Commercial Coverage Library Insurance

Houston, TX Commercial Coverage Library Insurance Coverage & Broker Services

Aviation & Airport General Liability Coverage

This policy provides you with liability protection for the aviation operations specified in the form. It can be written to include the following major coverages: premises liability, products and completed operations liability, limited contractual liability, personal and advertising injury liability, hangarkeepers liability and premises medical payments.

Aircraft Hangerkeepers Legal Liabilty

This coverage pays for damage or loss to aircraft owned by others, while in your care, custody or control for storage, repair or safekeeping and while in or on the described premises.

Aircraft owned/Non-owned

This policy provides direct and/or incidental protection to aircraft, either owned or used on a non-owned basis. The form contains several insuring agreements. Hull insurance will include "In Flight" (also called "In Motion" or "Not In Motion") agreements detailing coverage descriptions. Liability coverage is similar to that offered for automobiles, except that passengers can be included or excluded. If coverage is written for passengers, it can be handled as a legal liability coverage or on an admitted or "guest" liability basis in which the amount chosen is paid regardless of fault.

Products/Completed Operations, Personal and Advertising Liability and Medical Payments

As mentioned above, newer policies typically use an ISO based CGL form and as such include coverage for these exposures if a limit of insurance is shown on the declarations page. If a carrier is still using an older type OLT liability form it will require that specific endorsements must be added for these coverages to apply.

Contractual Liability

Most aviation CGL policies limit contractual liability to basic incidental contracts such as leases of premises, easement agreements, indemnification for municipalities or elevator maintenance agreement. Other types of contracts must normally be added on a scheduled basis since blanket coverage is not normally offered.

Pollution Liability

Airports and fixed base operations can have an extensive on-site pollution exposure

Air Shows, Contests, Exhibitions or Meets

This is a standard exclusion in all policies. Normally each event will be added individually to the primary CGL policy only after a thorough underwriting review.

BUSINESSOWNERS POLICY (BOP)

Is a "homeowners" approach to packaging insurance for businesses. When an amount of insurance on building and/or contents is selected, it automatically includes a broad range of additional coverages for an indivisible package premium. For eligible risks, the policy provides an alternative to the commercial package policy (CPP). The BOP is designed for small- to medium-sized habitational, retail, wholesale, service and contracting risks. ISO provides a list of eligible classifications. It also provides size guidelines that vary by type of risk and also a listing of classifications that are not eligible and risk characteristics that would make an otherwise eligible risk not eligible. Many carriers have their own criteria that may vary significantly from ISO. For smaller operations, a BOP is generally more desirable than a CPP. Some coverages automatically included are debris removal, automatic increase in building insurance, seasonal automatic increase, personal property off premises, business income and extra expense. Property is written at replacement cost valuation provided the limit carried is at least 80% to value at the time of the loss. Business personal property is covered at 125% of the limit of insurance when that limit is equal to 100% of the 12-month average business personal property value. Business income is included without a specific limit but losses are paid based on actual loss sustained for a period of up to 12 months.

ARTISAN CONTRACTOR BUSINESSOWNERS POLICY (BOP)

Is a "homeowners'' approach to packaging insurance for contractors. For eligible risks, the policy provides an alternative to the commercial package policy (CPP). This package is designed for small- and medium-sized artisan contractor operations. The liability and property are rated separately and only the liability is considered mandatory. Endorsements or floaters are available for tools and other contractors' equipment, as well as installation floaters.


Policies can provide a combination of liability and physical damage protection for vehicles owned, maintained or used by you. Additional coverages such as medical payments and uninsured motorist protection can be added to customize the policy to fit your particular needs.

AUTO DEALERS COVERAGE

Provides liability, garagekeepers and automobile physical damage coverages, as selected, for auto dealer operations. Liability coverage includes the auto dealer operations in a manner similar to a general liability policy, and the use of covered autos in a manner similar to a business auto policy. Physical damage coverage applies to the named insured's owned automobiles, not customers' cars, and applies to cars held for sale and those used in the business. Vehicles are not scheduled but instead are rated based on the number and types of employees.

Garagekeepers coverage within the coverage is for the benefit of the customer. Coverage can be purchased for collision and comprehensive or specified perils physical damage to customers' vehicles. Coverage can be on a legal liability basis or a direct coverage basis. The direct coverage basis can be either excess over the customer's other coverage or primary

AUTO MEDICAL PAYMENTS

Reimburses passengers and operators of vehicles for their medical and funeral expenses arising out of accidents occurring while traveling in an insured vehicle, or while entering or exiting it. The named insured and his or her family members are also covered when traveling in any auto and even when, as pedestrians, are struck by any auto.

BOBTAIL OR DEADHEADING LIABILITY COVERAGE

Referred to as truckers insurance for non-trucking use and provides protection for independent truckers who operate their equipment under lease with large trucking companies. While hauling for the trucking company they are protected by that company's automobile coverage. This coverage ends though when the trucker is not operating under that contract. Bobtail or deadheading insurance is needed when the independent trucker is operating a tractor either without a load or with a load that is not under that contract, sometimes referred to as "in between" driving. This protection may be provided for an independent trucker by an endorsement to a business auto policy.

BUSINESS AUTO COVERAGE

Provides selected liability and physical damage coverages without the need for numerous additional forms and endorsements. Liability coverage can be provided for all autos or coverage can be limited to selected groupings of autos or only to specifically scheduled auto. Coverage for when non-owned autos are used by employees or when autos are hired can also be provided.

Collision and overturn is one optional physical damage coverage. Comprehensive coverage, which is loss from causes other than collision or overturn is often purchased. Another less expensive option, specified causes of loss coverage, is similar to comprehensive but pays only from loss caused by named perils. The physical damage coverages are often provided on a scheduled vehicle only basis, but it can be provided on all autos or for selected groupings, just as with the liability coverages.

COLLISION COVERAGE

Protects the owner against loss from collision or upset of the motor vehicles. When a motor vehicle is sold under a finance contract or agreement, the loss payee (lender) usually requires that the purchaser provide a policy with collision and comprehensive coverage.

COMPREHENSIVE COVERAGE

Protects the insured's business autos and other motor vehicles against most causes of loss such as fire, theft or other physical damage hazards, including glass breakage. It does not cover loss due to collision and overturn and certain maintenance road hazard perils.

FEDERAL MOTOR CARRIER SAFETY ADMINISTRATION (FMCSA) ENDORSEMENTS

Businesses subject to interstate commerce regulation. Motor carriers businesses must file a certificate with the Federal Motor Carrier Safety Administration (FMCSA) acknowledging that the motor carrier is insured for its legal and statutory obligations with an acceptable insurance company. The policy must carry an endorsement making the insurance company absolutely liable for all claims for which the insured motor carrier is liable, even though the nature of the injury or liability is beyond the terms of the policy contract. The effect is that the policy guarantees the carrier's financial solvency and ability to pay. The named insured must reimburse the insurance company for payment of any loss that would not have been covered under the policy contract except for this endorsement being attached.

GARAGE COVERAGE FORM

Provides liability, garagekeepers and automobile physical damage coverages, as selected, for garage operations. Liability coverage includes garage operations in a manner similar to a general liability policy, and the use of covered autos, in a manner similar to a business auto policy. Physical damage coverage applies to the named insured's owned automobiles, not customers' cars, and applies to cars held for sale and those used in the business. Vehicles are not scheduled but instead are subject to a reporting form.

Garagekeepers coverage within the coverage is for the benefit of the customer. Coverage can be purchased for collision and comprehensive or specified perils physical damage to customers' vehicles. Coverage can be on a legal liability basis or a direct coverage basis. The direct coverage basis can be either excess over the customer's other coverage or primary

GARAGEKEEPERS COVERAGE

An endorsement that can be added to a business auto policy. It covers customers' automobiles in the insured's custody. Coverage is available on a legal liability basis or a direct coverage basis. Either of those selections can be provided as excess over the customer's insurance coverage or as primary.

HIRED CARS

Rented or hired by the business for the operator can be insured to cover the liability exposure for their operation. A hired physical damage option is also available.

INTRASTATE SUPERVISION

Applies to carriers that operate in only a single state and who are supervised by a bureau or commission that makes certain that state requirements are complied with. Requirements as to the minimum limits and the amount of insurance that must be carried vary widely from state to state.

LEASING OR RENTAL CONCERNS–CONTINGENT COVERAGE

Provides liability and mandated no-fault coverages as excess over a lessee's required coverages. This is used by operations who lease vehicles on a long-term basis.

LEASING OR RENTAL CONCERNS–CONVERSION, EMBEZZLEMENT, OR SECRETION COVERAGE

Excluded from standard physical damage coverage. Coverage can be provided for a charge but only for scheduled vehicles. This type of exposure is really a cost of doing business for leasing and rental concerns and they should have internal safeguards to prevent such actions.

MOTOR CARRIER COVERAGE FORM

Developed after the deregulation of the trucking industry and is in tune with current methods of transporting goods. This form refers to contracts and other written agreements and is compliance with current motor carrier regulations. Any motor carrier providing transportation of goods is eligible to use this form. If a motor carrier does not have a need for the unique "who is an insured" portion of the trailer interchange section, the business auto policy may still be a solid coverage option.

NONOWNERSHIP AUTOMOBILE COVERAGE

Protects the insured to the extent of liability imposed by law and within policy limits against claims for accidents due to employees, partners or other agents operating their own automobiles in the course of the insured's business.

PUBLIC AND CONTRACT CARRIERS

Federal Motor Carrier Safety Administration (FMCSA) cargo insurance regulations apply to all interstate operators of trucks used as common carriers. They do not apply to contract carriers that haul exclusively for one or more firms and that do not accept business from other sources. When a given operator qualifies under both classifications, it is usually recommended that all insurance be placed through and with one insurance agent.

SINGLE INTEREST INSURANCE COVERAGE

Protects the lender against the inability to collect the balance due because of physical loss or damage to vehicles that it holds as collateral for loans under any mortgage, security agreement, conditional bill of sale, or other instrument. The coverage is designed and negotiated with the lender but is paid for by the vehicle owner/borrower. This coverage eases the problem of being sure that coverage is maintained by borrowers.

TRAILER INTERCHANGE COVERAGE

Provides legal liability for damage to non-owned trailers that are hauled by named insured. The Motor Carriers Coverage Form includes this as standard coverage but it must be endorsed for coverage under a Business Auto Coverage Form.

UNINSURED/UNDERINSURED MOTORISTS COVERAGE

Provides coverage that pays the insured, within coverage limits, for damages caused by drivers of uninsured or underinsured automobiles when such drivers are legally liable for the injury to the insured. Each state establishes the minimum limits of liability for this coverage and also whether the coverage is for bodily injury only or extends to cover property damage. Many states require that limits equal to the bodily injury and property damage limits be offered to the insured.

VENDORS SINGLE INTEREST COVERAGE

Protects the lender against the inability to collect the balance due because of physical loss or damage to vehicles that it holds as collateral for loans under any mortgage, security agreement, conditional bill of sale or other instrument. This eases the problem of being sure that coverage is maintained by borrowers

COMMERCIAL GENERAL LIABILITY (CGL) COVERAGE

Designed to cover the bodily injury and property damage liability exposures related to operating a commercial venture. Instead of having to select and group the specific hazards to be insured, which may result in potential gaps in an insurance program, a comprehensive coverage approach is used. The basic areas covered by the CGL include the insured's ownership or use of the premises, the insured's ongoing operations that are on and off the premises, products manufactured, sold or distributed by the insured, completed operations of the insured, personal and advertising injury liability of the insured, and medical payments coverage. It also covers liability assumed by the insured under a defined contract. All coverages are subject to policy definitions, exclusions and limitations.

The basic CGL coverage form can be customized and tailored with a multitude of optional forms and endorsements that broaden, delete or restrict the contract's core coverages to form a contract specifically designed for the individual insured.

Two CGL policy programs are available. The first is the "occurrence-based" coverage form that provides protection for covered losses when the actual injury occurs during the covered policy period, regardless of when notification of the loss or claim takes place. The key to coverage is the date on which the covered loss or injury actually occurs.

The second is the "claims-made" coverage form. In these forms, coverage is triggered by the actual filing date or receipt of the claim, in addition to the date or time period in which the loss or injury occurred. Any covered loss or claim filed within the policy period is handled by that policy, regardless of when the actual loss or injury occurred, subject to the retroactive date. The retroactive date is shown on the declarations. The retroactive date can be the policy inception date or any date prior to it. However, for complete protection, it should be the date on which claims-made coverage first began. This is because prior to that date, loss or injury was covered by an occurrence policy. Only losses or injuries that occur after the retroactive date will be considered by the carrier of a claims-made policy.

EMPLOYEE BENEFITS LIABILITY COVERAGE

Addresses the requirements of employers to provide their employees with information about the benefits available to them. This form provides coverage for damages that result when an employer does not fulfill its notification requirements and the employee is denied access to benefits he or she could have received.

EMPLOYMENT-RELATED PRACTICES COVERAGE

Available for the legal costs to defend claims against sexual harassment, wrongful termination and discrimination, and the actual legal liability for such acts. The coverage is known by various titles through a number of insurers. Employment-related practices liability (ERPL), employment practices liability insurance (EPLI), management risk protection, employers errors and omissions, and Americans with Disabilities Act (ADA) insurance would all provide similar protection. Many policies cover employees as additional insureds or can be endorsed to do so.

LIQUOR LIABILITY COVERAGE

Designed for bars, restaurants, hotels, motels, package liquor stores or other places where liquor is sold, distributed or served. It handles vicarious liability claims that result from allegations that the serving of alcohol to an individual resulted in that individual causing injury or damage to others or to that individual. Dram shop statutes establish the criteria for such suits and vary considerably by state. Liquor liability coverage fills the gap created by the liquor liability exclusion in general liability coverage forms that apply only to businesses directly involved in the sale, distribution, manufacturing or serving of alcoholic beverages.

OWNERS AND CONTRACTORS PROTECTIVE (OCP) LIABILITY COVERAGE

Designed to protect either a property/business owner or a general contractor for the potential liability exposure resulting from the negligent act of a subcontractor or an independent contractor hired to perform work on the insured's behalf. The independent or subcontractor is the actual purchaser of the policy, but the protection is for the insured property/business owner or the general contractor for whom the work is being done. Coverage is limited to a specific location and project. This form is an alternative to a general contractor or owner being added as an additional insured to the subcontractor's policy and provides limits of insurance dedicated to the project.

PRODUCT RECALL or PRODUCT WITHDRAWAL EXPENSE COVERAGE

Fills the gap caused by the CGL product recall exclusion. This insurance covers the expenses incurred by the insured when it conducts mandated and/or voluntary product recalls.

PRODUCT TAMPERING INSURANCE

Applies if an individual tampers with products or threatens to do so. It covers related costs, such as necessary inventory destruction, lost profits, business interruption, product recall and product rehabilitation. If a product tampering case arises, crisis management and loss prevention firms can be called in to assist the insured in reducing the chances that it will continue to be a target and minimize damage that might arise. Coverage does not apply to third-party liability or extortion payments.

PRODUCTS LIABILITY RETROACTIVE COVERAGE

Helps to move a client from a claims-made coverage basis to an occurrence basis. Policies may be tailored to provide coverage for: (1) a specified period of time retroactively, such as 12, 24 or 36 months; (2) complete occurrence coverage back to the original claims-made effective date; or (3) an ongoing occurrence form including coverage for all prior acts. Another method of easing the transition back to occurrence coverage is to purchase a policy or an endorsement that extends the discovery period of the nonrenewed claims-made form for a specified number of years or even indefinitely.

RAILROAD PROTECTIVE LIABILITY COVERAGE

Provides protective liability coverage for railroad owners from the vicarious acts of contractors or subcontractors that work under contract for them or on their behalf. It covers claims for bodily injury or property damage and for physical damage to certain railroad-related property that arise out of operations the designated contractor performs. The contractor or subcontractor that does the work purchases this coverage in the name of the railroad and for its benefit.

SPECIAL EVENTS LIABILITY COVERAGE

Available for festivals and similar events. This coverage is available from specialty insurance markets when all-inclusive general liability insurance does not apply. It should be considered to shield the standard operation's CGL limits from being exhausted by a special activity.



CLIENTS' PROPERTY COVERAGE

Similar to the employee theft insuring agreement, but it covers theft of clients' property by employees of the insured. Covered property must consist of either property owned by the client, property of others held by the client, or property for which the client is legally liable. Coverage applies only when the employee who caused the loss is identified.

COMPUTER AND FUNDS TRANSFER FRAUD COVERAGE

Applies to money, securities and other property fraudulently transferred from the insured premises or banking premises to a location other than the insured premises or the banking premises. Coverage is worldwide.

CREDIT UNION BLANKET BOND #23

Similar to the commercial crime coverage forms but is only available only to credit unions. Coverage is provided for losses caused by employees and outsiders. The form contains four insuring agreements: fidelity coverage for employee dishonesty; loss on premises; loss in transit; and redemption of United States Savings Bonds.

CRIME COVERAGES FOR GOVERNMENTAL ENTITIES

Available using the government crime coverage forms. The coverage provided is nearly identical to that provided in the commercial crime coverage forms. The employee dishonesty coverage limit can apply either per loss or per employee.

DESTRUCTION OF ELECTRONIC DATA OR COMPUTER PROGRAMS COVERAGE

Pays costs incurred by the insured to restore or replace damaged or destroyed electronic data or computer programs. Coverage is limited and applies only to data or programs stored within the computer system. The loss or damage can be from an external source or from the actions of an employee, manager, director, trustee, representative or official of the insured. The damage or destruction must result directly from either a computer virus designed to damage or destroy electronic data or computer programs or from vandalism to electronic data or computer programs by a person with unauthorized access to the computer system.

EMPLOYEE THEFT COVERAGE

The insuring agreement that applies to employee theft losses involving money, securities and other property. It covers the unlawful taking of covered insured property by employees. Coverage applies regardless of the number of employees involved in the loss. This is an important point, because the limit of insurance applies to each act, and not to each employee. This is the only coverage that applies to dishonest acts of employees. Coverage is provided using either a standard ISO form or a Surety & Fidelity Association of America form.

EMPLOYEE THEFT AND FORGERY COVERAGE

Modified version of the commercial crime coverage. It includes only the employee theft and the forgery and alteration insuring agreements.

EMPLOYEE THEFT–NAME OR POSITION SCHEDULE COVERAGE

Allows the insured to specifically schedule individuals or positions to be covered for employee theft. This can be used as excess coverage over the blanket employee theft insuring agreement

EXTORTION COVERAGE

Applies to money, securities or other tangible property surrendered or paid in response to an extortion threat or demand communicated to the insured. This is more limited coverage than that provided by the kidnap and extortion coverage part

FINANCIAL INSTITUTION BOND #14

Similar to the commercial crime coverage forms but is only available to stockbrokers and investment bankers. Coverage is provided for losses caused by employees, officers and outsiders. The form contains six insuring agreements: fidelity coverage for employee dishonesty; loss on premises; loss in transit; forgery or alteration; loss to securities; and loss due to counterfeit currency.

FINANCIAL INSTITUTION BOND #15

Similar to the commercial crime coverage forms but is only available to finance companies, small loan companies, mortgage banks, title insurance companies, certain holding companies, and real estate investment trusts. Coverage is provided for losses caused by employees, officers and outsiders. The form contains six insuring agreements: fidelity coverage for employee dishonesty; loss on premises; loss in transit; forgery or alteration; loss to securities; and loss due to counterfeit currency.

FINANCIAL INSTITUTION BOND #24

Similar to the commercial crime coverage forms but is only available to banks and savings and loan associations. Coverage is provided for losses caused by employees, bank officers and outsiders. The form contains seven insuring agreements: fidelity coverage for employee dishonesty; loss on premises; loss in transit; forgery or alteration; loss to securities; loss due to counterfeit currency; and fraudulent mortgages.

FINANCIAL INSTITUTION BOND #25

Similar to the commercial crime coverage forms but is available only to insurance providers including fraternal orders. Coverage is provided for losses caused by employees, officers and outsiders. The form contains five insuring agreements: fidelity coverage for employee dishonesty; loss on premises; loss in transit; forgery or alteration; and loss to securities.

FINANCIAL INSTITUTION BOND #28

Employee dishonesty excess bond used to protect a bank against losses resulting from dishonesty of its employees. Coverage and limits apply on an excess basis over and above the single and aggregate limits in the Financial Institution Bond No. 24, but coverage only applies for employee dishonesty losses. Coverage is available only to national- and state-chartered commercial banks.

FORGERY OR ALTERATION COVERAGE

Insuring agreement that applies when someone other than an owner or employee forges a signature on a check or other negotiable instrument in order to obtain funds belonging to the insured. Coverage does not apply to forgery or alteration of checks done by the named insured or any employee, manager, director, trustee or representative. Coverage is provided using either a standard ISO form or a Surety & Fidelity Association of America form.

FUNDS TRANSFER FRAUD COVERAGE

Insuring agreement that provides coverage for loss of funds resulting directly from fraudulent instruction to a financial institution to transfer, pay or deliver funds from the insured's transfer account. The fraudulent instruction must be from someone other than an employee of the insured.

GUESTS' PROPERTY COVERAGE

Two-part insuring agreement. It covers any property belonging to a guest of the insured while the property is in a safe deposit box on the premises. It also covers property belonging to guests of the insured while it is on the premises or in the insured's possession. Insurance applies to sums the insured becomes legally obligated to pay as damages because of loss or destruction of, or damage to, the property.

INSIDE THE PREMISES–ROBBERY OR BURGLARY OF OTHER PROPERTY COVERAGE

Applies to property not classified as money and securities. However, coverage applies only if a watchperson is present and on duty and is robbed inside the premises or if the premises is burglarized. In addition, coverage applies for any property damage to the exterior and interior of the premises resulting from attempted or actual robbery or burglary. This is very limited coverage and should not be used when a special causes of loss property form applies to the property because doing so would duplicate the coverage.

INSIDE THE PREMISES–ROBBERY OR SAFE BURGLARY OF MONEY AND SECURITIES COVERAGE

Provides coverage when a person responsible for the property is robbed or when a safe is burgled. The robbery or burglary must take place within the premises situated inside the building. Loss of money and securities is covered as well as damage to the safe, vault or premises due to the actual or attempted criminal act.

INSIDE THE PREMISES–ROBBERY OR SAFE BURGLARY OF OTHER PROPERTY COVERAGE

Insuring agreement where coverage applies only to robbery of a person responsible for the property or to safe burglary. The act must take place within the premises situated inside the building. Money and securities are NOT covered. This is a very limited coverage and should not be used when a special causes of loss property form applies to the property because doing so would duplicate the coverage.

INSIDE THE PREMISES–THEFT OF MONEY AND SECURITIES COVERAGE

Insuring agreement that covers theft of money and securities from within the insured's premises or from within a banking premises. It also covers damage to the interior of the premises and to the exterior of the building caused by an attempted or actual theft. Lastly, it covers damage to locked safes, vaults, cash registers, cash boxes and cash drawers inside the premises caused by an attempted or actual theft.

INSIDE THE PREMISES–THEFT OF OTHER PROPERTY COVERAGE

Applies to theft of property not considered money and securities from inside the insured's premises. Coverage also applies for any property damage to the exterior and interior of the premises resulting from an attempted or actual theft.

KIDNAP AND RANSOM COVERAGE

Contains four insuring agreements. The first is the primary insuring agreement and pays for extortion and ransom demands. The rest of the agreements cover supplementary expenses that occur because of a kidnap or extortion demand. These include expenses incurred because of kidnap, extortion, detention or hi-jack. Coverage also applies for theft, disappearance, confiscation or destruction of the property when it is being delivered by a messenger to the persons making the ransom or extortion demands. Two unusual features of this coverage is the requirement that existence of the coverage be kept secret and that a security company fees and expenses are paid out of the limits of insurance when listed on the Declarations but inside the limits when not listed. The first requirement prevents the insured from becoming a target, while the second requirement makes sure that action can take place immediately upon notification

LESSEES OF SAFE DEPOSIT BOXES COVERAGE

For securities stored in safe deposit boxes. Loss or damage is covered if resulting from theft, destruction or disappearance of the securities while in the box. Coverage also applies while the securities are outside the box but still in the depository if the securities are being removed or deposited. Property that is not money or securities is covered for loss or damage due to burglary, robbery or vandalism. There is no coverage for money.

MONEY ORDERS AND COUNTERFEIT MONEY COVERAGE

Insuring agreement that covers money accepted in good faith in exchange for purchases as well as money orders received from customers that are not accepted when presented to the supposed issuer. The coverage territory is limited to the United States, its territories and possessions, and Canada.

OUTSIDE THE PREMISES COVERAGE

Insuring agreement that covers theft, disappearance and destruction of money and securities when outside the premises and in the custody of a messenger or an armored car company. It also covers robbery of a messenger of other property when outside the premises and in the custody of either a messenger or an armored car company.

SAFE DEPOSITORY COVERAGE

Available for an insured, other than a financial institution, that provides safe deposit boxes for customers. The form consists of two insuring agreements. The first covers the legal liability of the insured for loss or damage to customers' property. The second does not require the insured be legally liable but covers only loss due to robbery or burglary of the customers' property. Under both agreements, the items must be inside the insured's vault. There is coverage when outside the vault but only when items are being removed or deposited. Coverage also applies to damage to the vault or safe.

SECURITIES DEPOSITED WITH OTHERS COVERAGE

Applies to loss or damage resulting from theft, disappearance or destruction of the insured's securities when located inside the premises of the person or organization who has been entrusted with the securities. It also covers the securities when transported by that person or an employee of that person or organization. It also covers securities of the insured placed in a depository, such as a bank, for loss or damage due to theft, disappearance or destruction when placed there by the entrusted person or organization.

TELEPHONE TOLL FRAUD

Occurs when an unauthorized person accesses a phone system and uses it to make outgoing calls. This results in the telephone system's owner having to pay the bill. This can be very expensive so this coverage is available to pay those fraudulent charges. There are two important conditions. The first is that protective measures must be in place to prevent such fraud. The second is that coverage applies for only 30 days after the initial fraudulent call.

UNAUTHORIZED REPRODUCTION OF COMPUTER SOFTWARE BY EMPLOYEES COVERAGE

Legal liability coverage for the fines and penalties incurred by the insured because an employee reproduced computer software in violation of a licensing agreement with a software vendor. Coverage does not apply if the insured, a partner, member, officer or director, or anyone with the responsibility of complying with the terms of the licensing agreement, is aware of or permits such activity.




CYBER LIABILITY COVERAGE

This coverage continues to evolve. Many insurance companies are developing products to provide errors and omissions and liability coverage for companies operating in cyberspace. The various forms include coverage for allegations of patent infringement, virus introduction, violation of confidentiality, and more. There is no standard form, standard name or consistency in coverage grants. In spite of this, if an insured has an active online presence, the exposure is real and is growing such that this coverage should be considered.

DATA SECURITY BREACH COVERAGE

This coverage offers loss prevention, risk management, liability insurance and crisis management. Companies offering this coverage provide tips and incentive for insured's to take important risk management steps in order to reduce the chance of loss. If a breach does occur, the carrier responds quickly to limit damage. It then provides necessary defense and liability coverage for suits brought against the insured for any data security breach.

INTERNET (CYBERSPACE) LIABILITY COVERAGE

Many insurance companies are developing products to provide errors and omissions and liability coverage for companies operating in cyberspace. The various forms include coverage for allegations of patent infringement, virus introduction, violation of confidentiality and more. There is no standard form, standard name or consistency in coverage grants. In spite of this, if an insured has an active online presence, the exposure is real and the coverage should at least be considered.

ACCOUNTS RECEIVABLE COVERAGE

Protects against loss resulting from the inability of the insured to collect accounts receivable due to the loss, damage or destruction of its books or records of accounts. This coverage is written using standard inland marine forms. A small amount of coverage is usually included in property coverage forms.

BAILEE CUSTOMERS COVERAGE

Used to insure bailment situations. In a bailment, one person accepts goods from another and promises to return them to that person in the same condition or better. This creates both a contractual obligation and a goodwill obligation. Bailee customers coverage is a nonstandard form offered by many inland marine insurance carriers. Coverage can be for legal liability only or can also include goodwill coverage. Valuation may be on an actual cash value or a replacement cost basis. Coverage can be purchased for the property involved while being worked on or not. Coverage may be for risks of direct physical loss or damage or for designated perils only. Coverage applies at the insured's premises, in transit or at another premises performing services on behalf of the insured.

BROADCASTING TOWER/EQUIPMENT COVERAGE

Insures broadcast towers, transmitting and receiving equipment, media, purchased recordings, and mobile equipment. It also covers similar property of others in the named insured's care, custody, or control. Specific premises must be scheduled but individual items do not have to be scheduled. Towers, equipment, media, and purchased recordings are covered property if they are at a premises listed and described on the schedule of coverages. Coverage can be extended to include computer equipment, computer software, and telecommunications equipment. Several income coverage options are also available. The definition of covered property includes property that the insured owns as well as property it leases. Coverage applies for risks of direct physical loss or damage, subject to limitations or specifically excluded perils.

BUILDERS' RISK COVERAGE

Insures a building or structure during construction, renovation or repair. The insured may be the building owner, a builder/contractor or the purchaser of the building. A policy may cover either a single construction project or multiple jobsites. In general, builders risk coverage is written for the full, completed value of the project, but loss payment is based on the amount of construction actually completed at the time of loss. The premium charged is based on the full, completed value but is discounted using a mathematical formula that anticipates zero coverage on day one and full value only when construction is finished and the building is released for occupancy.

CAMERA AND MUSICAL INSTRUMENT DEALERS COVERAGE

Pays for damages to the insured's stock on and off premises and while in transit. It also covers property of others in the custody of the insured. This floater is vital to any camera or musical instrument dealer because of how the coverage follows the property.

COMMERCIAL ARTICLES FLOATERS

Covers audio/visual equipment and musical instruments used by commercial enterprises. Coverage applies wherever the property is located on an all risk basis and does not require scheduling of locations or property. This is not meant for musical instruments and camera dealers who should use a dealers form to cover their stocks of merchandise held for sale.

CONTRACTORS' EQUIPMENT COVERAGE

Provides physical damage insurance on mobile or contractors' equipment located at the insured's premises, at jobsites or in transit. Property covered ranges from employees' tools to scaffolding to cranes and everything in between. If an item of property is used to do a job and is not licensed for road use, it probably qualifies as contractors' equipment and should be covered. This is a flexible policy that can be tailored to respond to specific situations. Coverage can be on an all risk or named cause of loss basis.

DIFFERENCE IN CONDITIONS (DIC) COVERAGE

Written to broaden other property coverage already written and in place. It is intended to provide primary coverage against causes of loss excluded in standard property forms, such as flood, water damage and earthquake. It is also used to broaden named perils coverage to provide additional perils coverage comparable to risks of direct physical loss. The form does not include a coinsurance clause but does contain a coverage cap and normally utilizes high deductibles. There is no standard coverage form but coverage is offered by both inland marine and property insurance companies. The keys to comparison are the limits, deductibles, exclusions, territory and methods of capping coverage.

ELECTRONIC DATA PROCESSING EQUIPMENT COVERAGE

Insures against loss or damage to electronic data processing equipment and its media and data owned, leased or used by the insured. Computerized production equipment may also be insured in addition to conventional computer equipment. Coverage may or may not include breakdown and power interruption. This coverage is available through various inland marine markets and is not standardized. Forms should be compared with respect to exclusions, on- and off-premises coverage and transit. The valuation basis is a consideration because most computer systems will not be replaced with systems of like kind and quality due to changes in technology.

EQUIPMENT DEALERS COVERAGE

Insures the stock of mobile agricultural and construction equipment held for sale by dealers. It is intended for use only by operations that sell this type of equipment, but it can be extended to include department and discount stores. The coverage provided is very broad which can make this an attractive alternative to property coverage form.

FILM COVERAGE

Insures operations that produce motion pictures or videos. The form covers the cost of re-recording exposed film or tape destroyed by a covered peril or cause of loss. It also covers the cost of re-recording a damaged soundtrack.

FINE ARTS COVERAGE

Insures scheduled works of art, including paintings, etchings, statuary, and stained or etched glass windows, against risks of direct physical loss or damage. Coverage applies on premises, off premises and in transit. An exclusion for breakage is common but coverage for it can often be bought back for a significant premium surcharge. A requirement for professional packing may apply to some objects when they are transported or shipped.

FINE ARTS DEALERS COVERAGE

For fine arts stock owned by a dealer. Coverage is primarily when the items are on premises and in transit. Off-premises coverage is provided at designated events. Coverage can be added to include customers' fine arts. Valuation of newly acquired pieces is very important to consider because of the frequent purchases, which makes scheduling impractical. A comparison will need to be made of competitors' forms to determine the one that is best for a given insured. It is important to understand any limitation and security provisions in the form plus loading, unloading, packing, and shipping requirements. Causes of loss will vary along with deductible and limits on and off premises.

FLOOR PLAN COVERAGE

Designed to work with the fluctuating values of dealership's stock. It is a blanket-type coverage over all of the property "on the sales floor" that is financed by a specified lender. The policy can cover the single interest of either the purchaser of the stock, or the party financing the stock, or it can be a dual interest policy and cover both interests. Coverage is usually on an "all risk" basis. The premium is developed using the actual values at risk at the inception of the policy and then adjusted after the policy expiration based on the submitted reports.

FURRIERS BLOCK POLICY

Provides coverage for furs and garments trimmed with fur in the insured's inventory. Coverage is provided on premises, in transit and elsewhere but does not include customer's items. This coverage is mandatory for anyone handling fur products because most property coverage forms provides very limited amounts of coverage for theft of fur or fur-trimmed items.

FURRIERS CUSTOMERS COVERAGE

Provides coverage on furs and garments trimmed with fur that are owned by customers but left with the insured for storage or service. The customer must declare the items value and receive a receipt as proof in case of a loss. It insures against risks of direct physical loss or damage, subject to specific exclusions and limitations.

FURRIERS CUSTOMERS EXCESS LEGAL LIABILITY COVERAGE

Protects an establishment insured under a furriers policy to the extent of the liability imposed on it by law for damage to property left in its custody. This protection is written as an endorsement to the Furriers Customers Coverage and pays the difference between the amount declared on the customers' receipts and the actual cash value. This is needed because people often declare values on furs for storage for lower amounts than their true value, especially if they have their own insurance on the articles.

GOODS IN TRANSIT

Policies cover product being transported. The product may be owned by the insured and being transported by the insured. It may be owned by the insured and being transported by a hired firm. It may be non-owned and the insured is the hired transporter. In all cases coverage can be purchased to protect the product through a number of inland marine carriers. The coverage may be called motor truck cargo or transportation insurance but the policies should be similar. Key comparisons are causes of loss covered, travel territory restrictions, and warranties on security, alarm systems, locks, and unattended circumstances.

INSTALLATION COVERAGE

Provided by an installation floater that covers personal property installed, fabricated or erected by an insured, usually a contractor. Coverage is for special causes of loss or all risk perils and applies to owned property and property of others. It can cover on a single project within an existing building, such as updating the plumbing system. It can also cover a contractor acting as a subcontractor on a building in the course of construction, such as the one that installs the sprinkler system. The policy can be written on a reporting form basis or on a scheduled job or project basis. It is covered until the installation work is accepted by the purchaser or when the insured's interest in the installed property ceases.

INSTALLMENT SALES COVERAGE

Designed for those who sell merchandise to a purchaser on an installment sales plan or who offer merchandise for trial periods. The form covers all covered property sold by the insured on an installment sales plan, if their accounting records show their variable financial interest in the property. The policy covers all such transactions as of its inception date, whether the transactions are already in force or new, and coverage continues until the final payment on the merchandise is made or the policy expires. Coverage protects only the financial interest of the insured seller in the merchandise.

JEWELERS BLOCK POLICY

Covers, on an "all risks" basis, jewels and precious metals used in the insured business. Coverage is both on and off premises and also while in transit. Coverage is available for customers' goods while in the insured's custody. While there is a standard ISO and a standard AAIS form for smaller insureds, specialty carriers have developed their own forms to provide coverage, especially for larger customers. It is important to review the perils that are covered, the limits attached to each type of property, and any limitations. Security system and changes to premises warranties are common and should be reviewed carefully.

MAIL COVERAGE

Insures valuable items sent through the mail. Securities, currency, checks and similar types of property are covered while in the possession of the United States Postal Service for all direct physical loss or damage, including theft, subject to the policy exclusions. Coverage is on a reporting basis. This coverage is available only to banks, bankers, trust companies, insurance companies, security brokers, fiduciary-oriented investment corporations, and security transfer agents.

MISCELLANEOUS FLOATER

May also be called Special Floater. It is used for items that cannot be covered under any other floater offered by a carrier. It is a very open form and allows for the maximum flexibility in developing necessary coverage. Because the items covered are not required to be at a fixed location, it is important to determine where and when values may be concentrated. Limitations can be a concern especially for off-premises situations. Another important consideration is any maximum capping when it is less than the total value of all items being insured. There are also a number of inland marine coverage forms that may be appropriate for a particular insured.

MOBILE EQUIPMENT COVERAGE

Designed for farm equipment. This equipment is normally kept on premises but may travel on public roads to other owned or leased fields. This equipment is highly mechanized and often used only for specific crops. Coverage should be broad enough to cover both on the premises and on the road.

MOTOR TRUCK CARGO LEGAL LIABILITY COVERAGE

Insures the legal liability of common or contract motor carriers for property of others, consisting of cargo, when it is being hauled or transported by the carrier. Coverage applies only to the extent of the insured's legal responsibility for the property shipped and for the amount of liability for a loss. The United States Department of Transportation Federal Motor Carrier Safety Regulations provides guidance and direction on the liability of trucking concerns and their responsibility for the property being hauled. The bill of lading or other shipping document also addresses the legal liability of the carrier. Both the regulations and the bill of lading establish the legal framework to determine the liability of the insured for the property being hauled.

PATTERNS AND DIES COVERAGE

Insures patterns, dies, molds and forms belonging to the insured and similar property of others in the possession of the insured. Coverage is all risk, the property covered must be specifically identified and described, and a limit of insurance assigned to it. Coverage is not limited to a stated location but is subject to the territorial limits of the policy.

PHYSICIANS' AND SURGEONS' EQUIPMENT COVERAGE

Provides property coverage in a manner that follows the way a doctor or dentist works. All equipment, supplies and books normal to the profession are covered without a restriction to premises. Office-related items and other location-oriented items can be covered while at a described premises or coverage can be limited to apply only to the medical, surgical and dental equipment and instruments usually carried by the insured.

PROCESSING RISK COVERAGE

Insures either the owner of the property sent to plants for processing or finishing or a processor who receives material from many sources for treatment in the course of manufacture. Coverage applies on a named perils basis. The policy is adaptable to a wide range of products being worked on by subcontractors. Each risk is individually underwritten based on the type of property being processed or worked on. Coverage availability is limited.

SCHEDULED PROPERTY COVERAGE

Insures property of the insured and property of others with no limitation as to place. It is a floater form and coverage is on an all risk type basis. The property covered must be specifically identified and described and a limit of insurance assigned to it. Coverage applies on premises, off premises and in transit. Scientific instruments, voting machines and religious organization paraphernalia are some examples of property that might be covered on this form. Items scheduled and insured on this form should be removed from the property coverage in order to eliminate duplicate coverage and premium charges.

SIGNS COVERAGE

Insures neon, fluorescent, automatic, mechanical and electric signs against risks of physical loss or damage except when excluded or limited. However, coverage does not apply to loss of use, internal explosion or blowout, short circuit, wear and tear, deterioration or damage sustained while being worked on.

THEATRICAL PROPERTY COVERAGE

Insures all property necessary to put on a play, including the costumes, scenery and similar related property items. Coverage is not location-based, instead it is based on the production. This allows traveling companies to be covered wherever they might be.

TRANSPORTATION COVERAGE

Protects property of the insured while being shipped. Coverage includes both shipments to the insured and shipments from the insured. Coverage is usually provided by one of three forms. The transportation form covers all shipments made during the policy period using transportation companies, carriers for hire, owned vehicles, railroads and airlines. The owner's form covers all shipments made using only the owned vehicles of the insured. The trip transit form is used for a single shipment by a specific mode of conveyance, on a "one-shot" basis.

VALUABLE PAPERS AND RECORDS COVERAGE

Applies to the papers of a business. These papers may include the deed to the property, original copyrights, patent rights to key products, patient records, books, construction plans or manuscripts. Few businesses can operate without acquiring quite a few valuable papers. If any of those papers are lost, the operation of the business could be seriously affected. Coverage is written on an all risk type basis, including misplacement and mysterious or unexplained disappearance.

WAREHOUSE OPERATORS LEGAL LIABILITY COVERAGE

Available to public warehouses. This covers only the legal liability imposed on the insured based on the agreement between the owner of the goods and the insured to hold goods. The terms of the agreement and the receipt provided are dictated by the Uniform Commercial Code.


PHYSICIANS, SURGEONS AND DENTISTS PROFESSIONAL LIABILITY COVERAGE

Protects insured physicians, surgeons or dentists against claims for injury arising from alleged malpractice, error or mistake in rendering professional services. The insurance may be written for individuals and partnerships. Coverage is normally written on a claims-made basis.

MISCELLANEOUS MEDICAL PROFESSIONAL LIABILITY INSURANCE COVERAGE

Insures claims alleging malpractice committed by the following classes of insureds: blood banks, medical or x-ray laboratories, nurses, optometrists, employed professional persons and technicians such as dental hygienists, medical laboratory technicians, opticians, pharmacists, physiotherapists and x-ray technicians. Coverage is normally written on a claims-made basis.

HOSPITAL PROFESSIONAL LIABILITY COVERAGE

Protects an insured hospital against claims for injury arising out of malpractice, error or mistake on the part of hospital personnel. Similar insurance may be written for nursing homes, sanitariums and similar institutions.

ACCOUNTANTS PROFESSIONAL LIABILITY COVERAGE

Insures direct monetary loss and expense to the insured accountant or accounting firm arising from claims for alleged neglect, error, omission or dishonesty in the performance of professional accounting services. Acts of office employees such as typing or clerical errors are covered as are mistakes directly traceable to the professional person.

ARCHITECTS OR ENGINEERS PROFESSIONAL LIABILITY COVERAGE

Insures economic loss to an architectural or engineering firm or an individual arising from claims for alleged negligent acts, errors or omissions in the course of its professional duties. Coverage can be modified to fit the needs of soil engineers involved with building projects.

INSURANCE AGENTS AND BROKERS ERRORS AND OMISSIONS COVERAGE

Is concrete proof that insurance producers are members of a full-fledged profession. The policy protects an insurance agency or brokerage firm against claims for negligent acts, errors or omissions in the conduct of its business. A growing number of companies write this coverage. Premium for an agency depends on the limit of liability and number of persons involved.

LAND SURVEYORS PROFESSIONAL LIABILITY INSURANCE

Land surveyors are hired to establish property boundaries. When boundaries are not properly established, substantial financial loss to their clients can occur. Land surveyors professional liability insurance is designed to protect the surveyor or survey firm that is faced with allegations of an error, omission or negligent act.

LAW ENFORCEMENT LIABILITY COVERAGE

Protects against damages from actual or alleged wrongful acts by an insured. It can cover a variety of insureds, including political entities and their public officials, law enforcement officers, other employees, auxiliary personnel, reserves, and authorized volunteers, but only when acting within the scope of their duties. However, coverage does not apply to the named insured's general liability exposures that must be insured under commercial general liability coverage forms and policies.

LAWYERS PROFESSIONAL LIABILITY COVERAGE

Insures direct monetary loss and expense to an insured lawyer or law firm arising from claims for alleged neglect, error or omission in the performance of legal professional services in a legal capacity. Coverage applies to claims for actions traceable to any person for whose acts the insured is legally liable, in addition to those of the insured.

MORTGAGE BANKERS AND SERVICING AGENTS ERRORS AND OMISSIONS COVERAGE

Protects the insured against loss from claims for any alleged act, error or omission committed in the originating, financing, closing, selling or servicing of mortgage loans on real estate, or the rendering of advice in connection with such activities.

POLICE PROFESSIONAL LIABILITY COVERAGE

Provides broad personal injury coverage and bodily injury liability insurance for all paid full- and part-time law enforcement officers as well as the law enforcement agency itself.

PRINTERS ERRORS AND OMISSIONS COVERAGE

Protects a printer for errors made in the printing process, but coverage does not apply to publishing activities. Examples of common errors include incorrect ink type, wrong paper weight, and missed dates. Coverage is available on a businessowners policy as an endorsement. Larger concerns must purchase the form from specialty carriers.

REGISTERED REPRESENTATIVE ERRORS AND OMISSIONS COVERAGE

Protects registered and licensed sellers of mutual funds and/or variable annuities regarding legal liability arising from any negligent act, error or omission by the insured or any person for whose acts the insured is responsible. Coverage is limited to acts related to the sale of mutual funds or variable annuities.

SAFETY AND ENVIRONMENTAL CONSULTANTS ERRORS AND OMISSIONS COVERAGE

Insures professional liability, errors and omissions arising from engineering and technical services. Examples of those services are those associated with asbestos and other pollution problems. A principal risk involved is when an option is provided that a given area or operation meets Environmental Protection Agency (EPA) standards when EPA later rules that the area or operation, in fact, does not.

TITLE ABSTRACTORS AND EXAMINERS PROFESSIONAL LIABILITY OR ERRORS AND OMISSIONS COVERAGE

Insures claims that arise because of negligent acts, errors or omissions of the insured in the professional performance of research, abstracting, examining, retrieving or reporting of land and title records. Coverage applies to employees provided they are following directions of the professional.

TRUST DEPARTMENT ERRORS AND OMISSIONS COVERAGE.

Banks are required to exercise great care in the administration of estates or trusts or managing real or personal property within their trust departments. Discretion must be used in giving financial, economic or investment advice and in rendering investment, advisory and managing services for clients. Errors and omissions insurance for trust departments against claims by clients alleging breach of duty in discharging responsibilities is, therefore, a wise and prudent investment. High limits and defense protection are important features of the coverage.


OCEAN CARGO WAR RISK COVERAGE

Insures cargo against the risks of war otherwise excluded under an ocean marine cargo policy. This insurance is available as a running mate to the open policy and applies to the same shipments. Rates are quoted when coverage is requested and vary according to the cargo and the ports of call.

OCEAN MARINE CARGO COVERAGE

Written to cover merchandise of every description against perils of the sea. The policy can be expanded to cover most forms of loss to which the property may be subject. The policy is almost always on an open basis, where all shipments are automatically covered and reported to the insurer as they are made. Insurance is usually extended to cover from the original point of shipment until arrival at the final destination and may apply to both imports and exports.

OCEAN MARINE HULL COVERAGE

Indemnifies the owners of a commercial vessel for loss due to perils of the sea, barratry of the master, pirates and similar hazards. Coverage also applies for fire and other named perils that can occur on land or sea. The basic hull form covers the legal liability of the insured to others because of collision damage to other vessels. Protection and indemnity (liability) insurance should be written as a companion coverage.

PROTECTION AND INDEMNITY COVERAGE

Provides bodily injury and property damage liability protection for accidents arising from the ownership and operation of a vessel. It is written in conjunction with hull coverage. It includes liability coverage for loss of life or personal injury to guests, to swimmers, and to the general public and to employees, including a hired captain and crew. However, it does not protect the insured against claims arising under the Longshore and Harbor Workers Compensation Act.

SHIP REPAIRERS LEGAL LIABILITY COVERAGE

Protects an individual ship repairer, marina or boat yard operator for its legal liability to the vessel's owner for damage to the vessel being repaired. This care, custody or control coverage applies only to property damage liability but may be extended to include the insured's legal liability for damage to other property caused by a collision or otherwise while the vessel is being repaired or tested.

WHARFINGERS LIABILITY COVERAGE

Insures the liabilities imposed on the insured by law for accidental loss or damage to vessels and interests on board while in the custody of the insured at landing and mooring facilities.

YACHT COVERAGE

Insures yachts, sailboats and motor boats on a named perils or all risk basis within the authorized navigational limits stated in the policy. The policy also covers the legal liability of the insured to others by reason of collision damage to other vessels. The insured has the option of adding protection and indemnity coverage and Longshore and Harbor Workers Compensation Act coverage to the basic hull coverage.

BUMBERSHOOT LIABILITY COVERAGE

Designed for businesses whose principal exposure is ocean marine and involves the operation of vessels and use of docks. This is a specialized form of umbrella liability insurance. Bumbershoot coverage includes protection and indemnity, general average, collision and salvage charges, sue and labor, all other legal and contractual liability (including employers liability under admiralty laws or the longshore act), automobile liability, and coverage for other hazards associated with general liability insurance.

BASIC

Insures against loss or damage caused by fire, lightning, explosion, smoke, windstorm or hail, aircraft, vehicles, riot or civil commotion, vandalism, sprinkler leakage, sinkhole, and volcanic eruption. Sprinkler leakage may be excluded; however, this should be considered only when the risk is not sprinklered so that coverage is not needed.

BROAD

Insures against loss or damage caused by all the basic causes of loss plus falling objects; weight of ice, snow or sleet; water damage from plumbing fixtures; and collapse due to any of the named incidents in the basic and broad causes of loss.

EARTHQUAKE

Insures against loss caused by an earthquake. Loss or damage caused by earth movement is excluded by all three primary causes of loss forms. Coverage for earthquake damage (but not all earth movement damage) is available in three different ways. The earthquake cause of loss may be included by using an earthquake cause of loss form. A difference in conditions (DIC) policy may be purchased with earthquake as a covered cause of loss, or a separate earthquake policy may be purchased from a nonstandard insurance company.

The first two options are the most cost effective, but the nonstandard market may be the only place to obtain this coverage in certain earthquake-prone areas or with certain types of properties. Deductibles are usually expressed as a percentage of the amount of insurance and range from 1% to 10%.

FLOOD

Applies to direct loss or damage by flood to buildings and their contents on either a replacement cost or an actual cash value basis. Coverage for flood damage is available in four different ways. The flood cause of loss may be included by using a flood cause of loss form. A difference in conditions (DIC) policy may be purchased with flood as a covered cause of loss or a separate flood policy may be purchased from a nonstandard insurance company. In areas declared eligible by the Federal Insurance Administrator, agents and brokers may arrange for insurance directly with the National Flood Insurance Program (NFIP) or with participating insurance companies. When properties are located in NFIP eligible flood zone areas, most carriers will require that a NFIP policy be purchased for its maximum limit before they will provide excess flood coverage.

MINE SUBSIDENCE

Property policies may be endorsed to cover loss or damage to structures due to mine subsidence. Mine subsidence occurs when abandoned or inactive underground mines collapse. Coverage does not apply to loss or damage caused by earthquake, landslide, volcanic eruption or collapse of storm or sewer drains. The states of Illinois, Indiana, Kentucky, Oklahoma and West Virginia have filed exceptions to provide coverage in certain counties for specific limits. A few of these states mandate notice of coverage availability in certain counties while others only require that the coverage be available. Individual state requirements must be reviewed because notice of coverage availability is based on the location of the property and not the location of the insured's headquarters.

SPECIAL

Insures against loss or damage caused by risks of direct physical loss or damage. This wide open coverage is subject to the limitations and exclusions that make up the majority of this form. This is the broadest coverage of the three available forms.

AGRICULTURAL OUTPUT POLICIES

Combine multiple property coverages into a single policy that provides insurance protection from the production stage through processing operations and to the wholesale distribution function. The agricultural output policy is an outgrowth of the manufacturer's output policy and incorporates unique coverages needed by agricultural suppliers, cultivators and processors. Feed and fertilizer manufacturers, grain elevator operators, and seed processors also benefit from this form. Although it has characteristics similar to a farmowners policy, it is different with respect to eligibility requirements, coverages provided and pricing considerations.

BUILDERS' RISK COVERAGE

Indemnifies for loss or damage to a building under construction from the causes of loss that apply. This basic coverage form is a completed value form. This means the estimated final value of a covered building determines the amount of insurance required to be carried. The premium charged is discounted to reflect that the values are gradually increasing over the life of the policy. The form may be modified to a reporting form basis where the amount of insurance is adjusted throughout the course of construction, based on the monthly reports of value submitted by the insured to the insurance company.

BUILDING

The building or structure. It is also inside and outside fixtures, permanently installed machinery and equipment, and equipment used to service the building. Examples of building service equipment are refrigeration, cleaning and cooking equipment, but these are only examples and many other types of equipment are covered.


BUILDING AND PERSONAL PROPERTY COVERAGE FORM

Covers buildings, business personal property, property of others, and improvements and betterments. Specific coverages can be listed and their limits shown on the declarations or the coverages can be combined with a single blanket limit. A causes of loss form is required in order to complete the coverage.

The scope of coverage provided may be broadened, limited or modified through the use of several endorsements. Examples of endorsements include ordinance or law coverage, debris removal, outdoor trees, shrubs and plants, and off-premises utility services.

BUSINESS PERSONAL PROPERTY

The furniture and fixtures, machinery and equipment, stock and other personal property owned by the insured that is used in the business. Labor, materials or services that are furnished or arranged by the insured on personal property of others, use interest of the insured as a tenant in improvements and betterments made to the premises, and leased personal property for which the insured is contractually responsible to provide coverage are also business personal property.

COMMERCIAL OUTPUT POLICIES

Originally designed for automobile manufacturers but are now more appropriate for any medium to large property exposure. The coverage provided is usually broader and more flexible than a business and personal property coverage form. The form includes a number of built-in inland marine and crime coverages. The perils or causes of loss included in the form are similar to the all risk perils or special causes of loss form but with fewer exclusions. The rating approach is unique and is based on the risk characteristics of the individual risk.

CONDOMINIUM COVERAGE FORM-ASSOCIATION COVERAGE

Similar to the building and personal property coverage form but is modified for the specific needs of a condominium association. In this form, building coverage applies to fixtures and improvements and alterations making up part of the building. It also applies to appliances contained in a condominium unit, whether owned by the association or by the unit-owner, provided the association bylaws state that the condominium association is responsible for insuring them. It also prohibits subrogation against unit-owners. This coverage is available in standard forms, but some insurance companies have developed proprietary forms.

CONDOMINIUM COVERAGE FORM-UNIT-OWNERS COVERAGE

Applies to business personal property of a unit-owner and personal property of others in the care, custody or control of the unit-owner. Coverage under this form applies in the same manner and with the same general options as in the building and personal property coverage form, except for considerations given to the unique nature of condominium bylaws and their coverage requirements. Condominium declarations and bylaws must be examined to determine if fixtures and improvements should be covered by the association or by the unit-owner. Loss assessment coverage is important to a unit-owner and applies to the insured's share of an assessment by the association for an uninsured loss involving common property. It is usually an option under a unit-owner's policy and has the same perils or causes of loss that apply to the insured's own property. This coverage is available in standard forms, but some insurance companies have developed proprietary forms.

DEBRIS REMOVAL COVERAGE

Debris is a result of any building or business personal property loss. It must be removed before reconstruction can begin. Debris removal coverage in the building and personal property coverage form is limited to 25% of the loss. An additional $25,000 is provided as an enhancement to the basic form. These amounts may be insufficient for some insureds and an option is available to purchase additional limits. Limits are purchased for each location and not on the basis of each building. This approach gives an insured the opportunity to consider the entire location and determine the total potential debris removal consideration. Unusual construction or locations with access problems can mean higher debris removal expenses.

EQUIPMENT BREAKDOWN PROTECTION COVERAGE (AKA BOILER AND MACHINERY COVERAGE)

Contains three separate parts: damage from an accident to covered items; damage to the other property of the insured caused by an accident to the items covered; and loss of income due to damage to the items covered and/or damage to other insured property. The items covered consist of boilers and other heating devices. Most machinery and equipment, including electronic devices, can also be included. The expansion of objects covered by this form has caused ISO to change the name of the boiler and machinery coverage form to the equipment breakdown coverage form. Many insurance companies that write this coverage use proprietary forms and policies but their structure and coverage is similar to the ISO version.

IMPROVEMENTS AND BETTERMENTS

The insured's use interest in improvements and betterments made to a building occupied but not owned by the insured and that must remain with the building even when the insured moves out. This type of property can be listed as a separate item with its own limit on the declarations or it can be combined with all other types of business personal property within the business personal property limit. The loss settlement is based on the replacement cost of the items if replaced. If not replaced, the valuation is based on the actual cash value reduced by the percentage of the lease contract that has passed.

LEGAL LIABILITY COVERAGE

Provides property coverage for direct physical loss or damage (including loss of use) to property of others in the insured's care, custody and control or for which the insured is legally liable. The covered property can be real or personal property. Coverage is for the benefit of the property owner and not for the insured. The owner of the property is the one who files a claim for damages. A standard form provides this coverage and a causes of loss form must also be included. The determination of the cause of loss is based on the wording of the agreement between the property owner and the insured. Because this is a legal liability coverage, the only causes of loss covered are those required by the contract.

MORTGAGEHOLDER'S ERRORS AND OMISSIONS COVERAGE

Available only to mortgage lenders and mortgage servicing agencies. Four different types of coverages are provided. The first one provides first party coverage for damage to a mortgaged property when the property owner fails to obtain required coverage. The second provides up to 90 days coverage for owned or in trust property. The third and fourth provide third party errors and omissions coverage for when the mortgage holder did not perform certain of its functions appropriately to the detriment of the property owner.

ORDINANCE OR LAW COVERAGE

The standard unendorsed ISO building and personal property coverage form excludes coverage for any costs associated with the operations of building laws or ordinances. This endorsement can be purchased to provide coverage for the increased costs and effects due to building laws that had previously been grandfathered but that are activated because of a significant loss. Coverage A applies when laws require that a building not meeting current building codes be torn down following a significant loss so that it can either be constructed to meet current standards or that the owner must move to another location. Coverage A covers the value of the undamaged portion of the building that must be destroyed. Coverage B pays for the cost to demolish the undamaged portion of the building. Coverage C covers the increased cost of construction required to meet current building codes.

OUTDOOR TREES, SHRUBS AND PLANTS COVERAGE

Extends the property coverage beyond the limited coverage for these types of property provided in the business and personal property coverage form. Living outdoor property can be extensive and is costly to replace. This endorsement allows the insured to choose an aggregate limit, as well as a per-item limit. In addition, the causes of loss can be expanded beyond the limited causes of loss in the business and personal property coverage forms.

PERSONAL PROPERTY OF OTHERS

That personal property that is considered to be in the care, custody or control of the insured while it is situated on the insured's premises.

RADIOACTIVE CONTAMINATION COVERAGE

For insureds who use radioactive materials. The coverage is for direct damage to property caused by contamination from on-premises radioactive materials. Each individual case requires specific rating.

SPOILAGE COVERAGE

Applies to direct physical loss or damage to perishable stock caused by equipment breakdown or contamination and/or by an interruption of power beyond the control of the insured. Established limits are available and the insured can select the cause(s) of loss to insure. The term "perishable stock" means personal property that must be maintained under controlled conditions for its preservation, because it is susceptible to loss or damage when conditions change. Examples of such perishable stock are inks, drugs, dyes, flowers or chemicals in addition to food products.

STANDARD PROPERTY POLICY

A highly restrictive building and personal property policy. It is a self-contained policy that includes very limited causes of loss and restrictive cancellation and non-renewal conditions. The significant restrictions in this policy place a heavy burden on the named insured. As a result, its use is usually limited to only risks that cannot be insured in a more conventional manner. Of particular concern should be that only five days' notice is required for cancellation.

TOBACCO SALES WAREHOUSE COVERAGE

Insures the tobacco that is entrusted to the tobacco sales warehouse operator. Tobacco farmers harvest their crop, dry or cure it, and then take it to large, central warehouses. It is an annual reporting form that covers direct physical loss of or damage to sales-ready tobacco while it is in the warehouse. However, coverage applies only during the tobacco-selling season. Valuation is based on the five-day average selling price for tobacco sales in the surrounding area.

UTILITY SERVICES–DIRECT DAMAGE COVERAGE.

Standard coverage forms exclude on-premises losses caused by the disruption of communications, power or water utility services. This endorsement fills that gap and covers such losses provided the disruption is due to physical damage at the utility service provider or its power lines. The physical damage to the utility service provider or power lines must be caused by an insured peril or cause of loss.


CONTRACT–BID BONDS

Guarantee to a project owner that the contractor bidding for a contract will fulfill the terms of the bid if their bid is accepted or forfeit the bond penalty.

CONTRACT–BID BOND SERVICE UNDERTAKING

Provides a construction contractor with bid bond service for a year for a minimal annual fee. This enables the contractor to execute a bid bond without a premium charge. A premium is only charged for the required performance bond when a bid is accepted. This is a convenient procedure greatly appreciated by contractors.

CONTRACT–COMPLETION BONDS

Given by a project owner to a lender or mortgagee. It guarantees the successful financing to completion of a construction project free of liens. This should not be confused with a performance bond given by the contractor to the owner guaranteeing faithful performance of the building or construction contract.

CONTRACT–LABOR AND MATERIAL PAYMENT BONDS

Guarantee that a contractor will pay all legitimate bills for labor and material in connection with a construction contract. The bond may be written as a separate bond or as an integral part of a performance bond.

CONTRACT–PERFORMANCE BONDS

Guarantee that a contractor will perform its contractual obligations for the benefit of the owner. The bond obligations are those outlined in the contract and the plans and specifications attached to the contract. These obligations are owed to the owner in return for an agreed sum of money to be paid to the contractor by the owner. This bond is issued after bid bonds have been posted and the lowest responsible bidder has been awarded the contract.

CONTRACT–PERFORMANCE OF SERVICE OR SUPPLY BONDS

The most commonly requested contract bonds. They guarantee that a contract to furnish specified supplies or materials is completed according to its stated terms. These bonds are used mainly for public contracts but can be used for private ones too.

CONTRACT–SUBCONTRACT BONDS

Required of a subcontractor by the general contractor. The bond is a guarantee that the subcontractor will faithfully perform the subcontract in accordance with its terms and conditions and will pay bills for labor and materials incurred in the execution of the subcontract work.

COURT BONDS

Any bonds required of a litigant in a legal action or court proceeding enabling a remedy pursuit in court.

FIDUCIARY BONDS

Bonds for executors, administrators, guardians, trustees or receivers. They are furnished under the direction of a court and guarantee the performance of the terms of a will or a similar document. Banks and trust companies are required to purchase these bonds in the normal course of their business, but they are not the exclusive users of these bonds.

LICENSE AND PERMIT BONDS

As numerous as the regulations affecting commercial activities. When a governmental entity requires an individual or business to obtain a permit or a license to perform an action or service, a bond is normally required to guarantee that the licensee or permit holder will perform as promised.

MEDICARE AND MEDICAID PROVIDER SURETY BONDS

Required by some providers of Medicare and/or Medicaid services. The Medicare bond limit is determined by the federal government and the Medicaid bond limit is established by state authorities.

MISCELLANEOUS SURETY BONDS

Available for many situations where bonds are required that do not fit into other classifications. They are needed to guarantee the promises made by the principal and are often dictated by public authorities.

NOTARY PUBLIC BONDS

Cover loss to the state that commissioned the bonded notary and loss or damage to third persons resulting from the failure of the principal to faithfully perform the duties of a notary public. Duties and obligations of a notary are specified in statutes of the state in which the notary is appointed. The length of term, the bond requirements and the fee schedule vary considerably by state.

PUBLIC OFFICIALS BONDS

Required by law and guarantee the faithful performance of duty by the public official. The state law normally prescribes the form of bond to be used and it should strictly adhere to applicable statutes. If the statutes do not prescribe the form of bond, a common law form may be executed.

EXCESS LIABILITY COVERAGE

Provides insurance limits in excess of underlying general liability, automobile liability, employers liability, and/or other scheduled liability policies. This policy has no unique forms and is strictly a following form policy. The coverage available in the underlying policies is also available in the excess policy, and exclusions in the underlying policies are also exclusions in the excess policy.

FARM UMBRELLA LIABILITY COVERAGE

Designed to coordinate and work in conjunction with an ISO Farm Liability Policy. It also contains elements of a true umbrella. The most important feature of this policy is that it follows the provisions of the underlying coverages. However, it also provides limited excess coverage over a self-insured retention and offers some insurance protection not found in the primary policies.

RETROACTIVE EXCESS LIABILITY COVERAGE

Purchased in catastrophe situations with multiple claims and a need for exceptionally high limits. It is purchased after the loss, anticipating loss demands that will be in excess of the coverage limits available to the insured at the time of the loss.

UMBRELLA COVERAGE

Stand-alone liability policy that is purchased as a supplement to an insured's general liability, automobile liability, and employers liability policies. It provides excess limits over the underlying coverage. Because it has its own exclusions and amendments, it also provides broader coverage than what is provided in the underlying coverage. Losses that are covered under that broader coverage are subject to a self-insured retention (SIR) that is commonly either $10,000 or $25,000.The umbrella policy coverage is triggered when the limits of the underlying insurance are exhausted or when a claim not covered by an underlying policy occurs.

EXCESS WORKERS COMPENSATION SELF-INSURANCE BONDS

Required in many states if an entity wishes to self insure its workers compensation exposure. The bonds serve as evidence of financial responsibility or ability to pay workers compensation or employers liability benefits to employees.

FEDERAL COAL MINE HEALTH AND SAFETY ACT COVERAGE

Insures exposures subject to the Federal Coal Mine Health and Safety Act. Federal black lung workers compensation insurance is provided in a state (including monopolistic state fund states) by naming the state in the schedule found in the endorsement.

FEDERAL EMPLOYERS' LIABILITY ACT (FELA)

Insures employees who work for or on railroads that cross interstate lines who are not subject to state workers compensation coverages. This coverage is provided by an endorsement to the Workers Compensation and Employers Liability Insurance Policy

LONGSHORE AND HARBOR WORKERS' COMPENSATION ACT COVERAGE

Protects workers who load or unload vessels and repair or build vessels and who do this work on or over navigable waters of the United States of America as called for in the Longshore and Harbor Workers Compensation Act. It does not cover seamen, sailors, masters, and crewmembers of any vessel, as well as clerical, office, automation support, and security personnel. Coverage is added to a workers compensation policy by endorsement.

STOP GAP OR EMPLOYERS LIABILITY COVERAGE

In monopolistic workers compensation states, where the coverage provided by the state is not as broad as that of a workers compensation policy including employers liability coverage, many insurers offer a coverage called stop gap or employers liability coverage. This is can be by endorsement to the CGL policy, an out-of-state workers compensation policy or may be issued as a stand-alone form. It fills the gap between the coverage provided by the state and the coverage traditionally provided by a standard workers compensation policy.

VOLUNTARY COMPENSATION COVERAGE

Adds coverage for employees who are considered exempt from workers compensation coverage under the particular state's statutes. Farm, ranch, and agricultural employees and domestic employees are examples of such exempted classes. Covering these employees protects the employees but also protects the employers from lawsuits related to injured exempt employees.

WORKERS COMPENSATION AND EMPLOYERS LIABILITY COVERAGE

Insures against claims for work-related injuries or diseases suffered by employees provided the claims are compensable by statute and/or imposed by law as damages. Other states' insurance is incorporated in the policy and is activated by the appropriate entry on the declarations. Employees exempted by the law can be covered by using a voluntary workers compensation endorsement. Employers liability coverage provides protection when an employee sues the employer for damages that are outside of the state's workers compensation statute.

BUSINESS INCOME CHANGES–EDUCATIONAL INSTITUTIONS COVERAGE

Insures the loss of net tuition fees and other income resulting from damage to or destruction of school property by an insured peril or cause of loss. The unique valuation method in this endorsement recognizes that schools operate in semesters or terms and business income is lost for the entire term when the buildings are unavailable at the beginning of the term. This is the required form to use when business income coverage is provided to a college, university or school.

BUSINESS INCOME FROM DEPENDENT PROPERTIES COVERAGE

Applies to covered causes of loss that occur at scheduled dependent properties that lead directly to the suspension of operations at the insured property. Examples of dependent properties include suppliers of the insured, customers of the insured, or even the lead store at a shopping center that draws customers to the insured. This coverage is provided using an endorsement attached to the business income coverage. There is no requirement that business income be purchased on the insured's premises as a prerequisite to purchasing business income from dependent properties coverage.


BUSINESS INCOME WITH EXTRA EXPENSE COVERAGE

Reimburses an insured for the sum of the net income that would have been earned plus its continuing expenses for the length of time needed to repair property following a covered cause of loss. The approach is in line with generally accepted accounting practices. The coinsurance clause in the form applies to the 12 months after policy inception. Loss of rental income can also be covered by this form. The rental value exposure is usually associated with a building owner. However, there are cases where it may also be significant for a lessee with a lease that requires continued rent payments after a covered cause of loss causes the insured building to be unusable.

Extra expense coverage does not include a monthly limitation and is included as an automatic coverage feature. This makes use of separate extra expense insurance unnecessary for most businesses. Note that the coinsurance requirement does not apply to this coverage. It pays the expenses needed to continue operations, including rental of other locations and use of other facilities and other expediting expenses.

Coverage automatically extends for up to 60 additional days to cover the additional time needed for activities to be restored to the level that existed before the loss occurred, provided the limit of insurance has not been exhausted. If concerns exist over loss of market and the amount of additional time needed to reach the normal income plateau, the 60-day extension may be increased for an additional premium charge. Ninety days is often a more appropriate extension of time.

BUSINESS INCOME WITHOUT EXTRA EXPENSE COVERAGE

Identical to business income with extra expense coverage with one important exception. The only extra expenses that are covered are those that directly reduce the amount of the business income loss. Extra expenses incurred for the good of the business that do not directly reduce the business income loss are not covered. Examples of extra expenses for the good of the business are the costs of emergency trailers to keep operating even though the income earned is a fraction of what had been earned; surcharges paid to expedite shipping of vital equipment even though the business income is minimally impacted; the cost to purchase and maintain emergency generators to keep refrigeration units functioning even though the loss of income is barely impacted.

EXTRA EXPENSE COVERAGE

Pays all sums required for an insured to get back in business as soon as possible, without regard to the income to be generated by the return to business. This includes, but is not limited to, transportation fees when using next-day service instead of normal shipping schedules, any surcharge to put a rush on a purchase order, or special set-up fees charged for a manufacturing order. Money used to re-open a business are paid under this form. This coverage should be considered in cases where no business income loss will be sustained but where the insured will spend considerable funds to resume operations, regardless of the circumstances.

LEASEHOLD INTEREST COVERAGE

Designed for tenants who have more favorable long-term leases than the prevailing rate in the area. It pays the difference between the prevailing rent levels and the current rent being paid following the cancellation of the lease due to direct damage to the building by a covered cause of loss. It covers a variety of up-front amortized costs in addition to the rental or lease difference. The coverage limit decreases based on the length of the lease.

MINING PROPERTIES–BUSINESS INCOME COVERAGE

Available only to businesses engaged in mining operations. When business income coverage is purchased by a mining operation, this endorsement must be attached in order to clarify the type of coverage that is provided when underground property is damaged resulting in a business income loss. . One of three options must be selected— none, limited or broad coverage. This endorsement has no impact on business income losses due to damage of aboveground property.

ORDINANCE OR LAW INCREASED PERIOD OF RESTORATION COVERAGE

Not included in any business income coverage form. This endorsement extends to cover the additional time needed to rebuild damaged property in compliance with current building codes. It also includes the time needed to demolish the undamaged portion of the building. If the ordinance or law direct damage coverage form is purchased, this coverage should also be purchased.

UTILITY SERVICES–TIME ELEMENT COVERAGE

Not provided in most standard property forms. However, disruptions of electricity, water and communication can limit or completely stop operations at certain businesses. This endorsement provides coverage if a covered cause of loss or insured peril damages the off-site utility service provider location and/or its power lines causing a disruption of power to the insured's operation and causing a loss of income.


DISTILLED SPIRITS AND WINES MARKET VALUE

Distilled spirits and wines do not depreciate with age. As a result, actual cash value is not an appropriate valuation to use. Replacement cost is also inappropriate because new vintage spirits and wines are actually worth less than older stock. This valuation method allows manufacturers to choose an alternative value method such as market value or anticipated aged value.

MANUFACTURERS' SELLING PRICE

Property coverage forms apply actual cash value treatment to a manufacturer's finished stock. This valuation approach covers only the cost of raw materials and production but not other expenses and profit related to that product. This endorsement modifies the valuation loss condition to base the loss settlement for manufactured finished stock at whatever price the manufacturer would have sold the stock. However, the valuation is still reduced by discounts the manufacturer would have provided and normal expenses in shipping the product that the insured does not incur.

MARKET VALUE–STOCK

This form is added to a commercial property policy covering a manufacturing risk with stock that is subject to market swings. Valuation is based on the market price at the time and place of loss or damage, but reduced by its standard discounts and any expenses the insured otherwise would have had but does not incur because of the loss. "Stock subject to market value" means stock customarily bought and sold at an established market exchange where the market prices are posted and quoted. Examples are certain commodities traded on the market, such as grains, coffee, concentrated orange juice, cotton and pork bellies to name a few.

PEAK SEASON LIMIT OF INSURANCE

Increases the scheduled business personal property limit of insurance to a higher limit in order to cover predictable inventory increases for specified time periods. This endorsement is recommended in place of a property reporting form when inventory is relatively constant, except for a few known peak periods. The peak time period selected should anticipate and include early deliveries and unsold inventory. Note that businessowners policies (BOPs) include automatic coverage for seasonal or abnormal inventory increases as long as the business personal property scheduled limit equals at least 100% of the average monthly values.

REPLACEMENT COST

Actual cash value (depreciated value) is the default valuation method on business and personal property coverage form because it compensates the insured for what is actually lost. However, it is usually difficult to replace old goods with old goods! Replacement cost allows the insured to replace old goods with new. When this option is chosen, the limit of insurance purchased must reflect the replacement cost values which can lead to a substantial increase in premium.

VALUE REPORTING

For business personal property should be considered when values regularly fluctuate or move between locations. It is used with stores, processors, businesses, manufacturers and warehouses with significant inventory levels. This form assures full recovery of loss when required periodic value reports are submitted on a timely and accurate basis and limits of insurance are maintained at proper levels. The most commonly used reporting frequency is monthly but, depending on the insured's operations and requirements, the reporting period may be daily, weekly, quarterly or annually. A provisional premium charged at the beginning of the policy period is adjusted at the end of the policy year, based on the values reported. Using this approach, the insured pays only for the insurance coverage needed.

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