FREQUENTLY
ASKED QUESTIONS
ABOUT OFFICE INSURANCE PACKAGES
What are the basic coverages
provided by standard office insurance package policies?
What's the difference between
General Liability and Professional Liability Insurance?
What's the difference between
Claims Made and Occurrence Policies?
How
do I protect my business?
What should I look for when
shopping for insurance coverage?
What do I do when I have a
claim?
What Insurance Solutions are
there for the Telecommunications Industry?
What are Return to Work
Programs?
What is E & O Insurance?
What is the coverage for terrorism
and Acts of War?
What
triggers a Business Interruption Insurance policy?
What are the basic coverages
provided by standard office insurance package policies?
- Fire and theft coverage on office equipment and
inventory.
- Trip & fall and lawsuit coverage, in the event
someone claims that something you did caused them to
become injured.
- Lots of other related benefits, often utilized by
small businesses. Two examples are:
- Certificates Of Insurance
- Additional Insured Endorsements
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What's the difference between
General Liability and Professional Liability Insurance?
The two main types of liability insurance for
professionals are General Liability insurance and
Professional Liability insurance. Both coverages
are important to properly protect a professional
organization from financial loss.
General Liability insurance will protect an
organization in the event the insured causes bodily
injury or property damage to others and becomes legally
obligated to pay damages. Liability for Bodily Injury
can occur when a physical injury to a person is caused
by third party. Liability for Property Damage can occur
when a third party causes direct or indirect damage
(such as loss of use of property) to another person's
property.
General liability insurance is standardized and
relatively easy to obtain. It is often provided in a
package policy with other coverages, sometimes called a
business office package policy. Most general liability
policies issued to professional organizations contain
exclusions for professional liability claims.
Professional Liability insurance is designed
to provide coverage to professionals for claims arising
out of their professional activities or services
provided to clients. It is also called errors and
omissions insurance or E&O (or medical malpractice
for doctors). Coverage is typically provided by
stand-alone professional liability policies and includes
coverage for the defense costs associated with a claim.
Coverage is not usually provided for intentional or
dishonest acts.
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What's the difference between
Claims Made and Occurrence Policies?
There are two primary forms of liability insurance
policies - claims-made and occurrence
policies. Most professional liability insurance,
including directors and officers and employment
practices liability insurance, is written on a
claims-made basis.
An occurrence policy obligates the insurance
company to pay for claims arising out of occurrences
during the policy period regardless of when the claim is
reported. The policyholder is covered for any incident
that occurs during the term of the policy regardless of
when the claim arising from the incident is reported to
the company. In some situations the claim might be made
many years after the incident occurred. This leads to
uncertainty for both the insured and the insurer.
A claims-made policy protects an insured
against claims or incidents that are reported while the
policy is in force. Normally, a claims made policy
provides coverage for acts occurring prior to the
claims-made policy period. Coverage for acts occurring
prior to the policy period is called "prior acts
coverage," and the period prior to the policy
period for which claims are covered is called the prior
acts period. Prior acts coverage is usually only
provided when a claims-made policy has been in force
immediately prior to the current claims-made policy on a
basis consistent with the prior policy. Prior acts
coverage is defined as "full prior acts",
covering acts occurring at any time prior to the current
policy period, or is defined by a "retroactive
date." When a retroactive date is used, prior acts
coverage is provided from the retroactive date to the
current policy period.
"Tail coverage," also called an
"extended reporting period," provides
protection for claims that are filed after a claims-made
policy has been non-renewed or canceled. This coverage
is optional, and the need can arise if the professional
organization is acquired or goes out of business, or a
decision is made not to purchase insurance. The terms
and pricing for tail coverage vary greatly and are
usually defined in the policy.
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What should I look for when
shopping for insurance coverage?
- What are the principal risks being insured?
Is it business interruption, property damage due to
fire or flood, employee claims for harassment or
unlawful discharge, director and officer liability?
The list can grow quickly. You must be sure the
policies you have cover the risks identified.
- Do your insurance policies fully cover the risk?
Are your coverage limits high enough? What are the
deductibles? Will losses at separate facilities or at
separate times be considered a single loss or multiple
losses for purposes of the coverage limits and
deductibles? Are there exclusions that preclude
coverage? Is the policy an occurrence policy or a
claims made policy? If a claim is made, is there a
retroactive date? Do the costs of defending a claim,
if borne by the insurer, reduce the total limits
available to cover claims?
- If there are gaps in coverage, can they be
filled? Different insurance companies use
different language in their policies. A recent review
of several director and officer liability policies for
a client found that coverage for negligent
misstatements related to the sale of shares in a
cooperative was expressly excluded in some policies
and not in others. Many insurers are willing to
negotiate endorsements to their policies that broaden
coverage, usually for an increased premium. The trick
is to recognize there is a deficiency and ask for the
extended coverage.
- Will the policy be handy when a claim comes in?
Every company should establish a means of keeping
insurance policies forever. The increase of pollution
claims has given rise to a cottage industry in
reconstructing insurance policies, often going back
decades, where businesses have failed to keep copies
of their policies. Purchasing insurance is complex and
not to be taken lightly. Take the time to carefully
review your company's coverage requirements. Seek the
guidance of experienced professionals. Working with a
knowledgeable insurance broker and seasoned insurance
counsel will go a long way to preparing your company
for any contingency.
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What is Errors & Omissions
Insurance?
Errors and omissions insurance is coverage that protects
those people that give advice, make educated
recommendations, design solutions or represent the needs
of others. "E & O" is also referred to as
Professional Liability or Malpractice Insurance. The
original name, Errors and Omissions came from
"doing something they shouldn't have done (an
error) or not doing something they should have done (an
omission)".
Who Needs E&O?
Today, many business trades and professions require the
coverage. Teachers, consultants, software developers, ad
copywriters, web page designers, placement services,
ISP’s, telecommunications carriers, inspectors,
realtors, insurance brokers, lawyers, doctors and just
about everyone else.
What is the difference between E&O coverage and
General Liability coverage?
General Liability is intended to cover physical injury
to people or physical damage to things (your product
causes physical injury to the user of your product or
your client trips over your foot and breaks their face)
E & O is intended to protect you, the consultant
or designer, in the event your client alleges that
something you did on their behalf was done incorrectly,
which resulted in some kind of financial loss or
business interruption to your client. Contracts can help
to limit your real liability, but the big expense in
this kind of claim is the legal defense to prove your
true liability or innocence. E & O policies are
designed cover many of these defense costs and
ultimately the final settlement if you do not prevail.
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3rd Party Fidelity Bonds
REMEMBER: Always refer to your policy
and review all papers carefully to be aware of any
limitations or exclusions which may apply. Remember, ALL
policies contain certain limitations and exclusions, a
policy is nothing more than a contract between you and an
insurance company. Consult your policy and ask your Agent,
just to be certain that you are clear on issues which may
effect you. Return to top
What is the coverage for terrorism and
Acts of War?
Question: Are "acts of War" covered
by normal home and business insurance?
Answer: No, such acts are normally excluded
due to the catastrophic nature of war risks.
"Catastrophic" risks are those that are so
severe that a major occurrence could threaten the
solvency of insurance companies.
Question: Are "terrorism acts"
considered "acts of war"?
Answer: Usually not. The courts have generally
held that "war" can only be conducted between
sovereign governments. Acts by a radical political
group, without the vestige of sovereignty, can be
expected to be covered, but difficulty in identifying
the responsible party could complicate coverage issues.
Question: If "warlike actions by a
military force" are excluded by many policies, does
this mean that actions by guerilla groups are excluded?
Answer: Not necessarily, but the answer may
require a thorough investigation into the background of
the particular group. If the group was not acting on
behalf of a sovereign authority, coverage would probably
apply.
Question: What long-term effects might result
from terrorist attacks in the United States?
Answer: That remains to be seen, however, if
insurance companies expect future acts to occur they may
seek specific exclusions on certain kinds of policies.
Question: Will this mean my homeowners premium
will go up, or a terrorist exclusion will be added?
Answer: Probably not. The acts of Sept. 11,
2001, were against major landmarks known to be possible
targets for terrorists. It would be inappropriate for
insurance companies to assume average homes and
properties would be terrorist targets.
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Other Web Resources:
EPLI - Employment
Practices Liability Insurance
Worldwide Ocean Cargo
Insurance®
Medical Malpractice
Insurance
Insurance for ISPs
CMA Real Estate
Finance, Inc.
Restoration
Central
Asanti Fine Jewellers
James W.
Cox, Property Insurance Consultant
Activ - Alternative
health care services
