Personal Insurance Terms

PERSONAL AUTO POLICY:

Characterized by readability and understandability, this new simplified language product provides protection under four coverage parts. Liability coverage is a single limit (some companies optionally offer split limits). Medical payments covers expenses incurred within three years. Uninsured motorists coverage is available and underinsured motorists coverage may be added by endorsement. Physical damage coverage is a single insuring agreement, with collision loss included if specified. A customizing equipment coverage endorsement is designed to extend physical damage insurance on a stated amount basis, to custom installations and modifications in and on vans, panel trucks and pickups. Endorsements are available for motorcycles, motor homes, snowmobiles and other recreational type vehicles. Coverage may be extended by endorsement for limited car use in Mexico provided liability insurance is purchased through a licensed Mexican insurance company. A personal auto policy may be written for a named nonowner.

HOMEOWNERS POLICY:

A single policy, at a discount from the cost of separate policies with identical coverage, is available to provide all of the essential property insurance and liability insurance for owners of homes and tenants of residence buildings. Homeowners policies are designed for the owner-occupant of a home to cover the dwelling building, personal possessions (other than automobile and certain specifically excluded items) and personal liability. A policy may also be written to provide package protection for apartment dwellers, renters of dwellings and condominium and townhouse unitowners. Homeowners policies written by many companies newly include coverage for volcanic eruption (other than loss caused by earthquake, land shock waves or tremors) in addition to the causes of loss described below.

Scheduled personal property endorsement or separate personal articles floater policy is frequently needed additional protection to cover valuable articles on a scheduled "risks of direct physical loss" basis for their full value. Endorsements include special computer coverage endorsement and home day care endorsement.

CONDOMINIUM UNITOWNERS FORM:

Provides coverage for the personal property and activities of the owner of a condominium unit comparable to that afforded an apartment tenant under a tenants (contents) broad form, but modified for the special conditions identified with condominium living. The provisions of the form are designed to mesh with insurance carried by a condominium association for the structure and the common risks of all of the unitowners. Loss assessment coverage, reimbursing the insured for their share of an uninsured loss to collectively owned property, is an option.

AUTOMOBILE LIABILITY COVERAGE:

Insures against third-party claims arising from alleged bodily injury or property damage to members of the public from operations of motor vehicles.

COLLISION:

Insures owner against loss from collision or upset of the motor vehicles used in the business. When car is sold under finance contract, the loss payee (lender) usually requires the original of the policy providing collision and comprehensive coverage.

COMPREHENSIVE:

Insures operator's business automobiles and other motor vehicles against loss by fire, theft, or other physical damage hazards, including glass breakage.

UMBRELLA

This policy provides protection against catastrophic liability claims. The policy acts as an excess coverage over your primary liability policies. Its limits apply in addition to that provided by the underlying coverage.

Commercial Insurance Terms

UMBRELLA

EMPLOYEE DISHONESTY

This coverage is used to insure against loss of money, securities or other property belonging to you, or for which you are liable, that is caused by employee dishonesty. Please note, coverage does not include inventory shortage unless you can prove that the loss was sustained through dishonest acts of employees.

AGREED VALUE VALUATION

This coverage is used to remove the coinsurance requirement for covered property. With it your company agrees that the amount of coverage purchased is adequate, and any coinsurance requirements are waived if the limit of insurance equals the agreed value.

BUSINESS INCOME INCLUDING EXTRA EXPENSE

This coverage is used to insure against loss of income (including any continuing normal operating expenses) that you experience because of a suspension of your business when insured property has been damaged by a covered peril. Under this form, extra expenses are included and rental values can be added as an option. An extended period of indemnity provision is also included to provide coverage after you resume operations until your business returns to its normal level of activities, up to a maximum of 30 days.

OFFICERS, OWNERS OR PARTNERS (INCLUDED)

The Workers Compensation policy allows you to provide coverage for any executive officer, partner or owner of your company. When covered, such individuals are afforded the same protection as any other company employee.

MECHANICAL BREAKDOWN AND ELECTRICAL CURRENT COVERAGE

This coverage will extend the Property policy to include protection against loss resulting from artificially generated electric current and mechanical breakdown of machinery. Most standard Property forms do not include coverage for losses of this kind.

ENVIRONMENTAL IMPAIRMENT (POLLUTION) LIABILITY

The standard General Liability policy eliminates coverage for most costs related to pollution losses. While difficult to obtain, there are a few limited ways in which pollution coverage is written.

PERSONAL PROPERTY IN-TRANSIT COVERAGE

This provision is used to extend your Property policy to include specified protection for your personal property (other than property in the care of sales persons) while such property is being transported in a motor vehicle owned, leased or operated by you.

PERSONAL PROPERTY OFF-PREMISES

This provision is used to extend your personal property coverage to include specified protection for such property (other than stock) while it is temporarily located at premises you do not own, lease, or operate. Please note that this extension does not cover these items while they are in-transit; at a fair or exhibition; or in the care, custody or control of a salesperson. Separate insurance must be purchased for these exposures.

EXTRA EXPENSE COVERAGE

This coverage pays for the necessary additional expenses needed to continue business when a covered loss damages or destroys insured property.

EMPLOYEE BENEFITS ERRORS AND OMISSIONS

This coverage is used to insure against negligent acts, errors or omissions committed by you or any person for whose acts you are legally responsible for while engaging in the management of your company's employee benefit plans.

FIDUCIARY LIABILITY

This coverage is used to insure you against claims alleging breech of fiduciary obligations as outlined under the Employment Retirement Income Security Act of 1974.

ENVIRONMENTAL IMPAIRMENT (POLLUTION) LIABILITY

The standard General Liability policy eliminates coverage for most costs related to pollution losses. While difficult to obtain, there are a few limited ways in which pollution coverage is written. Cost, availability and your exposure to loss have determined which option is best suited for you.

EMPLOYMENT-RELATED PRACTICES COVERAGE

This coverage is used to provide protection against lawsuits by employees alleging wrongful discharge, discrimination, harassment or other specified employment related exposures.

EMPLOYEE DISHONESTY - BLANKET BASIS

This coverage is used to insure against loss of money, securities or other property belonging to you, or for which you are liable, that is caused by employee dishonesty. It pays for any one loss caused by one or more employees up to the face amount stated on the form.

FORGERY OR ALTERATION

This coverage is used to insure against loss resulting from forgery of checks, drafts, notes or other similar written promises prepared by you or your agent. It does not cover dishonest acts of employees, which must be insured by Employee Dishonesty coverage.

THEFT, DISAPPEARANCE AND DESTRUCTION

This coverage is used to insure against loss of money and securities caused by theft, disappearance or destruction while located inside or outside your premises. It also covers damage to premises resulting from actual or attempted theft. It insures only money and securities and not other types of property.

VALUABLE PAPERS AND RECORDS

This policy is used to cover valuable papers and records including books, maps, films, drawings, abstracts, deeds and manuscripts, either on a blanket or scheduled basis. Coverage includes the actual cost of materials and any additional expenses necessary to reproduce these records.

TOOLS AND EQUIPMENT FLOATER

This policy is designed to cover your mobile equipment while it is stored on premises, in transit or at temporary locations or job sites. Larger equipment items are specifically scheduled with separate amounts of insurance applying to each covered piece. Miscellaneous smaller items are grouped under a single blanket limit subject to a maximum value for any one item per loss.

MECHANICAL BREAKDOWN AND ELECTRICAL CURRENT COVERAGE

MEDICAL PAYMENTS COVERAGE

Reimburses for reasonable first-aid, medical, hospital and funeral expenses for persons other than the insured or employees of the insured, injured while on the insured's premises.

COMMERCIAL GENERAL LIABILITY INSURANCE

The frequency and magnitude of third-party claims alleging bodily injury and property damage arising from the premises operations or products/completed operations, has the potential for financial ruin. Insurance coverage for the threat is available in an "occurrence" version and a "claims-made" version.

The differences between the two versions are in the provisions by which coverage is activated. The "occurrence" form provides coverage for injury and damage that occurs during the policy period. The "claims-made" form provides coverage if the claim is first made during the policy period.

Both the "occurrence" and the "claims-made" forms basically provide coverage for: premises/operations liability; products/completed operations liability, which can be eliminated for underwriting reasons, when covered separately or if not wanted; contractual liability for all business contracts, which may be limited to leases of premises, sidetrack and easement agreements, and other specific contracts; personal and advertising injury, both or one of which can be eliminated; medical payments, which can be eliminated; fire damage legal liability, which can be eliminated; broad form property damage; host liquor liability; incidental medical malpractice; nonowned watercraft; limited worldwide liability; extension of protection to employees and, if the named insured is a partnership, to spouses of partners; bodily injury resulting from use of reasonable force by or at the direction of the insured to protect persons or property; automatic coverage for 90 days for newly acquired organizations.

Endorsements are available to adapt coverage to the particular needs of the insured. Notable among them are:

Coverage for injury to leased workers, recently designed as an option for increasing numbers of businesses that lease employees from labor leasing firms, which assume full responsibility for personnel administration. "Employee" is defined in the policy to include a "leased worker," who is subject to the same commercial general liability coverage and exclusions as a conventional employee. The described endorsement may be attached if the named insured wants or needs coverage for claims arising from injuries sustained by leased workers.

Hired and nonowned auto liability, affording significant protection for insureds that do not own automobiles and eliminating the need for separate automobile insurance. Covers leased autos and the use of employee-owned cars in the interest of the named insured.

EMPLOYEE BENEFITS LIABILITY

Covers the cost to employees that result from incorrect information provided regarding their employee benefits. This DOES NOT INCLUDE fiduciary responsibilities or any discrimination or harassment situations. A simple example is not providing the employee with the appropriate COBRA information following termination that results in the ex-employee losing benefits. Coverage is provided by most carriers on their own filed forms. Coverage is provided either with a separate coverage part or as an endorsement to the CGL. ISO has developed a form but it is not yet in wide usage. Key comparisons are the types of benefits covered, claims-made vs. occurrence and the employer contribution.

ERRORS AND OMISSIONS INSURANCE

Protection against claims by clients alleging pecuniary loss due to errors or omissions in the performance of work for them is available for a growing list of semiprofessional and service type pursuits. These include adjusters, data processors, advertising agencies, hearing aid service offices, insurance agents and brokers, real estate agents, stockbrokers, surveyors, telephone secretarial services, title abstractors, and travel agencies. Insurance for the latter, a recent innovation demonstrating the need for protection for mistakes by an increasing number of for-profit activities, indemnifies the insured for breach of duty claims arising out of any negligent act, error or omission in the advising or arranging of transportation, hotel or motel accommodations or special tours for clients.

Errors and omissions insurance must be considered for numerous service type businesses emerging in a service-oriented economy. Notable examples are electronic data processing companies, computer software developers, employment and temporary help agencies, marketing and direct mail companies. The concern is the potential for economic loss incurred by a client as a result of dependence on service performed by the insured.

AUTOMOBILE LIABILITY COVERAGE

Insures against third-party claims arising from alleged bodily injury or property damage to members of the public from operations of motor vehicles.

COLLISION

COMPREHENSIVE

Insures operator's business automobiles and other motor vehicles against loss by fire, theft, or other physical damage hazards, including glass breakage.

Disclaimer: There are many coverages available that may not included in your current insurance program. The coverages described below are among those that would top our priority list of coverage recommendations. The list is not all-inclusive.