FREQUENTLY ASKED QUESTIONS

Answering your questions:

1

What is a named peril policy?

A named-peril policy is a type of insurance policy that covers only specific perils or risks that are explicitly listed in the policy. In other words, the policy only provides coverage for losses that are caused by events that are specifically named or listed in the policy. If a loss is caused by an event that is not listed in the policy, the policy will not provide coverage.

Named peril policies are commonly used in property insurance, such as homeowners insurance, where the policy may only cover specific perils such as fire, wind, hail, and theft. For example, if a homeowner's policy is a named peril policy and a pipe bursts in the home causing water damage, but the policy does not list water damage as a covered peril, the policy may not provide coverage for the damage.

Named peril policies typically have lower premiums than all-risk policies, which provide coverage for any losses that are not specifically excluded in the policy. This is because the insurer is taking on less risk by only providing coverage for the specifically named perils.

It is important for policyholders to review their insurance policy carefully to understand which perils are covered and which are excluded. Policyholders may want to consider purchasing additional coverage or a different policy if they want coverage for perils that are not covered by their current policy.

2

What is an open peril policy or all risk policy?

An open peril policy, also known as an all-risk policy, is a type of insurance policy that provides coverage for all perils or risks unless they are specifically excluded from the policy. This means that unless the policy specifically states that a certain event is not covered, the policy will provide coverage for any type of loss or damage that is not excluded.

All-risk policies are commonly used in property insurance, such as homeowners insurance, where the policy covers a wide range of perils such as fire, wind, hail, theft, water damage, and many other types of damage. For example, if a homeowner's policy is an all-risk policy and a tree falls on the home causing damage, the policy will likely provide coverage for the damage.

All-risk policies typically have higher premiums than named peril policies, which only cover specific perils that are explicitly listed in the policy. This is because the insurer is taking on more risk by providing coverage for a wider range of perils.

It is important for policyholders to review their insurance policies carefully to understand which perils are covered and which are excluded. While all-risk policies generally provide more coverage, there may be certain exclusions or limitations that policyholders should be aware of. Policyholders may want to consider purchasing additional coverage or a different policy if they want coverage for perils that are not covered by their current policy.

3

Why are claims sometimes denied?

Claims may be denied by insurance companies for a variety of reasons, such as:

  1. Policy exclusions: Insurance policies often have specific exclusions that limit coverage. If a loss or damage is caused by an event that is excluded under the policy, the claim may be denied.

  2. Lack of coverage: If a loss or damage is not covered under the policy, the claim will be denied. For example, if a policy only provides coverage for fire damage and a loss occurs due to water damage, the claim may be denied.

  3. Policy limits: Insurance policies often have limits on the amount of coverage provided. If the loss or damage exceeds the policy limits, the claim may be denied.

  4. Failure to pay premiums: If the policyholder fails to pay the insurance premiums, the policy may lapse, and any claims submitted after the lapse may be denied.

  5. Fraud or misrepresentation: If the policyholder provides false or misleading information when submitting a claim, the claim may be denied. Similarly, if the policyholder commits insurance fraud, the claim will be denied.

  6. Failure to report the loss in a timely manner: Insurance policies often have specific requirements for reporting a loss or damage. If the policyholder fails to report the loss within the specified time frame, the claim may be denied.

It is important for policyholders to carefully review their insurance policy and understand the coverage, exclusions, and limitations of their policy. They should also promptly report any loss or damage and provide accurate and complete information when submitting a claim. If a claim is denied, the policyholder can often appeal the decision or work with their insurance company to resolve the issue.

4

How are insurance rates determined? I have never had a claim and my rate keeps increasing.

Insurance rates are determined based on a variety of factors, such as the type of coverage, the risk of loss, and the policyholder's individual risk profile. Insurance companies use complex algorithms and actuarial tables to analyze data and determine rates.

Some of the factors that may be considered when determining insurance rates include:

  1. Age, gender, and marital status: Certain demographic factors, such as age, gender, and marital status, may impact insurance rates.

  2. Driving record: For auto insurance, driving history is a major factor in determining rates. Drivers with a history of accidents or traffic violations are considered higher risk and may be charged higher rates.

  3. Credit history: In some states, insurance companies may use credit history to determine rates. Research has shown that individuals with better credit histories tend to file fewer insurance claims.

  4. Type of coverage: The type and level of coverage chosen by the policyholder will impact the insurance rate. More coverage and lower deductibles will typically result in higher premiums.

  5. Location: Insurance rates may vary based on where the policyholder lives. For example, areas with higher crime rates or natural disaster risks may result in higher insurance rates.

  6. Claims history: Insurance companies may also look at a policyholder's claims history when determining rates. A history of filing claims may increase the risk profile of the policyholder and result in higher rates.

It's also worth noting that insurance rates can vary from year to year, even if the policyholder has never had a claim. This is because insurance companies are constantly analyzing data and adjusting rates to account for changing risk factors. Additionally, rates may increase due to external factors, such as changes in the regulatory environment or shifts in the insurance market.

5

Why do I need employment practices liability insurance? 

Employment Practices Liability Insurance (EPLI) is a type of insurance that provides coverage for claims made by employees against their employers for various employment-related issues such as discrimination, harassment, wrongful termination, and other workplace-related issues.

Here are some reasons why you may need EPLI:

  1. Protect your business from lawsuits: Lawsuits can be costly and time-consuming. EPLI can help protect your business from the financial burden of defending against such lawsuits.

  2. Reduce your exposure to risks: Even if you have a well-managed business, employment-related issues can still arise. EPLI can help reduce your exposure to risks by providing coverage for claims made by employees.

  3. Comply with legal requirements: Depending on the state in which your business operates, you may be required to carry EPLI. It is important to check with your state's labor department to determine whether EPLI is mandatory in your state.

  4. Attract and retain employees: Offering EPLI coverage to your employees can be an attractive benefit that can help you attract and retain top talent.

  5. Provide peace of mind: Knowing that you have coverage in the event of an employment-related claim can provide peace of mind and allow you to focus on growing your business.

It is important to note that EPLI policies can vary in terms of coverage and cost. It is recommended to speak with an insurance professional to determine the best policy for your business.

6

Why do I need hired and non-owned liability insurance? 

Hired and Non-Owned Liability Insurance (HNO) is a type of insurance that provides coverage for businesses that rent or borrow vehicles or that have employees who use their personal vehicles for business purposes. Here are some reasons why you may need HNO:

  1. Protection against liability claims: If an employee or an individual who has rented or borrowed a vehicle on behalf of your business is involved in an accident and is found to be at fault, you may be held liable for damages or injuries. HNO insurance can provide coverage for these types of liability claims.

  2. Additional coverage for business auto insurance: HNO insurance can provide additional coverage to supplement your existing commercial auto insurance policy or if your business does not own any vehicles.

  3. Protection for personal vehicle use: If your employees use their personal vehicles for business purposes, you may be held liable for any accidents that occur while they are on the job. HNO insurance can provide coverage for these types of claims.

  4. Compliance with contracts: Some contracts with clients or vendors may require you to carry HNO insurance. By having this coverage, you can comply with contractual obligations and avoid potential legal issues.

  5. Peace of mind: By having HNO insurance, you can have peace of mind knowing that your business is protected in case of an accident or liability claim.

It's important to note that HNO policies can vary in terms of coverage and cost. It's recommended to speak with an insurance professional to determine the best policy for your business based on your specific needs and risks.

7

Why do I need Water Back Up Coverage? 

Water backup coverage is an insurance policy that protects your property from damage caused by the backup of water or sewage from a sewer, drain, or sump pump. Here are some reasons why you may need water backup coverage:

  1. Protection against water damage: Water damage is one of the most common causes of property damage. Water backup coverage can provide protection for damages caused by water or sewage backup, which can be costly to repair.

  2. Protection against sewer system failures: Sewer system failures can happen unexpectedly and can cause extensive damage to your property. Water backup coverage can provide protection against these types of failures.

  3. Protection against basement flooding: Basements are particularly vulnerable to water damage, especially if they are located below ground level. Water backup coverage can provide protection against basement flooding caused by sewer backups or sump pump failures.

  4. Affordable coverage: Water backup coverage is usually an affordable addition to your homeowner's insurance policy, and it can provide additional protection that may not be included in your standard homeowner's policy.

  5. Peace of mind: By having water backup coverage, you can have peace of mind knowing that your property is protected in case of water or sewage backup.

It's important to note that water backup coverage is not always included in standard homeowner's insurance policies. It's recommended to speak with an insurance professional to determine if water backup coverage is necessary for your property and to determine the best policy for your specific needs and risks.

8

Why won't the coop master policy cover my individual coop unit? 

A cooperative, or a co-op, is a type of housing where residents own shares in the cooperative corporation that owns the building, and each resident has the right to occupy a specific unit within the building. In a co-op, the building and common areas are typically insured under a master policy purchased by the cooperative corporation. However, the master policy generally does not cover the individual units owned by residents.

There are a few reasons why the coop master policy may not cover your individual coop unit:

  1. The cooperative corporation only insures its own property: The master policy purchased by the cooperative corporation is designed to cover the building and common areas, which are considered the property of the cooperative corporation. The individual units, on the other hand, are typically considered the property of the resident owners, not the cooperative corporation.

  2. Each resident-owner is responsible for their own unit: In a co-op, each resident-owner is responsible for insuring their own individual unit. This is because the resident-owner is considered the owner of the unit and is responsible for any damage or loss that occurs to the unit.

  3. Coverage may vary depending on the type of loss: The master policy purchased by the cooperative corporation typically provides coverage for certain types of losses, such as damage to the building or common areas due to fire or theft. However, coverage may not be available for losses that occur within individual units, such as damage to personal property or liability claims.

It's important to understand the coverage provided by the coop master policy and to purchase additional insurance as needed to protect your individual coop unit. It's recommended to speak with an insurance professional to determine the best policy for your specific needs and risks.

What is Business Income Coverage? 

Business Income Coverage is a type of insurance coverage that provides financial protection to a business in the event of a temporary shutdown or interruption. It is designed to help the business recover lost income and pay for continuing expenses during the period of interruption caused by a covered peril, such as a fire or natural disaster.

The coverage typically includes reimbursement for lost income, as well as expenses such as rent, payroll, and taxes that the business continues to incur during the period of interruption. It may also cover the cost of temporary relocation and other expenses related to the interruption.

Business Income Coverage is often included as part of a commercial property insurance policy or a business owners policy (BOP). It is important for business owners to carefully review their policy to understand the specific coverage and limitations of their Business Income Coverage.

9

10

What is the difference between Full Replacement Cost and ACV? 

Full Replacement Cost and Actual Cash Value (ACV) are two different methods for determining the value of a property or asset, such as a home, vehicle, or personal belongings. Here's the difference between Full Replacement Cost and ACV:

  1. Full Replacement Cost: Full Replacement Cost is a method of valuation that provides coverage for the full cost of replacing or repairing a damaged or lost item with a new item of similar kind and quality, without any deduction for depreciation. This means that in the event of a covered loss, the insurance company would pay the full cost of replacing the damaged or lost item with a new one.

  2. Actual Cash Value (ACV): Actual Cash Value is a method of valuation that considers depreciation of the damaged or lost item. It is the cost to replace an asset of similar kind and quality, less depreciation. This means that in the event of a covered loss, the insurance company would pay the cost of replacing the damaged or lost item with a new one, less the depreciation of the item.

The difference between Full Replacement Cost and ACV can be significant, as ACV takes into account the age and condition of the item at the time of the loss. Full Replacement Cost provides more comprehensive coverage but may also be more expensive than a policy that provides ACV coverage.

It's important to review your insurance policy to understand what type of coverage is provided for your property or assets. Depending on your specific needs and risks, you may want to consider purchasing a policy that provides Full Replacement Cost coverage, especially if you own valuable items that would be expensive to replace.

11

Why do I need to cover independent contractors with workers’ compensation insurance? 

Workers' compensation insurance is designed to provide benefits to employees who are injured or become ill as a result of their work, including medical expenses and lost wages. Independent contractors, on the other hand, are not considered employees, as they are not under the direct control of the employer and typically have their own insurance coverage. However, there are situations where employers may be required or choose to cover independent contractors with workers' compensation insurance. Here are some reasons why:

  1. Legal requirements: In some states, employers are required by law to provide workers' compensation insurance coverage to independent contractors if they meet certain criteria, such as if they work in a hazardous industry or perform work for a government agency.

  2. Contractual requirements: Some contracts between employers and independent contractors may require the employer to provide workers' compensation coverage. This is often the case when the work being performed is hazardous or involves a high risk of injury.

  3. Protection against lawsuits: If an independent contractor is injured while working on a job, they may file a lawsuit against the employer for damages. If the employer has workers' compensation insurance coverage that includes independent contractors, the insurance policy may provide protection against lawsuits by the independent contractor.

  4. Risk management: Even if an independent contractor has their own insurance coverage, an employer may choose to cover them with workers' compensation insurance as part of their overall risk management strategy. This can help ensure that all workers on a job site are protected in case of an accident or injury.

It's important to note that the rules and requirements for covering independent contractors with workers' compensation insurance can vary depending on the state and the specific circumstances of the job. It's recommended to speak with an insurance professional to determine if covering independent contractors with workers' compensation insurance is necessary for your specific situation.

12

What is a waiver of subrogation? 

A waiver of subrogation is a contractual provision in which one party agrees to waive their right to seek reimbursement or take legal action against another party for damages or losses covered by an insurance policy. Specifically, it is an agreement in which an insured party waives its right to subrogate against a third party for a covered loss.

In the context of insurance, subrogation is the right of an insurance company to seek reimbursement from a third party that caused a loss or damage to the insured property. This allows the insurance company to recover the amount of money they paid out to the insured for the loss. However, if there is a waiver of subrogation clause in a contract between two parties, the insurance company is prevented from seeking reimbursement from the party that caused the loss.

For example, a landlord may include a waiver of subrogation clause in a lease agreement with a tenant. If there is a fire in the building that damages the tenant's property, the tenant's insurance company may pay for the damages. However, if there is a waiver of the subrogation clause in the lease agreement, the tenant's insurance company cannot seek reimbursement from the landlord, even if the fire was caused by the landlord's negligence.

Waivers of subrogation are commonly used in commercial contracts, such as construction contracts or rental agreements, as a way to allocate risk and protect parties from being held liable for damages covered by insurance. However, it's important to note that the inclusion of a waiver of subrogation clause in a contract can affect the terms of an insurance policy, and may require additional insurance coverage or consultation with an insurance professional.


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