FREQUENTLY ASKED QUESTIONS

BUSINESS INSURANCE

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

Q: What is the difference between Replacement Cost (RC) and Actual Cash Value (ACV)?
A: Replacement Cost is the current cost to replace property. Actual Cash Value is the replacement cost less depreciation.

Q: What does 80% co-insurance mean?
A: Insurance carriers require that an insured party insure at least 80% of the property's value in order to collect a partial loss in full. This is the way the insurance company encourages all insureds to adequately insure their property in relation to other insureds.

Q: Does my policy cover physical damage to a vehicle I rent?
A: This damage will be covered only if that type of coverage is purchased.

Q: Can other people drive my business vehicle?
A: Other people may drive your vehicle with your permission. It is important that they be listed on your policy if they are regular drivers of the vehicle.

Q: Am I isured if I run a business from my home?
A: The homeowners' policy clearly excludes liability coverage arising out of business activity. Any particular claim would be investigated independently but it is suffice to say that if you are operating a standing business for monetary gain from your home you should not be looking towards your homeowners' policy for coverage with respect to liability claims.

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

Q: Why do I need certificates of insurance from sub-contractors?
A: An audit may require you to show proof that sub-contractors had their own insurance coverage. The sub-contractors' certificates of insurance will prevent you from being charged for their exposure.

Q: What is General Liability?
A: General Liability provides coverage if you are liable for damages to other individuals arising from your premises, general operations (ongoing and after completion) and products manufactured or sold.

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

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

Q: What is the difference between "Named Insured", "First Named Insured" and "Additional Insured?"
A: Named Insureds are those listed by name in the relevant block of the policy's declaration page. Although the named insured is commonly one person, partnership, corporation or other entity with insurable interests, multiple named insureds may be included. First Named Insured is the first "named insured" listed on the policy declarations (front page of the policy). This insured acts as the legal agent for all named insureds in initiating cancellation, requesting policy changes or accepting any return premiums. The first named insured may also be responsible for payment of the premiums. Additional Insured is an entity to which a policy's coverage is extended. An additional insured must be added to the policy prior to a claim being paid. There must be a tied to relationship between the additional insured and named insured. Being an additional insured on another's policy does not eliminate the need for someone to have his/her own Commercial General Liability policy.

Q: I'm just getting my business started. Do I need insurance immediately?
A: Yes. Your chance of suffering a loss begins with the first day of business. If you suffer a loss and have no insurance or have improper or insufficient coverage, your insurance agent can do little, if anything, to help you. Also, many states and local jurisdictions require businesses to have insurance to begin operating. And if you rent space for your business, your landlord probably requires you to obtain adequate insurance.

Q: I don't have any major business assets. Why do I need insurance?
A: Every business has some property. When you think about it, your business is your property. Just like your home and your car, your business needs to be protected from loss, damage, and liability. In addition, your business is your source of income, so you need protection from the potential loss of that income.

Q: Does insurance coverage vary for different businesses?
A: It can. Many small businesses opt for package policies that cover the major Property and Liability exposures as well as for a loss of income. A common package policy used by many small businesses is called the Business Owners Policy (BOP). Generally, BOPs provide more complete coverage at a lower price than separate policies for each type of insurance needed. We can help you decide which policy or policies are right for your business. You can also purchase additional coverage for perils or conditions otherwise excluded (e.g., flood protection) as endorsements to a standard policy or as a separate, second policy called a Difference in Conditions (DIC) policy. We can advise you of the best policy (or policies) to protect you and your business.

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