Business Insurance FAQ’s

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Commercial Lines Insurance FAQ:

• What is fire legal coverage?

  Fire legal coverage provides coverage to for you if you rent a business space and are held responsible for fire damages to that rented space. It does not apply to all business risks.

• What is the difference between Replacement Cost (RC) and Actual Cash Value (ACV)?

  Replacement Cost is the current cost to replace property. Actual Cash Value is the replacement cost less depreciation.

• What does Products/Completed Operations mean?

  Products/Completed Operations refers to the liability coverage for damages caused by your operation or products after the point at which you no longer have control of them.

• What does 80% co-insurance mean?

  Insurance carriers require that an insured party pay 80% of the replacement cost in order to collect a partial loss in full. This is the way the insurance company encourages all insured to adequately insure their property in relation to other insured.

• Does my policy cover physical damage to a vehicle I rent?

  This damage will be covered only if that type of coverage is purchased.

• Can other people drive my business vehicle?

  Other people may drive your vehicle with your permission. It is important that they be listed on your policy if they are regular drivers of the vehicle.

• How does an audit work?

  At the end of the policy term, the insurance company will review the policy and either charge or credit the policyholder based upon an audit of estimated figures. Examples of estimated auditable items include sales and payroll. Audits can be performed onsite by an auditor or via mail or telephone. A premium is charged for audit estimations.

• Why do I need certificates of insurance from sub-contractors?

  An audit may require you to show proof that sub-contractors had their own insurance coverage. The sub-contractors’ certificates of insurance will prevent you from being charged for their exposure.

• What is General Liability?

  General Liability provides coverage for other individuals who are on your property and/or exposed to your operations.

• What is Business Interruption/Extra Expense coverage?

  Business Interruption/Extra Expense coverage provides coverage for income loss and the expense of establishing a temporary site during repairs due to damages related to a fire or compensable loss.

• Named Insureds are those listed by name in the relevant block of the policy’s declaration page. Although the named insured is commonly one person, partnership, corporation or other entity with insurable interests, multiple named insureds may be included.

  The First Named Insured is the first “named insured” listed on the policy declarations (front page of the policy). This insured acts as the legal agent for all named insureds in initiating cancellation, requesting policy changes or accepting any return premiums. The first named insured may also be responsible for payment of the premiums.

  An additional insured is an entity to which a policy’s coverage is extended. An additional insured must be added to the policy prior to a claim being paid. There must be a tied to relationship between the additional insured and named insured. Being an additional insured on another’s policy does not eliminate the need for someone to have his/her own Commercial General Liability policy.

Commercial Property Insurance FAQ:

• What is a peril?

  A peril is the cause of a possible loss (examples include fires or windstorms).

• What is Business Income Coverage (Time Element)?

  Business Income Coverage provides coverage for loss of earnings and ongoing expenses when operations are curtailed or suspended due to property damage resulting from a covered cause of loss.

• Should I purchase special coverage for my computer equipment?

  Electronic Data Processing (EDP) equipment can be covered as unscheduled business personal property in “commercial property” forms such as the building and personal property coverage. An EDP equipment floater can provide added benefits. Many EDP floaters cover special perils such as mechanical or electrical breakdown and typically cover property in transit.

• What is co-insurance?

  In property insurance, co-insurance is a clause under which the insured shares in losses to the extent that he/she is under-insured at the time of a loss. You may have heard of co-insurance relative to health insurance; this is a provision in which the insured and the insurance company will share covered losses in an agreed proportion.

Commercial Lines Liability FAQ:

• What is a third party claim?

  A third party claim is a claim brought against you by someone other than an insured.

• Does my General Liability Policy provide coverage if my company is sued for pollution?

  This insurance does not apply to bodily injury, property damage, advertising injury or personal injury arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of pollution.

• Does my General Liability Policy provide Liquor Liability Coverage?

  Yes, your General Liability policy provides liquor liability coverage unless you are in the business of manufacturing, distributing, selling, serving or furnishing alcoholic beverages. These types of businesses need to purchase additional coverage specific to liquor liability coverage.

• What is Fire Legal Liability coverage?

  Fire Legal Liability provides coverage against liability for fire damage to premises rented to the named insured or temporarily occupied by the named insured with the owner’s permission. Most Commercial General Liability policies provide a separate limit of $50,000 to cover this exposure.

• Will my liability insurance cover me if I am sued in another country?

  Most liability policies provide coverage for lawsuits only if they are brought in the United States, its territories and Canada.

• What is the difference between Employee Benefits Liability Coverage and a Fiduciary Bond?

  The Employee Benefits Liability policy was designed primarily for a variety of benefit plans to provide coverage for administrative errors and omissions. The Fiduciary Bond policy was designed to cover a fiduciary’s ERISA (Employee Retirement Income Security Act) exposures that are caused by a “wrongful act.” Fiduciary coverage responds to claims for damages arising out of improper investments as well as plan and employee advice.

• What is an Umbrella Policy?

  An umbrella policy provides additional limits of insurance over and above underlying coverages found on a General Liability,  Automobile or Workers’ Compensation policy. If there is a claim, the underlying policy will pay its limits of liability and the umbrella policy coverage would then be activated

• When do I need to purchase Workers' Compensation Insurance?

  Most states require an employer to purchase Workers’ Compensation Insurance as soon as they have employees. These states also consider a corporate entity to have employees from the moment the corporation is formed.

  Workers’ Compensation Insurance will provide medical expense and disability income for injured employees as required by the laws of each state. In addition, the insurer will defend any claim proceeding or suit against the insured for benefits payable under the policy.

  Premium shall be computed on the basis of the total remuneration (payroll) paid or payable by the insured for services covered by the policy.

• What should be included in the remuneration?

  In addition to ordinary wages or salaries, remuneration includes several other types of compensation. These include:

  • Bonuses
  • Extra pay for overtime work except as provided in Rule V-E
  • Pay for holidays, vacations or periods of sickness
  • Payment by an employer of amounts otherwise required by law to be paid by employees to statutory insurance or pension plans
  • Payment to employees on any basis other than time worked, such as piece work, profit sharing or incentive plans
  • Payment or allowance for hand tools or power tools used by hand and provided by employees and used in their work operations for the insured
  • The rental value of an apartment or house provided for an employee based on comparable accommodations
  • The value of lodging received by employees as part of their pay
  • The value of meals received by employees as part of their pay to the extent shown in the insured’s records
  • The value of store certificates, merchandise, credits or any other substitute for money received by employees as part of their pay

   

  Items not included are:

  • Tips and other gratuities received by employees
  • Payments by an employer to group insurance or group pension plans for employees other than payment covered by Rule V-B.2e
  • The value of special rewards for individual invention or discovery
  • Dismissal or severance payments except for the time worked or accrued vacations

   

Worker’s Compensation FAQ:

• What types of injuries are covered under the act?

  Employees are entitled to receive compensation for an “injury by accident” or an “occupational disease.”

  In order to be covered, an “accident” must:

  1. Occur at work or during a work-related function.
  2. Be caused by a specific work activity.
  3. Happen suddenly at a specific time. (Injuries incurred gradually or from repetitive trauma are not covered, although certain diseases caused by repetitive trauma are covered.)

  In order to be covered, a disease must:

  1. Be caused by the work.
  2. Not be a disease of the back, neck, or spinal column.

   

• What are the time limits for filing a claim?

  An employee must file a claim with the Workers’ Compensation Commission within two years from the date of the accident or any right to benefits may be lost. Claims for an occupational disease must be filed within two years from the date the doctor tells the employee the disease is work related, or five years from the date the employee was last exposed to the work condition causing the disease, whichever is sooner. (Certain diseases, such as asbestosis, byssinosis, silicosis and coal workers’ pneumoconiosis have different limitation periods.)

  If after returning to work, you are again disabled, you must file a claim within two years of the date for which you were last paid compensation under an award. (This is called a “change in condition.”) Payment only goes back 90 days from the date of filing with the Commission. Even if the employer has paid lost wages or provided medical care, it is still the employee’s responsibility to file a claim with the Commission. If no claim is filed with the Commission or no award entered, the employer may stop paying medical expenses or wage loss at any time. The employer or carrier may get information from the employee to send to the Commission, but this is not the filing of the employee’s claim. The employee must file a claim even if the employer filed reports with the Commission.

• What benefits are provided under the Workers' Compensation Act?

  The employer must pay the following benefits under the Act:

  1. Wage Replacement (Temporary total or partial)

  While temporarily unable to perform any work, an employee is entitled to 2/3 of his or her gross average weekly wage up to a set maximum weekly limit. There must be seven (7) days of disability before benefits are payable. However, if disabled for more than three weeks, the employee receives payment for the first seven days. Benefits cannot exceed 500 weeks unless the person is totally and permanently disabled. If the injured employee cannot return to regular work and is given a light duty job at a lower wage, benefits are 2/3 of the difference between the pre-injury wage and the current pay up to the maximum weekly limit. Cost of living supplements are not paid on temporary partial benefits.

  2. Lifetime Medical Benefits

  Medical expenses for conditions caused by the accident or occupational disease are payable for as long as necessary, provided a claim was filed by the employee within the required time period. The employee must select a doctor from a panel of three physicians provided by the employer/carrier. If a panel is not offered after notice of the accident, the employee may seek treatment from any physician. The treating physician may refer the employee to other doctors. Once treatment begins, the physician cannot be changed without approval of the employer/carrier or after a hearing by the Commission. The employee must cooperate with medical treatment or the weekly benefits may be suspended. Medical bills should be sent to the insurance carrier for payment.

  3. Permanent Partial Impairment

  Separate benefits are payable for the permanent loss of use of a body part such as an arm, leg, finger, or eye. Vision and hearing loss, as well as disfigurement may also be compensated. This does not include the back, neck or body as a whole. Benefits are for a specific number of weeks depending on the percentage of loss. The employee can receive these benefits while working if maximum medical improvement has been reached.

  4. Permanent and Total Disability

  Lifetime wage benefits may be payable if an individual loses both hands, arms, feet, legs, eyes, or any two in the same accident, or is paralyzed or disabled from a severe brain injury.

  5. Death Benefits

  A surviving spouse, children under 18, children under 23 enrolled full time in an accredited educational institution, parents in destitute circumstances or other qualifying dependents may be entitled to wage loss benefits. Death benefits include funeral expenses not to exceed $10,000 and transportation cost of $1,000.

  6. Cost of Living Increase

  A person receiving temporary total, permanent total or death benefits is entitled to cost of living increases effective October 1 of each year if the date of the accident is prior to July 1 of that year and if the combinations of compensation and Social Security benefits are less than 80% of the pre-injury earnings. Cost of living increases must be specifically requested by the employee.

  7. Vocational Rehabilitation

  Employees who are released to light duty work must prove that they are actively looking for a light duty job, even if they expect to return to their regular job. You must accept all suitable positions offered, or risk suspension of benefits. Where appropriate, an employee may be entitled to retraining.

• What is the procedure if a claim is denied by the employer?

  The Workers’ Compensation Commission makes the final decision whether the employer must pay for the injury or disease. If the employer/carrier denies the claim or refuses to make certain payments, this does not mean you are not entitled to benefits. It only means that the benefits will not be voluntarily paid. The employee should then send a written request for a hearing to the Commission. At the hearing, the employee must prove through testimony, witnesses and medical reports, that the injury or disease and disability were caused by the work. If the employee was released to light work, then the employee must submit evidence that he/she has actively sought work. This includes seeking employment at the pre-injury employer, registering with the Virginia Employment Commission and listing dates and places where applications for work were made. The employee is entitled to have a lawyer at the hearing at his/her own expense. All attorneys’ fees are subject to approval by the commission.

• How do I request a review?

  If you disagree with the written hearing opinion, you must notify the Commission in writing within 20 days after receipt of notice of such award that you are requesting a review of the decision.

• What are the responsibilities of an injured employee?
  1. Give notice to the employer as soon as possible.
  2. File a claim with the Workers’ Compensation Commission within two years from a) the date of the accident or b) the date the doctor diagnoses an occupational disease.
  3. Select a doctor from a panel of three provided by the employer/carrier. Do not change doctors without employer/carrier permission or after a hearing by the Commission.
  4. Seek and accept employment if released to light duty, and cooperate with “rehabilitation counselors.”