Over the years, insurers have rewritten business insurance policies in a way that’s less complicated and thus easy to understand by business people. However, these policies still appear convoluted to a lot of small business owners. Like any other legal contract, it is important to know business insurance policy construction.
If you intend to understand better what’s entailed in a business insurance policy, start by identifying all the sections within the policy. Thereafter, you can look at these areas one by one, taking in what they’re each all about.
What Is a Business Policy?
A business insurance policy refers to an absolute insurance contract that consists of declarations and one or several preprinted forms. Additionally, there’s a chance they include one or more endorsements therein. Critical policy provisions linked to some specific coverage are contained within the coverage form.
Endorsements have the unique purpose of amending the terms and conditions covered within the declarations or the coverage form. For example, a cancellation endorsement that comes with a general liability policy alters cancellation provisions within the preprinted coverage to ensure compliance with state law.
There are policies that have lists known as schedules. An auto policy, for instance, would contain the covered autos schedules, while property policies contain covered locations schedules.
What’s in a Business Policy?
To better understand what a business insurance policy includes, you need a keen grasp of the policy. The five basic components normally contained in most insurance policies include:
On the first page of business insurance policies are the declarations. They provide basic but important information like the name of your company or small business, its address, the name of your insurance agent, and their address. Additionally, it may also contain the policy number, effective dates, plus a summary of coverages and the limits provided.
Usually, in a package policy, a section covers general declarations and disparate declarations for every type of coverage included.
An insuring agreement is a short statement that outlines the payments promised by your insurer on your behalf or to you in the case of a covered loss. This agreement details the coverage extensively. Subsequently, the coverage narrows down and refines the definitions, conditions, and exclusions.
As you’ve probably determined from the term itself, exclusions are risks the insurer refuses to cover completely or only if an additional premium is paid. Certain risks fall under this category simply because another kind of business insurance policy covers them.
The other exclusions are those that need the payment of an additional premium to unlock their coverage, for example, in the case where one employee files a suit against another. The standard general liability policies don’t include ‘fellow employee suits’. However, some insurers cover this with an additional premium.
These policy rules outline obligations that need to be satisfied before the small commercial insurance policy enforcement. Within this contract are the procedures to be followed for valuing damaged property, reporting claims, and canceling the policy, among other actions. Some conditions specifically apply to the insurer, others to all insured parties, and some to the named insured.
Most of these insurance contracts have defined terms denoted in italics or bold. The policy’s definitions section defines these terms. The scope of coverage narrows or broadens these definitions. A general liability insurer, for instance, might broaden coverage by defining a term like ‘bodily injury’ more extensively than, say, the standard liability policy.
In some cases, definitions may act as exclusions. While the standard general liability policy won’t refer to temporary workers in exclusions, the definition excludes ’employee’, stating the term doesn’t stand for temporary workers
Why It’s Good to Ask Your Insurance Advisor Questions About Your Business Insurance Policy
You’ll certainly have a lot of questions in mind when consulting with your insurance advisor about your policy. The most important thing you can do is speak up. It’s your money that you’re paying to the insurance company. As such, get protection against all unfortunate eventualities, even if you must pay more for additional coverage.
At IMA Select, an insurance advisor will simplify the overly legal lingo into statements and facts that are easily digestible. Don’t ignore the fine print. When the time comes to make your small business insurance claims, focus.
Learn More About a Business Insurance Policy
Let’s face it, insurance is a necessity. To adequately protect your business, you’ll need all the information you can get. For any particulars about your business insurance policies, contact us at IMA Select, and a knowledgeable representative will take you through everything you should know.
Have questions? Want to know more?
Reach out! At IMA, we’re here to help safeguard your future!