Business Insurance FAQ

Certificate Of Insurance (COI)

A COI is a document showing that insurance was in force on the date issued.

It is issued for information only and does not amend or endorse coverage. If a contract requires Additional Insured, Waiver of Subrogation, or Primary & Non‑Contributory status, the policy typically must be supported by the applicable endorsement(s).

What's An Additional Insured? 

Additional Insured status means a person/organization is added as an insured by endorsement at the named insured’s request, often to satisfy a contract.

In liability policies, it usually provides the additional insured coverage for liability claims connected to the named insured’s work, subject to the endorsement wording, limits, exclusions, and “other insurance” terms.

Does My Home-Based Business Need Insurance?

Often, yes, your home-based business may need insurance, but it depends on your operations. Many entrepreneurs mistakenly believe that their homeowners' insurance will cover their business operations, but this is typically not the case. Home-based business insurance can protect you from business-related losses. For example:

• If a courier were to get injured delivering a business package to your home, your homeowners' insurance might not cover their medical expenses.
• If your business equipment is damaged or stolen, homeowners' insurance might not cover the loss.

You might need several types of insurance for your home-based business, such as general liability insurance, professional liability insurance, or a business owner's policy, depending on the nature of your business.

Claims Made vs. Occurrence Policy

"Claims-Made" and "Occurrence" are two different types of policies in liability insurance, and they determine how and when a policy will respond to a claim.

1. Claims-Made Policy: Coverage is generally triggered when a claim is first made (and often reported) during the policy period (or an extended reporting period), for wrongful acts occurring on or after the policy’s retroactive date (if applicable).
   
   For example, if a claim is made against you after the policy period ends, even if the incident occurred while the policy was active, the claim will not be covered.

2. Occurrence Policy: This type of policy provides coverage for any incident that occurs during the policy period, regardless of when a claim is filed. So, even if the policy is no longer in effect when a claim is made, as long as the incident happened while the policy was active, the claim should be covered.

The type of policy you choose can significantly impact your coverage. Occurrence policies are generally preferred because they provide long-term protection against incidents that occur during the policy period, but they can be more expensive than claims-made policies.

Admitted vs. Non-Admitted Insurance Carriers: A Quick Guide

1. What's the Difference?

• Admitted Carriers: Approved by the state, they follow its rules and have a safety net (the state's guarantee fund) in case they face financial issues.
• Non-Admitted Carriers: Non-admitted carriers are not admitted in the state, but they may legally provide coverage through a licensed surplus lines broker.

2. State-Specific Approval: An insurance company can be approved (admitted) in one state but not approved (non-admitted) in another. Always check their status in your state before buying.

3. Pricing Differences:

• Admitted Carriers: Their prices are more stable since they follow state guidelines.
• Non-Admitted Carriers: They cover a wider range of risks, have more flexible pricing, and are sometimes cheaper.

Form CG 2037 (Completed Operations)

• It adds owners, general contractors, or landlords as additional insureds.
• This coverage specifically applies to your completed work.
• It falls under the products-completed operations part of the policy.
• Protection is limited by specific causation wording.
• It is subject to existing contract requirements.
• The coverage limits do not increase beyond the policy's face value.

Explosion, Collapse, and Underground (XCU) Coverage

XCU stands for Explosion, Collapse, and Underground hazards. When a contract requires an "XCU endorsement," it means your liability insurance must cover high-risk activities like blasting, demolition, and excavation without excluding the resulting property damage.

To comply, check your policy for exclusion forms (like ISO CG 21 42). You must ensure these exclusions are removed or modified so that striking a utility line or causing a structural collapse is fully covered under your CGL and Umbrella policies.

Waiver Of Subrogation

A waiver of subrogation is an insurance endorsement where your insurer gives up the right to sue a third party to recover claim costs. Usually required by contract, it prevents legal battles between business partners after a loss.

Key Points: No Lawsuits: Stops your carrier from seeking reimbursement from your client or partner.

Pre-Loss Agreement: Usually must be signed in writing before an incident occurs.

Limited Scope: It doesn’t provide the other party coverage or make them an "Additional Insured."

Extra Cost: Carriers may charge a fee or premium to add this endorsement.

Contractual Liability

Contractual liability comes up the moment your business signs a lease, a vendor agreement, a subcontract, a master service agreement (MSA), or a purchase order with “indemnify/defend/hold harmless” language.

In insurance terms, contractual liability is the liability you take on because you agreed to it in a contract, not simply because a court would have found you negligent anyway.

Under most standard Commercial General Liability (CGL) policies, contractual liability coverage is an option, but it’s not unlimited, and it’s easy to accidentally “contract around” your insurance.