CH19 BUSINESS PROPERTY AND LIABILITY INSURANCE

Motor Carrier Coverage Form.

The Motor Carrier Coverage Form is designed for businesses that provide transportation by vehicles in the furtherance of commercial enterprise.

Professional Liability Insurance:

best be defined as insurance to protect against liability for the failure to use the degree of skill expected of a person in a particular occupation. Although the terms tend to be used interchangeably, professional liability insurance is often referred to as malpractice insurance for those occupations in which professional liability is likely to result from bodily injury and errors and omissions insurance for other occupations.

Employee Benefits Liability Insurance:

covers claims that arise out of improper advice or other errors or omissions in the administration of employee benefit plans.

• extra expenses to minimize or avoid the suspension of operations—

rent at a temporary location, for example, and the cost of obtaining services, such as data processing, that can no longer be handled in house

Inland Marine Insurance:

Historically, marine insurers wrote insurance on ships and their cargoes, and fire insurance companies wrote insurance on property at fixed locations. As other types of transportation became more common, a hybrid type of insurance—inland marine insurance —evolved.

Commercial Property Insurance:

policies that deal with property specifically related to buildings and their contents

Part One—Workers Compensation Insurance:

states that the insurer agrees to pay all compensation and benefits required of the insured by the workers' compensation law of any state listed. These benefits vary from state to state. The insurer also agrees to pay any defense costs that arise out of a workers' compensation claim and certain other expenses the insured might incur as part of a claim.

• reduction in net income—

the difference between the net income the business would have earned had no loss occurred and the net income the business did earn while recovering from a loss.

Garage Coverage Form.

The Garage Coverage Form is designed to meet the special needs of auto dealers.

* LOSS SETTLEMENT:

The policy form provides that the amount of the loss is determined based on the following: * • the net income of the business before the loss occurred * • the probable net income of the business if no loss had occurred * • the operating expenses that must continue during the period of restoration so the policyowner can resume operations with the quality of service that existed prior to the loss * • other relevant sources of information

Part Two—Employers Liability Insurance:

a traditional form of liability insurance that protects an employer when it is sued because of injuries to employees.

Equipment Breakdown (Boiler and Machinery) Insurance:

agrees to pay for direct damage to covered property as a result of a breakdown to covered equipment.

Fiduciary Liability Insurance:

also involves employee benefit plans, but it involves claims that result from the breach of fiduciary duties, such as pension plan losses because of improper investments.

SURETY BONDS:

an agreement in which a surety provides a guarantee of indemnity if a second party, the principal, fails to perform a specified act or fulfill an obligation to a third party, the obligee. Surety bonds are not insurance contracts. However, they are often discussed within the context of insurance.

Commercial General Liability Insurance:

designed to cover a wide variety of liability loss exposures that can face an organization,

• Extra Expense Coverage Form:

designed to provide extra expense insurance for organizations that must remain in operation after a property loss. Businesses that might purchase only extra expense insurance include banks, hospitals, newspapers, insurance agencies, and financial planning firms. In most cases, these businesses also have a business income loss exposure, and in such cases the Business Income (and Extra Expense) Coverage Form is the better way to obtain extra expense coverage.

Farm Insurance:

essentially combines commercial general liability insurance, homeowners liability insurance for the farm owner's personal needs, and other insurance coverages unique to farming operations.

A nonowned auto

is an auto owned by a named insured's employee or a member of his or her household but only while used in the named insured's business or personal affairs

A hired auto

is an auto, other than a nonowned auto, that is leased, hired, rented, or borrowed by the named insured. Many businesses own no auto but have a loss exposure from accidents that involve nonowned and hired autos.

Excess Liability Insurance:

written to provide additional liability limits for claims that are covered under specified underlying coverages. There is no drop-down coverage for claims excluded by the underlying coverages. Excess liability insurance is often used to obtain larger limits for such loss exposures as directors and officers liability when a firm's umbrella policy does not cover that particular loss exposure.

Employment Practices Liability Insurance:

Coverage for employment related claims is often excluded under CGL policies. Employment practices liability insurance can cover these claims.

Directors and Officers Liability Insurance:

purchased by a corporation, but the corporation (unless it is a nonprofit organization) is often only the policyowner and not an insured; the insureds are the directors and officers.

Part Three—Other States Insurance:

This part of the WC&EL Policy provides coverage when an employer expands operations to include other states listed in the policy declarations for which Part Three applies. In many cases, the declarations list all states except those with monopolistic state funds or in which the insurer is not licensed to do business. The policyowner must notify the insurer when operations begin in these states.

BUSINESS OWNERS (BOP) POLICIES:

designed to provide property and liability coverage for small- to medium-sized businesses and organizations that meet certain eligibility requirements. A BOP resembles a homeowners policy in the sense that it includes a package of coverages designed to meet most of a typical policyowner's needs. Because it presents a prepackaged set of coverages, a BOP often includes some coverages that might otherwise be overlooked. Where it meets a client's needs, a BOP is usually more convenient and less expensive than purchasing each coverage individually in a commercial package policy.

Business Income insurance:

once known as business interruption insurance, may be purchased not only for profit-seeking commercial businesses but also for nonprofit organizations and governmental entities. Business income coverage applies when property has been damaged by an insured peril. Most policyowners buy business income insurance against the same set of perils as their building and/or personal property, either on a named-perils basis or on an open-perils basis.

Commercial Umbrella Liability Insurance:

operate much like the personal umbrella policies discussed in chapter 18. Unlike follow form excess policies, there is often coverage for claims that are excluded by the underlying policies. However, each insurer that sells commercial umbrella liability insurance usually uses its own form, and differences exist. Therefore, it is important to look at relevant policy provisions, including required underlying limits, insuring agreements, policy limits, events that trigger coverage, exclusions, and coverage territory.