Anytime you purchase something of value your mind sets to protect it. Make sure you understand your insurance coverage and what your paying for. Remember that insurance is to cover your damage or loss in your time of need. Don't sacrifice coverage when you need it the most.
This website is only intended for the use of residents in the state of Colorado, and is not intended as a solicitation or offer of insurance in any other state or where such an offer would be a violation of law.
ACCOUNTS RECEIVABLE COVERAGE
This coverage provides protection for the following losses:
1. All sums due you from customers, providing you are unable to effect collection thereof as a direct result of loss or damage to records of accounts receivable.
2. Interest charges on any loan to offset impaired collections pending repayment of such sums made uncollectible by such loss or damage.
3. Collection expense in excess of normal collection cost made necessary because of such loss or damage.
4. Other expense, when reasonably incurred by you in re-establishing records of accounts receivable following loss or damage.
ACTUAL CASH VALUE (ACV)
"Actual Cash Value" is the replacement cost of property damaged or destroyed at the time of loss, with deduction for depreciation. Actual cash value cannot exceed the applicable limit of liability shown in the declarations of the policy, nor the amount it would cost to repair or replace such property with material of like kind and quality within a reasonable amount of time after a loss.
ADDITIONAL INSURED
An individual or entity that is not automatically included as an insured under the policy of another, but for whom the named insured's policy provides a certain degree of protection. An endorsement is typically required to affect additional insured status. The named insured's impetus for providing additional insured status to others may be a desire to protect the other party because of a close relationship with that party (e.g., employees or members of an insured club) or to comply with a contractual agreement requiring the named insured to do so (e.g., customers or owners of property leased by the named insured).
ADDITIONAL NAMED INSURED
1. An individual or entity, other than the first named insured, identified as an insured in the policy declarations or an addendum to the policy declarations.
2. An individual or entity who is added to a policy with the status of named insured after the policy is written. Such an individual or entity would have the same rights and responsibilities as an individual or entity named as an insured in the policy declarations (other than those rights and responsibilities reserved to the first named insured). In this sense the term can be contrasted with additional insured, an individual or entity added to a policy as an insured but not as a named insured. The term additional named insured has not acquired a uniformly agreed-upon meaning within the insurance industry, and use of the term in the two different senses defined above often produces confusion in requests for additional insured status between contracting parties.
Additions and Alterations
Additions and Alterations coverage protects any additions, alterations, and improvements you make to your unit, for up to 10% of your contents limit. This coverage can be increased.
ADVERTISING INJURY LIABILITY
"Advertising Injury" means injury rising out of an offense committed in the course of your advertising activities, if such injury rises out of libel, slander, defamation, violation of right of privacy, piracy, unfair competition or infringement of copyright, title or slogan.
AGGREGATE
1. A limit in an insurance policy stipulating the most it will pay for all covered losses sustained during a specified period of time, usually one year. Aggregate limits are commonly included in liability policies. While not often used in property insurance, aggregates are sometimes included with respect to certain catastrophic exposures, e.g., earthquake and flood.
2. The dollar amount of reinsurance coverage during one specified period, usually 12 months, for all reinsurance losses sustained under a treaty during such period.
AGREED AMOUNT ENDORSEMENT
This endorsement is an agreement made by the insurance company wherein it waives the coinsurance clause on the specified property. As long as this endorsement is in effect, there would be no coinsurance penalty at the time of a claim.
By combining an Agreed Amount Endorsement with a Replacement Cost Endorsement (see separate explanation), you can obtain an unusually high quality of insurance coverage!
ALIENATED PREMISES EXCLUSION
This exclusion eliminates coverage for property damage liability to premises alienated (i.e., sold) by you. For example, you own a lot and build a house on it. After the house is completed and sold, a subcontractor's faulty wiring causes the house to burn. The buyer, or his/her insurance company, sues you for the cost of repairing or rebuilding the house. There is no coverage for this exposure under standard liability policies.
AUTOMOBILE ACCIDENTS AND NO INSURANCE
If you don't have Personal Automobile insurance -- perhaps because you use a company vehicle -- you have a number of possible uninsured exposures.
For example, you may be without protection in any of the following situations:
BAILEE COVERAGE
Inland marine coverage on property entrusted to the insured for storage, repair, or servicing. It is typically purchased by businesses such as dry cleaners, jewelers, repairers, furriers, etc.
Basic Condominium Coverages
Contents coverage is basic. A limit is selected $75,000 for example, based on the value of your contents to replace your things for damages arising from perils named in your policy such as fire, water damage, theft, explosion, and more. There is a deductible usually $500 or a $1000. In a superior policy coverage is provided in a way that allows you to replace your lost property with new items, without depreciation. (Note: Most policies provide depreciated value or almost nothing for most clothing and furniture unless those items are quite new). "Replacement Cost Coverage; i.e., new for old" is preferred.
There are specific limits on the theft of certain types of property such as jewelry, money and securities, watercraft, etc. It may be preferable to schedule specifically your valuables and collectables. There is a credit card coverage up to $10,000 is available.
Additions and Alterations coverage protects any additions, alterations, and improvements you make to your unit, for up to 10% of your contents limit. This coverage can be increased.
Unit assessment coverage pays up to $50,000 for your share of an assessment charged against all unit owners as a result of a covered loss.
Loss of Use is an extra expense you incur while staying at a temporary location if your condo becomes uninhabitable. While most policies allow a limited dollar amount for this coverage, our program is UNLIMITED.
Personal Liability coverage insures you for claims involving damages for which you are held liable. Our program starts with $500,000 limit. Higher limits are available and highly recommended due to the great number of lawsuits and large settlements common today. Limits can often be increased to $5 million.
NON-OWNED AND HIRED CAR coverage is for policies written with limits of liability of $1 million or more. It provides coverage for rental or borrowed autos as long as the insured does not own any private passenger vehicles, pick-up, panel truck or van and the use does not exceed 30 days.
Also recommend is Personal Excess Liability Coverage, often called an Umbrella policy. A personal Excess Liability Policy provides you with liability Coverage for damages for which you or members of your household may be legally responsible for beyond the basic limit.
EXPLANATION OF NAMED PERIL VERSUS ALL RISK
A "peril" is defined as a cause of damage or loss. To be covered for damage or loss under a "basic" contract, the damage or loss must be caused by a peril that is "named" or listed in the contract. Consequently, if damage or loss is caused by a peril that is not named, there is no coverage. In addition, the contract's exclusions must also be considered in determining coverage.
In a "special" contract, it is not necessary to name or list the insured perils since the intent is to cover all risk of damage or loss. Here, too, the contact's exclusions must be considered; however, the "special" form of coverage provides a much greater coverage quality.
Note that "special" coverage should not be construed to mean "all loss" coverage. Certain types of loss are definite and therefore not insurable.
DEFINITION OF BINDER
A binder is a legal agreement that serves to effect insurance coverage for a specified period of time until the actual insurance policy can be issued. A binder can be issued by either an insurance agent or company and must provide the following information:
- Name of insured
- Type of insurance coverage
- Limits of insurance
- Covered perils
- Name of insurance company
DEFINITION OF BLANKET INSURANCE
Blanket insurance provides coverage under a single limit for the following:
- Two or more items (e.g., Building and/or Contents)
- Two or more locations (e.g., Location A and/or Location B)
- A combination of items and/or locations
DEFINITION OF BLOCK POLICY
A block policy provides a form of inland marine insurance. It covers loss to the property of a merchant, wholesaler, or manufacturer including:
- Property of others in the insured's care, custody, or control
- Property on consignment
- Property sold but not delivered
A block policy will cover loss caused by most perils (including transportation), subject to certain limitations as specified in the policy exclusions. Common block policies are jeweler's block and furriers block policies.
BOILER AND MACHINERY COVERAGE
This form of insurance provides important mechanical breakdown coverage generally not available under any other insurance policy. A Boiler and Machinery policy can protect an insured against the effects of catastrophic property loss, such as steam boiler explosion or an expensive breakdown of machinery and equipment.
But it's not just the physical damage caused by the explosion or breakdown that's of concern. While repairs are being made, valuable time and profits are lost. Business Interruption coverage protects against this. Often Extra Expense coverage is required to keep the business in operation regardless of cost. Consequential Damage and Refrigeration Interruption insurance protect against spoilage as the result of a breakdown. Many times these business interruption, extra expense and spoilage losses can be much more extensive than the damage to the equipment itself.
Equally important is the very valuable inspection service that Boiler and Machinery insurance can provide. Not only does this service satisfy most jurisdictional inspection requirements, but it also can benefit the insured by providing sound loss control recommendations that can help assure efficient operation and longer equipment life.
It is our opinion that virtually every commercial business has some type of Boiler and Machinery insurance exposure. Keep in mind that mechanical breakdown coverage encompasses much more than just boilers and pressure vessels. It also can include refrigeration equipment, air conditioning equipment, various types of piping, turbines, engines, pumps, compressors, blowers, gearing, shafting, electric motors, generators, transformers and assorted other types of mechanical and electrical equipment. In fact, many policies are written for insured’s who do not own or operate boilers or pressure vessels, but yet have sizable mechanical and electrical exposures.
BROAD FORM PROPERTY DAMAGE COVERAGE INCLUDING COMPLETED OPERATIONS
This coverage extension is of great value to the general contractor as respects "completed operations" property damage liability claims. Without it, the normal Comprehensive General Liability policy will not respond for "completed operations" claims (i.e., claims rising out of work performed on behalf of the insured by subcontractors). With it, this exposure is covered.
Additional broadening coverage features are also included, but none as important as the above to the general contractor.
BROADCASTERS' LIABILITY COVERAGE
The legal liabilities of a broadcaster are numerous and vary from the use of incorrect news stories, libel and slander, invasion of privacy, copyright infringement, and unauthorized use of plot, characters, or music. Broadcasters' Liability insurance covers these exposures, as well as defense costs in contesting suits or claims. Employees are covered as insured’s while acting within the scope of their duties as such.
BROADENED NAMED INSURED WORDING
Regarding liability coverages, these coverages will automatically apply to ". . . any affiliated, associated, allied or subsidiary company or entity (including subsidiaries thereof), now held or hereinafter acquired or constituted . . ."
BUILDER'S RISK
Indemnifies for loss of or damage to a building under construction. Insurance is normally written for a specified amount on the building and applies only in the course of construction. Coverage customarily includes fire and extended coverage and vandalism and malicious mischief. Builders risk coverage can be extended to a "special" form as well. The builders risk policy also may include coverage for items in transit to the construction site (up to a certain percentage of value) and items stored at the site.
DEFINITION OF CAPTIVE INSURANCE COMPANY
A captive insurance company is an insurance company that has been set up to provide coverage at a lower cost than available by going through the general insurance market. The company's stock is controlled by one interest or a group of related interests so as to provide coverage for their business operations. A captive insurance company may be a no admitted, nonresident, or foreign insurer. Sometimes it may provide reinsurance to a self-insure or a domestic company.
EXPLANATION OF CO-INSURANCE
Co-insurance is an arrangement by which the insured, in consideration of a reduced rate, agrees to carry an amount of insurance equal to a percentage of the total value of the property insured.
An example is if you have guaranteed to carry insurance up to 80% or 90% of the value of your building and/or contents, whatever the case may be. If you don't, the company pays claims only in proportion to the amount of coverage you do carry.
The following equation is used to determine what amount may be collected for partial loss:
Amount of Insurance Carried x Loss = Payment
Amount of Insurance that
Should be carried
Example A
Mr. Right has an 80% co-insurance clause and the following situation:
$100,000 building value
$ 80,000 insurance carried
$ 10,000 building loss
By applying the equation for determining payment for partial loss, the following amount may be collected:
$80,000 x $10,000 = $10,000
-------
$80,000
Mr. Right recovers the full amount of his loss because he carried the coverage specified in his co-insurance clause.
Example B
Mr. Wrong has an 80% co-insurance clause and the following situation:
$100,000 building value
$ 70,000 insurance carried
$ 10,000 building loss
By applying the equation for determining payment for partial loss, the following amount may be collected:
$70,000 x $10,000 = $8,750
-------
$80,000
Mr. Wrong's loss of $10,000 is greater than the company's limit of liability under his co-insurance clause. Therefore, Mr. Wrong becomes a self-insurer for the balance of the loss-- $1,250.
COMPANY FURNISHED VEHICLES
The Business Auto policy does not extend coverage to employees and their family members if the company furnished vehicle is operated outside the scope of the employer's permission or if the employee rents or borrows a vehicle on a personal basis which is not owned, rented, or borrowed by the business. Also, even in those instances in which coverage extends to the employee under the Business Auto policy, protection is subject to the policy limits, which must be shared with the named insured ( The Employer).
For example, an employer's permission for use of a company vehicle may not extend to employee vacation or other personal activities or to use of the vehicle by members of the employee's family. Even if permission is granted for personal use of the vehicle, the Business Auto policy covers only vehicles owned, rented, or borrowed by the named insured. No coverage extends to vehicles rented or borrowed by an employee on a personal basis.
Individuals who drive a company furnished vehicle must make other insurance arrangements to protect against these coverage gaps in the Business Auto policy. Four alternatives are available:
Expanding the Personal Auto Policy -- Those employees who own one or more personal vehicles in addition to operating a company-furnished car must insure the personal vehicles under a Personal Auto policy. This normally excludes liability and physical damage coverage for the operation of a vehicle furnished for the insured's regular use, but this exclusion may be eliminated by attachment of an Extended Non-Owned Liability Endorsement. This grants coverage for the insured and spouse for operation of a company furnished vehicle and for operating any non-owned vehicle.
Named Non-Owner Coverage -- Individuals who own no personal vehicles may acquire a Personal Auto policy with a Named Non-Owner Endorsement. This provides coverage for the named individual and other listed family members while operating a non-owned vehicle, including a company furnished vehicle. Most carriers prefer not to issue the Personal Auto policy with this endorsement on the presumption that the premium is inadequate; no owned vehicle exists to act as the rating basis.
Expanding the Business Auto Policy -- Those individuals who operate their business as a
proprietorship with all vehicles, both personal and business titled in the business name should add the Individual Named Insured Endorsement to the Business Auto policy. This includes family members of the individual named insured as insured’s for the operation of both owned and non-owned automobiles, thus providing the same coverage under the Business Auto policy as is applicable under the Personal Auto policy.
In the absence of this endorsement, coverage still would apply to the individual named insured with the named insured's permission. The recommended endorsement extends coverage to allow family members to operate vehicles owned, hired, or borrowed by the named insured without permission.
Adding "DOC" to the Business Auto Policy -- A final alternative for providing non- ownership coverage for those persons operating a company furnished car is the Drive-Other-Car Endorsement to the Business Auto policy. This includes listed individuals and their spouses as insured’s for the operation of automobiles hired or borrowed by the listed individual.
Depending on premium, coverage applies for liability, medical payments, uninsured motorists, and physical damage. The endorsements should be used when the scheduled individual is not the named insured, thus precluding the use of the Individual as Named Insured Endorsement.
Because of the coverage gaps under the Business Auto policy, it is essential that additional coverage be provided for individuals and their resident relatives while operating a company furnished vehicle.
COMPLETED OPERATIONS LIABILITY COVERAGE
This form of liability insurance provides coverage for bodily injury and property damage rising from completed or abandoned operations, provided the incident occurs away from premises owned or rented by the insured.
Operations are deemed completed at the earliest of the following items:
- When all operations to be performed by or on behalf of the insured under contract have been completed.
- When all operations to be performed by or on behalf of the insured at the site of the operations have been completed.
- When the portion of work out of which injury or damage rises has been put to its intended use by a party other than the contractor or subcontractor.
COMPREHENSIVE AUTOMOBILE COVERAGE
Brief Coverage Explanations:
- Owned Automobiles - Covers liability rising out of the ownership, maintenance or use of automobiles.
- Hired Automobiles - Covers liability for the use of hired automobiles in your business.
- Non-Owned Automobiles - Covers liability for the use of non-owned automobiles in your business. An example would be an employee using his/her own car on an errand for you.
- Uninsured Motorists - Protects insured’s who are not contributory negligent against bodily injury caused by negligent uninsured motorists.
- Comprehensive - Pays for damage to or the loss of automobiles from perils other than collision. A deductible applies.
- Collision - Pays for damage to or the loss of automobiles from upset or collision with another object. A deductible applies.
COMMERCIAL GENERAL LIABILITY COVERAGE
Under this form of insurance and regarding a covered occurrence, the company will pay all sums the insured becomes legally obligated to pay as damages due to:
1. Bodily Injury (Coverage A)
2. Property Damage (Coverage B)
The insurance company has the right to defend any suit against the insured seeking damages on account of such bodily injury or property damage, even if any of the allegations of suit are groundless, false or fraudulent, and to make such investigation and settlement of any claim or suit as it deems expedient. However, the company is not obligated to pay any claim or judgment or to defend any suit after applicable limit of the company's liability has been exhausted by payments of judgments or settlements.
COMPREHENSIVE GENERAL LIABILITY COVERAGE
Under this form of insurance and regarding a covered occurrence, the company will pay all sums the insured becomes legally obligated to pay as damages due to:
1. Bodily injury (Coverage A)
2. Property damage (Coverage B)
The insurance company has the right to defend any suit against the insured seeking damages for bodily injury or property damage, even if any of the allegations of suit are groundless, false, or fraudulent, and to make such investigation and settlement of any claim or suit as it deems expedient. However, the company is not obligated to pay any claim or judgment or to defend any suit after the applicable limit of the company's liability has been exhausted by payments of judgments or settlements.
CLARIFIED AND EXPANDED CONDOMINIUM COVERAGE
(1)Conformance With Master Deed and Bylaws
One of the most common problems in Condominium policies is their nonconformance to the basic legal documents of the condominium. Almost all condominium declarations or bylaws treat the matter of insurance with some specificity.
Any condominium board that approves an insurance policy not conforming to the condominium instruments runs a serious risk of legal action being taken against it in the event of a claim not fully honored by the insurance carrier.
The major source of protection available to a condominium board against the perils of nonconforming insurance policies is through an endorsement to the master policy conforming the coverage to the requirements of the condominium instruments, notwithstanding provisions or omissions to the contrary in the master policy itself.
(2)Waiver of the Right to Avoid Liability for a Loss Caused By an Act of the Condominium's Board, a Member Thereof, or an Individual Unit Owner
Deliberate acts of arson or gross negligence on the part of a unit owner might render the master policy unenforceable. The unit owner would in effect be recovering for his/her own negligence. An endorsement that the master policy cannot be nullified by an act of a unit owner, board of directors, or someone employed by the condominium should be included.
(3)Permission Granted to Complete
Since it is probable that some continuing construction activities may still take place, coverage should be given for this additional exposure.
(4) Waiver of Subrogation and Additional Property Coverage should be added.
(5)Property Specifically Covered ("Common Property")
The policy itself will be specifically amended to included coverage for the following items:
(a) Outdoor swimming pools, fences, diving platforms, light poles, tennis courts, retaining walls not constituting part of a building, walks, roadways, and other paved surfaces.
(b) Underground pipes and plumbing constituting part of lawn sprinkler systems.
(c) Outdoor signs, whether or not attached to a building or structure.
CONDOMINIUM UNIT OWNER INFORMATION
Lewis-Chester Associates, Inc. is a leading writer of insurance for condominium associations and condominium unit owners. “We have been doing this for many years and have learned where the ‘gaps’ in Condominium coverage are! “ Little attention seems to be given to certain personal exposures, additional premium charged to include this protection.
Please consider just the few examples below.
(1) Divorce
If you are involved in a separation/divorce situation, a no-cost coverage amendment may be necessary to extend your policy's personal liability coverages to both spouses.
(2) Babysitting, Snow Shoveling, Etc.
Coverage for your liability arising out of certain "for profit" activities -- even if done by your children or other household residents -- may not be covered in the normal Homeowners' or Condominium Unit Owners' policy, unless such coverage is specifically added.
The additional charge is typically less than $5.00 per year, and can extend to the following representative situations: babysitting, snow shoveling, lawn mowing, leaf raking, sales of homemade foods, garage sales, certain "fellow employee" damage and injuries, etc.
(3) Condominium Loss Assessment
Members of a condominium association may be assessed additional fees by their board of directors for unexpected expenses that exceed the association's operating budget or funds. These additional expenses could be due to uninsured losses, insurance deductibles, losses in excess of the limits of insurance, pollution liability, etc. As a unit owner, you may be assessed for your portion of these expenses, which could be many thousands of dollars.
If such assessments are necessary due to accidental loss that should be covered by the condominium association's commercial insurance policy and is not, you could be covered if you have a certain coverage part added to your Condominium Unit Owners' policy. This coverage typically costs only $.58 per $1,000.00 of coverage per year!
This "missing" coverage would also respond for liability claims, including directors' and officers' liability respecting your membership on your own condominium association's board of directors, providing you are in an elected position and you serve without remuneration.
DEFINITION OF CONSEQUENTIAL LOSS OR DAMAGE
Consequential loss or damage -- as opposed to direct loss or damage -- is indirect loss or damage resulting from loss or damage caused by a covered peril, such as fire or windstorm. In the case of loss caused where windstorm is a covered peril, if a tree is blown down and cuts electricity used to power a freezer and the food in the freezer spoils, if the insurance policy extends coverage for consequential loss or damage then the food spoilage would be a covered loss. Business Interruption insurance extends consequential loss or damage coverage for such items as extra expenses, rental value, profits and commissions, etc.
CONTRACTOR'S LIABILITY COVERAGE
(1)Premises/Operations
The "premises" portion of your liability insurance provides for payment on your behalf of all sums you become legally obligated to pay as damages resulting from bodily injury and/or property damage caused by an insured peril and rising out of the ownership, maintenance, or use of premises and your operations in progress.
The "operations" portion of your liability insurance covers operations in progress and is intended for situations where your principal business operations are performed away from your premises.
(2)Completed Operations
This portion of your liability insurance covers you for possible liability for bodily injury and/or property damage after your work is complete and you have left the job site.
CROSS LIABILITY COVERAGE
In the event of claim by one insured for which another insured covered by the same policy may be held liable, this endorsement covers the insured against whom the claim is made in the same manner as if separate policies had been issued. However, it does not operate to increase the insurance company's overall limit of liability.
DEBRIS REMOVAL CLAUSE
This pays for the insured's expenses to remove debris of covered property caused by a Covered Cause of loss. This does not include "pollutants" and must occur during the policy period and reported within 180 days of the occurrence.
DIFFERENCE IN CONDITIONS (DIC) COVERAGE
DIC insurance provides coverage designed to close specific gaps in standard insurance policies and is usually available only for larger industrial or commercial risks. It allows coverage to be customized to extend to such exposures as water damage, flood, collapse, earthquake, landslide, etc., according to the insured's needs. DIC coverage may be provided by means of a separate insurance policy or it may be added by endorsement to the basic policy.
DIRECTORS AND OFFICERS (D&O) LIABILITY COVERAGE FOR NONPROFITS
In today's litigious society, the savvy nonprofit entity recognizes the need for D&O liability coverage. These are the facts:
- Nonprofit organizations are not immune from costly litigation.
- Nonprofit organizations are being sued more often and from more sources, despite laws in most states that limit the liability of nonprofit directors and officers.
- Employment related suits for such things as harassment and wrongful termination are at an all-time high, especially since enactment of the Civil Rights Act of 1991 and the Americans With Disabilities Act of 1992.
- Directors and officers are subject to the duties of diligence, obedience, and loyalty and can be sued for negligence in the performance of those duties.
- A claim could threaten the personal assets of directors, officers, and trustees.
- The financial burden of defending a D&O suit can drain a nonprofit organization's badly needed resources.
Who Sues Nonprofit Organizations?
Almost any day to day decision or action by anyone in the organization can trigger a lawsuit. Of all the lawsuits brought against nonprofit organizations, more than 50% involve employees. Even with the most diligent efforts to prevent employment disputes, the following claims can and are often alleged against nonprofit organizations:
- Discrimination due to race, sex, age, national origin, religion, disability, or sexual orientation
- Wrongful termination
- Sexual harassment
- Promotions and compensation
- Interference with employment contract
- Hiring decisions
- Conflicts of interest
- Libel, slander, and defamation of character
- Failure to supervise employees
- Invasion of privacy
- Copyright infringement, misrepresentation of ideas, and unauthorized use of logos
Coverage is available that defends against all of those allegations and more, including claims brought by:
- Donors who feel that their contributions have not been used to further the expressed aim of the organization.
- Board members who disagree with a majority decision on the use of funds.
- Beneficiaries who feel they are entitled to more than they received.
- State attorney Generals who institute legal proceedings against the board for issues such as mismanagement of funds and antitrust violations.
DRIVE OTHER CAR COVERAGE
Coverage applicable to employees or executives of a company or any other person who is supplied a company vehicle, but who does not own a personal vehicle, thereby not having personal automobile coverage. An endorsement may be added to the automobile policy of the company that furnishes the automobile, giving protection while the named individual or a member of his family is driving a car borrowed from a third party (other than the vehicle named in the policy). Individuals who are owners of the company qualify for the "individual named insured" endorsement, which includes family coverage. The drive other car coverage is usually added at little additional premium charge.
EARNINGS (BUSINESS INTERRUPTION) COVERAGE
This form of insurance provides loss of income coverage (i.e., "disability income") for your business by replacing your operating income during the period when damage to the premises or other property prevents income from being earned.
It is by means of your operating income that your business meets its expenses of payroll, light, heat, advertising, telephone service, etc., and from which your profit is derived. If you suffer a business interruption and have to close for several months or operate at reduced pace because of fire or other perils covered by your Earnings insurance, this income will cease or be reduced.
For the purpose of this insurance coverage, "earnings" are defined as the actual loss sustained by the insured as a direct result of business interruption necessitated by damage or destruction of real or personal property. The damage or loss must be caused by the insured perils.
Furthermore, "business income" is defined as the sum of total net profit, payroll expense, taxes, interest, rents, and all other operating expenses earned by the business.
The amount of coverage your Earnings insurance provides is established on the basis of either amount of insurance or actual loss sustained for each 30-day period of necessary business interruption caused by damage or loss from covered perils. There are several ways to set up Business Interruption depending upon your particular business. Monthly limitations, coinsurance, maximum time period to be paid, etc.
In addition to Earnings insurance, it is also advisable to carry Extra Expense insurance (see separate coverage explanation).
ELECTRONIC DATA PROCESSING (EDP) COVERAGE
A Standard property insurance policy leaves something to be desired in addressing special EDP-related exposures. Electronic data processing equipment and its software is particularly susceptible to damage from electrical or magnetic disturbance and changes in temperature or humidity -- perils which are excluded in a standard "special" perils property policy. Except for prepackaged software programs, which are typically covered on an actual cash value basis, coverage for programs and data in a standard property policy is essentially limited to replacement with blank tapes or diskettes plus transcribing expense. Finally business interruption coverage in connection with damaged EDP Media {not equipment} is limited to 60 days from the date of loss or the time when the other damaged property is repaired, whichever is longer. Therefore, if the building repairs are complete, but normal operations cannot resume because replacement computer programs, data or media are not readily available, an uninsured business interruption loss may result.
The best way to resolve these coverage inadequacies for EDP exposures is to buy a special EDP policy. Typically, EDP policies provide "special" peril coverage similar to that provided by "special" property forms, PLUS coverage for all electrical and magnetic damage, mechanical breakdown and often temperature and humidity changes as well. Some insurers include these perils in the basic form, while others make them available by endorsement for an additional premium. Usually these broader coverages are subject to a higher deductible as well. Valuation can be on either a replacement cost or actual cash value basis, and coverage may be available on a blanket as well as a scheduled basis. Media coverage includes the cost to reconstruct software developed in-house {subject to the limit of liability selected for the coverage}, if necessary.
Perhaps most importantly, an EDP policy will respond appropriately to extra expense or income loss from the loss of EDP equipment, programs and data, provided that these coverage options in the policy have been elected and adequate limits of liability have been established.
EMPLOYEE BENEFITS PLAN LIABILITY COVERAGE
Protects the insured employer against claims by employees or former employees resulting from negligent acts or omissions in the administration of the insured's employee benefits programs.
The term "employee benefits programs" is defined to include group life insurance and group accident and/or health insurance; profit sharing plans; employee stock subscription plans; and workers' compensation, unemployment insurance, social security benefits, disability benefits, etc.
Coverage is intended to extend to the "administration" of these plans, including counseling employees, interpreting employee benefits programs, handling records, enrolling/terminating/cancelling employees in specified plans on a timely basis, etc.
EMPLOYEE DISHONESTY COVERAGE
Employee dishonesty coverage protects an employer from financial loss due to the fraudulent activities of one or more employees. The coverage includes protection for loss of money, securities, and other property of the insured.
Some scheduled policies are still available, but the majority is written on a blanket basis. This provides coverage for all employees, subject to the policy definitions.
The limit of liability is "per loss" and is applied on an "occurrence" basis. All acts involving the same employee or group of employees is considered one occurrence.
EMPLOYMENT PRACTICES LIABILITY COVERAGE
Protects the corporation, directors & officers and employees for claims resulting from wrongful termination, discrimination, sexual harassment, wrongful discipline and failure to employ or promote.
Whether you are right or wrong in the eyes of the jury, the typical defense costs alone average $100,000 - $200,000 per case!
ERRORS & OMISSIONS
Coverage for liability resulting from errors or omissions in the performance of professional duties. Applicable as a general rule to professional business activities such as banking, accounting, law, insurance and real estate.
EXTRA EXPENSE COVERAGE
If your building was rendered untantable by fire or any other insured peril, it would probably be necessary to secure other quarters to continue your business operations. However, the use of such buildings would undoubtedly involve many extra expenses, such as rent, installation of telephones, etc. Extra Expense insurance covers such expenditures over and above your normal monthly expenses.
EXTRA EXPENSE COVERAGE FOR COMPUTERS
If your computer/EDP equipment was damaged or destroyed by fire or any other insured peril, it would probably be necessary to incur certain extra expenses to continue your business operations. While your equipment is being repaired or replaced, you might have to rent temporary equipment, hire additional personnel, pay overtime wages, and rent additional space.
Likewise, you might have to "recapture" and "re-enter" lost information after your equipment is repaired or replaced. This would be in addition to your normal, ongoing day-to-day operations.
Extra Expense insurance for computers covers these and similar expenses resulting from a covered loss.
FIDUCIARY LIABILITY COVERAGE
Fiduciary liability, also known as pension trust liability, provides coverage for loss that the insured becomes legally liable to pay because of a claim made against the insured for any alleged wrongful act by such insured or by any other person for whom the insured is legally responsible. It also covers the defense costs in connection with a covered claim. The policy is written on a claims made form.
A wrongful act includes any violation of the responsibilities, obligations, or duties imposed on fiduciaries by the Employee Retirement Income Security Act (ERISA), as well as acts, errors, or omissions in the performance of the duties of the plan administrator.
The ERISA definition of a fiduciary is very broad. It is any person so named in the plan or any person who exercises any discretionary authority or control with respect to the management or administration of the plan or its assets.
The rules and regulations of ERISA include strict guidelines for fiduciaries. Failure to comply can result in lawsuits from employees, former employees, and beneficiaries, as well as the Secretary of Labor, Treasury Department, and Pension Benefit Guarantee Corp. The sponsor corporation as well as the individual fiduciaries is at risk.
ERISA also has a broad definition of what is considered an employee benefit plan. It includes any plan, fund, or program established or maintained for the purpose of providing employee benefits to its participants or beneficiaries. Under a fiduciary liability policy, the insured includes the following:
- The sponsor organization
- The plan(s)
- Any natural person in his/her capacity as fiduciary or administrator of the plan(s)
Most fiduciaries are unaware of their personal financial risk or that of the sponsor organization. Fiduciary liability coverage provides one way of reducing the risk and providing protection for the sponsor organization and individual fiduciaries.
FIRE LEGAL LIABILITY COVERAGE
Coverage needed if you occupy leased or rented property for which you could be held legally liable for damage to the property due to fire or explosion.
FORGERY OR ALTERATION COVERAGE
This type of insurance covers loss sustained through forgery or alteration of outgoing negotiable instruments made or drawn by you, or drawn on your account(s), or made or drawn by one acting as your agent. This includes loss caused by any of the following:
- Checks or drafts made or drawn in your name, payable to a fictitious entity.
- Checks or drafts, including payroll checks, executed through forged endorsements.
- Alteration of the amount of a check or draft.
GARAGEKEEPERS LEGAL LIABILITY
Provides coverage to owners of storage garages, parking lots, etc. for liability as
bailees with respect to damage to automobiles left in their custody. Coverage is contingent upon establishing liability on the part of the insured.
GENERAL PARTNERS' LIABILITY COVERAGE
This type of insurance is also known as General Partners' Liability and Limited Partnership Reimbursement coverage.
A general partner's management and fiduciary responsibilities to a limited partnership closely parallel the director's or officer's to a corporation. Exposure occurs when general partners become the financial managers of a limited partnership. The directors and officers of corporate general partners share this type of exposure.
Some causes of claims are as follows:
- Untrue written or oral statements made by the general partners.
- Breach of fiduciary duty.
- Incomplete disclosure of facts.
- Omission or misleading statements in the offering memorandum.
- Selling of unregistered limited partnership interests.
- Conflict of interest.
- Failure to devote adequate time to the partnership.
- Appointment of drilling contracts without proper prior investigation as to their experience.
- Failure to minimize risk factors that prove detrimental.
EXPLANATION OF INDEMNIFICATION
When insurance policies are written on an "indemnification" basis, the insurance company will reimburse the insured for claim costs already paid. Technically, the insured must not only suffer a loss, but must also pay the loss before being reimbursed (indemnified) by the company.
INFLATION GUARD COVERAGE
This coverage extension automatically increases the building amounts of insurance by 2% per quarter. This is done at no additional cost and is an attempt to keep pace with inflation.
INLAND MARINE COVERAGE
Inland marine insurance indemnifies loss to moving or moveable property and is an outgrowth of ocean marine insurance. Historically, ocean marine insurance held the transporter responsible for property loss before, during, and after the completion of the voyage. In the 1800's, the non-ocean portion of the journey grew as cargoes were transferred to barge, etc., and the term "inland marine" was coined. Inland marine policies became known as "floaters" since the property to which coverage was originally extended was essentially "floating."
INTERNATIONAL INSURANCE COVERAGES/EXPOSURES
Foreign Coverage is needed by companies that conduct business overseas. This includes importers and exporters. To qualify, you must be a U.S. commercial business selling, traveling or consulting overseas.
Examples of Overseas exposures:
1. Export/Import
a. Sales overseas
b. Exhibitions or trade shows
c. Overseas Licensing
d. Overseas Salesmen
e. One source of products
f. Transit or shipments
2. Sell Services Overseas
a. Contracting services
b. Consulting services
3. Manufacturing Abroad
a. Overseas facilities
A single policy is all that is needed for all coverages. When purchasing a policy, at least 2 of the coverages available must be included. A list and brief explanation of these coverages follows:
Premises & Product Liability
This is broad coverage, protecting spouses, employees and vendors. It also covers newly acquired organizations for 90 days. This provides for defense, settlement and investigation into suits involving bodily injury, property damage, personal injury and advertising injury. Suit must be brought outside the United States and Canada.
Automobile Liability
Covers for owned, hired and borrowed cars when overseas. Admitted Auto liability insurance carriers overseas have very limited coverages. This coverage is broader and provides greater limits which are stated in familiar language. This provides primary and excess auto liability limits.
Workers Compensation and Employers Liability
Unless coverage is mandated by a Federal statute such as the Defense Base Act, International Workers Compensation insurance is a voluntary but necessary purchase. This is intended to cover staff traveling and permanently working overseas. Although these employees may be covered by the domestic workers compensation coverages, they may not be covered in whole while working in a foreign country. The foreign worker's compensation endorsement is not available in New Jersey. Under the International Policy, coverages:
1. Are primary
2. Are 24-hours per day when traveling abroad
3. Do not exclude terrorism, civil war or war
4. Provide 24-hour endemic disease coverage
5. Provide worldwide Employer Liability protection
6. Provide repatriation expense
Property including Transit
These cover samples or equipment in the possession of a salesperson and inventory either in transit to or within the foreign country. Ocean marine will not cover these items while either in transit or when on exhibition at trade shows. Business personal property and real property coverages are also available.
Confiscation and Civil War
Anyone who has goods abroad runs the risk of having them confiscated by foreign governments in certain situations or damaged/destroyed in a civil war. This coverage covers the insured goods that are being stored, exhibited or transported with foreign countries. The insured will be covered against direct physical loss of his goods.
Kidnap and Ransom
Media reports of the kidnapping of businessmen traveling or working abroad underscore the importance of having adequate insurance to meet possible ransom demands. This coverage provides for expenses incurred in negotiating the release of hostage or in making payments demanded in other types of extortion cases.
Crime
The risk of employee theft, loss of money and securities on foreign premises or in transit abroad and depositor’s forgery exists. Crime coverage protects you against these exposures. It also allows you to offer your inventory records and physical counts to support the amount of loss claimed when there has been a loss through employee theft.
Business Interruption
The package can protect against loss through loss of foreign royalties coverage. This coverage protects against the second contingency through loss of income coverage. This also protects you against the extra expenses you incur in continuing your business after suffering physical loss or damage to his own property. You can also be protected for contingent business income from physical loss or damage to your supplier's property.
Listed below are examples of claims that have occurred during overseas travel:
Premises Liability: A U.S. businessman, while staying in a hotel in China, negligently caused a fire while smoking in bed. The fire resulted in the death of ten individuals and extensive hotel damage. The U.S. businessman was brought to trial in China on both criminal and civil charges. After a lengthy and costly trial, he was sentenced to 18 months in prison and was ordered to pay $52,000 in damages.
If the U.S. businessman has had an International General Liability policy, any bail bonds, civil court costs and resulting civil penalties may have been paid under this coverage. Domestic CGL policies would not have responded because of territorial limitations on the policy.
Products Liability: A U.S. manufacturer of acne cream products had worldwide sales. A woman in South America suffered eye irritation, the cause of which was traced to the U.S. manufacturer's product.
The claim was settled before it went to trial. However, had it resulted in a suit, the policy would have paid the defense costs and any resulting judgments against the manufacturer.
Difference in Limits and Conditions: An insured, while on business in Korea, rented an automobile and accidentally struck and seriously injured a pedestrian.
The local liability policy on the rented vehicle provided $50,000 in limits. The non-owned/hired automobile liability portion of the policy paid damages which exceeded $50,000. Under the supplementary coverages, the company also paid for the insured's bail bond. There was no coverage provided under the local policy.
Endemic Disease: An individual with Foreign Voluntary Workers' Compensation coverage contracted malaria while installing satellite dishes in Africa. Originally, the insured was incorrectly diagnosed and treated for hepatitis. Eventually, a correct diagnosis of malaria was reached and the disease was cured.
Both hepatitis and malaria are considered endemic diseases; that is, they are common to particular regions of the world. The state of New Jersey offers coverage for occupational disease, but may not cover endemic disease. The company paid this claim, as the Exporter's Package is designed to cover endemic disease. The company also paid for medical expenses until the insured was cured. Domestic Workers' Compensation probably would not have responded to such a claim.
Protection of Experience Modifier: An insured temporarily in Mexico on business accidentally shut his finger in a taxi cab door, resulting in the finger being severed.
The insured's medical expenses were paid for by the company through the Foreign Voluntary Workers' Compensation coverage. In so doing, the insured avoided filing the claim through the state Workers' Compensation Board, not knowing if the claim would be approved or when the decision would be made final. In addition, the insured prevented the claim from negatively affecting their domestic workers' compensation experience and, hence, protected their domestic experience modification.
24-Hour Coverage: An individual, while temporarily working in Haiti, was killed in a late night auto accident.
The widow of the deceased filed a Worker's Compensation claim against the State of Florida, which was denied since the accident occurred after business hours, and the employee was deemed not to be within the scope of his employment. If this individual had had Foreign Voluntary Workers' Compensation coverage, full death benefits would have been paid to widow by the company.
If you determine that you have such exposures, then you should obtain International Insurance.
The following are examples of what can happen to U.S. companies when liability suits are brought overseas and their domestic coverages do not respond:
1. The Company's assets can be impounded in the form of:
a. Accounts Receivable
b. Demonstration Floaters
c. Salesmen's Samples
d. Work in Process
2. A manufacturer can be denied access to the market and therefore, all his future earnings.
3. Distributors may be forced to pay judgments:
a. In turn a suit may be brought against the U.S. manufacturer in the U.S. by the distributor.
b. Distributors can use their contacts to alienate the U.S. Corporation with the local market {within the European common market}.
4. The U.S. Government may be asked to enforce the principle of law known as Comity thereby forcing the U.S. Corporation to respond to a foreign judgment.
NOTE: Temporary travel implies a period not longer than six months.
Underwriting, loss control and claims services are immediately available around the world. Therefore, if a loss occurs there is a company representative available wherever you may be to help you.
JOINT LOSS AGREEMENT
This endorsement is intended to facilitate payment of insurance proceeds when there are two different carriers for the property and the boiler and machinery coverage and there is a disagreement as to the amount of loss to be paid by each carrier.
JEWELER'S BLOCK COVERAGE
(1) Covered Property
This insurance covers the insured's stock, property left with the insured for repair or other purposes, and the insured's interest in and legal liability for property on memorandum or consignment from others in the jewelry trade.
(2) Covered Perils
The policy is written on a "special" form. Some of the more prevalent perils covered are fire, open stock burglary, inside and outside holdup, safe burglary, theft, pilferage, kidnapping, shoplifting, window smashing, damage or loss of salesman's samples in transit, loss in transit by registered mail, water damage, sprinkler leakage, and smoke damage.
(3) Exclusions
The principal exclusions are loss caused by war or nuclear reaction; loss or shortage disclosed on taking inventory; loss from unattended vehicle other than common carrier vehicle; loss during shipment other than by registered mail or under receipt by armored car service, passenger bus line, or customer parcel delivery service; loss at insured's premises caused by earthquake or flood; loss caused by dishonesty of anyone to whom property is entrusted; damage sustained while property is being worked on; and damage sustained while property is being worn, except watches worn solely for the purpose of adjustment.
KNOWLEDGE AND NOTICE OF OCCURENCE
If an insured’s employee or agent fail to notify the carrier of any covered accident
that they have knowledge of it will not invalidate the coverage afforded under the
policy with respects the insured.
IMPORTANT INFORMATION REGARDING LEASED VEHICLES
If you have just entered into a lease agreement, please take a moment to read and understand this information. Contractual leasing agreements vary greatly from company to company. Your lease agreement is a contract which you will probably be held to by law.
Often leasing contracts hold you responsible for damage or theft to the car -- far beyond the actual cash value of the vehicle. Insurance companies offer comprehensive and collision coverages on an actual cash value basis only, as determined by NADA or similar books. Therefore, it is possible to be legally responsible to the leasing company for more than the amount the insurance company will pay you in the event of a loss. The balance, if any, will be your responsibility.
Please be very careful when entering into any contractual agreement, and fully understand your responsibilities stemming from such.
LEASEHOLD INTEREST COVERAGE
Leasehold Interest insurance provides coverage for a tenant in the event his or her lease is terminated. The lease may be terminated due to (1) a clause in the lease specifying that the lease is terminated in the event of property damage causing the premises to be unavailable for tenancy, or (2) condemnation of the leased premises. It is a form of "time element" coverage that serves to provide coverage for the difference between the old rental and a new, likely more expensive rental.
LIABILITY COVERAGE EXTENSIONS
(1) Knowledge of Accident
It is hereby understood and agreed that knowledge of an accident by the agent, servant, or employee of the insured shall not in itself constitute knowledge by the insured, unless the insured shall have received such notice from its agent, servant, or employee.
(2) Notice of Accident
It is further agreed that failure of any agent, servant, or employee of the insured (other than the insured) to notify the company of any accident of which he/she has knowledge shall not invalidate the insurance afforded by this policy as respects the named insured.
(3) Unintentional Errors or Omissions
Coverage afforded by this policy shall not be invalidated or affected by any inadvertent errors, omissions, or improper descriptions of premises, elevators, or other descriptions mentioned in this policy.
(4) Broadened Named Insured Wording
These coverages will automatically apply to ". . . any affiliated associated, allied or subsidiary company or entity (including subsidiaries thereof), now held or hereinafter acquired or constituted . . ."
(5) Liability Waiver of Subrogation
Carrier agrees that it shall accept no rights of subrogation against any grossly negligent employee or executive officer of any named insured.
(6) Voluntary Workers' General Liability
The word "insured" has been amended to include these individuals for General Liability coverages.
LIQUOR LIABILITY INSURANCE
Liquor liability insurance provides coverage for bodily injury or property damage for which an insured may be held liable by reason of the following:
- Causing or contributing to the intoxication of any person;
- Furnishing alcoholic beverages to a person under the legal drinking age or under the influence of alcohol; or
- Violating any statute, ordinance, or regulation relating to the sale, gift, distribution, or use of alcoholic beverages.
This coverage applies only if the insured is involved in the following activities:
- Manufacturing, selling, or distributing alcoholic beverages;
- Serving or furnishing alcoholic beverages for a charge, whether or not such activity requires a license or is for the purpose of financial gain or livelihood; or
- Serving or furnishing alcoholic beverages without a charge, if a license is required for such activity.
Loss of Use is an extra expense you incur while staying at a temporary location if your home becomes uninhabitable. While most policies allow a limited dollar amount for this coverage, our program is UNLIMITED.
LOSS OF MAINTENANCE FEES COVERAGE
This coverage protects the association against the loss of maintenance fees when occupancies have been interrupted or impaired by the occurrence of any insured peril.
This is a form of Business Interruption insurance for the association. It assures continuous income while the building is unattainable.
MEDICAL PAYMENTS -- GENERAL LIABILITY
A general liability coverage in which the insurer reimburses without regard to the insured's liability, the insured and others (as specifically provided in the policy) for medical and funeral expenses incurred by such persons as a result of bodily injury or death sustained by accident under the conditions specified in the policy.
EXPLANATION OF NAMED PERIL VERSUS ALL RISK
A "peril" is defined as a cause of damage or loss. To be covered for damage or loss under a "basic" contract, the damage or loss must be caused by a peril that is "named" or listed in the contract. Consequently, if damage or loss is caused by a peril that is not named, there is no coverage. In addition, the contract's exclusions must also be considered in determining coverage.
In a "special" contract, it is not necessary to name or list the insured perils since the intent is to cover all risk of damage or loss. Here, too, the contact's exclusions must be considered; however, the "special" form of coverage provides a much greater coverage quality.
Note that "special" coverage should not be construed to mean "all loss" coverage. Certain types of loss are definite and therefore not insurable.
NON-OWNED AND HIRED AUTO coverage is for policies written with limits of liability of $1 million or more. It provides coverage for rental or borrowed autos as long as the insured does not own any private passenger vehicles, pick-up, panel truck or van and the use does not exceed 30 days.
OCCURRENCE (CGL)
This term means an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured.
ORDINANCE OR LAW COVERAGE
(1) Coverage for Loss to the Undamaged Portion of the Building.
Pays for the loss of value of an undamaged portion of the existing building which must be demolished and/or removed to conform with municipal ordinance, code, etc.
(2) Demolition Cost
Pays for the cost of demolition of the undamaged portions of the building necessitated by the enforcement of building, zoning or land use ordinance or law.
(3) Increased Cost of Construction
Pays for any increased expenses incurred to replace the building with one conforming to building laws or ordinances, or to repair the damaged building so that it meets the specifications of current building laws or ordinances.
OPERATION OF BUILDING LAWS
Most communities have building or zoning laws to regulate the standards for type of construction, fire protection, electrical wiring, and plumbing, and to regulate the type of occupancy allowed in the city and certain other areas. Under "grandfather" provisions usually included in these laws, buildings that do not meet the standards generally are permitted to remain only because they were erected before the laws in question were passed.
Most laws, however, provide that if a nonconforming building is damaged or destroyed, it must be brought up to code before it can be reoccupied. Many laws also provide that if a building is damaged beyond a certain proportion of its value -- 50% is a common measure -- it may not be repaired, but must be demolished and, if replaced, replaced by a structure that meets the building or zoning requirement.
Although there are almost countless situations where the operation of such laws is applicable, some common examples are high-rise buildings that must be equipped with automatic sprinkler systems, buildings with electrical wiring meeting less than minimum code, and frame buildings in congested areas zoned for brick or fireproof construction. The effect of the operation of building laws is to almost always result in more costly repair than repair without such requirements.
In virtually all property insurance policies, a building owner's exposure to loss resulting from the enforcement of building or zoning laws is effectively excluded by language identical or nearly identical to that found in the Standard Fire Policy. The Standard Fire Policy specifies that recovery shall be "without allowance for any increased cost of repair or reconstruction by reason of any ordinance or law regulating construction or repair."
The effect of this exclusion is to leave the following basic exposures uninsured:
- The actual expense of tearing down the undamaged portion of a building if a law or ordinance dictates demolition and disposal of the resulting debris.
- The loss of the value of the undamaged portion of a building.
- The difference between the value of the building as it stands -- the insurable value of the building -- and its value if rebuilt to code. Even when insurance is written on a replacement cost basis (i.e., without deduction for depreciation), this exposure exists because the replacement cost referred to in the insurance is that required to restore the original building, not an improved and more expensive version of the original building.
- An extended loss of business income, extra expense, or additional living expense.
OWNERS' OR CONTRACTORS' PROTECTIVE LIABILITY COVERAGE
This insurance coverage provides for payment on behalf of the insured of all damages the insured becomes legally obligated to pay due to bodily injury or property damage caused by an occurrence rising from the following:
- Operations performed for the named insured by independent contractors.
- Acts or omissions of the named insured in connection with his/her general supervision of such operations.
This does not include maintenance and repair at premises owned by or rented to the named insured or structural alterations at such premises that do not involve changing the size of or moving buildings or other structures.
PERSONAL INJURY LIABILITY COVERAGE
This insurance coverage protects against false arrest, detention or imprisonment, or malicious prosecution; libel, slander, defamation, or violation of right of privacy; and wrongful entry, eviction, or other invasion of right of private occupancy. PESTICIDE OR
HERBICIDE APPLICATOR COVERAGE
Normally there is a pollution exclusion in a liability insurance policy that states that the insurance does not apply to bodily injury or property damage rising out of the discharge, dispersal, release, or escape of smoke, vapor, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials, or other irritants, contaminants, or pollutants into or on land, the atmosphere, or any watercourse or body of water. However, pesticide or herbicide applicator insurance affords coverage to the named insured in the following situations:
- Where such discharge, dispersal, release, or escape is sudden and accidental, or
- If the operations of the named insured are being conducted away from premises owned by or rented to the named insured and the bodily injury or property damage occurs away from such premises, and if such operations meet all standards of any statute, ordinance, regulation, or license requirement of any federal, state, or local government having application to such operation.
PLATE GLASS COVERAGE
This insurance coverage provides "special" protection, except for the perils of war, nuclear reaction, and fire. (Fire is covered under the building policy.)
This coverage is for full replacement cost and covers the expense of repairing frames, installing temporary plates, or boarding up openings.
POLLUTANT CLEANUP AND REMOVAL
This is an aggregate first party coverage that applies to your expense in extracting "pollutants" from land or water at your location, if the release of the pollutants is caused by or results from a covered loss.
POLLUTION LEGAL LIABILITY COVERAGE
Coverage
- Pays on your behalf all sums you are legally obligated to pay as a result of emission, discharge, release, or escape of any contaminants, irritants, or pollutants into or on land, the atmosphere, or any water course or body of water, provided this results in "environmental damage."
- Additionally pays to reimburse your expense for reasonable and necessary cleanup costs incurred in the discharge of a legal obligation validly imposed through governmental action, provided such expense is incurred because of "environmental damage."
- Pays for defense of any claim or suit that is the subject of this insurance.
Coverage Response
"Claims made" coverage response (i.e., responds only to claims first made during the policy period and only for incidents that have occurred after the effective date of this coverage).
Pollution "Environmental damage" is defined in the policy as" the injurious presence in or on land, the atmosphere, or any water course or body of water of solid, liquid, gaseous, or thermal contaminants, irritants, or pollutants."
PRODUCTS LIABILITY
The liability for bodily injury or property damage incurred by a merchant or manufacturer as a consequence of some defect in the product sold or manufactured or the liability incurred by a contractor after he has completed a job as a result of improperly performed work. The latter described part of products liability is called Completed Operations.
PRODUCTS AND COMPLETED OPERATIONS AGGREGATE
Liability arising out of the insured's products or business operations conducted away from the insured's premises once those operations have been completed or abandoned. An aggregate limit in an insurance policy stipulates the most it will pay for all covered losses sustained during a specified period of time, usually one year.
PROPERTY MANAGEMENT ERRORS AND OMISSIONS LIABILITY
("MISTAKE LIABILITY") COVERAGE
Coverage Type
- Liability -- Pays on your behalf all sums you become legally obligated to pay by reason of any act, error, or omission rising out of services you render or failed to render. Such services include arranging for property maintenance, renting or leasing, construction, alteration, land development, etc.
- Defense and Settlement -- Pays for defense of any claim or suit that is the subject of this insurance.
Examples
- Mishandling of accounting and financial matters
- Mismanagement
- Exceeding authority under the contract
- Failure to perform under the contract
- Failure to obtain certificates of insurance from contractors for Workers' Compensation insurance, resulting in owner being liable for the premiums
- Giving incorrect property values, resulting in uninsured losses or excessive premiums
- Failure to maintain an adequate amount of insurance
Important Coverage Feature
Intentional acts of employees (current and/or terminated) are covered.
RENT COVERAGE
This insurance coverage protects building owners against loss of income when rentals have been interrupted or rental value has been impaired by the occurrence of any of the insured perils.
Essentially this is Business Interruption insurance for the landlord. It assures continuous income while an insured building is unattainable.
REPLACEMENT COST COVERAGE
This form of insurance provides coverage on the basis of full replacement cost without deduction for depreciation on any loss sustained, subject to the terms of the co-insurance clause. This coverage applies to both building and contents items as specified on the face of the policy.
No deduction is taken for depreciation in arriving at the proper amount of insurance needed to comply with the co-insurance clause.
SELLING PRICE CLAUSE
This applies to the value of goods which have been damaged or destroyed by an insured peril. The purpose is to insure the profit that would have been incurred through a sale. It defines the insurable value of merchandise which has been sold, but not delivered, at the amount at which it was sold, less any charges not incurred.
DEFINITION OF SUBROGATION
An insurance carrier may reserve the "right of subrogation" in the event of a loss. This means that the company may choose to take action to recover the amount of a claim paid to a covered insured if the loss was caused by a third party. After expenses, the amount recovered must be divided proportionately with the insured to cover any deductible for which the insured was responsible.
THEFT, DISAPPEARANCE, AND DESTRUCTION OF MONEY AND SECURITIES COVERAGE
This provides insurance for loss of money and securities resulting directly from the following:
- Theft (any act of stealing)
- Disappearance
- Destruction
It applies while the money and securities are on the insured's premises, while in the custody of the insured or the insured's messenger while conducting business at the bank, and while off the insured's premises in the custody of the insured or the insured's messenger.
TIME ELEMENT COVERAGE
Time element insurance provides insurance for a covered incident resulting in loss of use of property for a period of time. The loss is considered to be time lost, not actual property damage. Examples of time element coverage are Business Interruption, Extra Expense, Tuition Fees, Rents and Rental Value, Additional Living Expenses, and Leasehold Interest coverage.
DEFINITION OF TORT
A tort is an unintentional violation of another person's rights, usually due to negligence. It is different than a crime, which generally is an intentional violation of another's rights. A tort is subject to civil action and subsequent judgment for damages payable to the wronged party, whereas a crime is subject to criminal action and subsequent penalty.
TRANSIT COVERAGE
Coverage of the insured's property while in transit over land from one location to another. Property insurance policies typically provide coverage only at locations identified in the policy.
UMBRELLA LIABILITY COVERAGE
This type of liability insurance provides excess liability protection. Your business needs this coverage for the following three reasons:
- It provides excess coverage over the "underlying" liability insurance you carry.
- It provides coverage for all other liability exposures, excepting a few specifically excluded exposures. This is subject to a large deductible of $10,000.
It provides automatic replacement coverage for underlying policies that UMBRELLA LIABILITY COVERAGE EXTENSIONS
(UNLESS EXCLUDED)
Personal Injury Coverage -- Even if standard personal injury coverage is provided in the primary policy, the coverage provided by the Umbrella Liability policy is broader as it provides coverage for mental injury, mental anguish, shock, disability, humiliation, discrimination, etc.
Advertising Liability Coverage -- Included in the definition of "personal injury"
Blanket Contractual Coverage -- Included for both oral and written contracts.
Employers' Liability Coverage -- Claims made by employees are not excluded.
Worldwide Coverage
Liquor Law Liability Coverage
Non-Owned Aircraft Liability Coverage -- Also Owned Aircraft Liability coverage if included in the schedule of primary insurance.
Non-Owned Watercraft Liability Coverage -- Also Owned Watercraft Liability coverage if included in the schedule of primary insurance.
Drop-Down Coverage -- For occurrences within the scope of this coverage and in the absence of primary coverage, this will respond for your benefit subject to a $10,000 self-insured retention.
Additional Insured Coverage:
1. Officers, directors, and stockholders of the named insured, while acting within the scope of their duties as such. Also employees, but not with respect to their own automobiles.
2. Any additional insured named in the underlying insurance, for the same coverage as afforded there under.
3. Any person or organization to whom the named insured is obligated under written contract to provide coverage as is afforded under the Umbrella Liability policy with respect to operations by or on behalf of the named insured.
Care, Custody, or Control Coverage -- Excepting only liability assumed under contract, unless excluded.
Occurrence Coverage -- Matching the new standard primary policy definition.
Products and Completed Operations Coverage -- Using the new standard policy provisions.
- have been reduced or exhausted by loss.
UNIT ASSESSMENT COVERAGE
Unit assessment coverage pays up to $50,000 for your share of an assessment charged against all unit owners as a result of a covered loss.
UNINTENTIONAL ERRORS AND OMISSIONS
Coverage will not be invalidated by any inadvertent errors, omissions or improper description of premises or elevators.
UNIT OWNERS' EXCESS COVERAGE
This type of insurance expands your insurance coverage to include damage or loss to alterations, fixtures, and improvements within individual units owned by the unit owner, caused by the insured perils. This includes damage to air conditioners, clothes washers, clothes dryers, cooking ovens, cooking ranges, dishwashers, floor coverings, countertops, kitchen cabinets, refrigerators, and freezers.
This coverage applies only as excess insurance over any other valid and collectible insurance that would apply in the absence of this policy.
INFORMATION REGARDING VALET PARKING SERVICES
The existence of a valet parking service usually causes an unspecified number of vehicles to be within the "care, custody, and control" of the association. Physical damage to these vehicles while in the association's care creates perpetual expenses for deductibles, premiums, costs of adjustments, etc.
An additional form of insurance, Garage keepers' Legal Liability coverage, is necessary. This coverage is already in effect for you.
Garage keepers' Legal Liability insurance is almost always written with significant deductibles that apply per vehicle. In addition, the premium for this coverage tends to be expensive and premiums have recently experienced dramatic increases. Even the use of larger deductibles has not greatly offset these increases.
Under your current circumstances, it appears that the association would have to perpetually fund the following expenses:
- Premiums for Garage keepers' Legal Liability coverage.
- The annual aggregate value of deductible expenses incurred.
- Loss adjustment expenses in the uninsured/deductible area.
- Possible catastrophic loss exceeding the limits of insurance purchased.
It should also be realized that the cost of Garage keepers' Legal Liability insurance would also have to include a loading for profit. Additionally, any adverse loss experience that might develop under this form of coverage could have an adverse effect on the otherwise applicable premiums for other essential coverages that the association must carry.
We can appreciate the benefits of a valet parking service; however, the consequences of owning and providing such a service can be both troublesome and expensive. And there is a relatively simple way of avoiding this exposure, thereby eliminating the need to increase monthly fees to fund the expenses mentioned above. We suggest an amendment to your master instruments to the effect that each unit owner would automatically waive his/her right of recovery against the association.
The results of such a waiver would be that each unit owner would then rely only on his/her own personal automobile physical damage coverages. In this way, there would be no expense to the association and the unit owner would incur only the loss of whatever deductible applies on his/her Personal Automobile policy. Since a given unit owner would incur this expense only on the occasion of an accident involving his/her own vehicle, the cost should be much less than a perpetual monthly assessment to all unit owners.
Valet parking, as respects guests, visitors, and other non-unit owners, must then also be considered.
VALUABLE PAPERS COVERAGE
An "all risk" insurance coverage that covers the cost of research to reconstruct damaged records, as well as the cost of new paper and transcription.
The term "valuable papers" refers to written, printed, or otherwise inscribed documents and records, including books, maps, films, drawings, abstracts, deeds, mortgages, and manuscripts.
X, C, AND U EXCLUSIONS
Explosion ("X") Hazard
Includes property damage rising out of blasting or explosion.
Collapse ("C") Hazard
Includes structural property damage and property damage to any other property rising out of the following:
- Grading of land, excavating, burrowing, filling or backfilling, tunneling, pile driving, or coffer dam or caisson work.
- Moving, shoring, underpinning, razing, or demolition of any building or structure.
Underground ("U") Damage
Includes damage to wires, conduits, pipes, mains, sewers, tanks, tunnels, or any similar property beneath the surface of the ground or water caused by and occurring during the use of mechanical equipment for the purpose of grading land, paving, excavating, drilling, burrowing, filling, backfilling, or pile driving.
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