Business Insurance: FAQ Frequently Asked Questions Q. What is fire legal coverage?A. Fire legal coverage provides coverage if you rent a business space and are held responsible for fire damages to that rented space. It does not apply to all business risks.Q. What is the difference between Replacement Cost (RC) and Actual Cash Value (ACV)?A. Replacement Cost is the current cost to replace property. Actual Cash Value is the replacement cost less depreciation.Q. What does 80% co-insurance mean?A. Insurance carriers require that an insured party insure at least 80% of the property’s value in order to collect a partial loss in full. This is the way the insurance company encourages all insureds to adequately insure their property in relation to other insureds.Q. Does my policy cover physical damage to a vehicle I rent?A. This damage will be covered only if that type of coverage is purchased.Q. Can other people drive my business vehicle?A. Other people may drive your vehicle with your permission. It is important that they be listed on your policy if they are regular drivers of the vehicle.Q. How does an audit work?A. At the end of the policy term, the insurance company will review the policy and either charge or credit the policyholder based upon an audit of estimated figures. Examples of estimated auditable items include sales and payroll. Audits can be performed onsite by an auditor or via mail or telephone. A premium is charged for audit estimations.Q. Why do I need certificates of insurance from sub-contractors?A. An audit may require you to show proof that sub-contractors had their own insurance coverage. The sub-contractors’ certificates of insurance will prevent you from being charged for their exposure.Q. What is General Liability?A. General Liability provides coverage if you are liable for damages to other individuals arising from your premises, general operations (ongoing and after completion) and products manufactured or sold.Q. What does Products/Completed Operations mean?A. Products/Completed Operations refers to the liability coverage for damages caused by your operation or products after the point at which you no longer have control of them.Q. What is Business Interruption/Extra Expense coverage?A. Business Interruption/Extra Expense coverage provides coverage for income loss and the expense of establishing a temporary site during repairs due to damages related to a fire or compensable loss.Q. What is the difference between “Named Insured”, “First Named Insured” and “Additional Insured?”A. Named Insureds are those listed by name in the relevant block of the policy’s declaration page. Although the named insured is commonly one person, partnership, corporation or other entity with insurable interests, multiple named insureds may be included.First Named Insured is the first “named insured” listed on the policy declarations (front page of the policy). This insured acts as the legal agent for all named insureds in initiating cancellation, requesting policy changes or accepting any return premiums. The first named insured also may be responsible for payment of the premiums.Additional Insured is an entity to which a policy’s coverage is extended. An additional insured must be added to the policy prior to a claim being paid. There must be a relationship between the additional insured and named insured. Being an additional insured on another’s policy does not eliminate the need for someone to have his/her own Commercial General Liability policy.