1. Per occurrence limit. As the name suggests, the liability insurance policy offers you a limit (the most money it will pay) per certain accident.

2. Aggregate limit. It is a type of a limit paid by your insurer for all accidents during the whole policy term (usually a year). Usually, it is twice larger than per occurrence limit: single occurrence limit may be 1 000 000 dollars and aggregate limit is 2 000 000 dollars. Do not forget, that aggregate limit comprises the total amount of insurance. So, you should think over beforehand about the exposure to risk during the policy term.

When there is a claim against your company, the insurance firm has two ways how to handle it:

1. to pay the claim loss (indemnify you);

2. to defend you in the court and pay all attorney costs associated with this.

You are also suggested to choose whether to include the defense costs in your policy limits or not. When you choose the included defense cost, you should be aware that the amount of your single limit is reduced by the sum needed for your defense as attorney fee and associated costs needed for your defense will be paid out of your limit.

In the next article about business liability insurance: exclusions and endorsements.

Damage to business property. This occurrence is already covered by your ‘property and casualty’ insurance. Moreover, liability insurance covers only third-party and your business is considered to be the first-party.

Automobile liability. All the losses and damage even those caused by your company’s car are covered by your auto policy, which is a separate policy but not a liability insurance policy.

Damage to a worker. A worker could get injured while working in your company, but the coverage he would get for such damage should be paid by workers’ compensation insurance. In addition, workers are not “third-parties”.

Products-completed coverage. You will find a products-completed operation clause in your liability policy, thus the latter do gives coverage against losses caused by a complete product. However, losses associated with the removal of the product are covered by a separate coverage known as ‘product withdrawal’ coverage.

In the next article about business insurance: limits of liability policies.

You may find a liability insurance to be a part of a big package called “business owners’ policy” (BOP). It comes together with property and casualty insurance. Usually such BOP are offered to small businesses. However, there is a possibility to purchase a separate liability policy known as CGL – a commercial general liability policy. Though both policies offer nearly equal coverage, usually separate liability insurance serves better.

There are two variants of liability insurance policies:

1. Claims made. Claims made policy is the one to insure you against any claims laid by the client of your company. In this case the insurer must defend you and settle the claim. This type of liability insurance policy is widely used among construction outfits where there is much time needed for a defect or mistake to become visible.

2. Occurrence. This form of liability insurance policy is widely used by majority of policies like auto, home and health insurance policies. The idea of occurrence policy is to handle the claim and cover the defense costs which usually comprise attorney fee. The insurer will handle the claim till the end of the course despite of the fact the expiration date of your contract could run out.

The main difference between these two types of liability insurance is when the obligation of the insurer starts and ends. When speaking about “occurrence” type, it gives the coverage only during the policy period. When accident happens to a third-person, not to you or the insurer, it means there is a trigger for your liability policy to give coverage. However, there could be an amendment to the policy concerning “continuous or repeated exposure to substantially the same harmful conditions”. It means the coverage for the third-party could be given even after a lapse of time. For example, a gravel pit could cause the neighbor to fall ill as a result of constant inhalation of gravel dust, thus he would be paid the coverage.

As you see, additional protection to your business has enough benefits. Casualty insurance aims to insure you against unpredicted things like:

Flood. Flood is also excluded form traditional  policies. In order to protect the business against that natural disaster you have to buy a separate flood insurance.

Government Liability or Political Risk. Not only natural disaster can cause losses to your business, but political situation as well, especially if you have business which is somehow connected with the government and its contracts. In case of unpredicted political change in a country you may have your business protected with political risk insurance policy.

Other things like cyber-fraud, cyber-liability, employee theft or identity theft. The insurance policies of this type are designed in response to current trends.

Very often you may find standard casualty coverage, that goes as a part of business owners’ policy, to be quite worthy, however casualty policies of mentioned types could be necessary for your business operation. Also there are some more types of casualty insurance that could be useful for you and your business. They are:

Employee Theft and Dishonesty policy. It gives you coverage in case of loss caused by employee dishonesty and theft. This type of business insurance is widely spread among organizations where employees handle cash transactions and have access to funds of the company.

Surety Bonds. This casualty coverage is used to insure someone you will complete the deal. If you apply for government job, you will be demanded to sign surety bonds insurance. Surety bonds casualty insurance makes employer be sure you will work till the expiration date of your contract.

Judging from all abovementioned you may see that casualty insurance differs from property insurance. These both types of insurance are designed for different purposes, however both of them are necessary.

An endorsement is a document attached to the policy which is eligible to change the amount of coverage defined by an insurance policy. Endorsements usually give increased coverage for things you chose to give additional protection. Concerning business insurance, a customer’s location could be the endorsement if, for instance, your business is working there. Typically, if you have a nice insurer, you may add endorsements even by a phone call.

Exclusions are those points in your insurance policy to take away coverage. Be attentive while signing a contract as you should know the exclusions for not to be in a scrape when there are difficult situations. For instance, in 2004-2005 there was a range of terrible hurricanes that caused terrific losses. However, people were not covered fully as there was an exclusion in the insurance policy for “wind damage”. Thus, a part of the coverage were taken away.

Schedules correspond to a list of property or location covered. This list should be updated regularly with regard to any purchases or changes. Normally, if you signed to a reputable insurer he will contact you regularly to inquire if there are any changes you want to apply in your list of schedules. Otherwise, if you have a damaged equipment which is not listed and would like to get coverage, the insurance company might deny your claim.

There are two ways you can get the insurance coverage of the damaged property:

1. Replacement value that gives you coverage equal to the amount of the damaged or lost thing. For instance, your computer equipment costs 10 000 dollars to replace it, no matter it was bought tree or more years ago. So, according to the terms of your contract you will get a new computer of the same value -  10 000 dollars. Though, replacement coverage has enough benefits, it usually implies higher premiums

2. Actual Cash Value or ACV is fair at first glance – the lost or damaged item is valued and covered at the value of the property loss. To illustrate this let’s view an example. Imagine you have a five-year-old car which has been damaged. Five years ago you bought it for 80 000 dollars, but at the time of its loss it cost about 18 000 dollars . ACV will pay you only 18 000 dollars and you see it’s not enough to purchase a new car.

Thus, all the above-mentioned should be taken into account while choosing the appropriate business insurance. Do not compare the amount of premiums, otherwise you will miss critical aspects of the insurance policy.

Except those most widely used types of insurance like health , car  and house insurance, business insurance takes significant part in this list also. Business or property policy is used to insure your business against possible damage or loss. Property insurance also extends to your business contents, so you can insure it against the loss. Moreover, to insure your business is obligatory for those who rents or leases a location  as a property owner requires you to carry business insurance.

The amount of premium varies depending on the number of perils the policy covers. There are two types of policies:

Single peril – a type of  policy that covers loss from definite identified peril, for instance property insurance against fire or terrorism.

Broad form typically offers a number of perils and gives coverage against all contracted disasters enumerated in a policy.

The insurance package called “business owner’s policy” is available for small businesses. A broad form of insurance is included in it. It is considered to be the ideal variant for small businesses as the premium is rather affordable and the coverage extends for sufficient number of damages. However, when there is high risk the companies do not offer such a package, instead small businesses have to be insured against specific perils, thus have specific perils policies.

All property policies include: endorsements, exclusions and schedules. What they are – in the next article.

Renters as well as homeowners can become the victims of any disaster that can cause damage to their dwellings. Usually, the landlord’s insurance or the one of condo association covers only building construction damage but does not protect renters’ belongings. The best variant for renters to protect their belongings is to buy renters insurance.

Residential insurance policies exist in several types. The one designed for renters is HO-4 policy, and for condo owners there is a separate insurance policy such as HO-6. These two policies give the coverage against 16 types of perils. They are: explosion, fire and lightning, smoke, hail or windstorm, damaged caused by vehicles, damaged cause by aircraft, malicious mischief or vandalism, riot or civil commotion, theft; weight of snow, ice or sleet; falling objects; volcanic eruption; accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning, or automatic fire-protective sprinkler system, or from a household appliance; sudden and accidental tearing apart, cracking, burning, or bulging of a steam or hot water heating system, an air conditioning or automatic fire-protective system; freezing of a plumbing, heating, air conditioning or automatic, fire-protective sprinkler system, or of a household appliance; sudden and accidental damage from artificially generated electrical current (does not include loss to a tube, transistor or similar electronic component).

As you see, there is no earthquakes and floods among these perils. So, if you live in a flood hazard territory and want to protect yourself and your family from flood damage, you may buy a separate policy. If you think your house and possessions have a risk to be damaged by hurricane, it would be better to purchase a separate policy for wind damage.

Renters insurance premium as well as homeowners one is determined by some conditions like location of your house, the company you are contracted to, your deductible and if you need any additional coverage. So, there are some pieces of advice how to lessen your premium bill for renters insurance policy:

1. Increase your deductible. A deductible is the amount you have to pay before your company will provide coverage for you. There is a direct dependence between premiums and deductible: the more deductible, the lower your premium and vice verse. Though keep in mind you can afford the amount you have chosen.

2. Do not buy a dog. Some insurers are not willing to sing contract with owners of certain dog breeds. Thus, if you are eager to have a dog, at least choose the breed wisely.

3. Install protective devices. Smoke detectors, fire extinguishers and burglar alarms are considered to be the most common types of protective devices. Some companies offer additional discounts if you have them.

4. Stay with one insurance company. If you buy several policies like car and home insurance it is offered to purchase them in one company. Most likely you will get a discount, called multi-line discount.

Percentage-based deductibles.

Pretend you have a coastal house which has been damaged by a wind storm. Broken windows and cratered roof – what a mass. Fortunately, your house is insured and now it’s time for your company to cover the losses. But what a surprise when you call your insurance agent and get to know your deductible has been shifted form flat-rate deductible to percentage-based one.

Your agent will surely explain you that there is a kind of rule for coastal homes to change flat-rate deductible to percentage-based. It could be changed when you renewed the policy some years ago. Though currently percentage-based rate equals only 1% of the home replacement value, but the amount of your deductible is about 4 000 dollars instead of 500 dollars or maximum 1 000 dollars as it was before. This might take you by surprise. Now you have to pay your deductible four or even eight times more to get the coverage.

One of the main things to pay attention at while applying insurance company for a policy is to consider whether it offers replacement cost coverage or actual cash value (ACV) for your property.

What is Actual Cash Value?

It is easy to guess that with ACV you will be paid only the amount of money your belongings cost at the time of disaster. Now you understand that the television you bought four years ago for 600 dollars would cost much less today. So, your insurance company will pay you only the worth of your old television minus your deductible. Still, you will have to buy a new television which will cost you about 600 dollars and the coverage won’t be enough for this.

What is Replacement cost?

Replacement cost coverage works another way. The main idea is to replace the item you have lost regardless of its age and state; the cost of the item minus your deductible again. Thus, most of insurers choose ACV coverage in spite the premiums are a bit high. But do not forget that you will be paid out more if anything from your personal things is damaged or stolen. That is why it is very important your agent should know about any valuable item you possess. However, jewelery, electronics and antiques won’t be covered to full amount. If you want to have full coverage for them or for other expensive items you appreciate and do not want to lose, there is addition rider option. Otherwise, due to your policy limits your loss won’t be covered to full extent.

Related articles:

Renters insurance liability

Cheap home insurance quotes

1. Inventory is required.

Actually, it’s up to you to take inventory or not, but if you want to be sure all your damaged or lost belongings would be covered by your home insurance policy, you should better take inventory. To take it you should list each thing you consider to be valuable, its serial number and value. Keep the list in a fireproof place for it not be damaged. Also videotape or take photos of each room and even closet. Open drawers and photograph all the stuff inside either. Do not forget about storage buildings and your garage. The Insurance Information Institute has created special software to make your inventory easier. With free inventory software you won’t find your room-by-room inventory to be so complicated.

2. Additional living expenses.

If your dwelling, either condominium or your own apartment, has been damaged by fire or any other reason listed in your home insurance policy and it appears to be unlivable so that you have to live in another place till your house is repaired, your company will pay you for additional living expenses.

3. Liability protection.

Usually condo and renters policies offer liability protection additionally. It works the following way: if you break any unit in a flat you rent, you will be covered for the cost of an item, of course the amount of coverage will not exceed your liability limit. In addition, if your landlord sues you and wins the case, you will be covered what he wins together with legal expenses.

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