Video Transcript Below
Insurance is confusing! When an unexpected event occurs, which part of your policy is triggered? Do you know where to look?
In this blog, you will learn to identify and understand the critical sections of your commercial policy to limit confusion the next time you review it.
The Named Insured Section
- The Named Insured should read as the legal name of your business.
- The policy covers the owners of this business as well as your employees.
- Directors and officers who are not employees must be covered under a separate Directors and Officers Policy.
- Subcontractors are usually not covered the same as employees and should have their own policy with you added as an additional insured.
The Policy Term
- The policy usually extends for a one-year term.
- There is often a minimum dollar amount retained by insurers once a policy is bound, which means that you cannot get this money back if you cancel before the term expires.
- If you cancel mid-term, you can expect a short-rate cancellation penalty applied on the premium that is owed to you.
Claims Made Policy vs Occurrence Policy
- A Claims Made Policy protects you from any covered incidents that are brought forward during the policy period regardless of when the claim occurred. Many directors and officers policies and professional errors and omission policies are structured this way.
- An Occurrence Policy protects you from any covered incidents that occur during a policy period, regardless of when a claim is filed. Most property and liability policies fall under this category.
The Property Section
- The Property Section lists the limits for all of your buildings, contents and equipment.
- The limit stated will be the maximum you will receive if a loss occurs.
- On a commercial policy, only property listed with a limit has physical damage coverage.
- Pay special attention to the Named Perils or risks you are insured for.
The Liability Section
The Liability Section outlines your limit of insurance should someone sue you for the following:
- bodily injury sustained on your property
- an injury that you caused them
- property damage that you may have caused a third party.
The Exclusions Section
An All Risks Policy covers everything except for the excluded items; it is essential to review the exclusions to see what applies to you.
What About The Deductibles Section?
We hope you have a better understanding of the essential components of your commercial insurance policy. It is in your best interest to review your policy at least once a year with your broker to ensure you understand what you are paying for and what you can expect in the event of a claim.
Do you have an insurance or risk management related question that you would like answered as part of our Frequently Asked Questions Series? Leave your questions in the comment box below.