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• Why Do I Need Professional Liability/Errors and Omissions Insurance?
• Why Do I Need General Liability Insurance?
• What Limits Should I Carry?
• What is an Independent Insurance Agency?
• What are Each Claim Limits and Aggregate Limits?
• What is a Retroactive Date, Prior Acts Date and Knowledge Date?
• What is the Difference Between a Claims Made Policy and an Each Occurrence Policy?
• What is an Extended Reporting Period (ERP)?
• What is an Agent of Record Letter/Broker of Record Letter?
• What is First Dollar Defense?
• What is a No Known Claims Letter/ Warranty Letter?
• What are Loss Runs, Loss Reports or Claim Reports?
• What are Certificates of Insurance?
• What is a Certificate Holder?
• What is an Additional Insured?
• What is the Difference Between an Admitted Insurer and a Non-Admitted Insurer?
• What is Surplus Lines Insurance?
Professional liability and errors and omissions are two different names for the same insurance coverage. Errors and omissions is actually a little more of a self explanatory title, meaning when you make an error or omission in services performed. Another explanation is a professional liability policy intends to cover claims arising from the rendering or failing to render professional services.
As careful and risk conscious as a business might be, claims might arise from false or frivolous allegations causing a business to incur defense costs. Within the scope of a policy's coverage, the insurance provider of a professional liability policy would have a duty to defend, within the policy limits.
For a more detailed explanation, see our Professional Liability/Errors & Omissions page.
For a Professional Liability/Errors & Omissions quote, please visit our applications page.
General liability provides protection for claims that might arise out of premises, operations, products, completed operations, contractual liability or the use of independent contractors resulting in bodily injury and/or property damage to a third party. Or claims may arise from specific personal injury offenses such as libel or slander or advertising injury.
You never know how the wind might blow or how someone might stub their toe. Below are some examples of scenarios that could result in a general liability claim:
- A home inspector, inspecting a roof, would logically leave his ladder propped against the house while he is on the roof performing a roof inspection. If a gust of wind were to knock a ladder over, causing it to smash atop the neighbor's vehicle, the resulting property damage might land you in a general liability claim.
- An engineering firm might have a standard receptionist desk situated in a logical, well positioned location at their entrance. Upon the arrival of a visiting guest, they walk past said desk resulting in them hitting their toe on the desk, causing their toe to break. Though there may be no fault on the part of this engineering firm, this could result in a general liability claim.
For a more detailed explanation of General Liability, see our General Liability page.
For a General Liability quote, please visit our applications page.
The best way to decide what limits to carry is to determine a worst case scenario of how much you could be sued for, based on the services you provide your clients. (Remember, the limits are reduced by judgments or settlements plus defense costs). In some scenarios you might believe your limit requirement to be too large to fit your worst case scenario. If this is the case, it is certainly practical to think in terms of the highest limits you can afford. The reality is, if your worst case scenario did happen, and your budget required you to purchase lower limits, only your financial exposure beyond your limits would be uninsured.
When considering which limits to purchase, you can consider the following factors that home inspectors take into consideration (these factors could apply to any industry):
- The value of the homes and buildings they inspect. If there was total devastation to the property, the value of the home or property would be a big part of the determination of what amount the inspector might be sued for.
- Also consider the amount of inspections performed. The more inspections performed the higher the risk of being sued. If an inspector carries a $100,000 aggregate limit and has a higher risk of being sued because he performs 500+ inspections a year, there could be a chance of one lawsuit exhausting the policy limits. This would leave the home inspector vulnerable to being uninsured for the remainder of that policy period.
- State licensing requirements may dictate minimum limits.
- Contracts with clients may specify what limits are required.
The budget for the business is one of the main factors when considering what limits to carry. Having an independent insurance agency that is able to seek out several options is the most practical way to find a coverage option that is adequate and affordable.
Interested in obtaining quotes for your business, complete an application and we can get started with that today!
An independent insurance agency is an insurance agency with access to several different insurance companies and is not obligated to provide quotes for any one particular insurance provider. They are paid on a commission basis. The commission is based on the agreement the agency has with each particular insurance provider and is not an expense that is added to the insured's cost. For a more detailed explanation, please visit our What is an Independent Insurance Agency? page.
All liability insurance policies have an each claim limit and aggregate limit. The each claim limit is the limit a policy can pay out for any one claim situation. An aggregate limit is the total amount that a policy can pay for the duration of a policy period. (Most policies have a one year policy period. Therefore, with a one year policy period, the aggregate limit is the total amount a policy would pay out in that year the policy is in force).
For example, a policy with $100,000 limits (per claim and in the aggregate) has a claim that pays out $50,000 and in that same policy period a second claim is filed resulting in $50,000 paid out. In this example, the policy's aggregate limit of $100,000 would be exhausted and no more coverage would exist under that policy, for the remainder of that policy period.
Interested in obtaining quotes for your business, complete an application and we can get started with that today!
Claims made policies will have a retroactive date, also referred to as a prior acts date. This is the earliest date from which the current claims made policy will provide coverage for wrongful acts committed after the retroactive date. Often the retroactive date is the date a business first purchased a claims made policy and carried it continuously without a lapse in coverage.
More specifically, if a policy with a 09/01/12-13 policy period has a retroactive date of 09/01/1998, coverage would be provided for claims arising from wrongful acts that took place on or after 09/01/1998 and prior to 09/01/2013.
Another date that might be found in a claims made policy is a knowledge date. But this is NOT the same thing as a retroactive date. For more information regarding the difference between a retroactive date and a knowledge date, check our previously posted blog titled "Retroactive Date vs. Knowledge Date."
Interested in obtaining quotes for your business, complete an application and we can get started with that today!
Claims made is "a term describing an insurance policy that covers claims first made (reported or filed) during the year the policy is in force for any incidents that occur that year or during any previous period during which the insured was covered under a "claims-made" contract. This form of coverage is in contrast to the Occurrence policy, which covers an incident occurring while the policy is in force regardless of when the claim arising out of that incident is filed-1 or more years later." (source: International Risk Management Institute, Inc. (IRMI))
When a claims made policy is no longer in force, no more coverage exists (unless an Extended Reporting Period option was exercised).
On an occurrence policy, if coverage was in force for 9/1/2011-2012 policy period and a claim arises on 10/1/2012 for an incident that took place on 12/1/2011, this policy with the 9/1/2011-2012 policy period may provide coverage.
Interested in obtaining quotes for your business, complete an application and we can get started with that today!
The extended reporting period (ERP) would allow you the ability to report claims for an extended period of time if the claims were to arise from wrongful acts that took place during the policy's retroactive date and the final policy's expiration date. Generally, the ERP comes into play if a claims made policy has not been renewed or has been cancelled.
The ERP terms, time limits and premium options are different for every policy. When the options are available they should be listed on the policy.
Interested in reviewing your policy's extended reporting period, contact us today.
Interested in obtaining quotes for your business, complete an application and we can get started with that today!
An agent of record letter, also known as a broker of record letter, is a letter to an insurance company advising them which insurance agency you would like to represent you. Insurance companies only allow one agent at a time to have access to a clients' records.
Different independent insurance agencies can sometimes have access to the same insurance companies. If you would like to maintain coverage with an insurance company but the insurance agency you are currently with has gone out of business or you decide you would no longer like to work with that agency, an agent of record letter can be used to provide a new insurance agency with access to your insurance information (i.e. policies, quotes & loss runs) with your current insurance company.
This letter would be provided to you by the agency you are seeking to switch to.
In need of a new agency to represent you? Contact us today!
When a policy has first dollar defense, also known as dollar one defense, the defense costs do not apply to the policy deductible. If a claim only results in defense costs and no indemnity payments are incurred, the insured would pay nothing out of pocket. The deductible would only apply if there was a settlement or judgment awarded to the claimant.
Interested in obtaining quotes for your business, complete an application and we can get started with that today!
A no known claims letter, also known as a warranty letter, is a letter stating that you are not currently aware of any claim situations or circumstances where a claim might arise.
Insurance companies can require this for a variety of reasons. The purpose of the letter is to protect the insurance company from an insured who is seeking coverage BECAUSE they are aware of a claim situation or the potential of a claim from known circumstances.
Interested in obtaining quotes for your business, complete an application and we can get started with that today!
This is a report created by your current and any previous insurance companies, that provides details of any claims that were reported during a period when coverage was in force. It can also used to prove no claim activity. Typically three to five previous years of coverage are required by a new insurance company quoting for your renewal coverage.
Certificates of insurance are forms generated for you by your insurance agent in order to provide your clients and vendors proof of your insurance coverages.
See also: "What is a certificate holder?" / "What is an additional insured?"
A Certificate of Insurance simply provides evidence or certification that the "Named Insured" actually has liability insurance. That is all a Certificate Holder really is: someone who is provided proof that another party does indeed have liability insurance.
See also: "What is a certificate of insurance?" / "What is an additional insured?"
As an "additional insured" one is actually given liability insurance coverage, and has certain rights under the other party,s liability insurance policy in the event of a future claim. Some insurance companies will charge additional premium for this privilege because they are actually extending coverage to the additional insured.
See also: "What is a certificate of insurance?" / "What is a certificate holder?"
An admitted insurer is licensed within that state to sell insurance on an admitted basis.
When an insurer sells insurance in a state where they are not licensed, it is sold on a non-admitted basis and must have a state specified surplus lines tax paid on top of the premiums and fees. The department of insurance in each state approves non-admitted insurers.
When the insurer is admitted to sell in the state, the state provides financial support if the insurer were to become financially insolvent. This state guaranty support would not be provided with a non-admitted insurer that became financially insolvent. (Note: Choosing an A or higher AM Best financially rated insurer will typically help you avoid this ever being an issue).
One of the reasons an insurer might choose to operate on a non-admitted basis is because the admitted insurers are required by the states to file every change to the policies they offer with the department of insurance. Thus, non-admitted insurers have more flexibility to make necessary changes to their policies as the need arises.
See also: "What is a certificate of insurance?" / "What is a certificate holder?"
Surplus lines insurance is a policy from an approved, non-admitted insurer.See "What is the difference between an admitted insurer and a non-admitted insurer?
Still have questions that were not answered here? Let us know! We are here to help you with all your commercial insurance needs.