Presented here is a brief overview of some of the
major types of Commercial Insurance. It includes a simple
discussion on Commercial Liability and Property Insurance, and does
not constitute insurance advice. This is not intended to be a
description of coverage, and does not include details of the
coverage nor the terms, conditions, qualifications, limitations and
exclusions applicable. Policies should be reviewed in their
entirety and related to your specific operations. Many insurers
permit changes (Changes to insurance policies are usually called
"endorsements" or "riders") in their limitations or exclusions to
match your specific requirements. As insurance advice must be
tailored to the specific circumstances of each situation, nothing
provided herein should be used as a substitute for the advice of a
competent insurance broker. IN NO EVENT WILL RHODES & WILLIAMS
LIMITED BE LIABLE FOR ANY DAMAGES WHATSOEVER, INCLUDING SPECIAL,
INDIRECT OR CONSEQUENTIAL DAMAGES, ARISING OUT OF OR IN CONNECTION
WITH THE USE OR PERFORMANCE OF THE INFORMATION PRESENTED IN THIS
DOCUMENT.
Commercial Liability Insurance Overview
Commercial General Liability Insurance (CGL) is
the standard liability policy for most business operations. It
provides insurance funds to pay claims and/or defence costs for your legal
liability for bodily injury, specified personal injuries and damage
to tangible property of others arising from your premises, products
or operations. Example: While working at your customer's building,
your employee fails to properly extinguish a cigarette. This
results in fire damage to their building and an injury suffered by
one of their office staff while escaping from the fire. Your CGL
policy may respond to pay for the resulting property damage, the
bodily injury, and related legal expenses.
Employer's Liability Insurance (EL) provides
funds to pay claims and/or defense costs for your legal liability
to your employees who sustain bodily injuries while working on your
behalf. It is available only for employees who are not required to
be insured under a provincial or state workers compensation plan.
For example, your office worker who is not required to be insured
under WSIB is injured while on the job and claims for his/her
injuries.
A supplemental insurance coverage known as Contingent Employer's
Liability (CEL) is available for workers who are required to be
insured under WSIB (or a provincial Workers' Compensation plan).
This insurance is usually included in today's "package" policies as a supplement to the
above CGL policy. CEL provides insurance if an employee suffers an
on-the-job injury and Workers Compensation (WSIB) does not apply.
Example: Your Ontario employee is injured while working on a job
outside the province for a longer period than the out-of-province
time extension allowed by WSIB.
Tenant's Legal Liability Insurance (TLL) provides
insurance funds to pay claims and/or defence costs for your legal
liability from damage to a rented structure (this is usually a
lease obligation) because this is excluded under a basic CGL
Policy. Many of today's "package" policies include this coverage.
The limit of insurance should reflect the cost to construct the
portion of the premises you occupy. Example: The TLL policy
responds for damages caused to your rented premises as a result of
a fire caused by your employee.
Automobile Liability Insurance provides insurance
funds to pay claims and/or defence costs for injuries or damage
suffered by others due to the negligent operation of your owned or
leased automobiles. Specific coverage is defined in various
provincial or state automobile insurance acts. Example: Your
automobile liability policy responds to pay for damage caused when
you accidentally hit another's car causing serious bodily injuries
to its occupants. Ontario Accident Benefits insurance, which is
included in this policy, has undergone substantial changes in 2010/2011 and this
should be reviewed by client and broker. Direct Compensation
Property Damage (DCPD), All Perils, Collision and Comprehensive
insurance is available to cover damage to your vehicle, usually
subject to a deductible. Numerous extensions available through
endorsements, each suited to a specific driving exposure. These
need to be reviewed with your broker and the policy tailored to
your business requirements.
Non-Owned Automobile Liability Insurance (NOA)
provides funds to pay claims and/or defense costs for injuries or
damage suffered by others due to the negligent operation of
automobiles rented for business purposes for less than 30 days. It
also includes coverage for your company's liability if an employee
uses his own vehicle for your business purposes. Coverage is also
available to cover physical damage to a rented vehicle. There are
numerous rules in connection with who pays what depending on the
circumstances of the loss and the jurisdiction where the loss
happens. Due to changes in governing legislation, this exposure has
increased substantially in recent years and should be reviewed
carefully with your broker so proper coverage can be put in
place.
Umbrella or Excess Liability Insurance provides
increased limits - in excess of your CGL, Automobile Liability and
specified primary insurance policy limits. An Excess Liability
policy, as the name implies, provides an additional amount of
insurance in excess of the specified primary policy limit. An
Umbrella Liability policy also provides an additional amount of
insurance in excess of the specified primary policy (or policies)
limit and it may provide more comprehensive coverage than the
primary policies it covers in excess of. The Umbrella Liability
policy is usually subject to a self-insured retention (S.I.R. or
deductible) for claims not insured under a primary policy. Example:
An automobile insurance accident results in a claim for $3,000,000.
If your Automobile Insurance Policy has a limit of $2,000,000, it
would pay the full limit. If your Excess Liability or Umbrella
Liability Insurance Policy has a limit of $5,000,000, it would be
called upon to pay the amount in excess of the primary policy's
payment = $1,000,000.
Errors and Omissions Liability Insurance
(E&O) provides funds to pay claims and/or defence
costs arising from your actual or alleged error or omission that
results in a customer's financial loss where no bodily injury or
damage to tangible property is involved and as a consequence,
coverage provided by your CGL policy is not available. Example: You
manufacture and sell a software product that malfunctions and your
customer incurs costs and a loss of revenue during the time
required to repair it. He claims for his loss.
Professional Liability Insurance is today an
interchangeable term for E&O insurance. Originally the
insurance was available for only for doctors, lawyers, and
accountants but today is broadened to include many other kinds of
businesses with this exposure.
Pollution or Environmental Impairment Liability
provides insurance funds to pay for claims and/or defense costs
resulting from bodily injury or property damage incurred by others
due to a pollution incident from your property or operations. A
wide variety of policies are available. Some insure only sudden and
accidental spills and some include pollution occurring over a
period of time. Some policies restrict the insurance solely to your
legal responsibility to others and some include clean-up costs on
your premises. All these policies have loss reporting requirements
that need to be understood and followed carefully. If your
operation has only a minimal pollution potential, limited coverage
may be available in your CGL policy.
Directors' and Officers' Liability
Insurance (D&O) provides insurance funds to pay
for claims and/or defense costs to protect directors and officers
of your organization from liability claims from a wrongful acts
related to their activities as directors or officers. A coverage
section in most D&O policies provides funds to reimburse the
organization for claims paid by the organization to protect their
directors and officers as required in the bylaws. There are
numerous policy wordings available with substantial differences in
coverage. This insurance is the directors' or officers' last line
of defense before his/her personal assets are at risk, so it is
vital that professional advice be obtained to ensure that you
obtain coverage to match your priorities. Recent legislation and
court decisions have increased directors' and officers' personal
liability for their actual (or alleged) wrongful acts whether the
corporation is public, private or non-profit. When an organization
requires this type of coverage it is important that they deal with
an insurance broker with expertise in this specialized
coverage.
Employment Practices Liability Insurance (EPL or
EPLI) may provide insurance funds to pay for claims and/or
defense costs resulting from a violation of an employee's legal
rights. Harassment, discrimination, and failure to promote are
typical claims. Coverage for wrongful dismissal is limited in
scope.
Fiduciary Liability Insurance provides insurance
funds to pay for a claim resulting from a breach of fiduciary duty
relating to an employee benefit plan such as: Group Insurance,
Employee Profit Share/Stock Ownership Plans, Retirement Plans,
etc.
Claims Made Liability Insurance Policies vs. Occurrence
Liability Insurance Policies
Some of the above policies are offered on a "claims made" rather
than "occurrence" policy basis. There are advantages and
disadvantages to each. The major difference is how they respond to
a claim. Occurrence - the policy in force on the date that the
accident occurs is the policy that responds. Claims made - the
policy in force at the time the claim is made is the policy that
responds. The claims made policy has numerous variations which
could restrict or eliminate insurance for some accidents. Claims
made policies should be reviewed carefully to ensure adequate
insurance for your operations.
Additional liability insurance policies are available from
specialty insurers for a variety of operations or exposures.
Insurance for some of the following may be available as extensions
to the above policies.
• Aviation/aerospace/airport products or operations
• International operations, foreign risk
• Liquor sales
• Special events - sports, entertainment, fairs
• Publishers' liability
• Vendors' liability
• Marine liability/Protection & Indemnity
• Contractor requirements/Wrap-up policy, XCU coverage (Explosion,
Collapse, Underground)
• E-commerce liability
• Intellectual property liability
• Internet liability
• Product recall
• and much more...
Rhodes
& Williams Insurance Brokers is one of the largest independent
insurance brokerage firms in Eastern Ontario. With offices in both
Ottawa and Toronto, our insurance brokers have provided superior
customer service and the right insurance coverage solutions since
1935. We specialize in custom-designed commercial insurance
for a wide variety of industries including High-Tech Insurance (TECHCOVER®), Construction, Retirement and Senior-Living, Not-for-Profit, Packaged Insurance Policy Solutions, and Specialty Solutions.
Bob's tenure in the general insurance field spans
more than thirty years, and includes experience as an underwriter,
commercial account inspector and insurance broker. As an insurance
broker, he specializes in insurance solutions primarily for
manufacturing, technology, construction and not-for-profit
organizations.
Bob is a Registered Insurance Broker in Ontario and is licensed in
most Canadian provinces and territories. He is a Chartered
Insurance Professional (CIP) and Canadian Risk Manager (CRM). Past
credits include instructing Insurance Institute students, RIBO
accredited continuing education course provider, and guest speaker
at insurance or risk management functions.
Bob
Burhoe
January 2011