5 Knowns about Commercial Insurance

May 25 - 5 Knowns about commercial InsuranceOn behalf of a customer, reading, understanding and structuring insurance coverage to tailor it to a specific client’s needs proves to be a crucial part of the service that a commercial coverage insurance agent performs. The first step in this process is reading the policy. It is easy to get lost in the language of the forms.  I always appreciate tips and tidbits of information to help me navigate through reading and interpreting an insurance form, so that I can explain coverage to a client in layperson terminology. Here are five knowns about how coverage works that I hope you find useful:

1) In a commercial auto policy form, the word “accident” refers to liability, or at-fault third party damages such as bodily injury or uninsured motorist claims. The word “losses” refers to physical damage, or first party claims including collisions or vandalism to a car.

2) The general liability policy has several limits listed on the Property Declarations page. General Aggregate Limit, Products Aggregate Limit and Occurrence Limit are three of the six limits listed. The Occurrence Limit does not actually contain dollars for claims payment, while the General and Products Aggregate Limits contain the dollars. The Occurrence Limit is only a regulator, or faucet, that allows the dollars to flow from the aggregate limits, but the flow of dollars stops once the Occurrence Limit is reached.

3) Most commercial coverages are defined in the policy language of the form. Bodily Injury and Property Damage in a General Liability Form are referred to in the policy language as coverages, but defined as to what the carrier means by bodily injury or property damage in the definition section of the policy. You may not have known that the definitions are listed in alphabetical order on the last pages of the policy form.

4) Blanket limit property insurance policies that contain margin clauses restrict you from applying the blanket property limit for all locations to one single location in a loss if you are not insured to value. Be wary of margin clauses.

5) Coinsurance is the silent killer. Coinsurance percentages in the Property Declarations page can break your heart after a loss. If you do not carry enough limits to meet the minimum requirements, a penalty in the form of a reduced loss payment awaits you after a loss.  You co-insure with the insurance carrier for not carrying a limit that meets the coinsurance percentage selected.  Coinsurance sits on the Declarations page silently until the loss occurs.  If activated because of under insurance, it becomes the silent killer of making you whole after a loss.  Using the Agreed Value Endorsement can get rid of this silent killer.

At AssuredPartners NL, we navigate through policy language every day. Ask one of our professional insurance brokers to help you navigate through the unknown coverage language, so that it is known to you before the loss occurs. For more information, visit AssuredPartners NL Property & Casualty.

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