Chad Farnum Director of Commercial Insurance 4655 N Central Expwy 2nd Flr Dallas, TX 75205
Ofc: 214-269-3037 Fax: 214-599-9829 Email: cfarnum@jzainsurance.com
Liability Policies
Commercial General Liability Insurance:
One of the key concepts of liability coverage is that it is comprehensive in nature. What this means is that the policy (insuring agreement) covers all hazards within the scope of the insuring agreement that are not otherwise excluded. It is likewise comprehensive in that it provides automatic coverage for new locations and activities of your business, which come about after policy inception and throughout the policy term. Commercial General Liability (CGL) is the standard commercial liability policy used to insure a business.
- PREMISES AND OPERATIONS
The Premises hazard exists when there is ownership or occupancy of property (the premises). A customer may have a premises claim against the Insured if the newly waxed floors caused the customer to slip and fall.
The Operations hazard exists when activity in addition to occupancy of property exists. Most of our customers have this exposure rather than Premises. A carpenter may be negligent and cut the electrical wiring, causing Property Damage to the building. - PRODUCTS AND COMPLETED OPERATIONS
Products hazard arises from the manufacturing or selling of a product such as an air conditioner. A compressor that our Insured sold and installed for the client may have been defective and caused a fire damaging the building.
Completed Operations is a hazard that remains after the contractor has completed the job. In the air conditioner example above, if the compressor was improperly installed and later caused fire damage due to the improper installation, any resulting injuries or Property Damage would be said to emanate from the Completed Operations hazard. - ADVERTISING INJURY
This coverage includes libel or slander; invasion of privacy; misappropriation of advertising ideas or style of doing business; or infringement of copyright, title, or slogan, all in the course of advertising the Insured’s goods or services. Some of the newer policies do exclude copyright infringement so make sure to check with us. - FIRE LEGAL LIABILITY
Provides Property Damage coverage to property leased or rented to the Insured. If the Insured rents a building and by negligence on the part of the Insured, fire damages the part of the building that is leased by the Insured, Fire Legal Liability coverage limit would apply. - MEDICAL PAYMENTS
Provides Medical Payments for persons, other than the Named Insureds, for Bodily Injury suffered on the premises, even though the Insured was not negligent. The difference between Medical Payments and Premises Liability is negligence. You do not need to be held negligent for the insurance company to pay a medical payment claim. This allows the company to pay small nuisance claims without the need for costly legal expenses.
Umbrella or Excess Liability:
· A form of liability insurance protecting policyholders for claims in excess of the limits of their business automobile, general liability and workers compensation policies, and it may also provide coverage for exposures not covered by the primary policies.
Directors & Officers Liability Insurance:
· Protects officers and directors of a corporation against damages from claims resulting from negligent or wrongful acts in the course of their duties. Also covers the corporation, the officers and directors for expenses incurred in defending lawsuits arising from alleged wrongful acts of officers or directors.
Professional Liability Insurance (Errors & Omissions Insurance)
· If you provide advice or charge fees for a professional service, you need Professional Liability to cover Errors & Omissions in your judgment. Do you develop or write software code? General liability does not protect you if your software fails to perform or malfunctions. Professional Liability provides that exact coverage. Many businesses over look Professional Liability Insurance and buy General Liability Insurance thinking they are adequately covered. That is almost always not the case.
Employee Benefits Liability Insurance
· Employee Benefits Liability is an endorsement you add to your general liability insurance policy. It covers insured’s in the event they make an error in enrolling an employee in company sponsored employee benefits programs such as group health, medical, dental etc. This coverage is often overlooked. If you have a benefits program for your employees it is highly recommended you consult with your agent to see if you are in need of adding this endorsement to your general liability policy.
Property Policies
The BOP is a package of insurance coverage’s in a single policy that meets the insurance needs of many small business owners. It includes commonly required property and liability insurance and some optional coverage’s. Unlike other stand-alone small business policies, it eliminates coverage restrictions and limitations and offers additional enhancements.
Property Insurance is designed to replace property damage arising from claims covered under the provisions of the policy. Determining whether a claim is caused by a “covered peril” is often difficult and confusing. “Peril” refers to what caused the damage to happen in the first place. Some instances are obvious such as fires or vandalism. Other causes of damage can be more confusing such as Off Premises Power Failure or Sprinkler Leakage.
Some of the basic property coverage’s are:
- BUILDING – Covers buildings against direct physical damage, subject to standard policy exclusions. Valuation can be based upon Replacement Cost or Actual Cash Value.
- BUSINESS PERSONAL PROPERTY- Covers personal property and contents against direct physical damage subject to standard policy exclusions. Valuation can be based upon Replacement Cost or Actual Cash Value
- LOSS OF INCOME – This is perhaps the most important part of any insurance policy. Covers loss of income less non-continuing expenses due to the necessary suspension of business operations during the period of restoration. Interruption must be caused due to damage at the described location and caused by a covered peril. There are several options to the loss of income form, you can choose to include payroll for certain employees or choose to insure only the net income. One of the best forms of coverage you can find is Actual Loss Sustained for 12 Months (ALS). This coverage pays your actual loss of income for up to 12 months. Consult with us to find the right coverage for your business.
- LOSS OF INCOME FROM DEPENDENT PROPERTIES – Covers loss of income from a business or source of materials that your business relies upon in order to sell your products of services. An example would be if your business manufactured computer boards and utilized chips that were only made by company XYZ. If company XYZ were to suffer a loss preventing production of their chips, your company could also suffer a loss. This endorsement protects your business for just such a loss.
- LOSS OF RENTS-Covers the loss of anticipated gross rental income, all transferred charges, back to you the insured which are the legal obligation of the lessee and the fair rental value of any portion of the property occupied by the insured.
- EXTENDED LOSS OF INCOME COVERAGE – most forms of business income coverage pay you the lost income for the period the business was closed. In some cases it may take your customers extra time to find out you have once again opened your doors. Consequently your income after re-opening is less than normal. By purchasing this endorsement you can buy coverage to pay the difference in income for a short amount of time, usually 3-6 months. Very necessary for restaurants.
- EXTRA EXPENSE- covers the necessary additional expenses and charges incurred in order to continue as nearly as possible the normal conduct of business following a covered loss. Examples would be the extra costs to rent a temporary facility and equipment to keep your business functional during a loss.
- FIRE LEGAL LIABILITY-Covers rented or leased building against direct physical damage due to Insured’s negligence that results in Fire Damage Only. It is important for insured’s to have the fire legal liability limit equal to the amount it would cost to rebuild the structure you rent in the event of a full fire loss.
- PERSONAL PROPERTY OF OTHERS – Covers the personal property of others in your care, custody or control. Examples, dry cleaners, repair shops, auto repair shops etc.
- BUILDING ORDINANCE- Covers the enforcement of any building, zoning, or land use law to the undamaged portion of the building caused by ordinances or laws that require demolition or regulate construction, repair, zoning, or land use. Coverage is included in building limit.
- INCREASED COST OF CONSTRUCTION
- DEMOLITION – Covers the cost to demolish a building or other structure due to an enforcement of a building ordinance.
- OFF PREMISES POWER FAILURE – Covers direct and consequential loss to the insured’s premises or business due to a power failure caused away from the insured’s premises. An example would be if the local power company has an outage causing your restaurant to close down for lunch causing you an income loss.
- BOILER and MACHINERY – MECHANICAL BREAKDOWN
- MECHANICAL, ELECTRICAL PRESSURE EQUIPMENT – Covers sudden and accidental mechanical breakdown of refrigeration and air conditioning equipment, pressure vessel, pressure boilers, etc., including processing and production equipment.
- CONSEQUENTIAL DAMAGE – Covers loss due to the spoilage of property from lack of power, light, heat, steam, or refrigeration, resulting from a covered cause of loss.
Auto Policies
Business Auto insurance & Trucking Insurance
Perhaps one of the most important considerations when buying a business auto policy is to check the auto symbols. Make sure you are aware of the symbols on your policy in case you buy or lease a new vehicle. These symbols define when and if vehicles are covered under your business auto policy. Here is a list of the covered auto symbols.
Covered Auto Symbols
- Any auto
- All owned autos
- Owned Private Passenger autos
- Owned autos other than PP
- All Owned Autos – No-Fault
- Owned Autos Subject to U.M.
- Autos Specified on Schedule
- Hired Autos
- Non-Owned Autos
- AUTO LIABILITY-Covers against Bodily Injury and Property Damage for which the insured may become liable.
- MEDICAL PAYMENTS-Covers payment for injury to the insured and/or passengers in the insured automobile when a loss occurs.
- UNINSURED AND UNDERINSURED MOTORIST-Pays damages for Bodily Injury caused by drivers of uninsured vehicles, when such drivers are legally liable for injury to the insured and/or passengers.
- COMPREHENSIVE COVERAGE-Provides coverage for your vehicle for damage other than collision.
- COLLISION COVERAGE-Provides coverage for loss or damage in excess of the deductible to an insured vehicle.
- SPECIFIED CAUSES OF LOSS – Provides coverage for your vehicle for damage resulting from fire, lightning, explosion, theft, windstorm hail, earthquake, flood mischief, vandalism, sinking, burning, collision or derailment while transported on a conveyance. (this coverage would be in lieu of Comprehensive)
- HIRED AUTO COVERAGE- Covers liability only, for your company while driving a leased, hired, rented, or borrowed vehicle.
- NON-OWNED AUTO COVERAGE – Covers bodily injury and property damage for your company while vehicles are used by employees for your business use.
- NON-OWNED PHYSICAL DAMAGE – Covers property damage to vehicles you rent or hire for your business.
- ON-HOOK LIABILITY – Covers customers cars while under the operation of tow truck type automobiles while towing vehicles and while transporting vehicles on crane, dolly attached to such tow truck, or on the bed of an auto carrier type truck. Safety Chain warranty – towed vehicle must chained to tow truck at all times. .
- RENTAL CAR COVERAGE – Includes coverage to rent a vehicle in the event of a covered loss.
- TOWING – Covers cost to tow an insured vehicle.
- DRIVER OTHER CAR COVERAGE – Unlike your personal auto insurance policy, business auto insurance does not cover you when you drive vehicles not owned by the business or listed on the business auto insurance policy. If you are a business owner and have your personal use vehicle insured on your business auto policy and don’t have personal auto insurance, you need to add DOC Broad Form coverage to your business auto policy. With DOC you are then covered if you drive a vehicle not covered or listed on you business auto policy, such as a friend or relatives vehicle.
- TRAILER INTERCHANGE LIABILITY – Insurance coverage for truckers who frequently trade trailers under an agreement that makes them responsible for any damage to a trailer in their care or custody. It covers the insured’s liability for damage to a trailer not belonging to the insured.
- POLLUTION – If you transport chemicals, paints, or other solvents your auto policy does not provide coverage for spilling these chemicals even in the event of an auto accident. Most policies will only pay pollution clean up expense for chemicals and fluids that are used as part of the vehicles engine. Oil, gas, transmission fluid etc. If you were hauling a few cans of paint and were involved in an accident and the paint spilled into a waterway there would be no coverage for the clean up or contamination. You would need to buy a separate pollution policy to cover this exposure.
Employee Policies
Workers Compensation and Employers Liability Insurance
Workers Compensation insurance pays benefits to your employees if they are injured while on the job. Specifically, it covers their medical bills, a portion of lost wages, vocational rehabilitation and death benefits. Almost every state requires by law that employers carry some form of workers’ compensation insurance. Because the coverage amount is established by state law, benefits do not vary from company to company within the same state.
- What does workers’ compensation cover?
Benefits paid to employees generally include:- unlimited reimbursement of medical expenses
- a portion of lost wages
- some vocational rehabilitation
- a survivors death benefits paid to the employer generally include:
Responses to lawsuits brought by injured employees or their dependents for grossly negligent acts by the employer
Protection against employee claims for pain and suffering and loss of relationship
- Who does workers’ compensation cover?
Workers’ compensation covers all the employees of the small business. Special provisions must be made if employees work out-of-state. It can cover the business owner if the business is a corporation, and the owner is actively involved in the business. It does not cover independent contractors.
Sole Proprietors are not included for coverage.
Officers of Private, For Profit Corporations may be excluded from coverage.
Partners – Only general partners may be excluded from coverage. Limited partners may not be excluded.
Officers of Public Corporations may not be excluded.
Non-Profit Organizations/Corporations
Officers/Directors who receive compensation are considered employees. They are included for coverage and may not be excluded. Their payroll should be included and is not subject to a minimum or a maximum.
Officers/Directors who DO NOT receive compensation are considered volunteers and are not covered. No payroll should be included for these volunteers. Some companies will include Volunteers, ask your agent.
- What affects my rates?
- Size of payroll
Workers’ compensation premiums are based directly on the amount of your payroll. The higher your payroll, the more in workers’ compensation premiums you will pay. - Job classifications
The cost of workers’ compensation insurance also varies widely depending on the work function of an employee. In general, a premium for an employee who is a roofer is much higher than a premium for a clerical worker. Employers must accurately report payroll by classification of work performed. We can help advise you which classes apply to your employees.
- Size of payroll
Employment related Practices Liability Insurance
The employment arena has become complicated and litigious. The number of employment-related lawsuits has increased, and award levels are setting records. USA Today recently estimated that there are more than 150,000 wrongful employment practices complaints currently filed at state agencies and the Equal Employment Opportunity Commission (EEOC). The average damage award employers must pay in employment-related lawsuits is $650,000.
Unprecedented liability for fiduciaries that manage employee benefit plans was created with the passage of the federal Employee Retirement Income Security Act of 1974 (ERISA). To protect the interests of plan participants and their beneficiaries, ERISA defines the liabilities and responsibilities associated with the management and administration of an employer’s health and welfare, pension, profit sharing and other employee benefit plans.
Enactment of ERISA was only the first step in pension reform. Since its passage, a number of additional laws have supplemented ERISA to further protect the innocent and penalize the guilty For example, the Consolidated Omnibus Budget Reconciliation Act (COBRA) and the Retirement Protection Act of 1994 create additional compliance obligations for fiduciaries. Furthermore, the increase in employee stock ownership plans (ESOPs) creates significant liability for fiduciaries.
In recent years, corporate America has witnessed an increase in the number of claims alleging ERISA violations and the costs associated with these claims. The average indemnity payment has increased over 22 percent, from $715,000 to $875,0001, and the average defense expense has gone up 471 percent, from $70,000 to $400,000.
While insurance may protect the financial assets of a company and its fiduciaries from claims, an effective loss prevention program can reduce the potential for those claims.
***The above definitions are abbreviated and not guaranteed to apply to any proposed insurance presented by James Zander & Associates or any of its agents. Final provisions and coverage’s are at the discretion of the insurance carrier. Please refer to the actual policy for all terms, conditions, limitations and exclusions. If there is any conflict between the above definitions and the actual insurance policy, the policy provisions will prevail.
Chad Farnum Director of Commercial Insurance 4655 N Central Expwy 2nd Flr Dallas, TX 75205
Ofc: 214-269-3037 Fax: 214-599-9829 Email: cfarnum@jzainsurance.com
