As many of our clients are design professionals, the commercial coverage normally required is a professional office policy. The primary coverages afforded by this policy are a) office contents (furniture, computer equipment, etc). b) commercial general liability and c) business interruption insurance.

Many of the questions posed on applications pertain to CGL coverages. Accordingly insurers will pose questions that will allow them to gain relevant details of the insurer's exposures. It is also standard practice for insurers to inquire if a firm is involved with international work, particularly if staff are travelling outside of Canada where they may sustain injuries which are not covered by workers compensation and accordingly the commercial general liability insurer may be forced to respond.

You may find the following information helpful in understanding why some of the questions are posed;

1. Errors and Omissions Insurer - any insurer offering commercial general liability insurance to a business that has a potential for a professional liability claim will normally ask for confirmation of errors and omissions insurance. This is because the commercial general liability insurer does not want to be drawn into court for a profesional liability related claim where the insured business does not carry coverage. Although commercial general liability policies exclude professional liability claims, the defense costs alone can be quite expensive.
2. Gross receipts - business receipts are asked for most business operations as a standard commercial question. Insurers use income as a way to calculate liability premiums as well as loss of income coverage . Since the latter provides reimbursement for income loss as a result of a fire, water damage, or other insured peril, the insurer will need verification of income in order to determine the appropriate premium. Likewise, payroll figures are often requested due to the fact that the general liability insurance is priced based on payroll figures. Insurers use payroll as an indication of liability exposure taking into account that employees are covered by the policy contract as additional named insureds.
3. Subcontracting Work - is required because your insurer may be forced to respond to a loss arising from the work performed by subcontracts that you have hired. If your subcontractors do not carry their own insurance, there is a greater risk of your insurer paying liability claims arising from your subcontractors work.
4. Details of coverage required - this information allows your broker to review your coverage limits in order to ensure that they are appropriate.

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