FAQ
Please click on a question to be taken to its corresponding answer below. Additional insurance information and answers to other common questions can also be found on the Insurance Information Institute website at www.iii.org.
What is the difference between Replacement Cost (RC) and Actual Cash Value (ACV) ?
Replacement cost is the current cost to replace property. Actual cash value is the replacement cost
less depreciation.
How does an audit work?
At the end of the policy term, the insurance company will review the policy and either charge or credit the policyholder based upon an audit of estimated figures. Examples of estimated auditable items include sales and payroll. Audits can be perfomred onsite by an auditor via email or telephone. A premium is charged for audit estimations.
Can other people drive my business vehicle?
Other people may drive your vehicle with your permission. It is important that they be listed on your policy if they are regular drivers of the vehicle, however.
What is '80% co-insurance'?
Insurance carriers require that an insured party insure at least 80% of the property’s value in order to collect full payment for a partial loss. This is done to encourage people to adequately insure their property and ensure risk is appropriately spread among the pool of all insured people.
What is fire legal coverage?
Fire legal coverage provides protection if you rent a business space and are held responsible for fire damages to that rented space. It does not apply to all business risks, however.
Why do I need certificates of insurance from sub-contractors?
An audit may require you to show proof that sub-contractors had their own insurance coverage. Obtaining certificates of insurance from sub-contractors will prevent you from being charged for their exposure.
What is the difference between “Named Insured”, “First Named Insured” and “Additional Insured”?
Named Insureds are those listed by name in the relevant block of the policy’s declaration page. Although the Named Insured is one person, partnership , corporation or other entity with insurable interests, multiple Named Insureds may be included.
First Named Insured is the first “named insured” listed on the policy declarations (front page of the policy). This insured acts as the legal agent for all Named Insureds in initiating cancellation, requesting policy changes or accepting any return premiums. The First Named Insured may also be responsible for payment of the premiums.
Additional Insured is an entity to which a policy’s coverage is extended. An Additional Insured must be added to the policy prior to a claim being paid. There must be a tied relationship between the Additional Insured and the Named Insured. Being an Additional Insured on another’s policy does not eliminate the need for someone to have his/her own Commercial General Liability policy.
