Actual Cash Value - The replacement cost of the item minus depreciation. For example, a new desk may cost $500. If your 7-year-old desk gets damaged in a fire, it might have depreciated 50%. Therefore, insurance would pay you $250.
Agreed Amount - Art objects, antiques and other unique items are usually insured at an amount agreed upon when the policy is being written. An appraiser values the goods to be insured and the business owner and the insurer agree upon an amount that the insurer will pay if the goods are destroyed due to a covered peril.
Coinsurance Clause - In property insurance, a clause requiring the insured to maintain insurance at least equal to a stipulated percentage of value in order to collect partial losses in full. If the insurance is less than the minimum required, that proportion of the loss will be paid which the amount of insurance carried bears to the amount which should have been carried. May also be referenced as an “insurance to value” clause. The formula for the coinsurance clause is:
Insurance Carried x Loss = Payment (subject to policy limit)
Insurance Required
Commercial General Liability policy (CGL) - The commercial general liability policy provides comprehensive general liability coverage for commercial risks covering all liability exposures for all locations and causes of loss except those specifically excluded or limited either within the coverage form or by endorsement. Protection may be provided on either an occurrence type of policy or on a claims-made basis.
Commercial Umbrella - A form of liability insurance protecting policyholders for claims in excess of the limits of their primary automobile, general liability and workers compensation policies, and for some (few) claims excluded by their primary policies which are subject to a deductible, which may range from $250 for a personal umbrella to a minimum of $10,000 for a commercial umbrella.
Contribution Clause - The clause in a policy which describes how much its issuer must pay if there is insurance in more than one company on a given loss.
Directors and Officers Liability Insurance - Protects officers and directors of a corporation against damages from claims resulting from negligent or wrongful acts in the course of their duties. Also covers the corporation (and even the officers and directors in some cases) for expenses incurred in defending lawsuits arising from alleged wrongful acts of officers or directors. These policies always require the insured to retain part of the risk uninsured.
Employment Practices Liability Insurance (EPLI) - Changes in federal and state laws, such as the Americans with Disabilities Act and the Civil Rights Act of 1991, resulted in increased consumer awareness of sexual harassment and discrimination in the workplace. Coverage is available for legal costs to defend claims involving sexual harassment, wrongful termination and discrimination including legal liability for such acts. The coverage is known by various titles. Employment-related practices liability, management risk protection, employers E&O and Americans with Disabilities Act insurance are basically the same coverage. Most policies provide limits ranging from as low as $25,000 per claim up to $1 million. Policies may cover employees as additional insureds.
Employee Benefit Liability - Protects the insured employer against any claims made against him or her by employees or former employees caused by a negligent act, error or omission in the administration of the insured's employee benefit programs. Exposures such as providing incorrect advice concerning an employee's pension plan or failure to enroll employees under a benefit program are covered under this insurance. The coverage is provided either under a separate policy or as an endorsement to the employer's general liability policy.
Excess Insurance - An amount of protection which bears all or a portion of a loss after the loss exceeds an agreed amount. This amount may or may not be insured elsewhere by the company issuing the policy. Excess policies are not subject to the basic principle of contribution with non-excess policies, although they may contribute or share the loss with other excess policies.
Fiduciary Liability Insurance - Protection for those who administer pension and welfare funds, profit-sharing and other employee benefit programs against loss for errors and omissions by the administrator. The need for this coverage was created by the Employee Retirement Income Security Act (ERISA) of 1974. Also known as pension trust liability insurance.
Gramm-Leach-Bliley Act (GLB) - Also known as the Financial Services Modernization Act, which took effect in November 1999. The GLB’s major impact is on the greater freedoms of banks, insurers and security firms to participate more widely in financial areas that used to be strictly defined, such as banks, through holding companies, being able to purchase insurers or brokerages and sell such products. The other area concerns privacy rights and the new requirements placed on companies regarding how customer data is collected, used and shared.
Hazard - A condition which may lead to a loss, such as oily rags leading to a fire.
Inland Marine - Property that is mobile in nature has been traditionally handled on these types of policies. A wide variety of forms and coverages has been developed to handle the needs of this property.
ISO--Insurance Services Office - A corporation which provides a wide variety of services on a national basis. Among its operations are rating, statistical, actuarial, and policy form services for all classes of property and casualty businesses. The corporation also functions as an insurance rating organization and, where applicable, as an advisory organization or as a statistical agent. Headquarters: New York, NY.
Peril - The cause of loss, for example, fire, wind, vandalism, or accident.
Personal Property - This coverage protects personal property owned by your firm and used in your operations. Furniture and fixtures, equipment and machinery, raw stock, and finished goods all fall within this category. Personal property of others while located in your covered building or within 100 feet of the premises can also be insured. Contents located off premises are not covered and must be insured by alternate methods.
Replacement Cost Coverage - This coverage pays the cost of replacing an item without deducting for depreciation. So today’s cost for a desk of a size and construction similar to the 7-year-old one damaged by fire would determine the amount of compensation. If it costs $500 today, that would be the replacement coverage.
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