School of Insurance

AUTOMOBILE POLICY

Bodily Injury Liability Coverage

Protects you when you are liable for injury or death of others in an automobile accident including legal and court costs. 

Property Damage Liability Coverage

Pays to repair or replace another person’s property when you are responsible for the damage because of a covered auto accident.

Medical Payments Coverage

Pays doctors’ bills, hospital bills and other related costs for you and your family—regardless of who is at fault in an accident.

Uninsured Motorists Coverage

Protects you, your family and passengers if you are injured by a driver with no liability insurance or by a hit-and-run driver, who is held legally responsible for your injuries.

Underinsured Motorists Coverage

Pays for your damages after the other driver’s coverage has been exhausted.  This is protection against drivers who have some liability insurance, but not enough to cover your claim.

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.

Comprehensive Coverage

Comprehensive coverage provides protection against loss or damage to a covered auto resulting from loss other than a collision or upset. This coverage also provides for supplemental payments for transportation expenses in the event of total theft of a covered auto or a non-owned auto. Coverage begins forty-eight hours after the theft.

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 forty-eight 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.

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.

 

BUSINESS INCOME

Business Income is the net profit or loss that would have been earned or incurred if the suspension of the business had not occurred, plus any normal operating expenses that must continue during the suspension of the business. Business Income insurance pays the actual loss of business income sustained by the insured because of a necessary suspension of the insured's operation during the period of restoration following a loss. The suspension must result from direct physical loss or damage to real or personal property. Coverage is provided against the same causes of loss covered under the insured's property policy. Under certain conditions, the policy also provides an extension of coverage for newly acquired property.
The insured's operations are the business activities of the insured, which occur at the location listed in the policy. The period of restoration is the period beginning on the date of the direct loss, and ending when the damaged or destroyed property could have been restored.
The business income and extra expense form provides the following additional coverage:

Extra Expense

Extra Expenses are any expenses over and above those that would have been incurred during normal operation of the business. Some of the covered extra expenses are; expenses incurred to avoid or minimize the suspension of operations, expense to repair or replace property, and expense paid for overtime work to speed up the restoration of the business.

Maximum Period of Indemnity

Maximum Period of Indemnity is a restriction of the period of restoration provided under the policy. If this option is selected the insured's loss payment is limited to the lesser of (1) the amount of loss sustained during the 120 days immediately following the loss or (2) the policy limit. The coinsurance requirement does not apply if this option is chosen.

Monthly Limit of Indemnity

Monthly Limit of Indemnity is an option that allows the insured to recover a percentage of the actual policy limit during each thirty day period of interrupted operations. If a loss occurs, payment would be made for the lesser of the actual amount of the loss, or the maximum amount allowed to recover with this option. Under this option, the coinsurance requirement does not apply.

Extended Period of Indemnity

Extended Period of Indemnity is an option that extends the "extended business income coverage" over the standard thirty-day period. The insured can extend the coverage to 60 days, or up to a maximum of 360 days. The selected time would depend on the time the insured estimates it would take for revenues to return to normal after a suspension of the business.

 

BUILDERS RISK

Building and personal property coverage form provides some protection for new buildings while under construction.  However, that coverage is limited and is intended only as a temporary protection.  The builders form involves:

 

Boiler & Machinery

Boiler & 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 in 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. The three extensions are 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; and 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, policy limits.
In addition to the three extensions the policy has four interior limits of $5,000 each, for 1) the cost of cleanup, repair or replacement, or disposal or 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 losses.

 

Coinsurance

Most building and business personal property polices 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.

 

Employee Dishonesty

Employee dishonesty is considered to be a criminal act committed by an employee acting alone or in collusion with others. There must be intent by the employee to cause the employer a loss and to obtain a financial benefit for the employee or someone else.
Coverage is provided for dishonest acts of employees of the named insured only. Coverage insures against loss of money, securities, and property other than money and securities. The blanket form provides coverage for dishonest acts of all employees. The limit for blanket coverage applies per loss, regardless of how many employees are involved. The scheduled form provides coverage only for the dishonest acts of employees specifically listed in the policy. On the scheduled form, a separate limit applies to each employee listed on the schedule.

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.

Theft, Disappearance and Destruction

Theft means any act of stealing.
Disappearance is unknown causes of loss. Disappearance lacks the elements of knowing if the crime was a theft, burglary or robbery.
Destruction is the loss of certain property, it is usually the  result of another cause of loss.
Section (1) of the form covers money and securities against loss by theft, disappearance, or destruction inside the premises. Section (2) covers money and securities outside the premises in the care and custody of a messenger.

Robbery and Safe Burglary

Robbery is the taking of property from a person by the threat of personal injury to that person.
Safe Burglary is a specific kind of burglary that means the taking of property from a safe or vault which shows visible signs of forcible entry.
This form covers property other than money and securities inside and outside the premises. Property other than money and securities is covered while outside the premises and only in the care and custody of a messenger. Coverage inside the premises is for loss or damage resulting from robbery of a custodian or from safe burglary. A custodian is the named insured or a partner or employee of the insured.

Premises Burglary

Covers property other than money and securities inside the premises.  It also covers damage to the insured's premises resulting from a covered cause of loss.

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.

Extortion

Extortion is the surrender of property away from the premises as a result of a threat of bodily harm to someone who is, or allegedly is, being held captive.
This form covers money and securities and property other than money and securities.

Premises Theft & Robbery Outside

Section (1) covers property other than money and securities inside the premises for loss caused by actual or attempted theft. Section (2) Robbery Outside the premises covers property other than money and securities while it is in the care and custody of a messenger.

DIRECTORS & OFFICERS LIABILITY
This policy was designed to protect the personal assets of the directors, officers and employees of a business from losses arising from “Wrongful Acts”.  A “Wrongful act” is any actual or alleged act or omission, error, misstatement, misleading statement, neglect or breach of duty by an “insured person” in the discharge of his/her duties with the business. Insured Persons are any past, present or future director, officer or employee or honorary director or trustee of the business.  Losses include any amount which the insured persons are legally obligated to pay, including judgments, settlements, defense costs, pre and post-judgment interest, and punitive or exemplary damages (where insurable by law).

In 2002, the U.S. Congress passed the Sarbanes Oxley Act, which has had a major impact on the liability of directors and officers.  Although this legislation protects shareholders and is expected to improve corporate governance, it also bears the risk of increasing the number of litigations.  This act establishes new fines and penalties for the corporate board for securities fraud violation involving accounting irregularities and financial fraud.

DWELLING

The dwelling policy provides property coverage for the dwelling and its contents. Many of the coverage found in the dwelling policy are found in the Homeowner policy, but there are some differences. The dwelling policy tends to provide narrower coverage than the homeowners policy. The insured under the dwelling policy is the named insured and the spouse, if a resident of the same household. The DP-03 dwelling policy form is the broadest and provides coverage for the dwelling, other structures, personal property, fair rental value and additional living expenses.

INLAND MARINE

Virtually any type of mobile equipment or tool can be insured. The equipment covered can be used in a wide variety of operations such as, home improvements to strip mining. It might be used to build roads, buildings, pipelines, or many 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 if covered property is out of service by a covered cause of loss.

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.

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.

 

Sign Coverage Form

The sign coverage form is used to insure neon fluorescent, automatic or mechanical electric signs, and lamps. All covered signs must be written on a schedule with a limit of insurance shown for each item on the schedule.

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.

Commercial Articles Coverage Form

The commercial articles coverage form is used to cover photographic equipment and musical instruments 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.

Mail Coverage Form

The mail coverage form is written for banks, trust companies, insurance companies, investment brokers and similar firms that frequently ship securities by mail. The mail coverage form purpose is to cover securities and other negotiable instruments while in transit by first class mail, certified mail, express mail, or registered mail.

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.

EMPLOYMENT PRACTICE LIABILITY INSURANCE

Provides coverage for employees or former employees that file a lawsuit for discrimination and/or harassment and/or inappropriate employment conduct by another employee during the course of employment.

Discrimination means termination of the employment relationship, a demotion or failure or refusal to hire or promote or denial of an employment benefit or the taking of any adverse or differential employment position because of race, color, religion, age, sex disability, pregnancy, sexual orientation or national origin, or any other basis prohibited by federal, state or local law.

Harassment means unwelcome advances, requests for favors or other verbal or physical conduct of either a sexual or non-sexual nature that (1) are explicitly or implicitly made a condition of employment, (2) are used a basis for employment decisions, or (3) create a work environment that interferes with performance.  Harassment does not include allegations of assault and battery if they are not related to a charge of sexual harassment.

Garage Liability

 

Garage liability for covered autos is provided for the named insured and anyone else while using the auto with the insured's permission, the insured's employees, if the covered auto is owned by that employee, and the insured's customers, if the insured is an auto dealership.
The liability insuring agreement for garage operations other than covered autos promises to pay all sums an insured legally must pay for damages because of bodily injury or property damage caused by an accident and resulting from garage operations involving the ownership, maintenance or use of covered autos.

Garage Keepers Liability

Covers auto(s) or auto(s) equipment left in the insured's care while the insured is attending, servicing, repairing, parking or storing the auto in the garage operation. Garagekeepers coverage is necessary because liability for such damages is excluded under the garage liability section of the policy with the care, custody, or control exclusion.

commercial 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. 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 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. 

HOMEOWNERS COVERAGE

The homeowner policy provides protection against the financial consequences of personal losses. A homeowner policy is a combination of property and liability coverage. The homeowner policy is tailored to meet the needs of a homeowner. The following is a basic outline of the homeowners (HO-3) policy and the endorsements most widely used on the HO-3 policy.

The Homeowners policy provides coverage dwellings that are owner occupied. The Homeowners 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.  Several additional coverage are included. Some of the coverage included is 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 coverage are included to provide protection for the insured following a covered property loss.

 

Hired Auto

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

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.

LIQUOR LIABILITY

Bars, restaurants, liquor stores, and any other businesses that serve or sell alcoholic beverages are exposed to what is commonly called “Liquor Liability”.  Liability may be established through principles or the common law or imposed by state statues know as dram shop acts.  A dram shop act gives persons a right of action against the provider of alcoholic beverages when they are injured or their property is damaged by the actions of an intoxicated person.

Dram shop laws ordinarily do not allow the intoxicated person to recover- only innocent persons who have been injured by the intoxicated persons.  however, under common law principles in some jurisdictions, even an injured intoxicated person may be able to recover damages from a provider who continued to serve the person after he or she became intoxicated.

Non-Owned Autos

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.

PERSONAL UMBRELLA liability

 

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 boat 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.

pollution liability

 

Contractor Pollution Liability(CPL):
CPL provides third party Cleanup coverage for unintentional pollution caused by covered operations while the named insured is working at sites that are not owned or occupied by the named insured.  CPL coverage usually ends once materials are moved beyond the boundaries of the job site.  As the name implies, contractors of all types purchase this coverage(through it is often included in environmental consultants and laboratories professional liability policies). CPL may be written on either a claims made or occurrence form, depending on exposures.

Professional Liability Including Pollution(PL/CPL):  
Professional Liability covers the named insured for errors and omissions in the rendering or failure to render professional services.  Professional Liability policies can include pollution, or in some cases Contractors Pollution Liability (CPL), and are written on a claims made basis.  See the CPL section of this document for more information concerning Contractors Pollution Liability.

Site Specific Pollution Liability (SSPL):
SSPL can cover both first party cleanup costs as well as third party BI, PD and Cleanup costs.  It is a very complicated coverage that defies simple explanation, but in short, SSPL provides coverage for unintentional pollution arising from a designated premise that is owned or occupied by the policyholder.  Most types of entities can purchase SSPL.  However, depending on exposures, first party cleanup costs may not be available for certain risks.  SSPL coverage is always written on a claims made basis and coverage can either be with a retroactive date of inception or if qualified, can be offered with full retroactive coverage (sometimes called “historical coverage”).  Site Specific Pollution Liability is often referred to as Pollution Legal Liability(PLL) or Environmental Impairment Liability(EIL).

Transportation Pollution Liability(TPL):  
TPL or Motor Vehicle Pollution Liability (MVPL) provides coverage for accidental pollution emanating from a scheduled vehicle.  It does not cover BI or PD resulting from automobiles other than the pollution aspect.  This coverage is no available as a stand-along policy but only as an endorsement in conjunction with several programs offered by NECC.

Underground and Above Ground Storage Tank Pollution Liability:
This coverage provides third party liability and first party cleanup costs for a covered spill emanating form a designated Underground or Above Ground Storage Tank.  Defense Costs are provided for in a separate limit from $100,000-$500,000.  This coverage is always written on a claim made basis.

pollution liability

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.  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. The following is a brief outline of coverage and how they are used within the Commercial Building And Personal Property coverage form.

 

uMBRELLA liability

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 terms 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.

watercraft

This limit provides liability insurance for the insured or any other person using the boat with the insured's permission. Coverage is provided for bodily injury and property damage arising from the ownership or operation of the boat.

Boat

This amount of insurance applies to the boat (sometimes referred to as the hull). This limit provides physical damage insurance for the boat, and any permanently attached equipment, such as the inboard motor.

Outboard Motor

This limit of insurance would apply if an outboard motor is attached to the boat. An inboard/outboard motor would be covered under coverage A since it is a permanent attachment.

Boat Equipment

This limit applies to any portable boat equipment or accessories. Some items that may be included in this limit are; dinghies, tenders, life preservers, cushions, fire extinguishers, anchors, oars, citizen band radios, ship to shore radios, and other transmitting and receiving equipment while used in or on the boat.

Trailer

This limit applies to the trailer. Very few policies include this coverage under boat equipment.

Workers Compensation/employers liability

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.

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.