An exclusion is a policy provision that eliminates coverage for some type of risk. Exclusions narrow the scope of coverage provided by the insuring agreement. In many insurance policies, the insuring agreement is very broad. Insurers utilize exclusions to carve away coverage for risks they are unwilling to insure.
Reasons to Exclude RisksExclusions serve various purposes. Most apply to risks that fall into one of the following categories.
Policy forms are not cast in stone. Most are revised periodically. ISO updates it's commercial auto, general liability and commercial property forms every few years. Insurers often follow, incorporating the changes ISO has made into their proprietary forms. A common outcome of the form revision process is the addition or modification of policy exclusions.
Many of the changes made to policy exclusions are a response to recent court decisions. ISO and insurers draft policy forms with the intention of limiting coverage to certain risks. A court may determine that the policy covers a risk that the drafter assumed was excluded. ISO or the insurer may then add or modify an exclusion to remove coverage for that risk.
An obvious place to look for policy exclusions is in the section entitled exclusions. Some policies contain both exclusions and limitations. A limitation is a partial exclusion. It narrows the scope of coverage for an insured risk. For instance, property policies often restrict coverage for valuable items like furs and jewelry to a specified (low) limit.
A policy that provides more than one type of coverage may contain multiple lists of exclusions. A separate list applies to each type of coverage. For example, a typical commercial auto policy contains two sets of exclusions, one under Liability Coverage and the other under Physical Damage Coverage.
Some policies that provide multiple coverages include only one set of exclusions. Each exclusion applies to all coverages. Other policies contain separate exclusions for each type of coverage and common exclusions that apply to all coverages.
A policy may contain exclusions that are not located in the exclusions section. Here are some places where they often appear.
One of the most common places to find policy exclusions is the definitions section. Definitions attach specific meanings to words so that they can narrow the scope of coverage. For example, many policies define a coverage territory, which limits coverage to events that take place in specified countries. This definition serves as an exclusion since events that occur outside the specified countries are not covered. Policies that do not specify a coverage territory generally cover events that occur anywhere in the world.
Exclusions can also be found in the policy section. For example, the ISO commercial auto policy contains a provision that limits coverage to accidents that occur in the coverage territory. This provision appears in the general conditions section, not the definitions.
Many insurers add exclusions to policies by attaching endorsements to preprinted forms. An endorsement may add a new exclusion or modify an existing one.
The insuring agreement is the backbone of a policy. It typically contains broad statements describing the coverage provided. Even the insuring agreement can contain exclusions. For instance, the insuring agreement in the standard general liability policy specifically excludes bodily injury or property damage that was known to certain insured parties before the policy began.
Terrorism insurance is offered separately or as a special addition—called an “endorsement” or “rider”—to your standard commercial property insurance policy. A standard business policy alone will not cover losses caused by terrorism.
Terrorism coverage is a public/private risk-sharing partnership that allows the federal government and the insurance industry to share losses in the event of a major terrorist attack. The Terrorism Risk Insurance Act (TRIA), which was enacted by Congress in November 2002, ensures that adequate resources are available for businesses to recover and rebuild if they are the victims of a terrorist attack. Under TRIA all property/casualty insurers in the U.S. are required to make terrorism coverage available.
Frequently asked questions about terrorism insuranceQ. What is covered by terrorism insurance?
A. A commercial terrorism policy covers damaged or destroyed property—including buildings, equipment, furnishings and inventory. It may also cover losses associated with the interruption of your business. Terrorism insurance may also cover liability claims against your business associated with a terrorist attack.
Q. What’s excluded in a commercial terrorism insurance policy?
A. Depending on your state, a terrorism insurance policy may exclude coverage for fire following. Nuclear, biological, chemical and radiological (NBCR) attacks are also excluded, except in the life, health and workers compensation lines of insurance.
Cyber risks are also an emerging terrorist threat. It is possible that property damage or injuries to employees could be caused by a cyber-attack—for instance an attack that causes equipment to malfunction. On the other hand, most computer attacks are not violent and do not cause physical damage. In general, terrorism insurance is unlikely to cover a cyber-attack, and a small business concerned about this risk should consider purchasing separate cyber liability insurance.
Q. How does terrorism insurance work?
A. Losses are only covered by a terrorism insurance policy if the U.S. Department of the Treasury officially certifies an event as an act of terrorism. This requires that the act be violent and be driven by the desire of an individual or individuals to coerce U.S. civilians or government. No act shall be certified by the Secretary as an act of terrorism if property and casualty losses, in the aggregate, do not exceed $5 million. The act must also cause at least $100 million in damage to be considered a terrorist attack.
The definition of a certified act of terrorism has been expanded to cover both domestic and foreign acts of terrorism.
Factors to consider when deciding whether to buy terrorism insuranceAbout 60 percent of U.S. businesses have terrorism insurance. A few factors to consider when deciding whether or not to insure yourself against terrorism include:
A product recall can have long-lasting and costly consequences for your business – affecting your reputation, productivity, employee morale and bottom line. Thirty years ago if you had a little problem, the chances of people knowing was slim. Now, with Social Media and how quickly news travels, it's bound to be noticed extremely fast. There are several steps you can take to help prevent a product recall. In addition, having the right insurance coverage in place can help minimize the impact.
Familiarize yourself with product safety standards and regulations within your industry – and remember they may change with evolving trends
· Know the product safety standards and regulations within your industry
· Establish a compliance team to ensure you meet standards and laws
· Train employees to be sure they know product safety is a top priority
Scrutinize and verify all partners and processes within your supply chain
· Fully assess manufacturing partners, particularly foreign companies, before doing business with them, including checking claims and litigation history, requesting references, testing products manufactured for others, and confirming company's financials and insurance coverage
· Inspect all third-party parts, materials or ingredients before using them in your products
· Require that suppliers meet quality standards, pass quality audits by independent third parties, and sign contracts that hold them responsible for errors
Establish and conduct robust quality controls
· Perform quality checks at multiple points of the manufacturing process
· Have the quality control program audited by an independent third party
· Create an open culture so employees feel comfortable raising safety concerns
· Have a plan in place should a complaint or claim be filed against your company
· Retain records that allow traceability throughout the supply chain
· Perform mock recalls to test recall plans
· Give us a ring to be sure you have the right coverage in place to help you recover from a product recall
Our carriers offer tailored product recall coverage for manufacturers, food industries, craft brewers, technology companies, retailers and more. Having the right insurance coverage in place can help minimize the impact of a recall by covering the costs to investigate complaints, communicate the recall, collect, repair and dispose of the products, lost profit, legal fees and penalties.
Let's discuss Workers Compensation Insurance. As your business is growing and increasing sales, you're also adding employees, interns and having the occaisional volunteer in your facility. I've gotten a lot of questions about whether or not Interns (paid or unpaid) are covered by your workers compensation policy.
As always with insurance, unfortunately, the answer is: "It Depends."
It depends on what state you're in and the laws implemented, it depends on their job duties, receiving college credits, considered "casual" workers, and whether or not they're performing services for "valuable consideration" aka payment.
Determining who's eligible for benefits under workers compensation is something you really want to discuss with an attorney. Here's an article for PA and NJ... and if you're in NY or other states, it's an easy google -- "are interns covered under workers compensation in (insert your state)" etc etc
Two Solid Articles here. And, as always, shoot us a call/text/email with anything you need.
It is incredibly hard to defend your system against employees clicking on phishing links that they shouldn't be clicking on. Contact us today to get a quality cyber policy for your clients.
How Does Telephone Hacking Occur?
Because VoIP sends calls directly through the same exact path that your network uses for internet and other traffic, your VoIP connections open your network to attack and exploitation. Hackers can sign up to lease premium-rate phone numbers (often used for sexual-chat or psychic lines), from web-based services that charge dialers over $1 a minute and give the lessee a cut. This type of attack is referred to as "Toll Fraud" but other common phone attacks include DDoS and Eavesdropping.
Claims Example: Architecture Firm
An Architecture Firm in Norcross, GA ran up a $166,000 phone bill in a single weekend. Hackers routed calls from the firm to premium-rate telephone numbers in Gambia, Somalia and the Maldives. High speed computers allowed the hackers to make hundreds of calls simultaneously. The local police said there had been no progress in finding the hackers. The firm had no idea that this was a potential risk factor could seriously threaten the health of the business.
How Can I Make Sure My Client is Covered?
First ensure that your you have a cyber policy in place that includes first party crime coverage. Because this is unique type of hacking attack, you want to make sure that it is specifically listed in the policy wording. Many times it is referenced as "telephone hacking." If you are looking to ensure that you have quality coverage in place in the event of a telephone hacking attack, please contact Kyle Rheiner at 610-217-8685
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