inherent
risk of the products will affect the premium.
Property Insurance
Product Summary
Property coverage can be purchased either as a stand-alone "monoline" policy or combined with other coverages to form a Business Owners Policy ("BOP") or a Commercial
Package policy.
What's Covered?
A property policy pays for direct physical loss or damage to certain types of property. Covered property typically includes buildings, business personal property,
signs, property off-premises, valuable papers, newly acquired properties, and personal property of others. Some of the coverages are subject to sublimits that can be increased for an additional
premium. Property insurance can be bought on replacement cost or actual cash value basis. A coinsurance provision might apply.
There are separate coverage forms available for business income and extra expense, equipment breakdown, accounts receivable, crime, and other coverages.
What Isn't Covered?
Examples of property generally not covered by a property policy are animals, land, vehicles, foundations and piers. Perils that are often excluded include wear and
tear, flood, earthquake and fungus.
What Affects the Cost of the Policy?
The premium is based on a variety of factors, depending on the types of coverage forms included in the policy. For property insurance, the age and construction of the
building and the value of the building and contents will greatly impact the premium. Fire protection issues, such as sprinklers and fire rating protection class, are also important.
Business Personal
Property
Product Summary
Many small business owners buy a type of insurance coverage called a Business Personal Property Policy. This is a policy that covers the contents belonging to the
insured and being used in the covered business.
A Business Personal Property Policy provides only the coverage limits shown on the declarations as covered property selected by the policyholder.
What's Covered?
A Business Personal Property Policy is covering property owned by the insured and used in the named insured business.
Property coverage generally includes the contents of buildings, such as furniture, supplies, fixtures, equipment, and inventory related to the business. Consequential
Loss Coverage may also be available for indirect losses, extra expense and loss of anticipated profit.
Property insurance can be purchased based on the property's actual cash value (its replacement cost minus depreciation), its current replacement cost or another
agreed-upon amount, such as an appraisal.
What Isn't Covered?
A Business Personal Property Policy doesn't cover damage due to earthquakes or floods; workers' compensation; group health, life or disability insurance; insurance for
company-owned vehicles; and specialized liability risks such as professional liability, director's and officers, employment practices and malpractice.
What Affects the Cost of the Policy?
The premium is based on the amount of coverage and deductibles selected by the insured.
Builder's Risk Policy
Product Summary
A Builders Risk policy covers a building in the course of construction or renovation. Builders Risk is a type of Inland Marine insurance. Covered property includes the
building, building materials in transit or at a temporary location, soft costs and rental income.
What's Covered?
The policy covers the costs of labor and materials for new construction. In addition to the actual building, the policy covers property such as temporary
structures, fencing, scaffolding and construction signs. Loss or damage to trees, shrubs, sod and plants is covered for specific perils such as fire, theft, and motor vehicle collision. If
damage is caused by defective workmanship, materials or design, the policy will cover the resultant damage. Mechanical breakdown coverage can be included for losses caused by testing certain
types of equipment. Valuable Papers coverage is often included to protect blueprints and other construction documents at the job site. The Builders Risk policy covers the Insured’s responsibility
for materials and property owned by others at the job site. A Builders Risk policy also covers the financial loss resulting from a new ordinance or law. Some Builders Risk policies protect the
profit the contractor has earned.
What Isn't Covered?
Seizure or destruction of property by order of governmental authority is not covered. The policy does not cover loss caused by the settling or cracking of walls,
ceilings or floors. Acts of destruction or theft by employees are not covered.
What Affects the Cost of the Policy?
The total value of the construction or renovation project drives the cost of the premium. The type of construction and where the property is located are also factors
impacting the premium.
Motor Truck Cargo
Product Summary
Motor Truck Cargo coverage is a type of Inland Marine coverage. Inland Marine insurance is designed for specific classes of property of concentrated high value. The
property is typically subject to risks associated with transportation and theft.
Carriers of cargo are legally liable for the property transported in their vehicles.
What's Covered?
Motor Truck Cargo insures against the risks of direct physical loss to covered property except as specifically excluded. Cargo insurance covers the property while in
transit, loading or unloading.
A Cargo policy typically insures the property while at the cargo carrier's terminal building or dock. Coverage can be extended to pay for physical loss caused by
spoilage or temperature change resulting from the accidental breakdown of refrigeration or heating units on the vehicle.
What Affects the Cost of the Policy?
The type of commodity being transported significantly affects the premium. High valued goods will carry a higher rate than low cost commodities. Geography can also
impact the premium. If the goods are being transported to or through higher risk regions, such as major metropolitan areas, a surcharge is often applied to the rating structure. Selecting a
larger deductible can lower the premium.
Commercial Truck GL/Auto
Product Summary
Commercial Truck Liability is a specialized program for long-distance truckers. The program provides Commercial Auto Liability and General Liability coverages.
What's Covered?
The policy covers the Auto Liability and General Liability exposures arising out of long-distance trucking. The policy includes physical damage coverage for the
trucks.
What's Not Covered?
This policy does not provide any coverage for the cargo being hauled in the trucks. To cover that exposure, a Motor Truck Cargo policy is needed.
What Affects the Cost of the Policy?
The type and value of the trucks significantly affects the premium. Territory can also impact the premium. If the trucks are driven to or through higher risk regions,
such as major metropolitan areas, a surcharge is often applied to the liability rating structure. Selecting a larger deductible can lower the premium.
Liquor Liability
Product Summary
A Liquor Liability policy covers the legal liability imposed on a business that sells, distributes or serves alcoholic beverages. General Liability policies exclude
Liquor Liability for establishments that sell, distribute or serve liquor, so those businesses need a separate Liquor Liability policy or coverage form. The types of businesses that should carry
Liquor Liability include bars, restaurants, hotels, motels, liquor stores, convenience and grocery stores that sell liquor. The coverage is available on either an "Occurrence" form or a
"Claims-Made" form.
What's Covered?
A Liquor Liability policy covers claims involving bodily injury and property damages that the insured is legally obligated to pay. The policy covers only injuries or
damages an insured has caused due to serving, selling or distributing alcoholic beverages, so a General Liability policy is also required to cover the other exposures of the business. The policy
covers attorneys' fees and other costs associated with defending against a lawsuit. An important optional coverage to consider on a Liquor Liability policy is Assault and Battery coverage.
What Isn't Covered?
If a liquor license is required and is not in effect at the time of an otherwise covered liquor liability exposure, there is no coverage. Common exclusions on a Liquor
Liability policy include Workers' Compensation and Products Liability from any product other than liquor (e.g., food).
What Affects the Cost of the Policy?
The premium is based on a variety of factors, depending on the types of coverage forms included in the policy. A tavern that is open past midnight will generally have
a higher premium than a restaurant that sells only a small amount of liquor.
Special
Events Liability
Product Summary
Special Events Liability coverage is a commercial general liability designed to provide liability insurance for the organization hosting an individual special event.
Examples of special events are concerts, arts and crafts shows, fundraisers, carnivals, golf tournaments, conferences/conventions, festivals, etc.
What's Covered?
For organizations hosting special events, coverage is provided for the organization if it is sued for something the organization did or failed to do that caused injury
or property damage to someone else. Liability insurance covers damages and settlements stemming from a lawsuit, up to the policy limits.
What Affects the Cost of the Policy?
The nature of the event, duration, expected attendance, the state in which the event is being held, and the limits selected all affect the premium.
Flood Insurance
Product Summary
Property and/or contents coverage can be purchased for Personal or Commercial exposures as a result of a declared flood. Coverage is underwritten by the National Flood
Insurance Program and is available directly through NFIP or various other carriers approved by NFIP.
What's Covered?
A Flood Policy pays for direct physical loss caused by declared flood waters. Covered property typically includes residences, commercial buildings and contents in the
amounts listed on the coverage summary. Coverages are subject to elected deductibles.
The maximum coverage available for a residential building is $250,000 and $100,000 for contents. For a commercial building the maximum coverage is $500,000 for the
building and $500,000 for contents.
A furnace, washer, dryer, hot water heater and other equipment used in the maintenance of the building are considered covered contents.
What Isn't Covered?
Contents such as furniture, clothing and finished materials used in basement area would be excluded from coverage.
The standard waiting period is thrity days unless the policy is being required by a lender for a loan closing.
What Affects the Cost of the Policy?
Flood Zone assigned by the National Flood Association, occupancy, construction type, building elevation and finished or unfinished basement along with limits and
deductible elections would be determining factors in regard to policy premium.
Prior Federal Disaster Relief payments and/or flood losses would be a determining factor in placing the coverage.
Contractors Pollution Liability
Product Summary
Contractors Pollution Liability insurance is designed to address environmental liability associated with the job-site operations of contractors. Contractors face many
pollution risks stemming from operations at their job sites. These include contaminated soil disposal and the accidental release of fuel oil, chemicals and/or toxic gases from broken pipelines,
utilities and stationary and mobile fuel tanks. Pollution Liability insurance helps protect liability when a covered operation results in a pollution incident.
What's Covered?
Available on either a claims-made or an occurrence basis, the Contractors Pollution Liability insurance policy helps protect contractors against pollution conditions
caused by covered operations including work performed by subcontractors. Covered losses include third-party claims for bodily injury, property damage, cleanup costs, defense costs and
environmental damage resulting from pollution conditions caused by the performance of covered operations.
What Isn't Covered?
A Contractors Pollution Liability policy is not comprehensive general liability coverage. It does provide protection against third-party claims typically excluded
under a commercial general liability policy.
What Affects the Cost of the Policy?
The premium is based on the limits of liability and specific contractor needs.
Underground Storage Tank Liability
Product Summary
Property owners or business operators who have an underground storage tank containing a petroleum product on their premises are legally required by the EPA to show
proof of financial responsibility should the contents of that tank cause any bodily injury or property damage to a third party.
Commercial operations with underground or aboveground storage tanks that should consider purchasing an UST Liability policy include, but are not limited to, gasoline
stations, convenience stores, manufacturing operations, building owners, airports, marinas, farmers or any business that uses tanks to store fuel to power emergencygenerators.
What's Covered?
An Underground Storage Tank Liability policy provides coverage for third-party bodily injury and property damage claims resulting from pollution conditions emanating
from scheduled tanks. Corrective actions coverage as a result of a legally required payment for compensatory damages is included. UST policies are offered on a claims made coverage basis. Along
with the UST policy, the insurer provides a Certificate of Financial Responsibility to satisfy federal and state requirements. Both aboveground and underground storage tanks can be scheduled on
an UST Liability policy.
What Isn't Covered?
An Underground Storage Tank policy does not cover damage due to expected or intended injury, contractual liability, worker’s compensation, employer’s liability, or
failure to comply with environmental laws.
What Affects the Cost of the Policy?
The premium is based on the number of tanks on the premises, limits of liability and chosen deductible.
Vacant Property
Package
Product Summary
The Vacant Property Package insurance policy provides property and premises liability coverage for vacant buildings, both residential and commercial.
What's Covered?
Coverage provided is based on ISO Coverage Forms: Property Basic Causes of Loss (CP1010) up to $5 million property limit; Premises Liability, Medical Payments and Fire
Damage Legal Liability (CG0001).
What Affects the Cost of the Policy?
The building value, type of construction, number of units, and fire protection classification are contributing factors to policy premium.