Business Policy – Composite Mercantile Policy (CMP)

Common terms:

Insurer: Accepts a contractual transfer of liability from the insured for a premium

Insured: Benefits from the contractual transfer of liability in exchange for a premium paid

Third Party: Not a party to the contract is protected from the negligence of the insured.

Insurable Interest: one cannot insure a property unless they have an insurable interest.

E.g. if Building is owned by John Smith it should be insured under the named insured John Smith. Or, if the building is owned by a holding company (1234 Ontario Inc.) operated by John smith it should be insured under the named insured 1234 Ontario Inc.

Commercial Mercantile Policy commonly known as CMP actually is a policy made up of multiple policies:

1. Commercial General Liability
2. Property
3. Equipment Breakdown/ Boiler & Machinery
4. Business Interruption
5. Crime
6. Cyber Liability
7. Legal Guard

1. Commercial General Liability

Legal Liability

• CGL Provides “Peace of Mind Insured must be legally liable for their actions

• Negligence must be established by evidence, witnesses or court trial

Negligence:

• Doing something a prudent person would not do, or

• Not doing something that a prudent person would do

What are the exposures?

1. Premises and operations Liability

Premises exposure examples- lose carpet, lose or missing railing, wet or slippery floors, an employee of a grocery store drops a can of food on someone’s foot etc., a contractor working at your home drops some nails and someone got injured with it…..

• Products and Completed Operations Liability
• Personal injury Liability e.g. wrongful arrest, libel, slander, suffering harm to reputation etc.
• Liability for property in the business’s care , custody and control
• Employer’s Liability Exposure
• Contingent Liability Exposure
• Contractual Liability Exposure

Coverage under CGL Policy

1. Bodily Injury and Property Damage – Coverage A
2. Personal Injury and Advertising – Coverage B
3. Medical Payments – Coverage C
4. Tenant’s Liability – Coverage D

Bodily Injury and Property Damage – Coverage A

• Bodily injury and property damage

• Compensatory damages and supplementary payments as defined

• Insurer will pay up to policy limits – defense costs are over and above the limit

• “Occurrence”, “Property Damage” and “Bodily Injury”

• Bodily Injury and Property Damage:

• The CGL insuring agreement agrees to pay for those sums that the insured becomes legally obligated to pay arising out of:

• Premises

• Operations

• Products

• Completed Operations

• The “aggregate” limit is the most we will pay for the sum of legal liability for all “compensatory damages” arising out of the “products-completed operations” hazard under

Coverage A or “personal and advertising injury” under Coverage B as a result of a “products and completed

Operations” loss.

Some Coverage A Exclusions (Bodily Injury & Property Damage)

• Automobiles

• Assumed or written contracts

• Expected or Intended Injury

• Abuse

• Electronic Data

• Aircraft/watercraft exclusion (owned)

• Care, custody and control

• Professional Services

• Access or Disclosure of Confidential or Personal Information

Professional Liability

• Excludes bodily injury, property damage and personal injury arising out of the rendering of or failure to

render any professional services by you or for you

Aircraft/Watercraft Exclusions

• Aviation liability is insured with specialty markets

• Owned watercraft are insured with marine liability insurers

• Note, we cover:

• Owned watercraft that is ashore

• Watercraft you do not own that is 8 meters long and not used for carrying passengers for compensation

Care, Custody & Control

• Property in your care custody and control or costs or expenses to maintain, repair, or replace the property are excluded from coverage since this property is intended to be covered by first party insurance coverage

• Other forms of coverage are available i.e. Bailee’s,

Warehouseman’s Legal Liability

Expected or Intended Injury

• CGL is intended to respond to unexpected acts of negligence

• Intended or expected bodily injury or property damage is excluded by CGL

Coverage B – Personal and Advertising Injury Liability

• Advertising Injury Liability provides Coverage in the event an advertisement makes a false statement

• Coverage trigger under Coverage B is offense related versus the

“Occurrence” trigger under Coverage A

• Personal Injury Liability:

• Personal injury

• Slander (verbal)

• Malicious prosecution

• Wrongful eviction

• False arrest

Some Coverage B (Personal Injury& Advertising) Exclusions

• Knowing violation of rights of another

• Infringement of Copyright, Patent, Trademark or Trade Secret

• Breach of Contract

• Interactive websites, electronic chatrooms, interactive forums or bulletin boards

Coverage C –Medical Payments

• Medical Payments (there is a sub –limit per person and per accident):

• Pays for medical costs of third parties injured on our premises or because of insured’s operations

• Expenses paid regardless of fault

• Reasonable expenses for first aid, medical, dental, ambulance, hospital, funeral services

• We will not pay “bodily injury” expenses:

• To any insured, except “volunteer workers”

• To a person hired to do work for or on behalf of any insured

• To a person, whether while practicing, instructing or participating in any physical exercises or games, sports or athletic contests

Coverage D – Tenant’s Legal Liability

• Insurance for property damage caused by insured through acts of negligence to premises rented, or occupied by you

• Damage due to fire caused by your negligence, or by other forms of property damage perils such as explosions, fires, etc.

• Applies to premises portion you occupy

• Large fire loss shows damage to leased premises that if insured was negligent would be legally liable to repair and replace

Some Coverage D (Tenant’s Legal Liability) Exclusions

• This insurance does not apply to:

• “Property damage” expected or intended from the standpoint of insured i.e. Intentional Act

• “Property damage” for which the Insured is obligated to pay compensatory damages by reason of the assumption of liability in a contract or agreement

Coverage Territory

Operations: Canada, United States of America

Common Exclusions

• Nuclear

• Pollution

• Asbestos

• Terrorism

• Fungi or Spores

• War Risks

Fungi or Spores (Mold Contamination)

• Not all flooding events or water escape results in mold growth

• There are companies that specialize in providing protection for remediation work

• Most insurer can provide a sub-limit for Fungi & Spores

War Risks Exclusion

• Exclusion due to acts of war

• Invasion, act of hostilities, civil war is not insurable risk in the general commercial insurance market place

Data Exclusion

• Excludes erasure or corruption of data

• Excludes loss or damage caused directly or indirectly by “data problem”

• As there are severe exposures with these activities and these exposures are difficult to underwrite or monitor, these activities should be written with a specialty market

Who is An Insured under CGL Policy?

• Individual: you and your spouse

• Partnership, limited liability partnership or joint venture: your members, your partners and their spouses

• Limited Liability Company: your members with respect to the conduct of your business and your managers with respect to their duties as your managers

• Organization: you, your executive officers, and directors are insureds with respect to duties running the organization

• A Trust with respect to their duties as trustees

Also An Insured

• “Volunteer Workers” – while performing duties related to the conduct of the business

• Your employees, while acting within their scope of employment, except as excluded

• Unit owners of condo’s or strata’s in relation to the common property

• Additional Insured/Blanket Additional Insured as defined in Section II, Who Is An Insured (f) and (g)

Commercial General Liability (Occurrence Form)

Comprehensive General Liability

Owners’, Landlords’, and Tenants’ Liability

Tenants’ Legal Liability

Non-Owned Automobile Liability (SPF 6)

Worldwide Non-owned Automobile Liability

Additional Insured

Voluntary Compensation

Directors’ & Officers Liability

Employers’ Bodily Injury Liability

Wrap-up Liability

Pollution Liability

Misc. Wording

Umbrella Liability

Excess Liability

2.      Property

Building, Equipment and Stock

• Building                -Replacement Cost
• Equipment          -Replacement Cost
• Stock

Property of Every Description (POED)

• Building                -Replacement Cost
•  Equipment         -Replacement Cost
• Stock

Contents of Every Description (COED)

• Equipment          -Replacement Cost
• Stock

Definitions

“Premises” means the entire area within the property lines and areas under adjoining sidewalks and driveways, and in the open within 305 metres at each location described on the “Declarations Page”; and in or on vehicles within 100 metres (328 feet) of such locations.

Condominium Unit means:

the condominium unit specified in the “Declaration Page(s)” to which this supplemental coverage applies and includes garages and private approaches reserved for the

Insured’s private use.

Condominium Corporation means:

a corporation constituted under provincial legislation relating to condominiums and includes a strata corporation and a society as so constituted.

Improvements and Betterments means:

building improvements, alterations and betterments made at the expense of the Insured, or by any previous owner of the unit, to a building owned by the Insured as a condominium unit owner.

Unit means:

a unit as defined in provincial legislation relating to condominiums and includes a strata lot so defined.

Stock:

(i)         merchandise of every description usual to the Insured’s business;

(ii)        packing, wrapping and advertising materials;

(iii)       similar property belonging to others which the Insured is under obligation to keep insured or for which he is legally liable; and

(iv)       customers’ property.

Equipment

(i)            Generally, all contents usual to the Insured’s business, including furniture, furnishings, fittings, fixtures, machinery, tools, utensils and appliances, other than “building” or “stock”;

(ii)           similar property belonging to others which the Insured is under obligation to keep insured or for which he is legally liable;

(iii)          tenant’s improvements, which are defined as building improvements, alterations and betterments made at the expense of the Insured to a “building” occupied by the

Insured and which are not otherwise insured, provided the Insured is not the owner of such “building”.

(iv)         If the Insured purchased the use interest in tenant’s improvements made by a predecessor tenant, this form applies as though such tenant’s improvements had been made at the expense of the Insured.

Tenants Improvements:  May be covered under equipment by insurer

• tenant’s improvements, which are defined as building improvements, alterations and betterments made at the expense of the Insured to a “building” occupied by the Insured and which are not otherwise insured, provided the Insured is not the owner of such “building”.
• If the Insured purchased the use interest in tenant’s improvements made by a predecessor tenant, this form applies as though such tenant’s improvements had been made at the expense of the Insured.

“Building” means: the building(s) described on the “Declarations Page” and includes:

(i) fixed structures pertaining to the building(s) and located on the “premises”;

(ii) additions and extensions communicating and in contact with the building(s);

(iii) permanent fittings and fixtures attached to and forming part of the building(s);

(iv) materials, equipment and supplies on the “premises” for maintenance of, and normal repairs and minor alterations to the “building” or for building services;

(v) growing plants, trees, shrubs or flowers inside the “building” used for decorative purposes when the Insured is the owner of the “building”.

(vi) At the option of the Insured, and only for a “building” occupied as rented private residences:

(a) Landlord’s permanent fittings and fixtures, excluding furniture and furnishings in furnished suites or apartments.

(b) Cooking, cooling, dishwashing, heating and refrigerating apparatus in suites and apartments.

(c) Electrical and lighting fixtures.

(d) Awnings, blinds, fencing, screen doors, screens and shutters.

(b) “Cash cards” means cards designed to store a cash value by electronic means

“Contents of Every Description” means “equipment” and “stock”.

“Property of Every Description” means “building”, “equipment” and “stock”.

Office Contents (Broad)

 Contents”: includes furniture, furnishings, fixtures, machinery, tools, utensils, and appliances, books of accounts, drawings and other records and generally all office contents of every description used in the conduct of the Insured business or profession.

Electronic Data Processing Systems (Broad)

Valuable Papers & Records (Broad)

The property insured under this Form is “Valuable Papers and Records” (meaning written, printed or otherwise inscribed documents and records, including books, maps, films, drawings, abstracts, deeds, mortgages and manuscripts, but excluding money or securities), which are the property of the Insured or for which they may be responsible or liable to others (the “Insured Property”), while located at the Premises as cited in the Declarations Page(s) of this Policy.

Accounts Receivable (Broad)

 This Policy is extended to cover against all risks of direct physical loss or damage to the Insured’s records of accounts receivable occurring during the policy period.

Residential Condominiums (Broad)

protect your personal belongings and any improvements that have been made to your unit, in addition to protecting you in case you damage any of the other units or if someone gets hurt while visiting your unit.

Commercial Condominiums (Broad)

 Commercial property insurance is designed to protect the physical assets of a business against loss or damage from a broad range of causes. A fire, hurricane, ice storm, earthquake and water damage are just some of the natural disasters that business owners need to contemplate. Vandalism is another possible threat to business operations. ​

Contractor’s Equipment

 Contractors’ equipment you own, lease, rent or borrow. The equipment may be scheduled or unscheduled

Tool Floater

 Cover your tools off the insured premises, for example on construction sites or during transportation.

Transportation Floater

 Transportation Floater, to include coverage for your goods or merchandise while being transported by public or paid truckers, rail carrier, air express companies or unspecified vehicles owned or operated by you.

Motor Truck Cargo – Owner’s

 A form that covers a truck owner against the loss of his or her property while it is being transported. This form also covers cargo loss or damage, without regard to who is legally liable for the loss.

Motor Truck Cargo

 Motor Truck Cargo insurance (Cargo) provides insurance on the freight or commodity hauled by a For-hire trucker. It covers your liability for cargo that is lost or damaged due to causes such as fire, collision, or striking of a load.

Trip Transit (Broad)

 An insurance policy that covers property in transit during a specific trip, being transported by a certain mode of transport.

Builders Risk

 builder’s risk insurance is “coverage that protects a person’s or organization’s insurable interest in materials, fixtures and/or equipment being used in the construction or renovation of a building or structure should those items sustain physical loss or damage from a covered peril

Installation Floater

 An installation floater is an insurance policy that covers personal property installed, fabricated or erected by a contractor. It covers the property until the installation work is accepted by the purchaser or when the insured’s interest in the property installed ceases

Bailees’ Customers

 Bailee’s customers insurance provides coverage for the legal liability of damage or destruction of a bailor’s property while under the care of a bailee. A bailee is a person or organization that has temporary possession of someone else’s personal property (dry cleaner, parking valet, jewelers, repairers, etc.

Warehouseman’s Legal Liability

 Warehouseman’s Legal Liability coverage is a unique type of liability insurance that responds when a warehouse operator’s failure to exercise reasonable care in the handling and storage of a customer’s goods results in loss of or damage to those goods.

Equipment Dealer’s Stock and Equipment

• Stock

Equipment includes furniture, fittings, machinery, tools and other appliances found at your business location that are not held for sale

• Equipment
• Equipment includes furniture, fittings, machinery, tools and other appliances found at your business location that are not held for sale

Exhibition Floater

 This Rider covers paintings or etchings which are the property of others, while on exhibit at the location specified in the declarations.

Fine Arts Floater (Broad)

 Floater insurance is a type of insurance policy that covers property that is easily movable and provides additional coverage over what normal insurance policies do not. This can cover anything from jewelry to expensive stereo equipment.

Signs Floater (Broad)

 Provides broad form coverage for exterior signs which are owned by the insured or for which they are responsible.

Misc. Property Floater

 This rider covers the property of the Insured or the property of others for which the Insured may be liable as specified in the Declarations, including appurtenances thereof or contained thereon. Each item scheduled is to be deemed separately insured.

Furriers Block (Broad)

 insurance coverage for fur garments belonging to a dealer or the fur department of a store. Coverage is written on an all-risk basis and includes fur garments of other dealers for which the insured is liable.

Furriers Customers – Custody Rider (Broad)

Furriers Customers – Legal Liability Rider (Broad)

Jewelers Block (Broad)

protects assets for the jewelry trade, from the moment they come out of the ground to the day the finished pieces are sold. We cover mining companies producing the raw materials, wholesaler, retailers and individual collectors, for a range of risks including theft, damage and loss in transit.

Heavy Equipment in Use

 Heavy equipment insurance, or commercial contractor’s equipment insurance is broad ranging coverage created to cover any equipment that gets damaged or goes missing during a job.

Installment Sales Floater

 Protects the seller of property in possession of the purchaser (for which payments by the purchaser have not been completed) against loss caused by insured perils to the seller’s remaining financial interest. Also known as conditional sales floater

• Business Interruption (Today we will talk only various types and will go over this in one specific seminar for this)

Misc. Wording (Named)

1. Actual Loss Sustained

Business income coverage covers the actual loss sustained by the insured as a result of direct physical loss or damage to the insured’s property by a peril not otherwise excluded from the policy.

• Profits (Broad/Named)

Gross profits insurance is a type of business interruption insurance that provides funds in the amount of profit lost if an insurable event, such as property damage, occurs. 

• Gross Earnings–Mercantile or Non-Manufacturing
• Gross Earnings–Manufacturing
• Business Income

Insurance that covers the loss of income that a business suffers after a disaster. The income loss covered may be due to disaster-related closing of the business facility or due to the rebuilding process after a disaster.

• Extended Business Income

This coverage may provide protection against a loss of business income that continues after operations have been resumed and the period of restoration has ended. The timeframe during which this coverage applies is typically specified in the policy.

• Extra Expense

Expenses reasonably and necessarily incurred to avoid or minimize the period in which the business is unable to operate.

• Extended Rental Income

Means the rental income during the period corresponding with the indemnity period in the 12 months immediately before the date of the damage appropriately adjusted where the indemnity period exceeds 12 months

1. Gross Rentals

If your apartment building suffered a fire, your Gross Rentals Insurance will pay for the loss of income during the repair period and for lost income during the time it takes to rental of the damaged apartments up to the limit of coverage.

• Rent or Rental Income

Rental income protection is a type of coverage in a landlord insurance policy. It may help replace lost rent payments if the property you are renting out is temporarily uninhabitable after a covered claim

• Other Business Interruption
  Business interruption insurance (also known as business income insurance) is a type of insurance that covers the loss of income that a business suffers after a disaster.

• Crime (Today we will talk only various types and will go over this in one specific seminar for this)

1. Comprehensive 3D

3 “D’s” referred to in the policy were: disappearance, dishonesty and destruction

• Employee Dishonesty Coverage Form A

Employee dishonesty: Provides coverage for fraudulent acts committed by an employee, e.g. employee forges your signature and withdraws money from your account

• Loss Inside the Premises Coverage

Theft of Money and Securities – helps cover loss of your money and securities by theft, disappearance or destruction and damage to your premises or building and damage to a locked safe, vault, cash register, box or drawer from an actual or attempted theft or unlawful entry.

• Loss outside the Premises Coverage

loss of “money” and “securities” by the actual destruction, disappearance or wrongful abstraction thereof outside the “premises” while being conveyed by a messenger or any armored motor vehicle company, or while within the living quarters in the home of any messenger (Gaurda world Money Transfers, Brinks)

• Depositor’s Forgery Coverage

An insurance policy a company purchases providing coverage in the event of a loss due to a forged check or other financial instrument. It is also called a forgery bond.

• Money & Securities

Coverage for loss of money and securities from within the insured’s premises or from the insured’s bank or safe depository is available under an Insurance Services Office

• ….. and many more types…………………
• Equipment Breakdown/ Boiler & Machinery (Today we will talk only various types and will go over this in one specific seminar for this)

1. Machinery Breakdown

Machinery Breakdown. This insurance covers the cost of repairing or replacing insured machinery following breakdown. It also includes electronic or mechanical machinery and equipment, such as boilers, pressure plants, refrigerators and air conditioners

• Business Interruption (Actual Loss)

Business income coverage covers the actual loss sustained by the insured as a result of direct physical loss or damage to the insured’s property by a peril

• Business Interruption (Loss of Profit)

Business income coverage covers the actual loss sustained by the insured as a result of direct physical loss or damage to the insured’s property by a peril. Profits that are lost as a result of the claim

• Business Interruption (Gross Earnings)
• Business Interruption (Rent or Rental Value)
• Business Interruption (Extra Expense)

• Cyber Liability
  
  
  
• Legal Guard

Prospecting New Business

Challenges

What if I don’t know how to underwrite this risk?

Coverages

Complete submissions

Critical information

What to look for when you visit a risk?

Small Business underwriting requirements?

Mostly for contractors or home-based business

Legal Name

Address

Phone:

Email:

Business Description

Gross Revenue

Payroll

# of employees

Years in business

Prior Experience if new venture

Prior insurance:                                       How long

Any USA sales

Coverage:

CGL

Stock

Equipment floater

Tool Floater

Cyber Liability

Legal Guard

• Follow online portal

We may have more questions e.g If they are renting an office or shop or they own a commercial place