Commercial Insurance

What is EPLI coverage and why is it important to my business?

EPLI stands for Employment Practices Liability Insurance.  It is a coverage that protects employers from employees who feel their rights have been violated.  sexual harassment, discrimination, Failure to employ or promote are just a few of the most common.  Here are a few statistics to help show why EPLI is so important:

  • You are more likely to have an EPLI claim than a General Liability or a Property claim.
  • 75% of all EPLI claims are against small businesses (1 – 50 employees)
  • The average cost to defend a EPLI claim is $150,000.
  • The average settlement for an EPLI claim is $200,000.

 What is Hired and Non-Owned Auto Coverage?

This is coverage for the policyholder against liability incurred while driving an automobile not owned or hired by the policyholder or resulting from the use of someone else’s automobile on the insured’s behalf, such as an employee using a personal car for the employer’s business purposes. This coverage is automatically included in personal and most commercial automobile policies.

What is Coinsurance and how does it apply to my policy?

Coinsurance is a clause requiring the insured to maintain insurance at least equal to a stipulated percentage of value in order to collect partial losses in full. If the insurance is less than the minimum required, that proportion of the loss will be paid which the amount of insurance carried bears to the amount which should have been carried.  In other words, if a policy requires 80% coinsurance, the insured would have to carry at least 80% of the property’s full replacement cost.

What happens if an employee sues me as a result of their pension plan values falling after a turn in the stock market?

The answer depends on whether you have purchased Fiduciary Liability Coverage.  This coverage is designed to protect the employer for their Acts, Errors, & Omission as related to their management of a qualified pension or 401k plan for their employees.  Depending on how the plan is managed you may need this coverage for your protection.

What if an employee is left off of our Group Health plan by mistake, and then they have an accident. Will I be covered if that employee sues me?

This question is related to Employee Benefits Liability Coverage. Just like Fiduciary Liability coverage, this coverage is designed to protect you against your acts, errors, & omissions as they relate to a group benefit plan (Health, Life, disability, etc.).  If you offer group benefits to your employees, you need this coverage.

My policy shows that my buildings are insured for “Actual Cash Value” (or ACV).  What does that mean?

This is a very important thing to review with your Agent.  Actual cash value in the insurance industry means Replacement cost, minus depreciation.  Do not confuse this term with market value, the two terms are unrelated.  It is a formula that insurance adjusters will use to determine how much money they will pay you after a loss.  In a partial-loss situation, ACV coverage could leave your business with a hefty bill to pay on your own.   One of the few advantage of insuring your buildings in this way is that it will reduce your premium cost.

What does “Functional Replacement Cost” mean?

Functional Replacement Cost (FRC) is an alternative to insuring your buildings to their full Replacement Cost, without some of the pitfalls of selecting Actual Cash Value (ACV).   When this option is selected, the insurance company will only pay the amount necessary to repair your building to the point that it can function the same way it did before.  The company isn’t required to use materials of like kind or quality, or to match existing aesthetics of the building.  Some of the downsides of this option are that you have given the company total control over the mitigation process, and your building could end up looking funny after a repair job.  In addition, many companies have moved away from offering this option, and some of them will offer it but without much pricing incentive to use it.  The benefit of this option is that it is less expensive than insuring to full replacement cost, and you may not care about what kind of materials are used after a loss.  You also don’t have the potential pitfalls of selecting ACV as your settlement option.