Archive for February, 2010

Basic Insurance Definitions

Glossary – Commercial Property

Additional Coverages: Coverage for indirect losses that would not otherwise be covered by the CP policy.

Agreed Value: Optional coverage that provides a predetermined amount in case of a total loss.

Bailee: One who is charged with the care of the property of another. For example, a garage is bailee of a customer’s (bailor’s) car (the bailment) and a jeweler is a bailee of
customer’s jewelry while in for repair or appraisal. There are various standards of care that a bailee must meet, depending upon whether the bailment is gratuitous or a bailment for hire (paid).

Building: The building or structure described. A building must have a roof and four walls.

Business Personal Property: Personal property owned and used in the business of the
named insured, including personal property of others in the care, custody or control of the named insured.

Collapse: “An abrupt falling down or caving in.” This falling down or caving in may be of a building or any part of a building.

Commercial Property Policy: The principal contract for insuring the building and business personal property exposures of commercial insureds. Generally referred to in this course as the “CP policy.”

Computer Virus: An unauthorized code into a computer.

Concurrent Causation: To avoid unintended insurance recovery in situations that involve an excluded peril and a non-excluded peril, current forms contain concurrent causation exclusions; concurrent causation is a legal theory finding coverage for loss or damage to property if such loss or damage is caused by more than one peril, one of which is excluded under the terms of the policy and one of which is not excluded.

Concurrent Causation Doctrine: Holds that losses are covered if caused jointly by an
excluded peril, such as flooding or earth movement, and some other peril not excluded by the policy, such as negligent construction.
Concurrent

Causation Exclusions: Exclusions added to modern property policies in response to litigation activity involving the concurrent causation doctrine. They are designed to avoid intended insurance recovery in situations that involve damage that can be said to be caused by both an excluded peril and a nonexcluded peril. Concurrent causation is a legal theory finding coverage for loss or damage to property if such loss or damage is caused by more than one peril, one of which is excluded under the terms of the policy and one of which is
not excluded.

Consequential Loss: Indirect loss arising out of direct damage to property, such as spoilage of food following lighting damage to a freezer unit.

Coverage Extensions: Additional insurance for things already covered under the CP policy.

Debris Removal: Coverage for the expense of removing debris of covered property that has been damaged by a covered cause of loss.

Delay, Loss Of Use, Loss Of Market: Indirect losses that are the result of a covered loss, such as a restaurant losing customers, with the attendant revenue, while rebuilding after a fire.

Direct Damage: Damage directly caused by a covered cause of loss.

Endorsement: An attachment to a basic policy that becomes part of the policy and modifies coverage. Endorsements can add, delete, or modify provisions in the basic policy.

Functional Valuation: An alternative valuation method that provides for the replacement of a scheduled building with similar property that performs the same function but is less costly.

Increased Cost Of Construction: Coverage for the additional costs of complying with
enforcement of an ordinance or law regulating the construction or repair of buildings after a loss.

Indirect Or Consequential Damage: Damage that arises as a result of a direct loss – such as loss of income when a business must shut down due to a fire. Inflation Guard A provision by which the limits of coverage are increased on a regular basis by a designated percentage in order to offset increasing building costs associated with inflation.

Intangible Property: Property that cannot be seen or felt – such as customer records, patents, and trademarks.

Liberalization: A broadening of coverage without an added charge to the insured.

Named Perils: A specific list of covered causes of loss, such as fire, lightning, or wind, contrasted to open perils, which provides coverage for any damage not otherwise excluded.

Open Perils: Property coverage that applies to risks of loss on a general basis, in contrast to policies that cover specifically identified (named) perils. Formerly known as “all risks”
coverage.

Permanently Installed: A piece of property that is set up for use and intended to
remain in the same place without fundamental change.

Personal Effects: Items usually worn or carried on a person.

Personal Property: All property other than real estate.

Physical Damage: What’s covered by property insurance policies.

Prosecution Or Abatement Policies: Insurance policy that pays for offensive litigation against a patent infringer.

Separation Of Coverage: The various categories of business personal property
(stock, machinery and equipment, furniture, fixtures, tenant’s improvements and betterments) may be assigned individual limits of insurance through the use of this
endorsement.

Sinkhole: A hole in the ground created when water wears upon limestone or dolomite.

Structure: A broader term than building. Anything that is constructed.

Subrogation: The insurer’s right to collect payment from the ultimate wrongdoer.

Valuation: The method used to place a value on damaged property.

Vandalism: The willful and malicious damage to or destruction of covered property.

What is an HSA plan?

An HSA plan stands for “Health Savings Account” and typically is associated with “high deductible” medical plans. HSA plans usually have lower premiums than standard “co-pay” types of plans as the insured normally pays the first dollar amounts up to the “high deductible”.

The high deductible is currently around $2500 to $5000 for individuals and can be around $10,000 for families. Either the plan will pay %100 after the deductible is met or an 80/20 split with the twenty percent being the insured’s responsibility.

HSA plans normally are good for younger and healthier people who don’t visit the doctor often as the money they put into their HSA is building interest and is tax free up to the annual limit. Thus it becomes a good savings plan for medical emergencies. Some HSA medical plans will include “well visits” which is an added benefit.

Like anything else it is best to shop around and compare different carriers if it is not part of your employment benefits.

Are Personal Umbrellas Necessary?

Personal line umbrellas are not necessary from the perspective of law, lenders or insurance carriers when it comes to covering your home and auto. However, from the perspective of protecting your assets and future it does make a lot of sense.

Personal line umbrellas can be purchased usually from the carrier that currently insures your home and auto. Most surprisingly is the inexpensive cost to have a million dollars over your home and auto policies. Typically a million dollar personal lines umbrella can be purchased for $200 to $300. To have this extra coverage is fairly inexpensive for what you get.

When considering an insurance umbrella consult your agent concerning requirements or any other state specific laws or requirements. And as always be sure to call and get a few quotes.