Frequently Asked Questions

Business Insurance

In today's society, it is absolutely mandatory to carry some form of it, regardless of size or location. Whether you have a business in the home, own a business, own rental property, or you are a self-employed contractor, you may need a special type of insurance coverage to meet your needs. The range of business insurance coverage is huge, with issues from lawsuits to disgruntled employees. Everyday practices can backfire with enough force to cause a disabling blow to the company.

What is Commercial Auto insurance?
No matter what mode of transportation your organization requires -- whether it's a large fleet of delivery trucks or a few executive limousines -- its critical to have adequate business auto insurance coverage. After all, the more vehicles you have on the road, the more lives you are responsible for. That translates into a greater risk for your business and your assets.

What is BOP (Business Owners Policy)?
Many insurance companies have bundled property and liability coverage into what's commonly called a business owners policy (BOP). It allows you to obtain broad coverage with affordable premiums. Even if you have a BOP, you'll want to consider adding coverages that might not otherwise be included. Property insurance can be tailored to fit your needs since no two businesses are the same.

For example, a restaurant has different needs than a furniture store; a retail business with a lot of customer interaction and builders who are contractually obligated to, say erect an office building, may face a greater amount of liability than, say, a two-person accounting office. Therefore, liability above and beyond a BOP package should be considered.

What is Business Property Insurance?
Liability insurance will protect your business assets in the event you are sued. These days, with lawsuits clogging the courts, you'll want to maintain a proper amount of liability insurance to protect the business you've worked so hard to build. Your company can be sued for something it did — or even didn't do — that resulted in injury or property damage to someone else.

Liability insurance will not only pay the cost of the damages but also the legal fees and other costs associated with your defense in a lawsuit. The expenses of defending yourself against such claims in court can be substantial, regardless of whether or not the lawsuit has merit. However, liability insurance will not protect you against claims arising from nonperformance of a contract, wrongful termination of employees, sexual harassment, or race and gender lawsuits.

There are some guidelines to consider, but no standard formula. Determining the amount of liability insurance to buy is an important task, since the sky's the limit on lawsuits. You could use a recent liability settlement in an industry related to yours as a guide, or you could base the amount on your business' total assets. Either way, discuss it with your agent and check for recommendations from your trade association. Some occupational licenses might require a set amount of liability insurance. If you rent your business property, check your lease, as it could require a set amount of liability. Then buy what you can reasonably afford, because the cost of the insurance will be far less than the cost of a lawsuit.

What is Errors and Omissions?
Particularly critical for businesses that provide professional services, Errors & Omissions insurance protects you against liability for committing an error or omission in performance of professional duties. Generally, these policies are designed to cover financial losses rather than liability for bodily injury or property damage.

What is General Liability Insurance?
Liability exposures exist all over your company, at every location. General liability programs protect business owners and operators from liability exposures arising out of accidents on premise, business operations and contractual liability, and provide both defense costs and settlements.

What is Workers’ Compensation?
Someone who provides any type of service for your business who are ill, injured, or die in the course of providing those services may attempt to claim an employment relationship with you, for the purpose of collecting workers' compensation benefits. It may not end there-often times, the worse off the situation, the more likely someone related to the victim will back them in their claim. If you maintain Workers’ Comp-Employer’s Liability insurance, your policy will usually cover you when anyone claims an employment related injury.

What is a deductible?
The deductible is the monetary portion of a claim which the policyholder is responsible for paying.

What is a certificate of insurance?
A certificate of insurance is a widely accepted form that provides evidence of insurance coverage to other people.

What is an exclusion?
An exclusion is a clause in the insurance policy that describes what is not covered. It is very important to always review the exclusions of a policy due to the coverage limitations.

What does "Limits of Liability" or "Limits of coverage" mean?
This is the amount of money that the insurance company will pay for claims. Insurance policies have different types of limits; some limits are for each event, some are for each claim, and some are the total aggregate of all claims during the policy period.

Is a deductible paid only once?
No, each claim usually has a separate deductible.

Can I combine other entities on my policy as part of my named insured?
Only entities that have more than 50% of the ownership in common may be combined on one policy.

Property, General Liability & Umbrella What is an Occurrence Policy?
A covered claim must occur during the policy period but it does not matter when the claim is reported or made.

What does Bodily Injury mean in General Liability coverage?
Bodily injury means bodily injury, sickness or disease sustained by any person which occurs during the policy period, including death at any time resulting therefrom.

What does Advertising Injury mean in General Liability coverage?
Advertising injury means injury arising out of an offense committed during the policy period occurring in the course of the named insured's advertising activities if such injury arises out of libel, slander, defamation, violation of right of privacy, piracy, unfair competition or infringement of copyright title or slogan.

What does Personal Injury mean in General Liability coverage?
Personal Injury means false arrest, wrongful detention or false imprisonment, or malicious prosecution; the publication or utterance of a libel or slander or of any defamatory or disparaging material, or a publication or utterance in violation of an individual's right of privacy; wrongful entry or eviction, or other invasion of the right of private occupancy; which occurs during the period.

What does Property Damage mean in General Liability coverage?
Physical injury to or destruction of tangible property which occurs during the policy period, including the loss of use thereof at any time resulting therefrom, or loss of use of tangible property which has not been physically injured or destroyed provided such loss of use is caused by an occurrence during the policy period.

What is professional liability insurance?
In general, professional liability insurance protects against claims for damages the policyholder becomes legally obligated to pay to a client as a result of an error or omission in the work provided to the client.

Why should I purchase professional liability coverage?
Professional liability coverage provides protection against claims resulting from your professional services. Most general liability policies will exclude this coverage.

Workers' Compensation Who/What are combinable on one policy?
We can only combine insureds on one policy if the ownership of 51% or more of the business matches with the majority ownership of each other business asking to be named.

Can one employee be split between 2 class codes?
No, generally, one person is never split between two class codes. The person is assigned to the highest rated class code. There are a few specific exceptions to this rule.

What is an ERM 14?
This is a statement of ownership changes to measure combinability of multiple insureds and to track impact of name changes.

Who calculates the experience mod?
The Rating Bureaus (NCCI) calculates the mod. No matter what insurance company writes the risk, the same experience mod would be used by all insurance companies due to the highly regulatory nature.

What is OD (Occupational Disease) and is it covered by Workers' Compensation?
Yes, it is covered. This is continuous or repeated exposure to something in the workplace that causes a disease. Examples are dermatitis, asbestosis etc.

Is overtime included in payroll?
No, generally, the overtime portion of the payroll can be excluded provided that the number of hours actually worked in the day or week exceeds 8 hours per day or 40 hours per week.

What coverage is available for the Business Owner?
It depends on the state. In most states, the business owner if a sole proprietor can elect or opt out of Workers `Compensation and the company cannot control that decision. This is a potential underwriting concern because the independent business owner works long hours and Workers` Compensation coverage can extend beyond what is anticipated in the payroll. The premium collected does not contemplate the increased exposure.

What is included in payroll?
In most states, payroll is defined to include total remuneration, including wages or salaries, commissions, bonuses, paid time off, etc.

What is premium discount?
This is a credit factor that is calculated on larger premiums to show a credit for the expense reduction of the company due to the size of the premium.

What are the standard exceptions?
These are classes of business that will not be included in the governing class code but will usually be separately rated and classified. Examples are clerical, outside sales.

What happens if we make a mistake in the class code?
Workers` Compensation is highly regulated by Workers`Compensation Bureaus and the class codes must be correct. The bureau will issue a criticism when they find an incorrect class code and the company will have to correct it by endorsement and charge or return the premium.

Is a subcontractor ever considered an employee?
The policyholder needs to retain copies of certificates of insurance for each subcontractor to show that the subcontractor has their own insurance. If these certificates are not kept, then it is possible that the subcontractors might be included in the calculation of total payroll.

Small Business Professional Liability What is professional liability insurance?
In general, professional liability insurance protects against claims for damages the policyholder becomes legally obligated to pay to a client as a result of an error or omission in the work provided to the client.

Why should I purchase professional liability coverage?
Professional liability coverage provides protection against claims resulting from your professional services. Most general liability policies will exclude this coverage.

How does a "claims-made" policy work?
A "claims made" policy protects the policyholder against claims or incidents that are reported while the policy is in force, or during an "extended reporting period." The negligent act, error or omission must have also occurred during the specific time frame set by the policy.

What is an Extended Reporting Period?
An extended reporting period extends the amount of time in which you can report a claim. The claim must still occur during the policy period…only the time to report is extended. ERP's vary by type of coverage. Some are automatic and some optional ones must be purchased.

Does the insurance company need my consent to settle a claim against me?
Many policies have a "consent to settle" clause that outlines the options for settlement. If a policy does not have this clause, then the insurance company may find that settlement is the best way to handle a claim.

What is a Retroactive Date?
The retroactive date sets how long before the inception of the policy that you are covered for negligent acts, error or omissions that you report during that policy. A retroactive date can match the policy inception date so that no prior acts are covered.

What is the difference between a policy written on an occurrence basis versus a claims made basis?
On an occurrence policy, the claim has to occur during the policy period, regardless of when a claim is actually made or reported. On a Claims Made policy, the claim must be made or reported during the policy period regardless of when the claim actually happened.

Are my independent contractors covered?
Independent contractors can be added by endorsement, subject to underwriter approval.

Does a separate limit apply to my corporation?
No. The total limit of our liability shall not exceed the limit set forth in the Declarations regardless of the number of insureds.

If my colleagues were involved in a criminal act, will I be denied coverage too?
We will defend insureds who have neither committed, had knowledge of, acquiesced in or gained an advantage to which it would not otherwise have been entitled to as a result of such criminal, malicious, dishonest or fraudulent acts, error or omission shall be defended.

If I can't collect my fees from my client due to a dispute that results in a suit, can I be reimbursed with this coverage?
No, but the policy will pay for losses, settlements, & claims expenses.