Common Insurance Terms

Description of operations: Offices not otherwise classified can include a multitude of operations, such as managing production or delivery of goods or services, marketing, and bookkeeping.

Property exposures are generally limited to that of an office, although there may be some incidental storage or an area for minor service work. In older offices, light to moderate exposures come from the large amount of paper used. In newer offices, there are often personal computers, photocopiers, and similar equipment. Ignition sources include electrical wiring, heating, and air conditioning systems, wear, and overheating of equipment. Computers and other electronic equipment may be targets for theft.

Equipment breakdown exposures are typically moderate. Climate control is important for many businesses, and breakdown of the heating or air-conditioning units or computers may cause serious loss.

Crime exposures include employee dishonesty and money and securities if receipts are collected in the office. The exposure increases in the absence of background checks and monitoring procedures. All job duties, such as ordering, billing and disbursing should be separate and reconciled on a regular basis. Receipts should be issued for any cash payments received. Bank deposits should be made on a timely basis to limit the buildup of cash on premises. Audits should be performed at least annually. Computer fraud may be a concern, not only directly to the insured, but also through identity theft of customers’ personal information.

Inland marine exposures are generally limited to accounts receivable if the firm offers credit, computers, and valuable papers and records for clients’ and vendors’ information. Duplicates should be kept off-site to allow for re-creation in the event of a loss. Equipment or laptop computers off premises may be subject to theft or transportation losses.

Premises liability exposure depends upon whether customers come onto the office’s premises or the firm’s employees visit or travel to the customer’s premises. If clients visit the premises, aisles must be free of debris and have flooring in good condition, no frayed or worn spots on carpet, and no cracks or holes in flooring. The number of exits must be sufficient and well-marked, with backup exit lighting in case of power failure. Parking lots and sidewalks must be in good repair, with snow and ice removed, and generally level and free of exposure to slip and falls. Off-premises exposures may arise from sales visits, training sessions, and similar work at the customer’s premises. There should be policies and training as to off-site conduct by employees.

Professional liability exposure will depend on the type of services offered to clients. Any professional must have an appropriate license and proper certification.

Automobile exposure is generally limited to hired and non-owned. If vehicles are provided to employees, there should be written procedures in place regarding the personal use by employees and their family members. All drivers must have appropriate licenses and acceptable MVRs. Vehicles must be maintained and records kept in a central location.

Workers compensation exposure will depend on the actual work being performed. Since most work will be done on computers, potential injuries include eyestrain, neck strain, carpal tunnel syndrome, and similar cumulative trauma injuries that can be addressed through ergonomically designed workstations. Workers who travel off-site can be injured by slips and falls at clients’ premises or in automobile accidents.

Minimum recommended coverage

Business Personal Property, Business Income with Extra Expense, Employee Dishonesty, Accounts Receivable, Computers, Valuable Papers and Records, General Liability, Employee Benefits Liability, Umbrella Liability, Hired and Nonownership Auto Liability, Workers Compensation

Other coverages to consider

Building, Earthquake, Equipment Breakdown, Flood, Computer Fraud, Forgery, Money and Securities, Cyberliability, Employment-related Practices Liability, Business Auto Liability and Physical Damage, Professional or Errors and Omissions Liability, Stop Gap Liability

Reprinted with permission from the Rough Note’s Company copyrighted content.