Commercial Insurance Definitions
Abuse Limited Liability
Abuse Limited Liability provides coverage for claims of abuse between employees and between employers and employees. If you are interested in this coverage please contact the office and we will provide you with an application.
Aggregate Limits Per Location
An aggregate limit is the total value of losses that you are able to have in one policy year. This endorsement allows you to have multiple liability claims in one policy year as long as each claim does not exceed your CGL liability limit and the total cumulative loss amount does not exceed your aggregate limit per policy year. Aggregate Limits per Location allows for a separate aggregate limit for each of your insured locations. This means that if you have an insurable liability loss on one of your locations it does not affect your limits of insurance available for your other locations.
If you have customer’s property in your possession this coverage provides you with actual cash value coverage for those goods. If you will be having customer’s goods in your care, custody or control please contact the office immediately.
This provides coverage for building materials (items installed and waiting to be installed) at the construction site. Construction has started from scratch (a new project) or exterior structure of a building or if you are changing the outside shell or footprint of an existing structure, altering or replacing the interior or exterior structure of a building. Should you be installing or replacing mechanical systems which require testing upon completion you will also need mechanical breakdown coverage with an extension for testing. This can be added to the Builders Risk Policy.
Your building limit must include the replacement value of the Building, Outside Structures, and Outside Equipment. In the event of an insurable loss this limit must reflect the replacement value plus the additional soft costs such as; permits, by-laws, engineering drawings, architects / professional fees, and debris removal. Please note that these are suggestions only and that it is always best to have a professional replacement cost estimate and then add soft costs on top of that. We are not property appraisers.
Your Business Income limit provides you with business income coverage in the event of an insurable loss. Included in your Business Income limit is any Rental Income that you earn. If your only income is Rental Income, 100% of your rents will be the total limit of your Rental Income coverage. If you earn Rental Income in addition to other profits, your Rental Income must be included in the totals reported on your Business Income Worksheet. We recommend that you choose an indemnity period of at least 36 months. It is also important to note that your business income coverage is subject to 100% co-insurance (please see the above note on co-insurance). Please note that the only way to determine the required limits for this coverage is to complete a business income worksheet. The indemnity periods for this coverage are available in 6 month increments from 12 to 36 months. We highly recommend taking the full 36 month indemnity period.
Please note that some policies contain a Co-insurance clause. This means that to avoid the penalty you must insure your building and contents to at least the percentage stated in the clause. We strongly suggest that you always insure to 100% of your replacement cost value. In the event of an insurable loss, if your limit is not at least the percentage stated in the clause of the value of your building and contents you will suffer a co-insurance penalty. This means that the amount of payout that you will receive as a result of the loss will be significantly lower than what it will cost you to replace or repair the damage. Please note that your business income and ordinary payroll contain a 100% co-insurance clause- please refer to the information section on those coverages.
Commercial General Liability (CGL)
Liability coverage will pay for the cost of legal defence if legal action is brought against your business for an insured peril. The liability portion of your policy also covers for property damage or bodily injury caused to others as a result of your legal negligence for insured perils noted in the policy wording. Due to recent trends in claim payouts we highly recommend that our clients carry a Liability Limit of $5,000,000 or higher. Please contact our office and we will be happy to provide you with a quotation for this coverage.
Your contents limit must include the replacement value of your entire contents including office contents, interior equipment, etc. Please note that if you do not have building coverage your contents limit must include debris removal expense. We would recommend having your contents professionally evaluated as we are not equipment appraisers.
Contingent Business Income Coverage
Contingent Business Income Coverage provides you with coverage for loss of business income if one of your main suppliers or a major customer is inoperative due to an insurable loss. Please advise if you would like this coverage added or if you are interested in getting more details.
Contractor’s Equipment (Owned)
Your contractor’s equipment is covered to a maximum limit stated on the declaration page. In the event of a loss, equipment that is under 5 years old will be paid based on replacement cost basis subject to your deductible. If the equipment is older than 5 years the claim will be processed on an Actual Cash Value basis. The Contractor’s Equipment Floater is subject to 90% co-insurance.
Contractor’s Equipment (Rented)
In the event that you rent contractors equipment for which you are legally liable, that equipment will be covered up to the limit stated on the declaration page subject to your deductible. The coverage will be provided on a repair/replace or Actual Cash Value basis- which ever allows for the most minimal payout.
Credit Card Receipts Rider
This endorsement provides a $5000 limit of protection for payments made by credit card on paper transaction slips.
Electronic Data Processing (EDP)
Electronic computer hardware and software limit must include replacement cost value. This coverage will also cover the mechanical breakdown of such equipment.
Elevator Collision Endorsement
The Elevator Collision endorsement provides a $50,000 sublimit for elevator collision as the result of an insurable loss.
Employee Benefits Liability
Should you neglect to add an employee on to your employee benefits plan when they are eligible and a legal action is brought against you this coverage provides protection against legal action. This coverage cannot be used in place of employee benefits coverage. This is a claims made form which means that the policy must be in force when legal action is brought against you.
Employers liability provides you with coverage should one of your employees take legal action against you as the result of a work place injury. Please note that this coverage only pertains to employees not covered under WSIB.
Extra Expense provides coverage for any excess costs incurred during the process of restoration for the purpose of continuing the course of business after an insurable loss. The intent of this coverage is to reduce the extent of the total loss. For example the extra expense would pay for the any additional rent that may have to be paid as the result of renting a different location in order to have the business back up and running in the shortest amount of time possible.
Fire Fighting Expenses
This endorsement provides you with a separate limit for fire fighting expenses up to $50,000. We have found in the past that this in the minimum amount of coverage that should be carried as fire fighting expenses can escalate very quickly in the event of a total loss.
Forest Fire Fighting Expenses
This endorsement provides a $50,000 sublimit to be used for fighting forest fires in the event of an insurable loss.
You may require an installation floater for your operations. This provides coverage for your building materials (items that have been installed or are waiting to be installed) at the job site. Limits reflect the full completed costs of the renovation project to your customer’s property. The limits on your installation floater may require it to be updated depending on the particulars of the current jobs that you are doing. The Installation Floater limit is the total limit for all of your current jobs combined. For example, if one of your jobs requires a $7,000 installation floater limit and another job requires a $5,000 limit than you need a total installation floater limit of $12,000. Please keep your limits in mind when starting a new job. If you are extending the foot print or shell of your customers existing structure then you may require Builder’s Risk coverage.
Leasehold Interest in Tenant’s Improvements
In the event of a loss this provides coverage if a tenant renting out your condo or building does not have proper coverage to repair or replace improvements that they have made themselves in your condo unit. The limits of your policy must reflect these improvements.
Ordinary Payroll provides you with coverage for the wages of non-essential (unskilled) employees for a specified period of time. Ordinary Payroll is subject to a 100% co-insurance clause. (Please see above note on co-insurance.) Please note that the only way to determine the required limits for this coverage is to complete a business income worksheet.
Selling Price Clause
In the event of an insurable loss, this coverage allows you to recoup the listed selling price of your stock if a transaction of sale has already taken place on a specific item and you are holding it for client pick up. Please keep in mind however that this policy does not provide any transportation coverage for your stock.
SPF 6 Non-Owned Automobile Coverage
The intent of the SPF 6 is to provide liability coverage for employees’ vehicles when used for a purpose related to your business. It only provides secondary coverage, the primary coming from the vehicle’s insurance policy. Please note that the SPF 6 Non-Owned Automobile Endorsement coverage does not cover long-term leased vehicles. It is only applicable for automobiles rented for a period of 30 days or less. Long-term leased vehicles require a separate Ontario Automobile Policy.
Statement of Values
The statement of values form overrides the co-insurance clause. This means that in the event of an insurable loss, your total policy limit is that which is listed on the statement of values for building and contents. If you make any capital expenditures throughout your policy period please alert our office immediately to ensure that you maintain adequate limits of coverage. We must receive the signed Statement of Values form within 60 days of your policy renewal or your policy will revert back to having a co-insurance clause.
Your stock is covered under actual cash value. That means that in the event of an insurable loss you will receive the amount that you paid for your stock, not the price that you are selling it for.
Subcontracting can significantly change your risk exposure. If you are subcontracting out a portion of a job you must inform our office so that we can assess the change in risk accordingly. You must obtain proof of insurance from all subcontractors working on the job. They must have insurance coverage with limits that are same or higher as the limits that you have on your policy. If you have any questions or if you are going to be taking part in a job of this nature in the future please contact the office.
Tenant’s Leasehold Interest in Rents Difference
This provides you with coverage to make up the difference in rental costs should the place that you are currently occupying at the time of an insurable loss is unable to be occupied further. There is also coverage for this provided under the extra expense portion of your policy. Please note however that this coverage only provides coverage for relocation to a place of comparable condition to the location occupied prior to loss.
Tenant’s Legal Liability
As a tenant, Tenant’s Legal Liability provides coverage to the limit shown on the declaration page if you are proven in court to be negligent of causing damage to the building owners’ property. This coverage is based on actual cash value.
Depending on your tools you may require a Tool Floater. This provides coverage for your tools but is subject to the limit listed on your declaration page. This coverage is all risk. It is subject to 100% co-insurance and payout is based on Actual Cash Value. Please note that there is a maximum of $1500 coverage per tool. Please inform our office if you purchase new equipment and tools so that you maintain proper coverage for them
The umbrella liability coverage has a self-insured retention of $10,000. This means that if you have a liability claim that is covered under your umbrella policy but not on your auto or property policy you will be responsible for the first $10,000 of the claim. Please note that the umbrella liability provides coverages which are not otherwise covered by your primary liability policy.
This coverage applies to employees not covered by WSIB and provides coverage similar to disability. This coverage does not replace WSIB for employees that are eligible for such coverage.