RESOURCES: Coverage Explanations

AUTO LIABILITY
Covers your liability for "bodily injury" or "property damage" resulting from the ownership, maintenance or use of your vehicle.

 

 

BUSINESS AUTO COVERAGE

 

Owned Automobiles – Covers liability arising out of the ownership, maintenance or use of owned automobiles

 

Personal Injury Protection (PIP) – Coverage is included for vehicle passengers under No-Fault Law provisions

 

Uninsured Motorists – Protects insureds that are not contributorily negligent against Bodily Injury and Property Damage caused by negligent uninsured and hit-and-run motorists. (If Collision coverage is not purchased on the insured vehicle, a $200 Deductible applies to Uninsured Motorists Property Damage)

 

Hired Automobiles – Covers the liability for the use of hired automobiles in your business

 

Non-Owned Automobiles – Covers the liability for the use of non-owned automobiles in your business. An example would be an employee using his own car on an errand for you

 

Broad Form Drive Other Car Coverage – Provides coverage for individual named on endorsement and spouse for use of non-owned car, sometimes referred to as "Borrowed Car" coverage

 

Comprehensive – Pays for loss of or damage to automobiles from perils other than collision or upset

 

Specified Perils – Pays for loss caused by fire, theft windstorm, hail, earthquake, explosion, flood, malicious mischief or vandalism, and the sinking, burning, collision or derailment of any conveyance transporting the covered auto

 

Collision – Pays for loss of or damage to automobiles from collision with another object or upset

 

 

BUSINESS INCOME
Reimburses actual loss of business income sustained due to necessary suspension of business operations during the period of restoration. Interruption must be caused by direct damage to property at the location described in the policy and caused by direct damage to property at the location described in the policy and caused by perils insured against.

 

Business Income Includes:

• Net Income
• Continuation of Normal Operating Expenses
• Extra Expense
• Rental Value

 

Resumption of Operation
It is a condition of the policy that the insured try to reduce the loss resulting from the interruption of business by:

• Resuming operations in whole or in part by using damaged or undamaged property (including merchandise or stock) at the described premises or elsewhere
• Resuming all or part of operations as quickly as possible

 

CARE, CUSTODY OR CONTROL COVERAGE

• Coverage is provided for the Insured's legal liability for accidental damage to property in the care, custody or control of the insured arising out of business operations.
• The coverage also applies to damage caused by independent contractors of the insured, provided the basic policy provides Independent Contractors Coverage.
• This coverage is excess over any other insurance carried by the Insured or others which applies to loss covered hereby.

 

CO-INSURANCE EXPLANATION

Insurance can be a very confusing subject and CO-INSURANCE is an often misunderstood term. The success of any property Insurance program is measured by its performance following an Insured Loss. In establishing adequate coverage, we must have first hand information as to the Insurable Values at Risk. Book Values do not fulfill this purpose. Insurable Values are Present Day Replacement Cost with proper allowance for Depreciation. Since Replacement Costs fluctuate, it is necessary to keep a constant check on Insurable Values.

 

The insurance applying in the following example is subject to the 80%

CO-INSURANCE CLAUSE. Under the terms of this CLAUSE, you should insure the property at risk to at least the stipulated percentage of Value. If you fail to do so, you will not be fully reimbursed for any Loss that may occur. The manner in which the CO-INSURANCE CLAUSE would operate in the event of a Partial Loss is derived in the following manner:

 

AMOUNT POLICY WILL PAY EQUALS THE POLICY LIMIT DIVIDED BY THE AMOUNT OF COVERAGE REQUIRED BY THE CO-INSURANCE TIMES THE AMOUNT OF LOSS.

 

Insurable Fair Market Value	Insurance Policy Limits	Insurance Required 80%	Amount of Loss	Policy Will Pay	Insured Will Pay
$100,000	$40,000	$80,000	$10,000	$5,000	$5,000

 

 

COMMERCIAL GENERAL LIABILITY
Commercial General Liability provides in a single contract insurance needed to cover liability for injuries or property damage sustained by members of the public. It covers accidents occurring on your premises, or away from your premises, as a result of business operations. It automatically covers certain hazards which do not now exist, but which may develop during the life of the policy.

• Aggregate Limits - All coverage parts have an Aggregate Limit. The Aggregate Limit is the most money the company will pay under a coverage part for all claims occurring during the policy period.
• Premises & Operations - Covers damages that arise out of the ownership, maintenance or use of the insured use of the insured premises. It also covers damages arising out of operations performed by the insured business.
• Products - Covers damage arising out of products manufactured, sold, handled or distributed by the named insured.
• Completed Operations - Covers damage which occurs after operations have been completed or abandoned. Damage has to occur away from the premises owned by or rented to the named insured.

 

EMPLOYEE BENEFITS LIABILITY

This coverage provides liability coverage for claims and suits brought against an insured alleging negligent administration of an Employee benefit Program.

 

The following Employee Benefit Programs are covered by the insurance without specifically being listed by the applicant:

Group Health Insurance

Group Life Insurance

Profit Sharing Plan

Employee Stock Subscription

Unemployment Insurance

Disability Benefits Insurance

Pension Plans

Workers' Compensation

Social Security

 

COVERAGE IS ON A "CLAIMS-MADE" BASIS

Claims must be "MADE" during the policy period for coverage to exist.

 

 

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.

 

 

FIRE AND EXTENDED COVERAGES VANDALISM AND MALICIOUS MISCHIEF

Fire and Lightning: Covers loss from these perils and includes destruction by civil authority to prevent the spread of fire to neighboring properties. It also insures damage by water and smoke when the proximate cause is fire.

 

Extended Coverage

Covers loss from the following perils:

Windstorm

Hail

Explosion

Riot

Riot attending a strike

Civil commotion

Aircraft

Vehicles

Smoke

(Explosion from steam boilers, rotating machinery etc. is excluded)

 

Vandalism and Malicious Mischief

Covers loss from willful damage to the property (except glass) and includes damage done by burglars to the building.

 

FIRST NAMED INSURED
The new term "FIRST NAMED INSURED" has been added to the Common Policy Conditions. This addition emphasizes that, in accounts with more than one named insured, the company recognizes the "FIRST" named insured in the Declarations Page as being:

• The only one authorized to cancel a policy
• The only one designated to receive notice of cancellation
• Authorized to make changes in the policy terms with the company's consent
• Responsible for payment of the premium

GARAGE KEEPERS' COVERAGE

Garage Keepers Insurance covers liability for damages to automobiles for the following causes of loss:

• Specified Causes of Loss (Fire, Explosion, Theft, Vandalism & Malicious Mischief) or
• Comprehensive
• Collision

YOUR COVERAGE OPTIONS ARE:

• Damage only for which you can be held legally liable
• Damage to the extent caused by a peril insured against, without regard to legal liability. It pays in EXCESS of the customer's insurance policy
• Direct PRIMARY insurance on customer's cars

 

NON-TRUCKING LIABILITY

Covers your liability for "bodily injury" or "property damage" resulting from the ownership, maintenance or use of your vehicle, EXCEPT while used to carry property in any business or used in the business of anyone to whom the vehicle is leased or rented.

 

OCCUPATIONAL ACCIDENT VS WORKERS' COMPENSATION

• Occupational Accident provides medical benefits according to limits established in the policy and will only pay medical bills for a limited time, which is usually no more than two years. The disability and loss of earnings are paid in weekly payments or lump sum for loss of hand, finger, arm, etc. according to the "schedule of benefits" outlined in the policy. Occ Acc doe not provide any employers' liability coverage for gross negligence (lawsuit against the employer due to bad maintenance or unsafe conditions).
• Workers' Compensation provides unlimited benefits for medical bills (with no time limitation) as long as the employee needs medical treatment, which can be for the remainder of his life. Indemnity payments (disability and lump sum payments for loss of physical abilities like a back injury that is not "curable") are determined by state jurisdictions and are somewhat negotiable based on medical findings.
• Owner operators do not have the same legal rights as employees and are not entitled to Workers Compensation. Although not as comprehensive, Occupational Accident offers coverage that will benefit an O/O in the event of injury or accident.

 

OCCURRENCE VS CLAIMS MADE

• Occurrence Policy - Coverage applies if the covered Bodily Injury or Property Damage loss occurs during the policy period, regardless of when a claim is filed against the insured.
• Claims Made Policy - Coverage applies if the covered Bodily Injury or Property Damage loss occurs during the current policy period, after the retroactive date and only if the claim is filed against the insured during the current policy period.

 

PROPERTY - ALL RISK

Covers the property for all risk of direct physical loss.

 

Exclusions are as follows:

• Mysterious disappearance of property
• Damage done to property being worked upon
• Artificially generated electrical currents
• Wear, tear, marring, or scratching, insects, vermin
• Dampness or dryness of atmosphere, changes in temperature
• Rust or corrosion
• Theft from an unattended or unlocked auto
• Fidelity of an employee or officer of the bank
• Damage done by rain, snow or sleet property in the open
• Earthquake
• Flood - surface waters or water which backs up through sewers or drains. Water below the surface of the ground, including that which exerts pressure on flows, seeps or leaks through sidewalks, driveways, foundations, walls, basement or other floors, or through any opening.

 

PROPERTY - BASIC FORM

Covers the property for eleven NAMED PERILS:

• FIRE
• LIGHTNING
• EXPLOSION*
• WINDSTORM OR HAIL
• SMOKE

• AIRCRAFT OR VEHICLE
• RIOT OR CIVIL COMMOTION
• VANDALISM & MALICIOUS MISCHIEF
• SPRINKLER LEAKAGE
• SINKHOLE COLLAPSE
• VOLCANIC ACTION

* Explosion from steam boilers, rotating machinery, etc., is excluded.

 

 

PROPERTY - BROAD FORM

Covers the property for the following perils:

• FIRE
• LIGHTNING
• EXPLOSION*
• WINDSTORM OR HAIL
• SMOKE
• AIRCRAFT OR VEHICLE
• RIOT OR CIVIL COMMOTION
• VANDALISM
• SPRINKLER LEAKAGE
• SINKHOLE COLLAPSE
• VOLCANIC ACTION
• BREAKAGE OF GLASS
• FALLING OBJECTS
• WEIGHT OF SNOW, ICE, OR SLEET
• WATER DAMAGE

*Explosion from steam boilers, rotating machinery, etc., is excluded.

 

 

PROPERTY - SPECIAL FORM

Covers the property for all "risks of direct physical loss" except as limited or excluded:

 

Exclusions Are:

• Release, discharge or dispersal of Contaminants or Pollutants
• Mysterious disappearance of property
• Damage done to property being worked upon
• Artificially generated electrical currents
• Wear...tear...marring or scratching, insects, or vermin
• Dampness or dryness of atmosphere, changes in temperature

• Rust or corrosion
• Theft from an unattended or unlocked automobile
• Dishonest or Criminal Acts except for Acts of Destruction

Damage done by rain, snow or sleet to property in the open

• Earthquake

• Flood--surface waters or water which backs up through sewers or drains.

 

PHYSICAL DAMAGE

Covers damage to your vehicle for a covered cause of loss. Most policies provide comprehensive or specified perils and collision.

 

Comprehensive Coverage

Caused by any loss except: The covered "auto's" collision with another object; or The covered "auto's" overturn.

 

Specified Perils Caused by:

• Fire, lightning or explosion;
• Theft;
• Windstorm, hail or earthquake;
• Flood;
• Mischief or vandalism; or
• The sinking, burning, collision or derailment of any conveyance transporting the covered "auto".

Collision Coverage

Caused by:

The covered "auto's" collision with another object;

or The covered "auto's" overturn.

 

 

TRANSIT COVERAGE

Covers your 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

Provides blanket excess liability. Coverage over other Liability Insurance, such as Automobile, General, and Employer's Liability.

 

 

WORKERS' COMPENSATION

• Coverage A - Workers' Compensation agrees to pay benefits required under the Workers' Compensation Law.
• Coverage B - Employers' Liability provides coverage for your legal liability to employees.