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Frequently Asked Questions & Insurance Information

Provided Courtesy of Insurance Information Institute (III)

Additional Living Expense

Under the broad and special dwellings forms, coverage is provided for additional living expenses in the event of a loss under Coverage A. If the insured was to temporarily lose use of the dwelling, this coverage would apply and payment could be made for expenses incurred to live elsewhere following a loss that makes the dwelling unsuitable for living. Back To Top

Advertising Injury

This coverage pays for damages done in the course of oral or written advertisement that disparages, libels or slanders a person's or organization's goods, products or services. Coverage for these offenses is provided under advertising injury coverage only if they occur during the course of advertising the named insured's own goods, products or services. Back To Top

Agreed Value

When the agreed value option is used the coinsurance requirement is removed and the insurer agrees to cover losses for its agreed value. When this option is used the insured and the insurance company agree on the value of the property before the policy is issued. As an example, the insured has property insured for $100,000 and the agreed value is also $100,000, if a loss occurs, any loss up to $100,000 is covered at 100%. This option is usually assigned to one-of-a-kind property.

The success of any Commercial Property program is measured by its effectiveness following an insured loss. Thus, in establishing adequate coverage, one must have firsthand 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.

Most building and business personal property policies have a coinsurance clause which requires the insured to carry insurance equal to at least a specified percentage of the actual cash value of the property, the agreed value endorsement suspends this clause. If a loss occurs, and it is determined that the amount of insurance carried is less than the amount required a penalty could be placed on the insured. The insurance applying in the following example is subject to the 90% Coinsurance Clause. Under the terms in this clause, you should insure the property at risk to 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 Coinsurance Clause would operate in the event of a partial loss is illustrated below and is merely a hypothetical example:
Insurable
Interest
Insurance
Carried
Insurance Required
(90%)
Amount of
Loss
Policy
Pays
Insured
Pays
$100,000 $60,000 $90,000 $10,000 $6,667 $3,333
The computation formula is 'did over should.' The insured carried $60,000, but should have carried $90,000. Therefore the insured carried two-thirds of what he should have carried and will receive payment for only two-thirds of his $10,000 partial loss in spite of the fact the face amount of the policy was $60,000.

The above is merely to show how Coinsurance works. If at any time you should substantially increase building values or contents values, you should notify us immediately to increase your coverage to avoid any Coinsurance penalties. Back To Top

Any Automobile

Coverage is provided for any auto, including autos owned by the insured, autos the named nsured hires or borrows from others, and other non-owned autos used in the insured's business. Back To Top

Bailee Policy

Bailee policies are written to insure dry cleaners, repair shops, public warehouses, and several other types of businesses with large amounts of the customers' goods in the insured's possession. There are two major types of bailee policies. The Bailee Liability Policy covers damage to customer's goods only if the insured is legally liable for the damage. The Bailee's Customers Policy covers damage to customers' goods without regard to the bailee's liability. Back To Top

Basic Extended Reporting Period (Basic Tail)

This coverage is provided automatically without an additional premium charge if coverage is canceled, not renewed, or the insurer renews with a later retroactive date. The basic extended reporting period starts at the end of the policy period and lasts for five years for claims made against the insured within the five year period and reported to the insurer within 60 days after the end of the policy period. Applicable for claims made policies. Back To Top

Bodily Injury by Accident

For worker's compensation insurance, this amount is the most an insurer will pay under coverage (B) for all claims arising from any one accident, regardless of how many employees are involved in the accident. The standard limit is $100,000 for any one accident, which can be increased. Back To Top

Bodily Injury by Disease (Each Employee)

For worker's compensation insurance, this amount is the most an insurer will pay under coverage (B) for damages due to bodily injury by disease to any one employee. The standard limit of liability for each employee is $100,000, which can be increased. Back To Top

Bodily Injury by Disease (Policy Limit)

For worker's compensation insurance, this is the aggregate limit the insurer will pay under coverage (B) for all claims sustaining bodily injury by disease during the policy period. The standard policy limit is $500,000, which can be increased. Back To Top

Boiler and Machinery / Equipment Breakdown

Boiler and Machinery insurance covers direct damage to covered property when caused by a covered cause of loss. Covered property is any property that is owned by the named insured or is in the named insured's care, custody, or control and for which the named insured is legally liable. A covered cause of loss is a sudden and accidental breakdown of the insured's boiler and machinery equipment or any part of the equipment described on the policy. Boiler and machinery insurance is necessary because commercial property policies exclude explosion of steam boilers and breakdown of machinery.

The standard boiler and machinery policy contains three extensions of coverage: (1) Expediting Expense coverage, which pays the reasonable extra cost incurred to expedite progress after a loss; (2) Automatic Coverage which covers accidents to objects at newly acquired locations for up to ninety days after the named insured acquires the property; (3) Defense Cost and Supplemental Payments which would apply when the insurer is defending the insured against claims or suits alleging liability for damage to property of others. Defense Cost and Supplementary Payments are payable in addition to the policy limit. Expediting Expenses are included in, and not in addition to, the policy limits.

In addition to the three extensions the policy has interior limits of $5,000 each for: (1) the cost of cleanup, repair or replacement, or disposal of hazardous substances; (2) damage resulting from contamination of covered property by ammonia; and (3) damage by water to covered refrigerating or air conditioning vessels and piping. These limits are part of, and not in addition to, the limit specified in the policy. A benefit of boiler and machinery insurance is the inspection service that insurers provide to the insured. Endorsements can be added to the standard boiler and machinery policy to provide coverage for business income, extra expense, and consequential loss.

Comprehensive Coverage

This coverage is written only under the standard policy form. Coverage is provided for all insurable boiler and machinery equipment, including or excluding production machines. Coverage can also be written to cover particular types of boiler and machinery equipment.

Basic Coverage

This coverage can be written under the small business form to cover boilers and vessels equipment, including or excluding air conditioners/compressor units.

Broad Coverage

This coverage is also written under the small business policy. Many insured's refer to this form as the comprehensive form for small business since it covers a broader range of equipment. Coverage is provided for any boiler, any fired or unfired pressure vessel, any refrigeration or air conditioning equipment, and any mechanical or electrical equipment. Only certain types of business can qualify for the small business policy and property values can be no more than $5 million.
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Buildings and Business Personal Property

Coverage for the building includes the building and structures, completed additions to covered buildings, outdoor fixtures, permanently installed fixtures, machinery and equipment. The building material used to maintain and service the insured's premises is also insured. Business Personal Property owned by the insured and used in the insured's business is covered for direct loss or damage. The coverage includes furniture and fixtures, stock, and several other similar business property items when not specifically excluded from coverage. The policy is also designed to protect the insured against loss or damage to the personal property of others while in the insured's care, custody or control. Back To Top

Builders Risk/Installation

The inland marine builders risk portion of the policy form covers structures being built, temporary structures at the building site, and building materials that have not yet become part of the building. The building materials are covered while on the insured location, in transit, or in storage at another location. Business income coverage can also be provided on the policy. The installation portion of the policy usually insures a contractor's interest in building supplies or in fixtures that the contractor has been hired to install. Back To Top

Business Income

This endorsement can be written to provide coverage on either a “valued” or an “actual loss sustained” basis. When the actual loss sustained option is used, the coverage pays only for the insured's actual loss of income. If coverage is written using the valued option, the insured is able to collect a predetermined amount of coverage for each day the business is interrupted because of an accident to an insured object. The coverage is subject to a per accident limit and a deductible that can be expressed as either a specified time period or a dollar amount. When the valued form is used the daily amount of insurance is paid regardless to the actual amount of loss. Back To Top

Causes of Loss

The term peril is used when discussing losses. A peril is a cause of loss. Basic property insurance policies are written to cover the perils of fire, lightning, explosion, windstorm, hail, smoke, aircraft or vehicle damage, riot or civil commotion, vandalism, sprinkler leakage, sinkhole collapse, and volcanic action. Other property insurance policies, often referred to as the broad form policy, add coverage for water damage, weight of snow, ice or sleet, breakage of glass and coverage for falling objects. The broadest coverage is the special form, which is best known as the all risk form. All risk covers all causes of loss, except those specifically excluded from coverage. It is possible for a commercial property policy to have more than one cause of loss form. Back To Top

Coinsurance

The success of any Commercial Property program is measured by its effectiveness following an insured loss. Thus, in establishing adequate coverage, one must have firsthand 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.

Most building and business personal property policies have a coinsurance clause which requires the insured to carry insurance equal to at least a specified percentage of the actual cash value of the property. If a loss occurs, and it is determined that the amount of insurance carried is less than the amount required a penalty could be placed on the insured.

The insurance applying in the following example is subject to the 90% Coinsurance Clause. Under the terms in this clause, you should insure the property at risk to 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 Coinsurance Clause would operate in the event of a partial loss is illustrated below and is merely a hypothetical example:
Insurable
Interest
Insurance
Carried
Insurance Required
(90%)
Amount of
Loss
Policy
Pays
Insured
Pays
$100,000 $60,000 $90,000 $10,000 $6,667 $3,333
The computation formula is 'did over should.' The insured carried $60,000, but should have carried $90,000. Therefore the insured carried two-thirds of what he should have carried and will receive payment for only two-thirds of his $10,000 partial loss in spite of the fact the face amount of the policy was $60,000.

The above is merely to show how Coinsurance works. If at any time you should substantially increase building values or contents values, you should notify us immediately to increase your coverage to avoid any Coinsurance penalties. Back To Top

Collision Coverage

This coverage provides protection against loss or damage to a covered auto or a non-owned auto resulting from the impact with another vehicle or object. Collision losses are paid regardless of fault. Back To Top

Commercial Articles Coverage Form

The commercial articles coverage form is used to cover photographic equipment and musical instruments, for example, used on a commercial basis. Coverage is provided for photographers, motion picture producers, professional musicians, and others. The form is not intended to provide coverage for dealers of these types of property. Coverage can be written on a schedule or blanket basis. Back To Top

Commercial Property

Property insurance is any type of insurance that indemnifies an insured party who suffers a financial loss because property has been damaged or destroyed. Property is considered to be any item that has a value. Property can be classified as real property or personal property. Real property is land and the attachments to the land, such as buildings. Personal property is all property that is not real property. The Building and Personal Property coverage form is the form used to insure almost all types of commercial property. The insuring agreement in the Building and Personal Property coverage form promises to pay for direct physical loss or damage to covered property at the premises described in the policy when caused by or resulting from a covered cause of loss. Back To Top

Computer Fraud

Computer fraud is a specialized kind of theft where a computer is used to steal property from it's rightful owner.
This form covers money and securities and property other than money and securities. Back To Top

Comprehensive Coverage

Comprehensive coverage provides protection against loss or damage to a covered auto resulting from loss other than a collision or upset. Back To Top

Consequential Damage

This endorsement can cover losses due to spoilage of specified property from lack of power, light, heat, steam or refrigeration, which results from an accident to an insured item. Back To Top

Contractors Equipment Floater

The property covered on the contractors equipment floater might range from simple hand tools to very arge cranes. Virtually any type of mobile equipment or tool can be insured. The equipment covered can be used in a wide variety of operations from home improvements to strip mining. It might be used to build roads, buildings, pipelines, or any other types of structures. The coverage provided is for direct physical loss to the equipment. Rental reimbursement coverage can be added by endorsement to cover the cost of renting substitute equipment. Rental reimbursement coverage can be added by endorsement to cover the cost of renting substitute equipment if covered property is out of service by a covered cause of loss. Back To Top

Cost Containment

By implementing various programs in your business, you may be able to reduce your premiums. Containment programs include early return to work programs & employee incentive programs. Back To Top

Coverage Extensions and Additional Coverage

In addition to the limits stated in the Building and Personal Property coverage form, the policy has a coverage extensions section and an additional coverage section. The coverage extensions section provides limited coverage for newly acquired or constructed property, property of others, certain outdoor property, and the cost to research and reconstruct information on destroyed records. When coverage is placed on the all risk form, two additional extensions are added for property in transit and coverage for certain repair costs related to damage caused by water. The two additional extensions are covered by certain perils only. The additional coverage section provides coverage for indirect losses that result from a direct loss. The coverage applies to removal of debris, preservation of property, fire department service charges and pollutant cleanup and removal. The coverage extensions and the additional coverage have limitations and are subject to certain conditions. Back To Top

Dwelling

This amount of insurance applies to the dwelling and attached structures. Back To Top

Each Occurrence

Each occurrence is considered to be an accident, which could include continuous or repeated exposure to the same harmful conditions. An occurrence can also be a sudden event, or a result of a long term series of events. Back To Top

Earthquake Coverage

This endorsement extends your causes of loss to include damage that results directly from an earthquake. Coverage is provided for replacement of buildings only. All earthquakes shocks that occur within a 168 hour period (one week) are considered to be a single occurrence. A separate deductible applies and is determined by the value of the insured property. Back To Top

Electronic Data Processing Equipment Form

The inland marine electronic data processing policy is used to insure damage to data processing hardware, software, and media. The policy also covers the extra expense to continue data processing operations following a covered loss that resulted in damage to the system. Back To Top

Employee Assistance Program

- Have a written program to assist employees with personal issues that adversely affect job performance and worker's compensation costs. Issue may include stress, depression, drug addiction, marital problems, alcohol abuse, compulsive gambling, eating disorders, domestic violence, sexual harassment, financial problems, dependent care needs, and workplace violence. - Utilize case management that includes a comprehensive assessment of the employee's problems by trained Employee Assistance Program counselors, development of an action plan for the employee with goals set, monitoring of the employee's progress and follow up. - Where appropriate, the Employee Assistance Program case manager will refer employees to external service providers or specialists. - The Employee Assistance Program managers are to be involved in the evaluation of multiple workers' compensation claims filed by an employee or claims where substance abuse or other personal issues may have contributed to the accident. Where appropriate the Employee Assistance Program manager should contact the at-risk employee for consultation. - The Employee Assistance Program should include critical incident stress debriefing. - A written Employee Assistance Program statement is posted where all employees may see it. Back To Top

Employee Theft

This insuring agreement protects the named insured against "theft" of "money," "securities" and "other property" committed by an employee (or employees) within the described territory or while an employee is temporarily out of the territory. It is a blanket coverage that is applicable to all employees, whether or not identified by name or position. An employee includes temporary employees, leased employees, former employees retained as consultants and student interns. Any business with employees can benefit from this insurance. Back To Top

ERISA (Employee Retirement Income Security Act of 1974)

This act is sometimes called the "pension reform act." One of the purposes of this act is to force employers to protect the assets of the business that have been designated as employee pension benefits. Back To Top

Employers Liability

This coverage protects employers for their legal liability for bodily injury by accident or disease to an employee arising out of and in the course of the employee's employment when not covered under the workers compensation law. Before benefits are paid under this coverage, the employee must prove the employer is liable for the injury. Back To Top

Equipment Dealers Coverage Form

The primary purpose of the equipment dealers coverage form is to insure the stock in trade of dealers in agriculture and construction equipment. Coverage is provided for customers' equipment in the care, custody or control of the named insured. The coverage can be written on a reporting basis or non-reporting basis. Back To Top

Executive Officers, Partners Exclusion Endorsement

In some states, workers compensation law allows an insured to include or exclude Executive Officers and Partners, or both, from coverage. Adding this endorsement can designate the individuals not covered under the policy. Back To Top

Exclusion Endorsement

In, the Worker Compensation Act allows an insured to include or exclude employees/owners and their family from coverage. Below you will find the persons that are eligible for exclusion by legal entity:
Sole Proprietor Spouse, children parent
Partnership Partner
Corporation Executive Officer may elect exclusion if corporation has ten (10) or fewer stockholders and the executive officer owns at least 10% of the stock. A corporate board resolution authorizing exclusion is required to be executed. Real estate salespersons and associate real estate brokers may be excluded in all corporations subject to (418.199).
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Experience Modification

This is a factor that deals with the rating of the policy. The Experience Modification figure is insured's loss experience. The factor is used to increase or decrease the manual rates of insurance. Back To Top

Extended Transportation Expense Coverage (Rental Reimbursement)

This coverage applies when a covered auto or non-owned auto is withdrawn from use more than twenty-four hours due to a loss, other than theft. The insuring agreement agrees to pay up to the stated amount for expenses incurred in renting a vehicle. The coverage usually carries a per day limit and a maximum amount limit. Back To Top

Extra Expense

This endorsement pays for the extra expense of maintaining operations after an accident to an insured item until normal operations can be restored. This endorsement excludes coverage for loss of income. To have coverage for loss of income and extra expense, the endorsement called Combined Business Interruption and Extra Expense must be added to the policy. Back To Top

Fair Rental Value

Under the broad and special dwellings forms, coverage is provided for fair rental coverage for that part of the residence premises that is rented or held for rental to others. If a loss occurs under coverage A that makes that part of the premises unsuitable for living, this coverage would pay the lost rental value. The limit of insurance is 10% of the dwelling limit. Fair rental value is the amount of rent that could reasonably be charged for the premise. Back To Top

Fire Damage Limit

The fire damage limit provides coverage for fire damage caused by negligence on the part of the insured to premises rented to the named insured. If a fire occurs because of negligence of the insured and causes damage to property not rented to the insured, coverage would be provided under the occurrence limit. Back To Top

Forgery or Alteration

Forgery is generating a document or signature that is not genuine. Alteration is changing a document in a manner that is neither authorized nor intended. This form insures against loss caused by the forgery or alteration of a covered item drawn against the insured's accounts. A covered item might be a check, draft, promissory note, bill of exchange or similar instrument. Back To Top

Funds Transfer Fraud

This insuring agreement protects the named insured against loss resulting from a "fraudulent instruction" directing a financial institution within the defined territory to transfer "money" and "securities" out of the insured's transfer account. Any business having a transfer account can benefit from this insurance. Back To Top

General Aggregate

The General Aggregate Limit is the most money the insurer will pay under a certain coverage for all claims occurring during the policy term. Back To Top

General Liability

The Commercial General Liability policy provides the insurance protection needed to pay damages for bodily injury or property damages for which the insured is legally responsible. The policy provides coverage for liability arising from personal injury and advertising injury. Coverage for medical expense is also provided. The policy also covers accidents occurring on the premises or away from the premises. Coverage is provided for injury or damages arising out of goods or products made or sold by the named insured. The insured is the named insured and the employees of the named insured. However, several individuals and organizations, other than the named insured, may be covered, depending upon certain circumstances specified in the policy. In addition to the limits, the policy provides supplemental payments for attorney fees, court costs and other expenses associated with a claim or the defense of a liability suit.

There are two commercial general liability coverage forms available, the occurrence form and the claims-made form. Both forms are somewhat identical in the coverage offered. The main difference is in the way the claims are handled under the two forms. The occurrence form covers bodily injury or property damage claims that occur during the policy term, regardless of when the claim is reported. The claims-made policy form only covers claims made against the insured during the policy term. A claim made after the policy expires is not covered by a claims-made policy unless the claim is covered by an extended reporting period. The claims-made policy will only have the extended reporting period. The following reflect both forms. Back To Top

Hired Auto

Coverage is provided only for autos leased, hired, rented, or borrowed for use in the named insured's business. Back To Top

Homeowners Policy

The homeowners policy provides protection against the financial consequences of personal losses. A homeowners policy is a combination of property and liability coverages. The homeowners policy is tailored to meet the needs of a homeowner.
The HO-3 policy provides coverages for one or two family dwellings that are owner occupied. The HO-3 policy provides coverage against risks of direct physical loss to real property, except for those causes of loss that are specifically excluded. Personal property is covered against direct physical loss caused by a specified peril. In addition to the coverages stated under Section I, several additional coverages are included. Some of the coverages included are; debris removal, fire department charges, reasonable repairs charges, property removal charges, and coverage for trees, shrubs and plants. Coverage is also included for loss involving credit cards, forgery, and counterfeit money. These additional coverages are included to provide protection for the insured following a covered property loss. Each additional coverage has limitations and is subject to certain conditions. Back To Top

Indemnity

When the indemnity insuring clause is used, the insurer will indemnify or reimburse the insured for those sums of money the insured becomes obligated to pay by reason of liability imposed upon the insured by law, or assumed under contract. Pay on behalf agreement would be the opposing agreement. Back To Top

Inflation Guard

An insured can insure a building for its full value at the beginning of the policy year, but, at the end of the year, it might not be covered for its full value. This problem can be corrected by adding inflation guard coverage. With inflation guard, the policy limit increases gradually during the policy term so that the total increase amounts to the desired percentage increase at the end of the policy term. Back To Top

Inland Marine (Personal)

An inland marine policy provides coverage for property transported from one place to another, goods in transit, bridges, tunnels, television broadcasting towers and other means of transportation and communication. Inland marine insurance also includes various floater policies that provide coverage for personal property. An inland marine floater policy is used to provide coverage that floats or moves along with the covered property as it changes locations. There are no standard inland marine floater policies, however, most floater policies share the following four characteristics: (1) The coverage can be tailored in order to insure a specific type of property for the insured. (2) The insured can select the appropriate policy limit for the property. (3) Floaters are typically written on an all risk basis which means all direct physical losses to property are covered, except for specially excluded losses. (4) Most floaters cover the property anywhere in the world, however, fine arts are usually covered only in the United States.
An inland marine personal articles floater is used to insure valuable personal property that often requires broader coverage than that provided by an insured's homeowner policy, due to the various exclusions and limitations on homeowners coverages. Back To Top

Inside the premises theft of money and securities

This insuring agreement protects the named insured against "theft," disappearance and destruction of "money" and "securities" while located inside the insured's premises or bank within the defined territory. In addition, damages caused by a thief to the exterior of the building (but not fire or vandalism) and to a locked safe inside the premises (but not vandalism) are covered. Any business that routinely collects and deposits significant amounts of "money" and "securities" can benefit from this insurance. Back To Top

Inside the premises robbery or safe burglary of other property

This insuring agreement protects the named insured against loss to "other property" due to "robbery" of a custodian (someone having the custody of the property) and "safe burglary" inside the premises within the defined territory. In addition, damages caused by a thief to the exterior of the building (but not fire or vandalism) and to a locked safe inside the premises (but not vandalism) are covered. Any business that keeps valuable property on the premises that is easily carried away can benefit from this insurance, assuming it does not already have this protection as Special Forms perils (which includes theft) on a property policy. Back To Top

Jewelers Block Coverage Form

This form was designed to meet the needs of retail jewelers. The form provides coverage for damage to the jeweler's stock of jewelry, precious and semi-precious stones, watches, precious metals and similar merchandise. Similar property of others in the insured's care, custody or control is also covered. Back To Top

Limit of Insurance

The most the insurer will pay for a loss or damage in any one occurrence is the limit of insurance stated in the policy declarations. Back To Top

Loss of Use

This coverage applies in the event of a loss under Coverage A. If the insured was to temporarily lose use of the dwelling this coverage would apply. Payment would be made for expenses incurred to live elsewhere following a loss that makes the home unsuitable for living. Another method used to determine payment for loss of use is fair rental value, which is the amount of rent that could reasonably be charged for the premises, less any expenses that do not continue while the premises are unsuitable for living. Back To Top

Medical Expense Limit

Medical payments coverage pays medical expenses resulting from bodily injury caused by an accident on premises owned or rented by the insured, or locations next to such property, or when caused by the insured's operations. These payments are made without regard to the liability of the insured. Back To Top

Medical Payments Coverage (Auto)

The insuring agreement states that the insurer will pay all reasonable and necessary medical and funeral expenses incurred by an insured because of bodily injury caused by an accident. The insured is the named insured, the insured's employees and guests, and any other person occupying a covered auto. These payments are made without regard to fault. Back To Top

Monopolistic States

There are six states that require all workers compensation insurance to be placed with their state fund. No private insurer is allowed to write Workers Compensation Coverage in the six states. The states are: Nevada, North Dakota, Ohio, Washington, Wyoming and West Virginia. Back To Top

Non-Owned Auto

Coverage is provided only for autos not owned, leased, hired, or borrowed by the named insured. Coverage includes autos owned by the insured's employees or members of their households, but only while used in the named insured's business or personal affairs. Back To Top

Owned Automobile

Coverage is provided for all autos owned by the named insured. The owned auto symbol is used for liability insurance only. Back To Top

Other States Insurance

This provides workers compensation coverages if the insured expands operations into other states not declared at the time the policy is issued or renewed. If the insured elects this coverage and operations begin in a state listed in other states, the insurer provides the same coverage as if the state was declared in the policy at the time of policy issuance. Back To Top

Other Structures

This coverage applies to detached structures such as a garage or storage shed. The limit of insurance coverage is set at 10% of the dwelling limit for loss to other structures. Back To Top

Outside the premises

This insuring agreement protects the named insured against "theft," disappearance and destruction of "money" and "securities" while in the custody of a messenger or an armored vehicle company away from the premises, but within the defined territory. It also covers the named insured for "robbery" of "other property" while in the custody of a messenger or an armored motor vehicle company away from the premises, but within the defined territory. Any business that takes valuable property off the premises can benefit from this insurance. Back To Top

Pay on Behalf

The agreement promises to make direct payment on behalf of the insured for those sums of money the insured becomes legally obligated to pay because of liability imposed upon the insured by law, or assumed under contract. Back To Top

Personal Property

This coverages applies to personal property that is usual to the occupancy of a dwelling. The coverage applies to personal property owned or used by the insured or resident family members, while the property is on the described location. The limit of insurance for this coverage is chosen by the insured. Back To Top

Personal Property Replacement Cost

Property loss settlements under the homeowners policy are made on an actual cash value basis. When the replacement cost endorsement is added, the loss settlement payment would be sufficient to replace the item for the cost at the time of loss without deductions for depreciation. Back To Top

Personal Injury

Personal injury means injury other than bodily injury. Coverage is provided for injury resulting from offenses such as false arrest, malicious prosecution, detention or imprisonment, the wrongful entry into, wrongful eviction from and other acts of invasion, or rights of private occupancy of a room. Coverage for libel and slander is also provided in the policy. Back To Top

Personal Injury Protection

Personal Injury Protection (PIP) is an endorsement that adds no-fault benefits. No-Fault means that in the event of an automobile accident, each party collects from his or her own insurer regardless of fault. The PIP endorsement is only available in certain states with No-Fault Laws. The endorsement applies only to bodily injury and not to property damage. (The state of Michigan is the exception to property damage.) No-Fault Laws vary widely from state to state. Back To Top

Personal Liability

Section II of the homeowners policy provides liability coverage for personal loss exposures. The insuring agreement under Coverage E provides liability coverage if a claim is made or suit is brought against an insured because of bodily injury or property damage. Coverage is provided for the residence premise as well as any other premises used by the insured, as a residence, permanently or temporarily. Liability coverage is provided for the named insured and members of the named insured's household who are relatives. Personal liability has a basic limit of $100,000 per occurrence, which the insured may increase for an additional premium. In addition to the basic limit, Coverage E also provides additional coverages for expenses such as defense cost, expenses incurred providing first aid to others, damage to property of others and loss assessment charges. The additional coverages provided under Section E are subject to limitations and certain conditions. Back To Top

Premises/Operations

Coverage is provided for damages arising out of ownership or occupancy of the insured premises when not maintained in a reasonable manner. This also covers damages arising out of operations performed by the insured's business. Back To Top

Products/Completed Operations

Products coverage is provided for damages arising out of products manufactured, sold, handled or distributed by the insured. Completed Operations covers damages occurring after operations have been completed or abandoned, or after an item is installed or built and released for its intended purpose. Back To Top

Property Damage Liability

Property damage liability is usually defined as injury or destruction of tangible property, which includes the loss of use of the property. Back To Top

Rental Reimbursement

The business auto policy provides a coverage extension if an auto is insured for comprehensive or specified cause of loss coverage which insures against loss of use of a covered auto only if the auto is a private passenger type auto and is stolen. The coverage extension pays up to a daily limit of $10 and a maximum limit of $300. Payments begin 48 hours after the theft and ends when the insured auto is returned or when the insurer has paid the insured for the auto.

However, for broader coverage the insured can pay an additional premium for rental reimbursement coverage. Rental reimbursement pays the cost of renting a substitute auto for replacement of any covered auto that has suffered a covered loss. The daily and maximum limit for this coverage varies among insurers. Back To Top

Replacement Cost and Actual Cash Value

Property can be valued in several different ways. Insurance companies commonly use two approaches to determine value, which also determines how a loss will be paid; the replacement cost method and the actual cash value method. Insurers consider replacement cost of a property item to be the cost to replace it with property of like kind. Actual cash value is replacement cost minus the accumulated depreciation for age and condition. Back To Top

Required Underlying Limits

Required Underlying Limits is a requirement of the insurer. It requires the insured to have certain types and amounts of primary insurance before the umbrella policy can be written. For personal lines coverage (home & auto), usually the required limits are $250,000 per person and $500,000 per occurrence on bodily injury liability and $100,000 for property damage liability under the auto policy. The personal liability insurance limits are usually $300,000 under the homeowners policy. Insured's that have a watercraft liability exposure are usually required to carry at least $300,000 in liability coverage. However, these required underlying limits can vary among insurers. Back To Top

Retroactive Date

The retroactive date shown in the policy declarations is the same as the inception date, or the retroactive date can be a date prior to the inception date. A policy can also be written with no retroactive date. Back To Top

Return to Work Program

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Scheduled Personal Property

The scheduled personal property endorsement is used to provide coverage for risk of direct loss for such items as jewelry, furs, cameras, musical instruments, silverware, golfer's equipment, fine arts, postage stamps and rare coins. Scheduled property can be insured for any amount the insured requires. Back To Top

Self Insured Retention

The self insured retention is the amount of the loss an insured must pay before the policy would be required to respond. Back To Top

Specified Cause of Loss

This provides coverage against loss from fire, lightning, or explosion; theft; windstorm, hail, or earthquake; flood; mischief or vandalism; and sinking, burning, collision or derailment of a conveyance transporting the covered auto. Back To Top

Subject to Audit

The proposed premium is based on the above estimates of annual exposures. A deposit premium will be collected at the time of inception and each month a reporting form will be obtained. Any adjustments will be invoiced at that time. A final audit of the policy will be made at the end of the policy period. Back To Top

Supplemental Extended Reporting Period / Supplemental Tail (Claims Made Policies)

The supplemental extended reporting period is available under the same circumstances as the basic one. However, it becomes effective only if the named insured makes a written request within 60 days after the termination of the policy period and the additional premium is paid. The supplemental extended reporting period begins when the basic one ends, and it continues forever. It cannot be canceled by the insured or the insurer. The supplemental tail endorsement would provide coverage for claims reported to the insurer within sixty days after the end of the policy period but did not result in a claim being made against the insured until after the end of the five year policy period. Other types of occurrence or offenses that are unknown by the insured and therefore not reported within the sixty days after the end of the policy period could also be covered by the supplemental tail. When the tail is purchased the policies general aggregate limit and the products/completed operations aggregate limit is reinstated. Back To Top

Towing and Labor

When this coverage is added, the insurer pays for towing and labor costs each time a covered auto or non-owned auto is disabled, up to a stated amount. Back To Top

Umbrella (Commercial)

Umbrella liability insurance provides excess liability coverage over several of the insured's primary liability policies. Most umbrella liability policies provide coverage that is broader than the insured's primary policies. An excess liability policy may be what is called a following form policy, which means it is subject to the same term as the underlying policies; it may be a self-contained policy, which means it is subject to its own terms only; or it may be a combination of these two types of excess policies. Umbrella policies have three functions: (1) To provide additional limits above the each occurrence limit of the insured's primary policies; (2) To take the place of primary insurance when primary aggregate limits are reduced or exhausted; and (3) To provide broader coverage for some claims that would not be covered by the insured's primary insurance policies, which would be subject to the policy retention. Most umbrella liability policies contain one comprehensive insuring agreement. The agreement usually states it will pay the ultimate net loss, which is the total amount in excess of the primary limit for which the insured becomes legally obligated to pay for damages of bodily injury, property damage, personal injury, and advertising injury. All umbrella liability policies contain an each occurrence limit of insurance. Some umbrella liability policies may have a separate limit that applies to all personal and advertising injury for one person or for the organization. Also, some policies are written with aggregate limits for only one type of loss. Other policies may have one or more aggregates for all losses. Umbrella policies can be written with several different variations of the aggregate limits. There are no standard umbrella policies. Back To Top

Umbrella (Personal)

The Personal Umbrella Policy was designed to provide coverage in the event of a catastrophic claim, lawsuit, or judgment. Personal umbrella policies provide excess liability insurance over the insured's basic primary policies, such as the homeowners, personal auto and boaters policies. Coverage is provided on a worldwide basis for the entire family. Umbrella policies pay only after the limits of the underlying primary policies are exhausted. Coverage is usually broader and applies to some loss exposures not covered by the primary policies. A typical umbrella policy will provide coverage on a single limit occurrence basis. Coverage is provided for bodily injury and property damage liability. Defense costs are also covered, normally in addition to the liability limit, and sometimes included as a part of the total limit. A self insured retention must be met when certain losses are covered under the umbrella policy but not covered under the primary policy. The insurer requires the insured to carry certain minimum amounts of liability insurance on primary policies. Coverage under a personal umbrella policy can vary depending on the insurer since there is not a standard personal umbrella policy form. Back To Top

Uninsured/Underinsured Motorist Coverage

Uninsured Motorist

This insuring agreement pays for bodily injury to an insured who is injured by an uninsured motorist, a hit-and-run driver, or a driver whose insurer becomes insolvent. These benefits are paid under the named insured's policy.

Underinsured Motorist

This coverage is added to supplement the Uninsured Motorist Coverage, the coverage applies only when the other driver has liability limits at the time of an accident, but the liability limits carried may be insufficient to pay for damages for which the driver is responsible. This is when the insured's underinsured motorist's coverage would apply and payment for the difference could be made. The two coverages are mutually exclusive and do not overlap or duplicate each other.
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United States Longshore & Harbor Workers Act Endorsement (USL&HWA)

This is a federal act which is similar to the state workers compensation act. The federal act was designed to provide workers compensation benefits to employees who work in maritime employment upon the navigable waters of the United States and who are usually considered outside the scope of state workers compensation laws. When the USL&HWA endorsement is added to the standard policy it applies to work done in the states scheduled on the policy and extends the definition of the workers compensation law to include the USL&HWCA. Back To Top

Voluntary Compensation Endorsement

Workers compensation laws of most states exempt some type of employment from workers compensation benefits. This endorsement amends the standard policy to provide coverage for employees with exempted occupations from the workers compensation act. When the endorsement is added it does not make employees subject to the workers compensation law. Back To Top

Worker's Compensation

This coverage agreement obligates the insurer to pay all compensation and other benefits required of the insured by the workers compensation law or occupational disease law of any state listed in the policy. The coverage applies to bodily injury by accident and by disease. Coverage (A) shows no dollar limit for the benefits provided since any applicable limits would be those established within the law. Benefits under coverage (A) are paid to the employee without regard to fault. Back To Top