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Business & Commercial Insurance Information

Commercial & Business Auto Insurance

Coverages Available in Commercial Auto Insurance

Business owners realize the importance of making sure that their business is well protected from all risks that can affect their businesses. A vehicle that is owned by the business may put the business in jeopardy of a lawsuit in the event of an accident if the accident is caused by that vehicle or its operators. The following are key points that business owners need to remember when shopping for commercial auto insurance.

Personal or Business Insurance: Take commercial auto coverage anytime the vehicle is titled in the name of the business, regardless of the size of car and regardless if the car is for doing business or pleasure. The titleholder of the vehicle (in this case it is the business) may be sued as a result of at fault accidents, bringing the entire business in a legal preceding. If the insurance coverage is not under the name of the business, then the business may have some issues related to the validity of the insurance coverage.

Liability Limits: Insurance companies offer different liability limits, from the basic limits mandated by law (in Illinois it is 20,000/40,000/15,000) to as high as one million dollar for every accident. A business that insures its commercial vehicles at the basic liability limits of ($20,000 bodily injury per person, $40,000 bodily injury per accident, and $15,000 property damage per accident) is certainly running in a big risk of losing its business assets in case of at fault accident involving their business autos with death or serious injury to others. High insurance limits are required to avoid losing business assets in case of auto accidents.

Vehicle Classification: Improper classification of the commercial auto may result in voiding insurance coverage, therefore, rendering policy useless and putting business in significant risk of losing business assets in the event of at fault automobile accident. A truck that is used by an electrician has different classification than a similar truck used as a dump truck. The two trucks have different classes and their premiums are not similar in amount.

Autos that are titled in the name of a business, or ones that is used to run a business must have commercial auto insurance coverage. The following are examples of automobiles that need commercial insurance coverages:

All trucks (local or long hauls), Artisans and all contractors, Messenger and delivery services, Ice cream vendors, Landscaping, Limousine services insurance, Para-Transit transportation insurance, Religious and non-profit, Food services and restaurant insurance, Pickup truck insurance, Truck insurance, Tow truck insurance, Dump truck insurance, Landscaping insurance, Snow plowing, Commercial Vans. etc.

Business Auto Mandatory Coverage Includes:

(1) Liability. In the State of Illinois a minimum of $20,000 bodily injury per person, $40,000 bodily injury per accident, and $15,000 property damage per accident is required from all registered vehicles, personal or commercial. Some commercial autos that need federal filing or state filing may need higher limits. For example, a limo operating in Chicago need to have a minimum of $350,000 in auto liability. A truck that transports hazardous materials is required to have at least one million dollars in auto liability coverage.

(2) Uninsured Motorist/ UM Coverage. In Illinois a minimum of $20,000 bodily injury per person, $40,000 bodily injury per accident is required for Uninsured Motorist/ UM coverage. These are the limits that your insurance company will pay people in your business vehicle in the event of them being injured by some uninsured motorist. This coverage may not apply if the accident is work related, and if the business workers compensation policy comes in the picture.

(3) Other coverages may be required, based on the nature of the business. For example, certain long haul trucking businesses are required to meet FHA Insurance Requirements, and their filing may be require to have Cargo Coverage in place.

Some Optional Coverages for Business Vehicle Includes:

(1) Physical Damage Coverage- Comprehensive coverage will pay for physical damage to the insured vehicles caused by a variety of risks, including fire, lightning, theft, vandalism, hail and flood. Collision will pay when the auto is physically damaged in an accident involving another vehicle or a stationary object, such as a wall, telephone pole, or guardrail.

(2) Underinsured Motorist/ UIM Coverage. In Illinois a minimum of $20,000 bodily injury per person, $40,000 bodily injury per accident is required for UIM (Underinsured Motorist, bodily injury.) These are the maximum limits that your company will pay people in the insured commercial vehicle in the event of them being injured by an insured motorist. Remember that this coverage will not apply if the accident was work related.

(3) Medical Payments: The coverage will pay medical care expenses for the insured(if you are not covered by workers' compensation) as well as passengers in your auto.

(4) Hired and Non-owned Auto: Pay for damages the business is legally obligated to pay due to bodily injury or property damages that happens during the use, loading or unloading of hired or non-owned autos used for your business.

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General Liability

If you have a personal umbrella liability policy, there's generally an exclusion for business-related liability. Make sure you have sufficient auto liability coverage.

Unfortunately for every business owner, the chances of getting sued have dramatically increased in the last decade. General Liability insurance can prevent a legal suit from turning into a financial disaster by providing financial protection in case your business is ever sued or held legally responsible for some injury or damage.

General Liability pays losses arising from real or alleged bodily injury, property damage, or personal injury on your business premises or arising from your operations. The Hartford's liability programs extend far beyond the provisions of typical policies, with broadened coverage and increased limits in over 30 areas.

Broad Range of General Liability Protection
  • Bodily Injury, including the cost of care, the loss of services, and the restitution for any death that results from injury
  • Property Damage coverage for the physical damage to property of others or the loss of use of that property
  • Products-Completed Operations provides liability protection (damages and legal expenses up to your policy's limit) if an injury ever resulted from something your company made or service your company provided
  • Products Liability is a more specialized product liability insurance that protects your company against lawsuits from product-related injury or accidents
  • Contractual Liability extends to any liability you may assume by entering into a variety of contracts
  • Other coverage includes: Reasonable Use of Force; Borrowed Equipment; Liquor Liability; Non-Owned Vehicles (such as aircraft and watercraft); Fire, Lightning or Explosion Damage; Water Damage Liability Protection; Legal Defense Costs; Medical Payments; Personal Injury; Advertising Injury; and specialized liability protection for specific business types

Workers Compensation
Workers compensation laws were created to ensure that employees who are injured on the job are provided with fixed monetary awards. This eliminates the need for litigation and creates an easier process for the employee. It also helps control the financial risks for employers since many states limit the amount an injured employee can recover from an employer.

Workers Compensation Insurance is designed to help companies pay these benefits. As a protection for employees, most states require that employers carry some form of Workers Compensation Insurance. Workers Compensation Insurance is not health insurance. Workers Compensation is designed specifically for injuries sustained on the job.

In most states, if you have employees, you are required to carry Workers Compensation coverage. Even in non-mandatory states, it can be a very good idea, particularly if you have many employees, or if they are engaged in hazardous activities.

Do I need workers compensation insurance?
Employers have a legal responsibility to their employees to make the workplace safe. However, accidents happen even when every reasonable safety measure has been taken.

To protect employers from lawsuits resulting from workplace accidents and to provide medical care and compensation for lost income to employees hurt in workplace accidents, in almost every state, businesses are required to buy workers compensation insurance. Workers compensation insurance covers workers injured on the job, whether they're hurt on the workplace premises or elsewhere, or in auto accidents while on business. It also covers work-related illnesses.

Workers compensation provides payments to injured workers, without regard to who was at fault in the accident, for time lost from work and for medical and rehabilitation services. It also provides death benefits to surviving spouses and dependents.

Each state has different laws governing the amount and duration of lost income benefits, the provision of medical and rehabilitation services and how the system is administered. For example, in most states there are regulations that cover whether the worker or employer can choose the doctor who treats the injuries and how disputes about benefits are resolved.

Workers compensation insurance must be bought as a separate policy. Although in-home business and business owners policies (BOPs) are sold as package policies, they don't include coverage for workers' injuries.

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7 Critical Areas That Need Review in Your Commercial Property and Liability Insurance Policy


Congratulations! You just received your new business policy by mail and you are happy that you feel more secured, have peace of mind, and you just saved some money over your prior insurance policy. Please, before you file your policy in the cabinet take a few moments to check the following 7 points. This can save you thousands, perhaps tens of thousands of dollars in losses or attorney fees. The real saving that you get with an insurance policy is not the reduction in the premiums. Actually the real savings come when you make sure that your policy is the 'right policy' for you, the one that fits your needs and budget.

Description of Operations: Check if the proper description of operations is listed in your policy. In some situations agents may forget to exactly describe the exact operations of your business, leaving your claims unpaid or delayed for a longer time. Examples of misdescribed operations include (1) failure to include operating a small restaurant with commercial cooking in a supermarket / C store, (2) failure to include live entertainment/ dance floor, if there are any, in a restaurant policy, or (3) failure to include roofing work for a construction contractor, so on.

Limits of Coverage & Deductibles: Examine the amounts of coverages that you have on the policy with regards to the building, business property, liability, and any other coverage that you may have requested to have (professional liability, garage keeper liability, liquor liability, so on.) Also examine your deductibles and see if that is what you really applied for.

Co-insurance Ratio: One of the most misunderstood terminology in the insurance business is the coinsurance clause. Coinsurance clause in property insurance is meant to penalize policyholders who underinsure their property, regardless of why. If you have a business and you want to insure your inventory and fixtures at $540,000 when you really have $800,000 worth of inventory and fixture your company may under pay your future claims. The Coinsurance ratio is the percentage at which you must have property coverage compared to the replacement cost of that property, in order for the insurance company to pay you in full for your future claims. So if you have a coinsurance ratio of 90%, and your physical inventory and fixtures have replacement cost of $800,000 then you must maintain at least $720,000 [800,000 X 90%] if you want to be paid in full for your future claims. Let's assume you only had $540,000 property coverage on your policy, when you were supposed to have the minimum of $720,000. This means that you only carried 75% coverage of the minimum that you were supposed to carry [540,000 / 720,000]. In that case, if you suffer a fire loss of $90,000 then your company will pay you only $67,500 [90,000 X 75%], without taking any account for your deductible which will also be deducted from the final figure paid to you. Unlike health insurance where premiums go down with higher coinsurance, higher coinsurance ratio in property insurance means lower premiums because it's less advantageous to the policy holder.

Description of Covered Property: If your policy is supposed to cover certain property that you own such as business property, buildings, inventory, equipment or tools; you need to make sure that the property is accurately described in the policy. For example, if you are insuring a building that was built in 1965 with frame materials but your policy states otherwise you might need to check with your agent to see why there is a discrepancy. In some instances, your company might have given you a steep discount which you did not qualify for because of the year and the type of construction. This situation can complicate claim paying procedures especially if the claim is too large.

Effective and Expiration Dates of the Policy: Examine these dates to make sure that there was no gap in coverage. Correcting dates can be easy in the beginning but may be impossible to do later. If you purchased insurance on January 15, but the policy came with an effective date of January 27, then you had two weeks without coverage. In most states your customers can sue you in 2 years after a particular accident. If something happened during the time, you may not be able to fix the error 8 months later when you receive documents from lawyers about an incident that happened on your premises on January 20.

Premium Base: Premium base, when listed, shows the assumptions based on which the insurance companies charged you for liability. The most common three premium bases are (1) annual sales, (2) square footage of insured premises, or (3) payroll. Most retail businesses are charged based on annual sales. If you see that you premium base is $750,000 when your reported sales are $1,650,000 then there is a big discrepancy that may result in complicating your claims. In cases similar to the above situation your company can argue that you lied to them to get a lower rate. Companies do have the right to audit your records, and charge you back for any un-charged premiums.

Policy Exclusions: Each policy has at least one section called Exclusions. There is no such policy that "covers everything". Reading the Exclusion parts will allow you to see if this particular policy does indeed exclude any part of your operations. If so, you have to review it with your agent. There could be two or more Exclusions Sections in your policy (one for property, one for liability, etc.) Read all possible Exclusions. Sometimes a standard Exclusions may be waived by an Endorsement, or an amendment to the policy that comes at the end of your policy packet. For example, Commercial General Liability does exclude professional liability. For a barber there needs to be an Endorsement at the end of the policy to add that professional liability coverage.

Insurance Navy, 4717 N Pulaski Rd, Chicago, Illinois 60630 (773) 478-3700. We stay focused on Auto Insurance in Chicago Illinois and low rates for Illinois SR22

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