Commercial General Liability Insurance
Commercial General Liability (CGL) insurance protects business owners against claims of liability for bodily injury, property damage, and personal and advertising injury (slander and false advertising). Premises/operations coverage pays for bodily injury or property damage that occurs on your premises or as a result of your business operations. Products/completed operations coverage pays for bodily injury and property damage that occurs away from your business premises and is caused by your products or completed work.
Excess liability insurance pays for covered losses that exceed your CGL policy’s dollar limit.
Umbrella liability insurance is excess liability insurance coverage above the limits of automobile liability and CGL policies. The umbrella policy also provides liability coverage for exposures not covered under the primary CGL insurance policies and not excluded by the umbrella liability insurance policy.
Claims-Made Versus Occurrence Policies
Occurrence policies cover claims arising from injury or damage occurring while the policy is in force, regardless of when the claim is first made.
Claims-made policies cover claims that arise from injury or damage occurring during the policy period and reported to the insurer during the policy period. Claims arising from events outside the policy period or claims reported to the insurer outside the policy period are not covered unless special coverage is purchased or arranged with the insurer. This special coverage comes in two forms:
- Prior acts (“nose”) coverage covers claims that arise from injury or damage occurring before the policy period, but reported to the insurer after the policy period begins.
Prior acts coverage is provided by establishing a “retroactive date” covering injury or damage occurring after the retroactive date. The retroactive date usually appears in the declarations page accompanying your policy. It may be the effective date of the policy or an earlier date. Prior acts coverage does not cover claims that were known at the time your policy began.
- Run-off (“tail”) coverage, also called extended reporting period, pays for residual claims made after your policy expires. A typical claims-made policy provides a short reporting period of 30 or 60 days after the policy’s expiration date to file claims that arose too late to report before the policy expired. Run-off coverage starts when the 30- or 60-day period ends and is provided for an additional premium. The extended reporting period may be one, three, or five years, or even unlimited.
If a claims-made policy does not continue (expires, cancels, or nonrenews), you should purchase either run-off coverage from your previous insurer or prior acts coverage from your new insurer to prevent coverage gaps. Generally, claims-made policies may be less expensive in their early years as the potential for claims increases as policy years accumulate.
Workers’ Compensation Insurance
Workers’ compensation provides benefits to employees who are injured or become ill during the course of or due to employment.
In California, every employer is required to carry insurance to cover the cost of occupational injuries and illnesses. This insurance requirement is mandatory even if you have only one part-time employee. Companies based out-of-state with employees hired in California must also have California workers’ compensation insurance.
Workers’ compensation covers various types of events, injuries, and illnesses. An injury could occur by a single event, such as hurting your back in a fall at work. Injuries could also be caused by repeated exposure, such as hurting your wrist at work from doing the same motion over and over.
A workers’ compensation injury or illness is one that occurs due to employment. If you are injured you will receive help no matter who was at fault.
No. Workers’ compensation is only for injuries or illnesses that occur due to employment. State Disability Insurance (SDI) is for injuries or illnesses that are not work-related. SDI is a benefit provided by the Employment Development Department.
Workers compensation laws were created to ensure that employees who are injured on the job are provided with fixed monetary awards. This eliminates the need for litigation and creates an easier process for the employee. It also helps control the financial risks for employers since many states limit the amount an injured employee can recover from an employer.
Workers Compensation Insurance is designed to help companies pay these benefits. As a protection for employees, most states require that employers carry some form of Workers Compensation Insurance.
Workers Compensation Insurance is not health insurance. Workers Comp is designed specifically for injuries sustained on the job.
In most states, if you have employees, you are required to carry Workers Compensation coverage. Even in non-mandatory states, it can be a very good idea, particularly if you have many employees, or if they are engaged in hazardous activities.
Commercial Auto Insurance
Commercial auto insurance is a vehicle insurance policy that provides protection for a business’ vehicles and its drivers. Employees involved in on-the-job collisions will receive coverage for medical injuries as well, regardless of fault.
Commercial vehicles are any vehicles and trailers that a business or company uses to transport job-related materials, goods or equipment. Work vehicles have insurance premiums paid for by the company, unlike policies for personal vehicles that the vehicle owner pays for.
The most common type of commercial auto insurance is liability coverage, which most states require. It covers a driver liable for damaging cars or injuring others. Other types of commercial auto insurance include collision, uninsured, gap and personal protection.
Factors that can increase premiums include the type of vehicle driven, safety devices such as air bags and automatic seat belts, anti-theft devices and parking locations. A company’s previous insurance claims can also affect the cost of insurance.
Builder’s Risk Insurance AKA Course of Construction Insurance
Builder’s risk insurance is a special type of property insurance which indemnifies against damage to buildings while they are under construction.Builder’s risk insurance is “coverage that protects a person’s or organization’s insurable interest in materials, fixtures and/or equipment being used in the construction or renovation of a building or structure should those items sustain physical loss or damage from a covered cause.”
Buildings are subject to many different risks while under construction. They may catch fire, be damaged by high winds, or fall victim to other force majeure. A principle of common law is that any new construction or other improvement to land becomes property of the owner of the land – the title holder – once there has been an “improvement” to the owner’s site. Builder’s risk insurance indemnifies against some of these losses.
Builder’s risk insurance usually indemnifies against losses due to fire, vandalism, lightning, wind, and similar forces. It usually does not cover earthquake, flood, acts of war, or intentional acts of the owner. Coverage is typically during construction period only, and is intended to terminate when the work has been completed and the property is ready for use or occupancy.
It is usually bought by the owner of the building but the general contractor constructing the building may buy it if it is required as a condition of the contract. It may be necessary to show proof of insurance to comply with local city, county and state building codes.