# Menlo Insurance Services > Menlo Insurance Services is an independent, licensed insurance brokerage (licenses: https://www.menloinsurance.com/licenses). We shop multiple insurance carriers for businesses and families and help in English and Spanish. Offices: 406 Utah Street, San Francisco, CA 94110; 5900 Balcones Drive, Suite 100, Austin, TX 78731. Phone (628) 285-5140. Email support@menloinsurance.com. We are paid a commission by the carrier that writes the policy and charge no broker fees. If a placement ever requires a broker fee, you see the amount in writing before anything is bound. Licensed broker: [Guido Trevisan, CIC, ARM](https://www.menloinsurance.com/authors/guido-trevisan). ## Get a quote - [Start a quote](https://www.menloinsurance.com/quote): pick the insurance you need and answer one short form, or call (628) 285-5140. Most product pages below open their own quote form. ## Business insurance - [General Liability Insurance](https://www.menloinsurance.com/general-liability-insurance): General liability insurance for businesses. Compare coverage for third party injuries, property damage, completed work, and advertising claims. - [Business Owner's Policy](https://www.menloinsurance.com/business-owners-policy): Compare business owner's policies that combine general liability, commercial property, and business income coverage for eligible small businesses. - [Commercial Property Insurance](https://www.menloinsurance.com/commercial-property-insurance): Commercial property insurance for buildings, equipment, inventory, tenant improvements, and business income. Compare market options. - [Commercial Auto Insurance](https://www.menloinsurance.com/commercial-auto-insurance): Commercial auto insurance for company vehicles, fleets, hired autos, and nonowned autos. Compare liability and physical damage coverage. - [Workers' Compensation Insurance](https://www.menloinsurance.com/workers-compensation-insurance): Workers' compensation insurance for employee medical care, wage benefits, and employers liability. Compare carriers with Menlo. - [Professional Liability Insurance](https://www.menloinsurance.com/professional-liability-insurance): Professional liability and errors and omissions insurance for professional firms. Compare protection for alleged mistakes, omissions, and service failures. - [Commercial Umbrella Insurance](https://www.menloinsurance.com/commercial-umbrella-insurance): Commercial umbrella insurance that adds liability limits above eligible general liability, auto liability, and employers liability policies. - [Cyber Liability Insurance](https://www.menloinsurance.com/cyber-liability-insurance): What cyber liability insurance covers, what it costs, first-party vs third-party, and whether your small business needs it. Get a fast quote. - [Excess and Surplus Lines Insurance](https://www.menloinsurance.com/excess-and-surplus-insurance): What excess and surplus lines means for a business, with a quote request across the commercial markets Menlo shops and plain guidance when a risk needs a non-admitted placement. - [Liquor Coverage in a Business Package](https://www.menloinsurance.com/liquor-liability-insurance): Review liquor coverage within eligible business packages. Start with your business class; coverage depends on the package and underwriting. - [Inland Marine Insurance](https://www.menloinsurance.com/inland-marine-insurance): What inland marine insurance covers, who needs it, contractors equipment, how it differs from commercial property, and cost. Get a fast quote. - [Employment Practices Liability Insurance](https://www.menloinsurance.com/epli-insurance): What EPLI covers, what it costs, whether your small business needs it, how it differs from general liability, and wrongful termination. Get a quote. - [Commercial Crime Insurance](https://www.menloinsurance.com/commercial-crime-insurance): What commercial crime insurance covers, employee dishonesty, how it differs from a fidelity bond, whether your business needs it, and cost. Get a quote. ## Personal insurance - [Homeowners Insurance](https://www.menloinsurance.com/homeowners-insurance): Homeowners insurance for your house, belongings, and liability. A licensed broker compares carriers, checks rebuild costs, and explains wildfire options honestly. - [Condominium Unitowners Insurance](https://www.menloinsurance.com/condominium-insurance): Start one condominium unitowners insurance intake for the unit, building details, requested limits, prior insurance, and loss history. - [Auto Insurance](https://www.menloinsurance.com/car-insurance): Car insurance with liability limits that actually protect you. A licensed broker compares auto insurance carriers, explains deductibles honestly, and re-shops when your record changes. - [Recreational Vehicle Insurance](https://www.menloinsurance.com/recreational-vehicle-insurance): Start one recreational vehicle insurance intake. Menlo collects common applicant details once and coordinates the remaining market questions. - [Renters Insurance](https://www.menloinsurance.com/renters-insurance): Renters insurance for your belongings and liability, usually the least expensive policy you will ever carry. Meet your landlord's requirement in minutes. - [Umbrella Insurance](https://www.menloinsurance.com/umbrella-insurance): A personal umbrella policy adds a million dollars or more of liability above your home and auto insurance. A licensed broker lines up the layers with no gaps. - [Landlord Insurance](https://www.menloinsurance.com/landlord-insurance): Landlord insurance for a property you rent out. Coverage for the building, liability, and lost rent, plus what a policy costs and how to get a quote. - [Flood Insurance](https://www.menloinsurance.com/flood-insurance): How flood insurance works, what NFIP and private policies cover, typical cost, and whether you need it. Get a flood insurance quote. - [Life Insurance](https://www.menloinsurance.com/life-insurance): Term life insurance sized to your income, mortgage, and family. A licensed broker gives straight answers on term versus whole life and compares carriers for you. - [Earthquake Insurance](https://www.menloinsurance.com/earthquake-insurance): Earthquake insurance for your home: private carrier options, why the deductible is high, and what a policy costs. Get a quote. - [Jewelry and Engagement Ring Insurance](https://www.menloinsurance.com/jewelry-insurance): How to insure an engagement ring or fine jewelry with scheduled coverage, whether homeowners is enough, appraisals, and cost. Get a quote. - [Boat and Watercraft Insurance](https://www.menloinsurance.com/boat-insurance): Boat and watercraft insurance for physical damage, on-water liability, and towing, plus what homeowners misses and what it costs. Get a quote. - [Classic and Collector Car Insurance](https://www.menloinsurance.com/classic-car-insurance): Request collector car insurance. This intake is for cars only; review the car’s value, storage and use with a broker. ## Specialty and property insurance - [Commercial Flood Insurance](https://www.menloinsurance.com/commercial-flood-insurance): Review commercial flood insurance for a business property. Start with ownership or lease status and provide property details for underwriting. - [Business IRS Audit Protection](https://www.menloinsurance.com/irs-audit-protection-insurance): Review IRS audit protection for corporate and partnership income-tax returns. Request a review and discuss your return type and eligibility with a broker. - [Employee Identity Fraud Insurance](https://www.menloinsurance.com/employee-identity-fraud-insurance): Request new or renewal employee identity fraud coverage. Review your organization, employee information, privacy procedures and prior losses with a broker. - [Commercial Excess Insurance](https://www.menloinsurance.com/commercial-excess-insurance): Start a commercial excess liability request. Review underlying business insurance, requested limits and placement requirements with a licensed broker. - [Manufactured Home Insurance](https://www.menloinsurance.com/manufactured-home-insurance): Tell us what kind of home you own and how it is used. Review insurance options for a primary home, seasonal residence or rental. - [Homeowners Association Insurance](https://www.menloinsurance.com/homeowners-association-insurance): Describe your homeowners association, planned community or master association and the coverage it needs. Start with the association’s activities and location. - [Nonprofit Management Liability](https://www.menloinsurance.com/nonprofit-management-liability-insurance): Review insurance for the leadership and management responsibilities of your nonprofit. Describe the organization and the protection you want considered. - [Surety Bonds](https://www.menloinsurance.com/surety-bonds): Request a bond review for a license, bid, performance or payment requirement. Start with the type of bond, who requires it and the required amount. - [Executive Risks Insurance](https://www.menloinsurance.com/executive-risks-insurance): Apply for executive risks insurance. Review directors and officers, employment practices, fiduciary and crime coverage for your business with a broker. - [Kidnap and Ransom Insurance](https://www.menloinsurance.com/kidnap-ransom-insurance): Apply for kidnap, ransom and extortion insurance for your business. Share travel, overseas operations and requested limits for a broker review. - [Community Bank Insurance](https://www.menloinsurance.com/community-bank-insurance): Apply for insurance for a community bank or credit union. Review management liability, professional services, crime and property coverage with a broker. - [Home Business Insurance](https://www.menloinsurance.com/home-business-insurance): Start a business owner's policy application for the business you run from home: business property and general liability, subject to underwriting review. - [Commercial Deductible Reimbursement](https://www.menloinsurance.com/commercial-deductible-reimbursement-insurance): Explore commercial deductible buy-back for wind, hail and earthquake. Share your property use, locations and current deductible for a broker review. - [Amateur Sports Insurance](https://www.menloinsurance.com/amateur-sports-insurance): Explore amateur sports insurance for leagues, camps, facilities, tournaments and swim clubs. Start with your organization type and location for a broker review. - [Equipment Breakdown Insurance](https://www.menloinsurance.com/equipment-breakdown-insurance): Explore equipment breakdown insurance for commercial machinery and systems. Share your business type, locations and loss history with a licensed Menlo broker. - [Condo & HOA Earthquake Insurance](https://www.menloinsurance.com/condo-earthquake-insurance): Earthquake insurance for condo and homeowners associations. The master policy excludes quake damage. A licensed broker quotes a dedicated policy for your buildings so the board can insure the gap or decline it on the record. - [Workers' Comp for 1099 & Independent Contractors](https://www.menloinsurance.com/workers-comp-1099-independent-contractors): Do 1099 contractors need workers' comp? Usually the hiring business carries the exposure. A licensed broker checks your class codes and places the policy. - [Builders Risk Insurance](https://www.menloinsurance.com/builders-risk-insurance): Builders risk insurance for owners, builders and contractors. Coverage for new builds and renovations while they are under construction, compared across several construction insurers by a licensed broker. - [Contractor General Liability](https://www.menloinsurance.com/contractors-general-liability-insurance): General liability for trade contractors: handypersons, electricians, plumbers, HVAC, carpenters, painters, landscapers and more. One application, several contractor markets, reviewed by a licensed broker. - [Vacant Commercial Property Insurance](https://www.menloinsurance.com/vacant-commercial-property-insurance): Apply for insurance for fully vacant commercial property. Describe the building, security, renovation plans and requested coverage for broker review. - [Vacant Property Insurance](https://www.menloinsurance.com/vacant-property-insurance): Request insurance for a vacant house, condo, 2–4 unit building or empty commercial building. Prepare the property's condition, vacancy period and value for broker review. - [Dwelling Fire Insurance](https://www.menloinsurance.com/dwelling-fire-insurance): Dwelling fire insurance for properties standard carriers decline: seasonal and secondary homes, short term and vacation rentals, older dwellings. DP1 and DP3 forms quoted by a licensed broker. - [Builders Renovation Insurance](https://www.menloinsurance.com/builders-renovation-insurance): Request insurance for a building under renovation. Review existing building value, project cost, structural work and requested coverage with a licensed broker. - [California FAIR Plan](https://www.menloinsurance.com/california-fair-plan-insurance): Get a California FAIR Plan quote through a licensed broker: homes, rentals, condos, mobile and floating homes, apartment buildings, commercial buildings, farms and wineries, with DIC to fill the gaps. - [High Fire Risk Home Insurance](https://www.menloinsurance.com/home-insurance-high-fire-risk-california): Dropped or non-renewed for wildfire risk in California? What to do next, how the FAIR Plan and a DIC policy replace a homeowners policy, and the wildfire discounts that lower the price. - [Apartment Building Insurance](https://www.menloinsurance.com/apartment-building-insurance-california): Property insurance for California apartment buildings of 5 or more units: the markets, the FAIR Plan commercial policy up to $20 million per building, lost rents and the paper BOP with liability. - [Farm and Winery Insurance](https://www.menloinsurance.com/farm-winery-insurance-california): Fire insurance for California farm buildings and wineries through the FAIR Plan commercial policy: barns, winery buildings, business property and income, up to $20 million per building. - [FAIR Plan + DIC](https://www.menloinsurance.com/dic-insurance-california): Get the California FAIR Plan and a DIC policy quoted together. What the FAIR Plan covers and leaves out, what DIC adds, how photos, underwriting and payment work, and every FAIR Plan product. - [Vacant Land Insurance](https://www.menloinsurance.com/vacant-land-insurance): Liability insurance for vacant land up to 1,000 acres depending on the market, owned personally or by a business, LLC or trust. Premises liability and medical payments for undeveloped land, reviewed by a licensed broker. - [Special Event Insurance](https://www.menloinsurance.com/special-event-insurance): Request insurance for an event. Prepare the activities, venue, attendance, schedule, alcohol service and requested limits for broker review. - [Restaurant Business Insurance](https://www.menloinsurance.com/restaurant-business-insurance): Start a restaurant business insurance intake for property and liability coverage. A licensed broker reviews the submission with Menlo's current restaurant market. - [Commercial Earthquake Insurance](https://www.menloinsurance.com/commercial-earthquake-insurance): Start a commercial earthquake insurance intake for building construction, values, occupancy and deductible preferences. - [Cannabis Business Insurance](https://www.menloinsurance.com/cannabis-business-insurance): Cannabis business insurance for dispensaries, growers, manufacturers, testing labs and delivery companies. One application for property, liability and more. - [Excess Flood Insurance](https://www.menloinsurance.com/excess-flood-insurance): Your NFIP flood policy stops at $250,000 for a home. Excess flood adds building and contents coverage on top for higher value homes and commercial buildings. No online form yet: request a quote and a broker contacts you. - [High Value Home](https://www.menloinsurance.com/high-value-home-insurance): Homes with dwelling limits from about $1 million up to $7 million, placed with specialty markets by a licensed broker. Request a quote. No online form yet: request a quote and a broker contacts you. - [Event Rain Insurance](https://www.menloinsurance.com/rain-insurance-outdoor-events): Rain coverage for outdoor events that pays by the recorded rainfall, from the first hundredth of an inch up to your limit. Request a quote. No online form yet: request a quote and a broker contacts you. - [Wind and Hail Deductible Buy Back](https://www.menloinsurance.com/wind-hail-deductible-buy-back-insurance): Bring a large wind, hail or hurricane deductible on your home down to as little as $5,000 per storm, with limits up to $1 million. Request a quote. No online form yet: request a quote and a broker contacts you. ## Insurance by industry - [Construction and Contractors Insurance](https://www.menloinsurance.com/industries/construction): Insurance for contractors, builders, and the trades. General liability, builders risk, workers' comp, and the additional insured endorsements your projects require. - [Auto and Transportation Insurance](https://www.menloinsurance.com/industries/auto-transportation): Insurance for fleets, truckers, and delivery operations. Commercial auto, motor truck cargo, and the limits your motor carrier authority requires. - [Motor Truck Cargo Insurance](https://www.menloinsurance.com/industries/marine-cargo): Request motor truck cargo insurance for trucking operations. Prepare commodities, routes and shipment values for broker and underwriter review. - [Manufacturing and Wholesale Insurance](https://www.menloinsurance.com/industries/manufacturing-wholesale): Insurance for manufacturers, distributors, and wholesalers. Product liability, commercial property, equipment breakdown, and business income coverage. - [Real Estate and Property Insurance](https://www.menloinsurance.com/industries/real-estate): Insurance for landlords, property managers, and habitational risks. Commercial property, general liability, and markets for vacant and hard-to-place buildings. - [Restaurants and Hospitality Insurance](https://www.menloinsurance.com/industries/restaurants-hospitality): Insurance for restaurants, cafes, and bars. Liquor liability, general liability, commercial property, and business income built for hospitality. - [Retail and Storefront Insurance](https://www.menloinsurance.com/industries/retail-storefronts): Insurance for retail shops and storefronts. Business owners policy, general liability, commercial property, and crime coverage for stores. - [Professional Services Insurance](https://www.menloinsurance.com/industries/professional-services): Professional liability (errors and omissions) and cyber insurance for consultants, accountants, and advisory firms. Coverage sized to your engagements. - [Nonprofit and Community Organization Insurance](https://www.menloinsurance.com/industries/nonprofits): Insurance for nonprofits and community organizations. Directors and officers, general liability, property, and coverage for staff and volunteers. # Actual Cash Value vs Replacement Cost Explained (https://www.menloinsurance.com/library/guides/actual-cash-value-vs-replacement-cost) Actual cash value pays replacement cost minus depreciation; replacement cost pays for new. Recoverable depreciation, the 180-day election and more. Markdown version: https://www.menloinsurance.com/library/guides/actual-cash-value-vs-replacement-cost.md Actual cash value (ACV) pays what it would cost to replace your property minus depreciation for age, wear and obsolescence. Replacement cost (RC) pays the full cost of new property of like kind and quality, with nothing taken off for depreciation. On a 20-year-old roof or a 10-year-old machine, the gap between the two can be most of the claim. The idea is simple, but the mechanics are not. Replacement cost claims are paid in two checks, and the larger share usually comes in the second one. Getting it means meeting a condition, finishing the repairs, living with a "least of" rule and a 180-day election that trips up many policyholders. ## Key takeaways * **ACV** = replacement cost minus depreciation. On older property, depreciation can take half the settlement or more. * **Replacement cost must be chosen on the declarations**. Under the standard ISO valuation condition, losses settle at actual cash value by default. * **The claim pays in two checks**: ACV first, then the recoverable depreciation, paid only after the property is repaired or replaced. * **Functional replacement cost** (CP 04 38) pays for a cheaper building that does the same job, for property you would not rebuild as it was. ### Actual Cash Value vs Replacement Cost Replacement cost and actual cash value are the two most common ways to value buildings and personal property at the time of a loss. Replacement cost is the cost to buy new property of like kind and quality. Actual cash value is that cost reduced by the property's depreciation at the time of the loss. ## What is the difference between actual cash value and replacement cost? [#what-is-the-difference-between-actual-cash-value-and-replacement-cost] The difference is one variable: depreciation. [Actual cash value](https://www.menloinsurance.com/library/glossary/actual-cash-value) (ACV) subtracts depreciation from the cost to replace the property. [Replacement cost](https://www.menloinsurance.com/library/glossary/replacement-cost) (RCV) pays for property of comparable material and quality used for the same purpose, at current prices, with no depreciation deducted. Most buyers want replacement cost, and they usually have to ask for it. Whether depreciation comes off your payment is decided on the declarations page, not at claim time, so it has to be settled before the loss. The two methods differ on the points that decide a settlement: The numbers make it real. Say a hail-damaged roof costs $80,000 to replace and is 15 years into a 25-year service life. An ACV settlement deducts roughly 60 percent for depreciation and pays about $32,000 before your deductible. A replacement cost settlement pays the full $80,000 once the roof is replaced. Same loss, same policy limit, and a $48,000 difference. ## How does replacement cost coverage pay a claim? [#how-does-replacement-cost-coverage-pay-a-claim] Replacement cost pays only if you chose it, and then it pays the least of three amounts. The Building and Personal Property Coverage Form ([CP 00 10](https://www.menloinsurance.com/library/forms/cp-00-10)) settles every loss at actual cash value unless the replacement cost optional coverage is marked on your declarations. Once it is, the policy pays the least of: (i) the limit of insurance, (ii) the cost to replace with material of like kind and quality, or (iii) the amount you actually spend to repair or replace. The replacement cost option does not pay for upgrades required by building codes, so a rebuild forced up to current code needs [ordinance or law coverage](https://www.menloinsurance.com/library/guides/ordinance-or-law-coverage) on top. The form also includes an election many policyholders miss. You can settle a loss at actual cash value first and still claim the difference up to replacement cost later, but only if you tell the insurer within 180 days of the loss that you intend to. If you don't, your replacement cost policy pays that loss at ACV. Put the date of loss in your file. Also check your endorsements: many carriers pay roof surfaces over a certain age at ACV instead of replacement cost. Read the declarations and every endorsement before assuming how a claim will be paid. ## What is recoverable depreciation? [#what-is-recoverable-depreciation] Recoverable depreciation is the part of a replacement cost claim the insurer holds back until you finish the repairs: the difference between the ACV payment and the full replacement cost. The adjuster pays the ACV amount first and releases the recoverable depreciation once you document that the work is done, for example with the contractor's final invoice and a certificate of completion. That creates a financing gap, which is why contractors and lenders almost always ask whether your policy pays replacement cost. If you rebuild, you have to cover the difference between the ACV check and the full repair cost until the second check arrives. If you don't rebuild, the insurer pays only ACV. How much is held back, and what can be depreciated, are common disputes. States split on whether an insurer can depreciate labor or only the physical components that wear out. Estimating software depreciates labor automatically, but California Insurance Code section 2051 limits the deduction to physical depreciation and applies it only to components of a structure that are normally repaired and replaced during its useful life. In Lammert v. Auto-Owners (2019), the Tennessee Supreme Court barred labor depreciation outright, because labor does not "wear out." When the percentage is disputed, the appraisal condition in your policy is the way to resolve it. ## What is functional replacement cost? [#what-is-functional-replacement-cost] Functional replacement cost values a building by the job it does, not by the cost to rebuild it exactly as it was. The Functional Building Valuation endorsement, CP 04 38, is designed for buildings the owner would not or could not practically rebuild as they are, such as an older building with ornate architecture that no longer fits its current use. After a total loss, it pays for a less expensive building that does the same job. [Coinsurance](https://www.menloinsurance.com/library/glossary/coinsurance) does not apply, and ordinance or law coverage is built into the endorsement rather than added separately. The trade-off shows up when nothing is rebuilt. If the building is not repaired or replaced, CP 04 38 pays the least of the limit, the building's market value (not counting land), or the cost to replace it with less expensive materials. In a weak real estate market, market value can be far below either standard valuation. A companion endorsement, CP 04 39, does the same for business personal property other than stock. Both cut the premium meaningfully on property nobody would duplicate. ## What are extended replacement cost and guaranteed replacement cost? [#what-are-extended-replacement-cost-and-guaranteed-replacement-cost] Extended replacement cost and guaranteed replacement cost are homeowners options for a different problem: a rebuild that costs more than the policy limit. Extended replacement cost pays above the dwelling limit up to a stated cushion, commonly 25 to 50 percent. Guaranteed replacement cost removes the cap and pays the full cost to rebuild. Both exist because construction costs have risen much faster than policy limits. The Bureau of Labor Statistics Producer Price Index for construction materials rose more than 57 percent, from 234.6 in February 2020 to 369.3 in June 2026. A dwelling limit set in 2020 and never updated would fall far short of a real rebuild. Neither option is free of conditions: insurers require the dwelling to be insured to 100 percent of its estimated replacement cost at the start. Most standard insurers have replaced true guaranteed replacement cost with percentage caps, so uncapped rebuild coverage is now mainly a high-net-worth product, such as Chubb's Masterpiece form, which pays the full cost to rebuild above the limit. On the commercial side, the same limit problem is handled with Inflation Guard and the Agreed Value option in a [commercial property policy](https://www.menloinsurance.com/library/guides/commercial-property-insurance-explained). ## Should you choose actual cash value or replacement cost? [#should-you-choose-actual-cash-value-or-replacement-cost] Choose replacement cost unless you have a specific reason not to, and have your broker quote both ways first. The premium difference is usually small compared with the depreciation you would lose at claim time, and an ACV settlement on an older building rarely pays enough to rebuild. Choose ACV, or better, functional replacement cost, only for property you would not replace as it is: obsolete buildings, equipment near the end of its life, or structures held for their land value. The valuation you choose also sets the coinsurance benchmark, so choosing replacement cost while keeping limits from an old ACV appraisal invites a coinsurance penalty. When we quote [commercial property insurance](https://www.menloinsurance.com/commercial-property-insurance), both valuations can be priced side by side. ## Frequently Asked Questions ### Is replacement cost coverage worth the extra premium? Almost always. The extra premium for replacement cost is small compared with the depreciation ACV takes off older property. The exception is property you would never replace in like kind, where functional replacement cost or ACV matches your real exposure for less premium. ### Can I get a replacement cost settlement without rebuilding? No. The ISO forms pay the amount above actual cash value only after the property is actually repaired or replaced, and the work must start as soon as reasonably possible. If you decide not to rebuild, the claim is settled at actual cash value. ### How is depreciation calculated on an actual cash value claim? Adjusters usually base depreciation on the item's age compared with its expected useful life, adjusted for its condition. A 15-year-old roof with a 25-year service life, for example, is about 60 percent depreciated. State law then decides what "actual cash value" means. California sets it by statute (replacement cost minus physical depreciation), Texas courts read it as fair market value, and New York applies the broad evidence rule, which weighs everything that bears on the property's value. ### Does replacement cost coverage pay for building code upgrades? No. The replacement cost option excludes the extra cost of enforcing building ordinances or laws. Code costs, including demolishing undamaged parts of the building, need an ordinance or law endorsement or the version built into the Functional Building Valuation endorsement. *This guide is for educational purposes and summarizes standard ISO policy language. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## Choosing your valuation before a loss [#choosing-your-valuation-before-a-loss] Replacement cost pays for new property with nothing taken off for age. Actual cash value pays replacement cost minus depreciation, a large deduction on anything more than a few years old, and the gap is often most of the claim. Replacement cost pays in full only when you rebuild and meet the 180-day election. Have your broker quote both, and read the endorsement schedule for a roof surfacing limitation before you sign. ## References . [California Legislative Information. Insurance Code Section 2051]() . [Tennessee Administrative Office of the Courts. Gregory J. Lammert v. Auto-Owners (Mutual) Insurance Company]() . [Federal Reserve Bank of St. Louis, FRED. Producer Price Index by Commodity: Special Indexes: Construction Materials]() . [Chubb. Masterpiece Homeowners Insurance]() # Additional Insured Endorsements, Explained (https://www.menloinsurance.com/library/guides/additional-insured-endorsements-explained) What additional insured endorsements do, CG 20 10 vs. CG 20 37, blanket (automatic) forms, primary and noncontributory wording, and the traps. Markdown version: https://www.menloinsurance.com/library/guides/additional-insured-endorsements-explained.md An additional insured endorsement gives a business partner, such as a landlord, general contractor or project owner, insured status on your general liability policy. What it covers depends on the form number: one family covers your ongoing operations and another covers your completed operations. No current edition raises your limits or covers a loss caused solely by the additional insured's own negligence. The split that matters most is [CG 20 10](https://www.menloinsurance.com/library/forms/cg-20-10) versus [CG 20 37](https://www.menloinsurance.com/library/forms/cg-20-37). The first responds while your crews are still on the job; the second responds after the work is done, and construction contracts commonly require both. If you sign construction contracts or commercial leases, you have almost certainly been asked for one. Several of the programs behind our [contractor general liability](https://www.menloinsurance.com/contractors-general-liability-insurance) quotes offer blanket additional insured wording. Here is what the request actually means, based on the ISO forms most insurers use. ## Key takeaways * Additional insured status is added only by endorsement to the ISO commercial general liability (CGL) form. Some endorsements name a specific person or organization; others grant status automatically whenever a written contract requires it. * **CG 20 10** covers the additional insured for your ongoing operations, and **CG 20 37** covers completed operations. Construction contracts often require both. * Since ISO's 2004 changes, coverage requires a causal connection to the named insured's acts or work, so an additional insured who was solely negligent is not covered. * All insureds share the same limits, and the endorsement never increases them. It pays the lesser of the limit the contract requires or the limits the named insured actually carries. ### Additional Insured Endorsement An additional insured endorsement adds a person or company (for example, a landlord or general contractor) to your general liability policy so they are insured for claims caused in whole or in part by your work or your acts or omissions. It does not cover losses caused by the additional insured's sole negligence, and it does not increase the policy's limits. ## What is an additional insured? [#what-is-an-additional-insured] An additional insured is a person or organization given insured status on your policy by endorsement because of a business relationship. The CGL already insures some people automatically: the named insured, and others such as employees acting within their duties (see [what general liability insurance covers](https://www.menloinsurance.com/library/guides/what-does-general-liability-insurance-cover) for the full list). An additional insured is a third category, added on purpose. Three relationships account for nearly every request. First, you do work for the party, such as a project owner or a general contractor hiring you as a subcontractor. Second, the party owns premises or equipment you use or lease, the landlord and equipment lessor case. Third, the party has a financial stake in your operation, such as a lender. The first two produce almost all requests, and construction produces almost all disputes. Businesses demand the status because the contract promise alone can fail. Construction agreements and leases pair a hold harmless clause, your written promise to absorb the other party's losses, with an additional insured requirement, because that promise may not hold up on its own. Most states restrict indemnity by statute, and California Civil Code Section 2782 voids construction contract clauses that try to indemnify a party for its own sole negligence. When a court strikes the indemnity clause, the endorsement still stands. Insured status also brings practical advantages no contract clause can: the additional insured's defense is paid as a supplementary payment outside the limit, and your insurer will not subrogate against another insured on the same policy. ## What is the difference between CG 20 10 and CG 20 37? [#what-is-the-difference-between-cg-20-10-and-cg-20-37] CG 20 10 covers the additional insured while your work is ongoing, and CG 20 37 covers it after the work is completed. The two most common endorsements split a construction project at completion: | Feature | CG 20 10 12 19 | CG 20 37 12 19 | | -------------------------------------- | -------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------- | | Full title | Additional Insured: Owners, Lessees Or Contractors, Scheduled Person Or Organization | Additional Insured: Owners, Lessees Or Contractors, Completed Operations | | Covers | Injury or damage caused in whole or in part by your acts or omissions during ongoing operations for the additional insured | Injury or damage caused in whole or in part by your work, within the products-completed operations hazard | | Coverage lines | Bodily injury, property damage, and personal and advertising injury | Bodily injury and property damage | | Written contract required by the form? | No, the party is scheduled | No, the party is scheduled | | Completed Operations? | **Excluded**: coverage ends once the work is completed or put to its intended use | **That is the point** | CG 20 10 stops at completion, and construction claims routinely surface after completion. That is why contracts commonly require both endorsements, often with CG 20 37 kept in place for two or three years after completion, or for the statute of repose period. The same post-completion exposure is why [builders risk](https://www.menloinsurance.com/library/guides/builders-risk-insurance-guide) and completed operations planning matter so much for contractors. ### 1985 Edition (CG 20 10 11 85) The original 1985 edition of CG 20 10 covered both ongoing and completed operations, and also the additional insured's own sole negligence. Sophisticated owners still ask for it by edition date, but fewer and fewer carriers will issue it. The current editions were deliberately written narrower than the 1985 edition. ## What about automatic additional insured status? [#what-about-automatic-additional-insured-status] Automatic, or "blanket", additional insured endorsements grant insured status to anyone a written contract requires, without naming each party. ISO publishes them because scheduling every party on every project gets unwieldy. [CG 20 33](https://www.menloinsurance.com/library/forms/cg-20-33) covers ongoing operations for parties you contract with directly. [CG 20 38](https://www.menloinsurance.com/library/forms/cg-20-38) extends to other parties, such as a project owner, named in your customer's contract even if they never signed anything with you. CG 20 39 and [CG 20 40](https://www.menloinsurance.com/library/forms/cg-20-40) are the completed operations versions. "Blanket" sounds like it covers everyone on the project, and most certificate reviewers treat it that way. It does not. These endorsements respond only when a written contract requiring additional insured status already exists, and that contract must be signed before the bodily injury or property damage happens. In practice, get the signature before the work that could cause a loss begins, not after the accident. Unsigned contracts, contracts signed mid-project and master agreements that lapsed before the work order are the classic blanket-form coverage fights. The question of who agreed with whom has reached New York's highest court. In *Gilbane Bldg. Co. v. St. Paul Fire & Marine Ins. Co.* (2018), the construction manager on a state forensic laboratory project claimed additional insured status under the general contractor's policy because the owner's contract required it. The endorsement covered organizations "with whom you have agreed to add as an additional insured by written contract," and Gilbane had no such written agreement with the general contractor. Coverage failed on one preposition. That gap is exactly what CG 20 38 was built to close. ## What does additional insured status not do? [#what-does-additional-insured-status-not-do] Additional insured status does not cover sole negligence, raise limits, go beyond the contract or give the additional insured control of the defense. ISO tightened these forms in 2004 and later, and the limits matter to both sides: * **No sole-negligence coverage**: the 2004 revision changed "arising out of" to "caused by," which requires a causal connection to the named insured's acts, omissions or work. * **No increase in limits**: every insured, named and additional, shares the same limits, with no priority for anyone. * **No coverage beyond the contract**: recent editions limit coverage to the lower of what the contract requires or the named insured's available limits. * **No control of the defense**: the named insured's carrier investigates, defends and settles. The additional insured cannot make those decisions, and defending both parties can create real conflicts, since each one's best defense may be to blame the other. ### Example A general contractor was added as an additional insured on its roofing subcontractor's CGL policy. When a loss came from work unrelated to the roofing contract, the endorsement gave no coverage: there was no causal connection to the roofer's acts, omissions or work, which the post-2004 "caused by" wording requires. If you are [protected only as an additional insured](https://www.menloinsurance.com/library/guides/named-insured-vs-additional-insured), you are also subject to that policy's exclusions, its cancellation or nonrenewal, and its aggregate limits being used up by other claims without your knowledge. Additional insured status adds to your own CGL coverage but never replaces it. ## What does "primary and noncontributory" mean? [#what-does-primary-and-noncontributory-mean] "Primary and noncontributory" means the named insured's policy pays first and does not ask the additional insured's own insurer to share the loss. Contracts often add this as a second requirement. Without it, the CGL's Other Insurance condition can pull two primary policies into a sharing arrangement, and the additional insured's own policy ends up paying part of a claim it expected the named insured to absorb completely. The fix is the Primary And Noncontributory: Other Insurance Condition endorsement ([CG 20 01 12 19](https://www.menloinsurance.com/library/forms/cg-20-01)). It changes the Other Insurance condition so the named insured's policy responds first and does not seek contribution from the additional insured's insurance, when a written contract requires it. When a request arrives, work through the contract's insurance exhibit in order. Identify which parties must be added and which form numbers or edition dates are named. Match each relationship to its form. Confirm that primary and noncontributory wording is actually attached, not assumed. Then show it with a [certificate of insurance](https://www.menloinsurance.com/library/guides/certificate-of-insurance-guide) that lists the endorsements: a certificate alone confers no coverage, the endorsement does. When a contract asks for something outside standard practice, such as a discontinued edition like CG 20 10 11 85 or wording your carrier has not filed, talk to your broker before signing. Agreeing to insurance terms your policy cannot deliver is a breach of contract waiting for a claim to expose it. ## Frequently Asked Questions ### What's the difference between an additional insured and a certificate holder? A certificate holder only receives a certificate as proof that coverage exists; it gets no rights under the policy. An additional insured is added to the policy by endorsement, so it has insured status, including a right to a defense, and can claim against the policy limits after a covered loss. ### What is the difference between an additional interest and an additional insured? An additional interest (sometimes called an interested party) has no coverage rights, only the right to be notified of cancellation or material changes. An additional insured is endorsed onto the policy and gets defense and indemnity for covered claims. For example, a landlord is usually an additional interest on a tenant's renters policy, while a general contractor is an additional insured when it is endorsed onto a subcontractor's CGL policy. ### Does an additional insured endorsement cover the additional insured's own negligence? Partly. The current ISO forms cover the additional insured for injury or damage caused in whole or in part by the named insured's acts or omissions, which includes shared negligence. They do not cover a loss caused solely by the additional insured's own negligence. ### Do I need both CG 20 10 and CG 20 37? Usually, yes, on construction projects where the contract requires completed operations coverage. CG 20 10 ends at completion, and CG 20 37 covers the products-completed operations hazard after that. Many contracts require keeping the completed operations endorsement for years after the work is done. *This guide is for educational purposes and summarizes standard ISO policy language. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## Matching the endorsement to your contract [#matching-the-endorsement-to-your-contract] An additional insured endorsement gives a business partner insured status on your CGL policy, but only as far as that form number reaches. CG 20 10 covers your ongoing operations and CG 20 37 covers completed operations. Neither covers the other party's sole negligence or increases your limits. Get your endorsement schedule, read each endorsement, compare it with the contract's insurance exhibit, and make sure the contract is signed by both parties before work begins. ## References . [California Legislative Information. Civil Code Section 2782]() . [New York Court of Appeals. Gilbane Bldg. Co. v. St. Paul Fire and Marine Ins. Co., 31 N.Y.3d 131 (2018)]() # Admitted vs Non-Admitted Insurance: The Difference (https://www.menloinsurance.com/library/guides/admitted-vs-non-admitted-carriers) Admitted carriers file rates and are backed by a guaranty fund; non-admitted (E&S) carriers have freedom of rate and form. When each fits, and taxes. Markdown version: https://www.menloinsurance.com/library/guides/admitted-vs-non-admitted-carriers.md An admitted carrier is licensed by your state, files its rates and forms with the state, and pays into the state guaranty fund, which covers claims if the carrier fails. A non-admitted carrier, also called a [surplus lines](https://www.menloinsurance.com/excess-and-surplus-insurance) or excess and surplus (E\&S) insurer, is not licensed in your state, sets its own rates and policy wording, and has no guaranty fund behind it. The trade-off is regulatory protection versus underwriting flexibility. Neither is better in the abstract. Clients are often wary of a non-admitted quote, but the [surplus lines market](https://www.menloinsurance.com/library/guides/surplus-lines-insurance) is the usual home for risks the standard market has chosen not to write. ## Key takeaways * **Admitted means licensed and filed**: rates and forms are filed with regulators, and policyholders are protected by the state guaranty fund. * **Non-admitted means freedom of rate and form**: surplus lines carriers price and word coverage without filing with regulators, because they write hard-to-place risks. * **No guaranty fund in E\&S**: if a surplus lines carrier fails, no state guaranty fund pays, which is why its financial strength rating matters so much. * **Access runs through a surplus lines broker**: the broker performs the required diligent search of admitted markets and collects the surplus lines tax and stamping fee. ### Admitted Carrier An admitted carrier is an insurance company licensed by a state to write insurance in that state. It files its rates and forms with the state and takes part in the state guaranty fund, which pays covered claims up to statutory limits if the carrier becomes insolvent. ## What does admitted mean? [#what-does-admitted-mean] Admitted means the carrier plays by the state's rules. It holds a certificate of authority, files its forms for review, and files rates that cannot be excessive, inadequate or unfairly discriminatory, and regulators examine its [market conduct](https://www.menloinsurance.com/library/guides/rebating-twisting-churning-insurance) and solvency. In return, admitted carriers pay into the guaranty fund, and guaranty fund recoveries are capped by law. The California Insurance Guarantee Association pays most covered claims only up to $500,000 under Insurance Code section 1063.1, although workers compensation benefits are not capped. Each state sets its own cap, so the one that matters is in the insured's home state. ## What is E\&S insurance and what does non-admitted mean? [#what-is-es-insurance-and-what-does-non-admitted-mean] E\&S (excess and surplus) insurance is coverage from a carrier that is not licensed in your state, bought through a surplus lines broker. That carrier does not have to file its rates or forms with your state, which is the point: it can charge what the risk actually needs. It may also use custom manuscript forms instead of standard ones, and those often cover less, so each policy has to be read line by line. Non-admitted does not mean unregulated. The carrier is licensed in its home state and appears on your state's list of eligible surplus lines insurers. ## What is the difference between admitted and non-admitted insurance? [#what-is-the-difference-between-admitted-and-non-admitted-insurance] The differences come down to licensing, rates and forms, guaranty fund protection, taxes and access: ## When is surplus lines the right answer? [#when-is-surplus-lines-the-right-answer] Surplus lines is usually where you go after the admitted market says no, and it says no more often than it used to. Fitch Ratings has tied continued growth in the excess and surplus segment to admitted carriers turning away business outside their risk appetites. Most placements fall into three groups. The first is distressed classes the admitted market has declined or will not renew, like a roofer with two recent losses. The second is new or unusual products without enough loss history for a filed rate, which is why emerging [professional liability](https://www.menloinsurance.com/library/guides/what-is-professional-liability-insurance) and technology exposures often start on E\&S paper. The third is capacity the admitted market will not provide. In these cases there is no admitted option to choose instead, so the broker negotiates the best terms available and explains what the manuscript form leaves out. Because no guaranty fund backs an E\&S placement, choosing the right carrier matters much more, and the rating is only half the check. The National Association of Insurance Commissioners (NAIC) publishes a complaint index for every insurer through its Consumer Insurance Search. It compares the number of complaints filed against an insurer with the number expected for the amount of premium it writes. An index of 1.0 means an average number of complaints for its premium; a number well above 1.0 means more complaints than expected. ## How do the diligent search requirement and surplus lines taxes work? [#how-do-the-diligent-search-requirement-and-surplus-lines-taxes-work] Most states allow a surplus lines placement only after a diligent search of the admitted market. Before binding, the broker must try admitted carriers and document each declination, usually in an affidavit filed with the state. The requirement does not apply to exempt commercial purchasers under the federal Nonadmitted and Reinsurance Reform Act. The affidavit is not paperwork to fill in after the fact; it is the legal requirement that makes the placement lawful. Surplus lines premiums also carry a state surplus lines tax and often a stamping fee, both charged as a percentage of premium and collected by the broker rather than built into a filed rate. In California that means a 3 percent premium tax plus the Surplus Line Association of California's 0.18 percent stamping fee. On a $50,000 E\&S premium, those charges add $1,590. [Rates in other states](https://www.menloinsurance.com/library/guides/surplus-lines-tax-by-state) run from under 1 percent to 6 percent, so a client comparing renewals needs the all-in number, not a surprise on the invoice. ## Frequently Asked Questions ### Is a non admitted carrier less safe than an admitted carrier? Not by itself. Many surplus lines insurers have AM Best ratings as strong as admitted carriers. The difference is structural: no guaranty fund backs a non-admitted insurer, so its own financial strength is the only backing. That is why brokers require strong AM Best ratings before placing coverage with a non-admitted carrier. ### Why would anyone buy from a non admitted carrier? Because the admitted market has turned the risk down. Surplus lines carriers use their freedom of rate and form to write distressed classes, new products with no loss history, and capacity the admitted market will not provide. The real choice is usually E\&S, lower limits or no coverage. ### What is the diligent search requirement? Most states, including California, require the broker to try to place the risk with admitted carriers before sending it to the surplus lines market, and to document each declination. The number of declinations required varies by state. In California, the broker needs three declinations from admitted insurers that write that type of coverage, documented on form SL-2. *This guide is for educational purposes and summarizes standard insurance regulation and market practice. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## Matching the risk to the right market [#matching-the-risk-to-the-right-market] Admitted carriers file their rates and forms and are backed by a state guaranty fund. Non-admitted, or surplus lines, carriers give up that backstop in exchange for the freedom to price and word coverage the standard market will not write. Match the risk to the market, hold every E\&S placement to a strong [AM Best rating](https://www.menloinsurance.com/library/guides/am-best-insurance-ratings-explained), and include the taxes in the all-in number before a client compares it with an admitted renewal. ## References . [California Insurance Guarantee Association. California Insurance Guarantee Association]() . [California Legislature. Insurance Code Section 1063.1]() . [Fitch Ratings. U.S. Excess and Surplus Lines Market Update, October 2023]() . [Surplus Line Association of California. Stamping Fee]() . [NAIC. How to File a Complaint and Research Complaints Against Insurance Carriers]() # Aegis Insurance for Vacant Homes in California: Aegis General's Dwelling Fire and DIC Programs (https://www.menloinsurance.com/library/guides/aegis-insurance-vacant-home) Whether Aegis General Insurance Agency can cover an empty California house, which Aegis programs and insurers are involved (DB Insurance, Lloyd's via Hiscox), what older Aegis guidelines said about vandalism and theft on vacant homes, and how to get a quote through a broker. Markdown version: https://www.menloinsurance.com/library/guides/aegis-insurance-vacant-home.md Aegis General Insurance Agency is a California-licensed program administrator (CA license 0I66850) and part of K2 Insurance Services. Its Specialty division writes homeowners, dwelling fire, residential DIC and stand-alone earthquake coverage in California, and it has long described its dwelling fire program as open to "seasonal (secondary), tenant, vacation rental and vacant homes." So yes, Aegis can quote an empty California house. Aegis is not the insurer, though. Its admitted California programs are backed by DB Insurance Co., Ltd. (U.S. Branch), and since March 2025 it also has surplus lines capacity from Lloyd's through Hiscox. This guide is for a California owner whose house is empty: between tenants, inherited and in probate, listed for sale, or waiting on a remodel. It covers which Aegis program an empty house can land in, who pays a claim, what older Aegis guidelines said about vandalism and theft on vacant homes, and how to get a quote. Menlo Insurance Services can submit to Aegis. To start, open our [vacant home insurance page](https://www.menloinsurance.com/vacant-property-insurance). ## Key takeaways * **Aegis administers, an insurer pays**: Aegis General quotes and services the policy, and the insurer on the declarations page, DB Insurance or a Lloyd's syndicate, pays the claim. * **Vacant is an accepted occupancy in California**: Aegis's dwelling fire program has listed vacant homes alongside seasonal, tenant and vacation rental homes, on DP-1 and DP-3 forms. * **Two Aegis names, two different rule sets**: Aegis's Affordable Housing brand also sells a vacant structures policy, but California is not on its list of states. * **Expect narrow vacant terms**: Aegis's 2020 California guidelines capped vandalism at $50,000 on a vacant DP-1 and did not offer theft coverage for vacant homes. Check the current terms on your quote. * **The paper is worth checking**: DB Insurance's U.S. Branch had zero justified homeowners complaints in 2024 in the Department of Insurance's latest complaint study. ### Aegis General Insurance Agency A program administrator, part of K2 Insurance Services, that runs specialty insurance programs under several brands. Its Specialty division writes California homeowners, dwelling fire, residential DIC and earthquake policies for all occupancies, including vacant homes, on paper issued by partner insurers. ## Why Can't You Keep a Normal Policy on an Empty House? [#why-cant-you-keep-a-normal-policy-on-an-empty-house] Because California's standard fire policy stops working after 60 days of vacancy. Insurance Code section 2071, which sets the terms every California fire policy is built on, says the insurer "shall not be liable for loss occurring" while a described building "is vacant or unoccupied beyond a period of 60 consecutive days," unless the policy provides otherwise in writing. Homeowners and dwelling forms often go further and drop vandalism coverage after the same stretch. That is why an empty house needs a policy written for vacancy. The owner tells the insurer up front that nobody lives there, the insurer prices for it, and the vacancy clause no longer voids the coverage you are paying for. ## What Is Aegis General Insurance Agency? [#what-is-aegis-general-insurance-agency] Aegis General calls itself "a full-service program administrator with a wide array of unique brands." A program administrator, like a managing general agent, handles underwriting, quoting and service for an insurer under a contract, while the insurer carries the risk. Aegis General sits inside K2 Insurance Services, which its site names as the parent brand. Two of its brands write homes: | Aegis brand | What it writes | California? | | ----------------------------------------------------- | --------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------- | | Aegis General (Specialty), at aegiseasy.com | Homeowners, dwelling fire, residential DIC and stand-alone earthquake "for all occupancies" | Yes. Its dwelling fire, homeowners and DIC programs are California programs | | Aegis General (Affordable Housing), at aegisfirst.com | Manufactured homes, rental properties and vacant structures | No. California is not on its state list | The Affordable Housing vacant structures policy is the one you will find if you search "Aegis vacant home." It advertises a basic named perils form, values up to $500,000 depending on geography, and 3, 6 or 12 month terms. It is not available for a California address. A California house goes through the Specialty programs instead. Do not confuse either brand with Aegis Security Insurance Company. That is a separate insurer that K2 bought in 2013 and spun off in 2019. An older market listing named it as the carrier on Aegis's California dwelling fire program. ## Which Aegis Program Covers a Vacant California House? [#which-aegis-program-covers-a-vacant-california-house] Start with the dwelling fire program. Aegis describes it as "fire insurance for seasonal (secondary), tenant, vacation rental and vacant homes," with a DP-3 form (limited replacement cost) and a DP-1 form (actual cash value), and personal liability available by endorsement. A market listing for the program gives dwelling values up to $750,000. When we walked through Aegis's broker application in September 2026, the admitted DP-3 line's occupancy menu offered Tenant, Owner-Primary, Seasonal and Vacation Rental, with no Vacant option. The DIC line's menu did include Vacant. So the program your house lands in is decided at the quote. It could be a DP-1, an E\&S DP-3, or a DIC wrap over a [California FAIR Plan](https://www.menloinsurance.com/library/guides/california-fair-plan) fire policy. Ask your broker which one the quote uses and why. The DIC route matters for houses in wildfire country. When Aegis launched its DB-backed dwelling fire program in 2020, it split the market by Wildfire Score: homes with scores of 0Y or lower could get a DP-3 fire policy, and homes scoring higher were steered to its stand-alone [difference in conditions](https://www.menloinsurance.com/library/guides/difference-in-conditions-insurance) program, which sits on top of a separate fire policy. ## Who Pays the Claim on an Aegis Policy? [#who-pays-the-claim-on-an-aegis-policy] The insurer named on the declarations page. For Aegis's admitted California programs that has been DB Insurance Company. Aegis announced in April 2020 that its new California dwelling fire program was "backed by A.M. Best 'A' rated DB Insurance Company," which it described as "one of the largest non-life insurance companies in South Korea," with U.S. operations based in California. DB Insurance Co., Ltd. (U.S. Branch) appears on the Department of Insurance's residential insurer contact list. Two public numbers help you judge that insurer: * **Complaints.** The Department of Insurance's 2025 Consumer Complaint Study ranks the 50 largest homeowners insurers in California. DB Insurance Co., Ltd. (U.S. Branch) ranked second, with an exposure count of about 62,324 and zero justified complaints in 2024, after 3 in 2023 and 1 in 2022. * **Financial strength.** In July 2025 AM Best affirmed DB Insurance Co., Ltd. of South Korea at A+ (Superior), outlook stable. Your policy is issued by the U.S. Branch, so ask your broker for the rating that applies to it. Our [AM Best ratings guide](https://www.menloinsurance.com/library/guides/am-best-insurance-ratings-explained) explains the scale. In March 2025 Aegis also added surplus lines capacity for its California home and fire programs, underwritten by Certain Underwriters at Lloyd's led by Hiscox Syndicate 33. If your quote is on that paper, it is a [non-admitted](https://www.menloinsurance.com/library/guides/admitted-vs-non-admitted-carriers) policy. That means no California Insurance Guarantee Association backing if the insurer fails, and surplus lines tax and fees on the bill. ## What Did Aegis's Guidelines Say About Vacant Homes? [#what-did-aegiss-guidelines-say-about-vacant-homes] The most recent full California dwelling fire guideline we could read in public is Edition 8, from April 2020, archived from Aegis's site. It is out of date and was written for the earlier paper. It still shows how Aegis has treated vacant homes, and the same questions apply to any vacant quote: | Topic | 2020 guideline (Ed. 8) | What to ask on a 2026 quote | | ----------- | --------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------- | | Eligibility | "The dwelling can be owner occupied, vacant, seasonally occupied or rented" | Is vacant accepted on this form and insurer? | | Perils | DP-1 is named perils: fire, lightning, windstorm, hail, explosion and a few others; vandalism only for additional premium | Is the form DP-1 or DP-3? | | Vandalism | Available on a vacant DP-1 at a $50,000 limit, with a deductible of the greater of $5,000 or the policy deductible | Is vandalism included, at what limit and deductible? | | Theft | "Theft coverage is not available for vacant risks" | Is any theft coverage offered? | | Water | Sudden and accidental water losses excluded on both forms, with limited water coverage added back by endorsement | What is the water limit, and does it need heat on? | | Liability | Neither form includes liability; a premises liability endorsement was used for vacant homes | Is premises liability on the quote? | | Term | 12-month terms; a shorter first term, 6 months minimum, only to line up with another policy | Can the term match your sale or lease date? | Theft and vandalism matter most. An empty house is exactly where copper pipe, appliances and fixtures walk out the door, and where a broken window can go unnoticed for weeks. If a quote leaves theft out, ask your broker whether another market will cover it before you decide. ### Guidelines are not your policy The 2020 guideline above is a historical Aegis document, not the terms you will get today. Current forms, limits and insurers may differ. The policy and endorsements issued with your quote control, and Menlo does not guarantee that Aegis or any other market will accept a given house. ## What Will Aegis Ask About Your House? [#what-will-aegis-ask-about-your-house] The Aegis application is built around the dwelling. From our September 2026 walkthrough, a quote starts with the ZIP code, the program and the effective date. Then it asks for the insured's name and the property address, which Aegis checks against a standardized address before moving on. Next comes the dwelling value. Aegis opens Verisk's 360Value estimator to estimate replacement cost, or lets the broker enter your own value with an acknowledgment. It also asks for year built, construction type, roof type, roof condition, the year the roof was replaced, and square footage, and it shows a Wildfire Score for the address. After that come occupancy and the surcharge and discount questions. These cover a burglar alarm, business or LLC ownership, a foreclosure purchase, and property losses in the past five years. The last page sets the coverage amounts. For a vacant house, have these ready as well: the date it became vacant, why it is empty, whether it stayed insured since then, who checks on it and how often, which utilities are on, and any work planned while the policy is in force. ## How Do You Get an Aegis Quote in California? [#how-do-you-get-an-aegis-quote-in-california] Through an independent broker. Aegis built its California programs for "California's independent insurance brokers," and quotes are run through its broker portal. Menlo Insurance Services is a licensed California broker (CA license 6020106) and can submit a vacant house to Aegis alongside other vacant home markets, so you can compare more than one answer. [Request a vacant home quote](https://www.menloinsurance.com/vacant-property-insurance). It opens our dwelling form, which asks how the home is used. Choose vacant and tell us how long it has been empty. If the house is in a wildfire area and the only fire option is the FAIR Plan, say so. An Aegis DIC wrap over the FAIR Plan may be the fit. ## Frequently Asked Questions ### Is Aegis a good insurance company? Aegis General is a program administrator, not the insurer, so judge the insurer on your policy. For its admitted California programs that has been DB Insurance Co., Ltd. (U.S. Branch), which had zero justified homeowners complaints in 2024 in the California Department of Insurance's 2025 complaint study. AM Best rates its Korean parent A+ (Superior). ### Does Aegis insure vacant homes in California? Yes. Aegis's California dwelling fire program lists vacant homes as an eligible occupancy. In the broker application we walked through in September 2026, the DIC line also offered a vacant occupancy. Which program and form you get depends on the house and its wildfire exposure. ### Is Aegis General the same as Aegis Security Insurance Company? No. Aegis Security Insurance Company is a separate insurer that K2 Insurance Services acquired in 2013 and spun off in 2019. Aegis General Insurance Agency is a K2 program administrator. ### Does an Aegis vacant home policy cover theft and vandalism? Check your quote. Aegis's 2020 California guidelines allowed vandalism on a vacant DP-1 up to $50,000 and did not offer theft coverage for vacant homes. Current terms may differ. ### Can I buy Aegis insurance directly? Aegis's California programs are sold through independent brokers. Menlo can submit your house to Aegis. *This guide is for educational purposes and summarizes Aegis General's public materials, archived Aegis guidelines, California Department of Insurance data and California law, plus the broker application as it stood in September 2026. Programs, forms, insurers and eligibility change, and your policy's specific terms, conditions and endorsements control. Menlo Insurance Services (CA license 6020106) may earn a commission on a placement and does not guarantee that any coverage or price will be available; talk to a licensed broker about your actual exposures.* ## The Bottom Line [#the-bottom-line] Aegis General Insurance Agency is a K2 program administrator whose Specialty division writes California dwelling fire and DIC policies. Its programs have accepted vacant homes. The admitted paper has been DB Insurance's U.S. Branch, which had a clean 2024 complaint record, and Lloyd's capacity through Hiscox has been added since 2025. Aegis's national vacant structures policy does not cover California, so a California house goes through the Specialty programs. Before you bind, confirm the form, the insurer, and whether vandalism, theft, water and premises liability are on the quote, because vacant terms are narrower than a homeowners policy. ## References . [Aegis General Insurance Agency. The Aegis General Suite of Brands]() (accessed 2026-09-24) . [Aegis General Insurance Agency. Fire Insurance: DP3 and DP1 policies available from Aegis (archived)]() (2021) . [Aegis General Insurance Agency. California Dwelling Fire Update (archived)]() (2020) . [Aegis General (Affordable Housing). Our Products]() (accessed 2026-09-24) . [Aegis General Insurance Agency. California Secondary Residence Insurance Program, Policy Forms DP-1 & DP-3, DP-GDL-CA (Ed. 8) (archived)]() (2020) . [California Department of Insurance. Residential Insurance Contact List]() (accessed 2026-09-24) . [California Department of Insurance. California Consumer Complaint Study 2025: Homeowners]() (2025) . [AM Best. AM Best Affirms Credit Ratings of DB Insurance Co., Ltd.]() (2025) . [Aegis General Insurance Agency. Aegis Specialty Division Adds Hiscox E&S Capacity for California Home and Fire Programs]() (2025) . [Insurance Journal. K2 Insurance Services Recapitalizes with Lee Equity; Will Spin Off Aegis Security]() (2019) . [MyNewMarkets. Dwelling Fire (DP-1/3) from Aegis General Insurance Agency]() (accessed 2026-09-24) . [California Legislative Information. Insurance Code Section 2071 (California Standard Form Fire Insurance Policy)]() # Agreed Value Car Insurance: How It Works and Who Offers It (https://www.menloinsurance.com/library/guides/agreed-value-car-insurance) Agreed value pays a set amount after a total loss, with no depreciation. How it differs from stated value and actual cash value, and who qualifies. Markdown version: https://www.menloinsurance.com/library/guides/agreed-value-car-insurance.md Agreed value car insurance pays a predetermined amount that you and the insurer set when the policy starts, so after a covered total loss you receive that amount instead of a depreciated market value. Hagerty, which calls it Guaranteed Value, says that in a covered total loss "you will receive the vehicle's full insured value, which we will have already agreed on." It is sold mostly on collector and classic cars, whose value can increase over time, whereas a standard auto policy typically pays only what comparable cars are selling for. This guide explains the differences between agreed value, stated value and actual cash value, who may qualify for an agreed value policy, and how the value is arrived at. To quote a collector car, start from our [classic car insurance page](https://www.menloinsurance.com/classic-car-insurance). ## Key takeaways * **Agreed value is settled up front.** The value is fixed when the policy starts and paid after a covered total loss. * **Stated value is not the same.** A stated amount can act as a cap: the insurer pays the lower of repair cost, the car's cash value at the time of loss, or the stated amount. * **Standard auto pays actual cash value.** In California, an insurer settling a total loss bases cash settlement on the cost of a comparable car of like kind and quality in the local market. * **Collector programs have rules.** Hagerty requires every licensed household driver to have a regular-use vehicle, prefers enclosed storage, and doesn't allow daily driving. * **Appraisals aren't always needed.** Hagerty says it typically doesn't require one and asks for documentation during underwriting when it does. ## What is agreed value car insurance? [#what-is-agreed-value-car-insurance] A policy that pays a pre-agreed amount if the car is a total loss. You and your insurer agree on what the car is worth when the policy is written, the premium is based on that value, and after a covered total loss the insurer pays it without depreciation. No matter what the car is worth at the time of the loss, nothing about its market price affects the payment. Partial losses, such as a damaged fender, are still paid as repairs. ## Agreed value vs. stated value vs. actual cash value [#agreed-value-vs-stated-value-vs-actual-cash-value] The difference is what the insurer pays after a total loss. | | Agreed value | Stated value (stated amount) | Actual cash value | | ------------------ | -------------------------------------------------- | ------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------- | | Value set | When the policy starts, by agreement | When the policy starts, by the owner | At the time of loss | | Total loss payment | The agreed amount | The lowest of repair cost, the car's cash value at the time of loss, or the stated amount | The cost of a comparable car, less the deductible | | Depreciation | None | Can apply, because cash value can be lower | Yes | | Typical use | Collector and classic cars | Some specialty auto policies | Everyday cars on a standard auto policy | The stated value trap is the one to watch. A stated amount sounds like agreed value, but because the insurer can pay the car's lower cash value, the number on the declarations page may be a ceiling rather than a promise. ## How does a standard auto policy value a total loss in California? [#how-does-a-standard-auto-policy-value-a-total-loss-in-california] By actual cash value, based on comparable cars. California's fair claims regulations let the insurer either pay cash based on "the actual cost of a 'comparable automobile' less any deductible," including all taxes and fees, or provide a replacement car. A comparable automobile must be of like kind and quality, the same or newer model year, with similar options and mileage, and available for retail purchase in the local market within 90 days of the settlement offer. For an ordinary car that works well. For a completely restored 1967 coupe or a rare modern collectible, finding true comparables is difficult, and the final value can be much lower than what the owner paid for the restoration. This is where agreed value comes into play. ## Who qualifies for agreed value coverage? [#who-qualifies-for-agreed-value-coverage] Owners who use the car as a collectible, not as daily transportation. Hagerty's rules are typical of collector programs: * **A regular-use vehicle for every driver.** All household members with a valid license must have a regular-use vehicle for daily driving, insured in their own name. * **Secure storage.** Hagerty prefers an enclosed, secure structure such as a private garage or pole barn, and will consider carports, driveways, parking garages and car-hauling trailers subject to underwriting review. * **Limited use.** Club events, shows, tours and occasional pleasure driving are allowed, but the car can't be a daily driver. * **A clean record.** In most states, drivers can't have serious infractions such as alcohol-related offenses, reckless driving or excessive speeding in the last three years. The same page says eligibility depends more on how a car is used and cared for than on its age, so newer collectible cars can qualify. ## How is the agreed value set? [#how-is-the-agreed-value-set] By agreement, based on market data, documented restoration and the car's originality and condition. Hagerty says it typically doesn't require an appraisal and will ask for more documentation during underwriting if it needs it. Have your photos, receipts from restoration work and any appraisal available, because they can help support a higher value. Review the value every time you renew: collector markets move, and when values go up, a car insured for last year's value is underinsured. Menlo quotes collector-vehicle insurance through Hagerty. Hagerty's policies are issued by Essentia Insurance Company; our guide to [Essentia Insurance Company](https://www.menloinsurance.com/library/guides/essentia-insurance-company) explains who stands behind the policy, and our guide to [who underwrites classic car insurance](https://www.menloinsurance.com/library/guides/who-underwrites-classic-car-insurance) compares other programs. ## Frequently Asked Questions ### What does agreed value mean in car insurance? You and the insurer agree the car's value when the policy starts, and that amount is paid after a covered total loss, without depreciation. ### Should I choose market value or agreed value? Agreed value fits a car whose worth depends on condition, rarity or restoration, where comparable cars are hard to find. Actual cash value on a standard policy fits an everyday car. ### Is stated value the same as agreed value? No. A stated amount can cap the payment: the insurer pays the lowest of repair cost, the car's cash value at the time of loss, or the stated amount. ### Can I get agreed value on my daily driver? Collector programs generally don't allow it. Hagerty, for example, requires a separate regular-use vehicle and doesn't cover a collector car used for daily driving. ### Do I need an appraisal for agreed value insurance? Not always. Hagerty says it typically doesn't require one and may ask for documentation during underwriting. *This guide is for educational purposes and summarizes California's fair claims regulations, carrier consumer information and program requirements. Program terms differ, and your policy's terms control. Menlo Insurance Services (CA license 6020106) is a licensed broker that may earn a commission on a placement and does not guarantee that any coverage or price will be available.* ## The Bottom Line [#the-bottom-line] Agreed value establishes the car's value up front and pays it after a covered total loss, with no consideration given to depreciation. Stated value can pay less, while a standard auto policy pays actual cash value based on comparable cars. If your car is a collectible you do not normally use for daily transportation, an agreed value collector policy is usually the better fit. ## References . [Hagerty. Insurance Frequently Asked Questions (Guaranteed Value, appraisals)]() (accessed 2026-09-27) . [Legal Information Institute. Cal. Code Regs. tit. 10, § 2695.8, Additional Standards Applicable to Automobile Insurance, subsection (b)]() (accessed 2026-09-27) . [American Family Insurance. Agreed value vs. stated amount]() (accessed 2026-09-27) . [Hagerty. Insurance Qualifications for Classic Vehicles]() (accessed 2026-09-27) # AM Best Ratings Explained: What Insurance Company Ratings Mean (https://www.menloinsurance.com/library/guides/am-best-insurance-ratings-explained) The AM Best A++ to D financial strength scale explained, whether B++ is a good rating, how to look one up, and why surplus lines buyers check it. Markdown version: https://www.menloinsurance.com/library/guides/am-best-insurance-ratings-explained.md An AM Best rating is an independent opinion of an insurance company's financial strength: its ability to pay the claims it owes on its policies. The Best's Financial Strength Rating scale runs from A++ (Superior) down to D (Poor), and B++ or better counts as secure. Many contracts and lenders still require A- or better. The full scale has seven categories: * A++, A+: Superior * A, A-: Excellent * B++, B+: Good * B, B-: Fair * C++, C+: Marginal * C, C-: Weak * D: Poor Separate non-rating designations E, F and S flag insurers under regulatory supervision, in liquidation, or with a suspended rating. The rating answers one narrow question: will this insurer still be solvent and paying when your claim arrives, possibly years after you bought the policy? That makes it one of the few numbers on a proposal worth checking before you look at price. ## Key takeaways * **The scale is A++ through D**: seven categories from Superior to Poor, plus the non-rating designations E, F and S for supervision, liquidation and suspension. * **B++ and B+ mean Good**: they sit in the third category and are not a sign of failure, but many contracts and lenders still require A- or higher. * **The rating measures claims-paying ability only**: AM Best says it is not investment advice and not a recommendation to buy or cancel any policy. * **Surplus lines buyers depend on it most**: no state guaranty fund stands behind a non-admitted insurer, so the rating carries the whole weight of the placement. ### AM Best Rating (Financial Strength Rating) An AM Best rating, formally a Best's Financial Strength Rating (FSR), is an independent opinion of an insurer's financial strength and its ability to meet its ongoing obligations under its policies and contracts. AM Best rates each company, not any specific policy, on a scale from A++ down to D. ## What is an AM Best rating? [#what-is-an-am-best-rating] An AM Best rating is a letter grade that AM Best, a credit rating agency founded in 1899 that specializes in insurance, gives an insurer after judging whether it can meet its ongoing policy obligations. AM Best's Guide to Best's Financial Strength Ratings defines the rating as an independent opinion of financial strength and ability to pay claims. When a proposal or contract mentions an insurer's AM Best rating, this letter grade is what it means. It measures solvency, not customer service or price. AM Best builds the opinion from four blocks: balance sheet strength, operating performance, business profile and enterprise risk management (ERM). Balance sheet strength is the starting point, and the other three move the rating up or down from there. AM Best is also clear about the limits: a financial strength rating is not a recommendation to buy, keep or cancel a policy, and it is not a guarantee against insolvency. ## What do AM Best rating letters mean? [#what-do-am-best-rating-letters-mean] AM Best's letters map to seven categories of claims-paying ability. Superior (A++ and A+) and Excellent (A and A-) are the strongest insurers and cover most of the standard market. Good (B++ and B+) still describes a secure insurer. The wording changes at Fair (B and B-), where the definition first mentions vulnerability, and gets harsher through Marginal (C++ and C+), Weak (C and C-) and Poor (D). AM Best defines the categories, not the individual letters: | Symbols for ratings | Category | What they mean | | ------------------- | --------- | ---------------------------------------------------------------------------- | | A++, A+ | Superior | Superior ability to meet ongoing insurance obligations | | A, A- | Excellent | Excellent ability to meet ongoing insurance obligations | | B++, B+ | Good | Good ability to meet ongoing insurance obligations | | B, B- | Fair | Fair ability, vulnerable to adverse underwriting and economic conditions | | C++, C+ | Marginal | Marginal ability, vulnerable to adverse underwriting and economic conditions | | C, C- | Weak | Weak ability, very vulnerable to adverse conditions | | D | Poor | Poor ability, extremely vulnerable to adverse conditions | The plus and minus signs are steps inside a category, so A- is still Excellent and B+ is still Good. A few symbols below D are not ratings at all but non-rating designations: E for an insurer placed in conservation or rehabilitation, F for one in liquidation after a finding of insolvency, and S for a rating suspended because AM Best lacks the information to evaluate a sudden event. NR means not rated. An NR is worth a phone call: some insurers never asked for a rating, and others let one lapse before bad news. ## Is a B++ rating good? [#is-a-b-rating-good] Yes. AM Best puts B++ and B+ in its Good category, the third of seven and inside its secure range. Many buyers see a B and assume the insurer is struggling, but that reading is wrong. Real caution starts at B and B-, the Fair category, where AM Best's definition adds "vulnerable to adverse underwriting and economic conditions." In practice, much of the market sets a higher floor. Construction insurance specifications usually require AM Best A- VII or better, lender mortgagee clauses often repeat that floor, and excess and [umbrella](https://www.menloinsurance.com/library/guides/umbrella-vs-excess-liability) underwriters want rated insurers beneath them before they sit above your [excess liability](https://www.menloinsurance.com/library/guides/excess-liability-insurance) program. A B++ policy can be perfectly sound and still fail the insurance requirements on your next job. ## Why do AM Best ratings matter for surplus lines buyers? [#why-do-am-best-ratings-matter-for-surplus-lines-buyers] The rating matters most for surplus lines buyers because no guaranty fund backs a non-admitted insurer. An [admitted carrier](https://www.menloinsurance.com/library/guides/admitted-vs-non-admitted-carriers) takes part in its state's guaranty fund, which pays covered claims if the insurer fails. Most states cap that recovery at $300,000 per claim or the policy limit, whichever is less, according to the National Conference of Insurance Guaranty Funds. A [surplus lines](https://www.menloinsurance.com/library/guides/surplus-lines-insurance) insurer has no fund behind it, so if it becomes insolvent in the middle of your claim, its own balance sheet is the only source of payment. Eligibility rules narrow the field but do not grade quality. Under the federal Nonadmitted and Reinsurance Reform Act of 2010, a US-domiciled surplus lines insurer generally must hold at least $15 million in capital and surplus, and non-US insurers usually appear on the NAIC Quarterly Listing of Alien Insurers. Those are solvency floors, not quality grades. The rating is what separates a merely eligible insurer from a strong one. Your [surplus lines broker](https://www.menloinsurance.com/library/glossary/surplus-lines-broker) should show it as routinely as the premium and recheck it at renewal, because a downgrade below A- can break loan covenants and contract requirements mid-term. When we place [excess and surplus lines insurance](https://www.menloinsurance.com/excess-and-surplus-insurance), the insurer's rating is on the proposal. ## How do you look up an insurance company's AM Best rating? [#how-do-you-look-up-an-insurance-companys-am-best-rating] You can look up almost any insurer's current rating in a few minutes with the free Rating Search at ambest.com, after registering. The key is searching for the right company. An insurance group can include many writing companies, each with its own rating, and they do not always share one. Search for the [exact legal entity name](https://www.menloinsurance.com/library/guides/essentia-insurance-company) on your declarations page, not the group's brand name. ### Steps ### Find the exact writing company name Take the insurer's full legal name from your declarations page or certificate, not the trade name. A group may write your policy through a subsidiary rated differently from its flagship company. ### Search the rating on ambest.com Search for that exact legal name on ambest.com and check that the state of domicile matches your paperwork, so you do not read a sister company's rating. ### Read the full rating unit Note the letter grade, the outlook and the Financial Size Category, a Roman numeral for the size of the insurer's surplus. Class VII means $50 million to $100 million, and Class XV means $2 billion or more. That is why specifications read "A- VII or better". ### Check the rating again at each renewal Verify the rating at each renewal, because an insurer rated A- when the policy was bound can be downgraded mid-term. Also check with your state insurance department. It confirms whether the company is licensed or surplus lines eligible, and it shows complaint records that the financial rating does not measure. ## AM Best ratings of major insurers (as of July 2026) [#am-best-ratings-of-major-insurers-as-of-july-2026] Most large national insurers hold ratings in AM Best's top two categories, Superior and Excellent. The grades below are each insurer group's published Best's Financial Strength Rating as of July 2026, compiled from AM Best rating announcements, carrier disclosures and annual SEC filings. A rating applies to a named rating unit, and writing companies within a group can carry different grades, so always check the exact company on your declarations page. Insurers are listed alphabetically: | Carrier | AM Best Financial Strength Rating | Category | | -------------------------------------------------------------------------- | --------------------------------- | --------- | | AIG insurance subsidiaries (National Union Fire, Lexington, American Home) | A | Excellent | | Allstate Insurance Company | A+ | Superior | | Amica Mutual Insurance Company | A+ | Superior | | AmTrust Financial insurance subsidiaries | A- | Excellent | | Auto-Owners Insurance | A+ | Superior | | Berkshire Hathaway GUARD Insurance Companies | A+ | Superior | | Chubb (grouped subsidiaries of Chubb Limited) | A++ | Superior | | The Cincinnati Insurance Company | A+ | Superior | | CNA insurance subsidiaries | A+ | Superior | | Employers group insurance companies | A | Excellent | | Erie Insurance Exchange | A | Excellent | | Farmers Insurance Group members | A | Excellent | | GEICO | A++ | Superior | | The Hartford (Hartford Fire Insurance Company) | A+ | Superior | | Kinsale Insurance Company | A | Excellent | | Liberty Mutual Holding Company members | A | Excellent | | Nationwide Mutual Insurance Company | A+ | Superior | | The Progressive Corporation members | A+ | Superior | | Selective Insurance Group | A+ | Superior | | State Farm Mutual Automobile Insurance Company | A+ | Superior | | Travelers | A++ | Superior | | USAA | A++ | Superior | | W. R. Berkley insurance subsidiaries | A+ | Superior | | Westfield | A | Excellent | | Zurich Insurance Group main rated subsidiaries | A+ | Superior | Ratings change as AM Best completes its reviews, so confirm your writing company's current rating with the Rating Search at ambest.com before relying on this table. ## Frequently Asked Questions ### What is the highest AM Best rating? A++ is the highest, the top step of the Superior category, followed by A+. Both mean what AM Best calls a superior ability to meet ongoing insurance obligations. Relatively few insurers hold A++, so insurers rated A and A- (the Excellent category) make up much of the quality standard market. ### Is a B+ rating from AM Best a red flag? No. B+ is the lower step of the Good category, which AM Best defines as a good ability to meet ongoing obligations. The practical problem is contractual: many lenders, landlords and project owners require A- or better, so a B+ insurer can fail your contract's insurance requirements even though the insurer is sound. Below B+, in the Fair category and lower, AM Best's definitions start to flag vulnerability to adverse conditions. ### Does a strong AM Best rating guarantee my claim will be paid? No. An AM Best rating is an opinion of financial strength, not a guarantee, and it does not measure how an insurer handles, disputes or denies individual claims. A highly rated insurer can still deny a claim the policy does not cover. The rating tells you the money should be there; the policy language decides whether you are owed it. *This guide is for educational purposes. Ratings are the independent opinions of the rating agency, not guarantees, and can change at any time. Verify a carrier's current rating at ambest.com and talk to a licensed broker about your actual exposures.* ## Checking a rating before you bind [#checking-a-rating-before-you-bind] An AM Best rating is an independent opinion of whether an insurer can pay the claims it owes, graded from A++ down to D. B++ and B+ mean Good, not troubled, but many contracts and lenders still require A- or better, so a sound insurer can still fail your paperwork. Before you bind, look up the exact writing company's grade and outlook at ambest.com and compare it with your contract's minimum. ## References . [AM Best. Guide to Best's Financial Strength Ratings (FSR)]() . [AM Best. Best's Credit Rating Methodology (BCRM): An Overview]() . [National Conference of Insurance Guaranty Funds. Insolvencies: An Overview]() . [Legal Information Institute, Cornell Law School. 15 U.S. Code 8204: Uniform Standards for Surplus Lines Eligibility]() . [NAIC. Surplus Lines (C) Working Group]() . [AM Best. Best's Credit Ratings: Rating Search]() # American Modern Vacant Home Insurance: Coverage, 3-to-12-Month Terms and California Availability (https://www.menloinsurance.com/library/guides/american-modern-vacant-home-insurance) How American Modern insures empty houses on its Dwelling Basic and Dwelling Special programs, with 3-, 6- and 12-month terms, optional vandalism and burglary, builders risk during a renovation, and what a California owner should confirm before counting on it. Markdown version: https://www.menloinsurance.com/library/guides/american-modern-vacant-home-insurance.md American Modern Insurance Group insures vacant homes through independent agents, on two dwelling programs. Dwelling Basic covers named perils on a house in fair condition or better. Dwelling Special is an open-peril form based on the DP-3 for homes in above-average condition. Its vacant property coverage comes in 3-, 6- and 12-month terms with a pro-rated refund when the house sells, and vandalism, burglary, liability and builders risk are options you choose on the quote. For a California owner, one caveat comes first. American Modern's policies are issued by insurers licensed in California, and its materials name them. The same materials also say a product "may not be available in your state." No public American Modern page confirms that its vacant program is open for a California address today. Plan to confirm it on a live quote. If you need a policy in place before your current one's vacancy limit runs out, have a broker quote other vacant-home markets alongside it. Our [vacant property insurance](https://www.menloinsurance.com/vacant-property-insurance) page explains how we do that. ## Key takeaways * **Two programs, set by condition.** Dwelling Basic takes homes in fair condition or better on named perils; Dwelling Special takes above-average homes on an open-peril, replacement cost form. * **Short terms are available.** American Modern writes vacant property for 3, 6 or 12 months and refunds the unused premium pro rata if the house sells or someone moves in. * **Theft and burglary are different coverages.** A burglary endorsement pays only when there are visible signs of forced entry; a theft endorsement is broader. * **Renovations have their own option.** You can add builders risk for the value of improvements, alterations or repairs made while the house is empty. * **Check California before you count on it.** The issuing companies are licensed in California, but American Modern says its products or options may not be available in every state. ### American Modern vacant home insurance Dwelling coverage for an unoccupied house written by American Modern Insurance Group through independent agents, on its Dwelling Basic (named peril) or Dwelling Special (open peril, DP-3 based) programs, with optional liability, vandalism, burglary, personal property and builders risk. ## Why does an empty house need a separate policy? [#why-does-an-empty-house-need-a-separate-policy] In California, the statutory standard fire policy says the insurer is not liable for a loss while a building "is vacant or unoccupied beyond a period of 60 consecutive days". Many homeowners and landlord policies carry a vacancy condition of their own. Once the house has been empty past that limit, a fire, a break-in or a burst pipe may not be covered. American Modern names the usual reasons an owner ends up here: the house is for sale, it's being renovated, or it's "part of an estate closing". Each of those can last longer than anyone plans, which is why the term length matters. ## What does American Modern's vacant policy cover? [#what-does-american-moderns-vacant-policy-cover] The answer depends on which of the two programs your house lands in. | | Dwelling Basic | Dwelling Special | | ------------------ | ------------------------------------------------------------------------------ | ---------------------------------------------------------------------------------------------- | | Condition required | Fair or better | Above average or better | | Dwelling coverage | Named perils, the causes of loss listed in the policy | "All risk" for dwelling and other structures, subject to the policy's exclusions | | Loss settlement | Actual cash value, with an upgrade to repair cost in many states | Replacement cost on the dwelling | | Home values | Not stated on the public page | $75,000 to $1 million, varies by state | | Water damage | Optional, $10,000 with a $5,000 mold sublimit | Included at 10% of Coverage A with a $5,000 mold sublimit; can be raised | | Premises liability | Optional, $25,000 to $500,000 | Optional, $25,000 to $500,000 | | Homes per policy | Up to 30 | Up to 30 in most states | Both programs include coverage for other structures at 10% of the dwelling limit, reasonable repairs, debris removal and a fire department service charge. American Modern's vacant property page adds that emergency repairs, such as covering a roof after a storm, are included. Vandalism is the line to check first. American Modern says physical damage or defacement of the home "is included with the comprehensive program, but optional for basic program". On a named-peril quote, a policy without the vandalism option leaves the most common vacant-home loss uncovered. If the house qualifies for Dwelling Special, the settlement difference is real. Actual cash value takes depreciation off every repair. Replacement cost doesn't. Our guide to [actual cash value vs replacement cost](https://www.menloinsurance.com/library/guides/actual-cash-value-vs-replacement-cost) walks through the math. ## Theft, burglary and copper pipes [#theft-burglary-and-copper-pipes] American Modern explains a distinction most vacant-home buyers learn only after a claim. A theft endorsement "applies whether someone enters through a garage you leave open or forget to lock, or whether they kick in the side door." A burglary endorsement pays only when forced entry leaves visible damage, such as a broken window. Its limited burglary option covers stolen personal items and things attached to the house, and the company names "a heat pump or even copper piping" as examples. If a would-be thief rips out drywall and leaves without the pipes, that is vandalism, a separate coverage. On an empty house, ask which of the three your quote includes. A policy with none of them covers the fire and wind risk and little else. ## Can you renovate while it's insured? [#can-you-renovate-while-its-insured] Yes, with the right option. American Modern lists builders risk as an add-on that covers "the value of improvements, alterations or repairs" during a renovation. Without it, the new cabinets and roof you're paying for may sit outside the dwelling limit you insured. Tell the agent the scope and budget of the work before you bind, since a house under construction is a different risk from one that is simply empty. ## Who issues the policy? [#who-issues-the-policy] An American Modern insurer. The company says its policies "are written by one of the licensed insurers of American Modern Insurance Group, Inc.", including American Modern Home Insurance Company, which does business in California as American Modern Insurance Company (license 2222-8), and American Modern Property and Casualty Insurance Company (California license 6129-1). American Modern is part of the Munich Re group. American Modern Property and Casualty also appears on the California Department of Insurance's March 2025 list of insurers that answered the Commissioner's notice on contents claims from the Los Angeles wildfires, a sign that it writes residential property in the state. Your declarations page names the issuing company, and that company pays the claim. Look up its rating yourself; our [AM Best ratings guide](https://www.menloinsurance.com/library/guides/am-best-insurance-ratings-explained) explains the scale. ## How do you get a quote? [#how-do-you-get-a-quote] Through an independent agent appointed with American Modern. The company sells through agents, and its consumer pages send you to an agent search or its phone line. Before the call, have: ### Steps ### The reason and the timeline For sale, estate, renovation or between tenants, and how long you expect the house to stay empty. That picks the term: 3, 6 or 12 months. ### The house Year built, construction, number of units, roof and systems updates, and recent photos. Condition decides between Dwelling Basic and Dwelling Special. ### The options you want Premises liability, vandalism, theft or burglary, personal property left inside, and builders risk if work is planned. ### The California question Ask the agent to confirm, on a live quote for your address, that the vacant occupancy is available in California. Don't rely on the national product page. Menlo Insurance Services is a licensed California broker. We don't claim an appointment with American Modern here. What we can do is shop your empty house across the vacant-home markets we work with, including admitted dwelling fire and surplus lines programs, and show you the terms side by side. [Request a dwelling fire quote](https://www.menloinsurance.com/f/dwelling-fire) and mark the house as vacant. ## Frequently Asked Questions ### Does American Modern insure vacant homes? Yes. American Modern writes vacant homes on its Dwelling Basic and Dwelling Special programs, through independent agents, for houses that are for sale, being renovated or part of an estate. ### Does American Modern write vacant homes in California? Its issuing companies are licensed in California, but American Modern says products and options may not be available in every state, and it doesn't publish California availability for the vacant program. Confirm it on a live quote for your address. ### How long can an American Modern vacant policy run? American Modern writes vacant property for 3, 6 or 12 months. If the house sells or someone moves in, you can cancel and get a pro-rated refund of the unused premium. ### Is vandalism covered on an American Modern vacant policy? It depends on the program. American Modern says vandalism is included with the comprehensive program and optional on the basic program. Check your quote for it. ### What is the difference between theft and burglary coverage? Theft coverage applies however the thief got in, including an unlocked door. Burglary coverage pays only when forced entry leaves visible damage, such as a broken window or a jimmied door. *This guide is for educational purposes and summarizes American Modern's public product materials and California Department of Insurance records. Your policy's terms, conditions and endorsements control. Menlo Insurance Services (CA license 6020106) is an independent broker, may earn a commission, and does not guarantee that any carrier will quote or bind a given home.* ## The Bottom Line [#the-bottom-line] American Modern insures vacant homes on two programs chosen by the home's condition: Dwelling Basic on named perils, Dwelling Special on an open-peril, replacement cost form. The terms run 3, 6 or 12 months with a pro-rated refund, which suits a house that should sell soon. Vandalism, theft or burglary, liability and builders risk are the options that make the policy fit an empty house. The issuing companies are licensed in California, but confirm on a live quote that the vacant program is open for your address, and have a second market quoted in case it isn't. ## References . [American Modern Insurance Group. Dwelling Basic]() . [American Modern Insurance Group. Dwelling Special product sell sheet (23002, © 2023)]() . [American Modern Insurance Group. Vacant Property Details]() . [California Legislative Information. California Insurance Code § 2071 (standard form fire policy)]() . [American Modern Insurance Group. Vacant Homes]() . [Wikipedia. American Modern Insurance Group]() . [California Department of Insurance. Insurance Company Responses to Commissioner Lara's 2/6/25 Notice on Personal Property Coverage (as of 3/5/25)]() # Annex Risk Insurance: Who It Is, What It Writes in California, and How to Get a Quote (https://www.menloinsurance.com/library/guides/annex-risk-insurance) What Annex Risk is, the homeowners and flood programs it offers in catastrophe-exposed areas, what its California wildfire program looks for, how a quote reaches it through an appointed broker, and the questions to ask about the paper before you buy. Markdown version: https://www.menloinsurance.com/library/guides/annex-risk-insurance.md Annex Risk is an insurance intermediary based in San Francisco. It writes homeowners and residential flood insurance for homes in wildfire, hurricane and coastal areas, the places standard carriers have been pulling out of. Annex is not an insurance company itself. It says it partners with leading insurance carriers rated "A" and "A-", underwrites with what it calls "sophisticated algorithmic underwriting and capacity", and distributes its policies "through a network of appointed licensed independent insurance brokers". Its homeowners program is live in California and, in Annex's own description, targets "well-maintained homes that struggle to obtain coverage due to their proximity to the wildland-urban interface". If you own a home in California, Annex is one of a handful of specialty programs worth checking before you settle for a FAIR Plan policy. Menlo Insurance Services can quote Annex's homeowners program. To see whether your home fits, [request a homeowners quote](https://www.menloinsurance.com/f/homeowners) and tell us the house is in a wildfire area. Below: who Annex is, what it writes, and what to ask about the policy you'd get. ## Key takeaways * **An intermediary, not an insurer**: Annex Risk & Insurance Solutions LLC underwrites and issues through partner carriers; the carrier named on your policy is who pays the claim. * **Built for catastrophe zones**: the company's own tagline is "modern insurance for cat-exposed areas", with fourteen states from California to Massachusetts. * **HO-3 homeowners plus flood**: the public products are a standard HO-3 homeowners policy and a residential flood policy; Annex has also announced HO-6 condo coverage. * **Broker-only distribution**: consumers do not buy from Annex directly. Appointed independent brokers quote and bind, and Annex says a producer does not need a surplus lines license to refer a submission. * **Ask whose paper it is**: Annex has described its homeowners product as excess and surplus lines in some states. In California, confirm the issuing carrier, whether the policy is admitted or surplus lines, and its rating before you bind. ### Annex Risk Annex Risk & Insurance Solutions LLC, founded in 2019 and based in San Francisco, is a digitally native provider of homeowners and residential flood insurance for homes in catastrophe-exposed areas. It underwrites and distributes policies issued by partner insurance carriers through appointed independent brokers in fourteen states, including California. ## Who is Annex Risk? [#who-is-annex-risk] Annex says it was founded by "industry experts" with more than 50 years of combined experience. Its idea is to use algorithmic underwriting to price homes the standard market won't touch. Its LinkedIn profile gives the founding year as 2019 and frames the mission as serving consumers in places exposed to natural disasters. The operating entity is Annex Risk & Insurance Solutions LLC, with a San Francisco mailing address and a payments lockbox in Dallas. The most important thing to understand is how the deal is set up. Annex doesn't carry the risk on its own books. It "partners with leading insurance carriers" and describes those partners as "A" and "A-" rated, without naming them on its public site. In the trade we call this a managing general agent, or program administrator, setup. Our [Delos Insurance guide](https://www.menloinsurance.com/library/guides/delos-insurance-california) describes the same thing. The intermediary picks the homes, sets the price and services the policy. A licensed insurer issues the contract and pays the losses. So when you file a claim, the company that counts is the carrier, not Annex. You want that name before you buy. Annex's stated footprint is Alabama, Arizona, California, Florida, Georgia, Maryland, Massachusetts, Mississippi, New Jersey, North Carolina, Pennsylvania, South Carolina, Texas and Virginia, and it reports roughly 15,000 agent partners. What Annex sells those agents on is speed: "quote and bind digitally in under 2 minutes". ## What does Annex Risk insure? [#what-does-annex-risk-insure] The public site shows two products. A third has been announced. **Homeowners.** Annex writes what it calls "standard HO-3 insurance" for owners in high-risk zones, naming hurricanes, tornadoes and fires as the events that make those homes hard to place. The coverages it lists are the familiar HO-3 parts: dwelling, other structures, loss of use, personal liability and personal property, plus a "reconstruction" coverage described as additional protection when the decision is to rebuild rather than take the replacement cost value. The homepage advertises capacity up to "$2m of replacement cost" and says "Tier 1 & 2 risks accepted", a reference to catastrophe-exposed rating tiers. For what the HO-3 form itself covers, see our HO-3 vs HO-5 guide and the [HO 00 03 form reference](https://www.menloinsurance.com/library/forms/ho-00-03). **Flood.** The residential flood product lists dwelling, personal property, loss of use and other structures. Annex's page doesn't say how it relates to the federal program. Ask whether the quote is private flood or backed by the NFIP, and how it handles waiting periods and elevation data. Our [flood insurance](https://www.menloinsurance.com/flood-insurance) overview covers the basics. **Condo.** Annex announced on its company channel that it now offers HO-6 coverage "as part of the Annex homeowners program", aimed at units in catastrophe- and wind-exposed areas outside the admitted market. You won't find it described on the public site, and whether you can get it depends on the state and the building. When Menlo quotes Annex, it quotes the homeowners program. If you own a condo, ask a broker whether HO-6 is available instead of assuming it is. | Program | Public coverages listed | Notes | | ----------------- | ------------------------------------------------------------------------------------------------------------ | ---------------------------------------------------------------------------------------- | | Homeowners (HO-3) | Dwelling, other structures, loss of use, personal liability, personal property, reconstruction | Capacity to $2 million replacement cost; Tier 1 and 2 territories accepted | | Residential flood | Dwelling, personal property, loss of use, other structures | Confirm private vs NFIP and waiting period | | Condo (HO-6) | Not described on the public site | Announced as part of the homeowners program for cat-exposed units | ## What does the California program look for? [#what-does-the-california-program-look-for] The best public clue to who qualifies is how Annex described its own California launch. The program targets "well-maintained homes that struggle to obtain coverage due to their proximity to the wildland-urban interface". That sentence has two halves, and both count. "Well-maintained" is the condition test. Expect questions about the age and condition of the roof, the electrical, plumbing and heating, your prior claims, and the house in general. If the place looks tired, that's where the conversation ends. "Struggle to obtain coverage" is the gap Annex wants to fill. These are homes a wildfire model pushed out of the admitted market even though, when someone actually looks at them, they aren't bad risks. The FAIR Plan asks a different question. It's the insurer of last resort, so all it wants to know is whether any traditional insurer will take you. Annex wants to know whether your house, on your lot, prices out inside its models. Those answers don't always match. A home that could only get the FAIR Plan a year ago might fit a specialty program today. A broker with access to both can find out with one submission. ### Do not read a program description as a promise of coverage Everything in this guide is Annex's public description of what it writes, not an offer. Eligibility is decided one address at a time, capacity can close, and terms change. Menlo Insurance Services does not guarantee that Annex or any other market will quote or bind a given home, or at what price. ## How do you get an Annex Risk quote? [#how-do-you-get-an-annex-risk-quote] You go through a broker. Annex says it offers policies "through a network of appointed licensed independent insurance brokers", and that a licensed property and casualty broker in its states "does not need to hold an E\&S license to produce/refer submissions". The public site has no quote tool for consumers. The only portal is an agent login. Menlo has access to Annex's homeowners program and can send your home there along with the other wildfire-area markets we work with. Annex will want the same facts every specialty homeowners carrier asks for: ### Steps ### Property facts Year built, square footage, construction type, roof material and age, foundation, and the year of any wiring, plumbing and heating updates. Photos help. Saying the house is "well-maintained" isn't enough; you have to show it. ### Location and mitigation Your address sets the wildfire exposure. What you can change is defensible space, ember-resistant vents and other hardening. Have recent photos of the whole perimeter ready. ### Coverage targets The dwelling limit you need to rebuild, contents and liability limits, and the deductible you can carry. Annex's homeowners program advertises capacity up to $2 million of replacement cost. ### History Prior claims, prior carriers, and any nonrenewal notices. Getting nonrenewed by an admitted carrier won't knock you out of a specialty program. It's the reason these programs exist. Then [start a homeowners quote](https://www.menloinsurance.com/f/homeowners). If Annex fits, the quote will name the issuing carrier and show the form, limits and deductibles. Then you can compare it with your other options, including a FAIR Plan policy paired with a difference in conditions policy. ## What should you ask before you bind? [#what-should-you-ask-before-you-bind] A specialty homeowners policy is only as good as the insurer behind it and the terms inside it. Ask these five questions: 1. **Which insurer issues the policy, and is it admitted in California or surplus lines?** Annex has described its homeowners product as excess and surplus lines coverage in Florida, New Jersey and Georgia. Whatever the answer is in California, it changes how the rates are regulated, whether a guarantee fund backs you, and what taxes you pay. If you think that's a technicality, read [admitted vs non-admitted carriers](https://www.menloinsurance.com/library/guides/admitted-vs-non-admitted-carriers) and [surplus lines insurance](https://www.menloinsurance.com/library/guides/surplus-lines-insurance) first. 2. **What is the issuing carrier's financial strength rating?** Annex says its partners are "A" and "A-" rated. Get the carrier's name and the rating agency, then look the rating up yourself. Our [AM Best ratings guide](https://www.menloinsurance.com/library/guides/am-best-insurance-ratings-explained) explains the scale. 3. **Is the form a true HO-3, and are contents at replacement cost?** Annex describes the product as standard HO-3. Check the form number, and ask whether your belongings are paid at actual cash value or replacement cost. 4. **What are the deductibles, including any separate wildfire deductible?** Some specialty wildfire programs charge a percentage deductible for wildfire and a flat deductible for everything else. Turn any percentage into a dollar figure so you know what you'd actually pay. 5. **Who handles claims and how?** With a middleman involved, get the claims phone number and the name of the adjusting company in writing now, before you ever need them. None of this is a reason to skip a specialty program. Get the answers in writing and you'll know exactly what you're buying. ## Frequently Asked Questions ### Is Annex Risk an insurance company? No. Annex is an intermediary that underwrites and distributes policies issued by partner insurance carriers it describes as "A" and "A-" rated. The carrier on your declarations page is the insurer. ### Does Annex Risk write homeowners insurance in California? Yes. Annex lists California among its states and has said its homeowners program is live there for well-maintained homes near the wildland-urban interface. ### Can I buy directly from Annex Risk? No. Annex sells through appointed independent brokers; there is no consumer quote tool on its site. Menlo can quote its homeowners program. ### Is an Annex policy admitted or surplus lines? Annex has described the homeowners product as excess and surplus lines in some states. Ask your broker which it is for your California quote and which carrier issues it. ### Does Annex Risk insure condos? Annex has announced HO-6 coverage as part of its homeowners program for cat-exposed units. Availability depends on the state and building; ask rather than assume. *This guide is for educational purposes and summarizes Annex Risk's public statements and general California market practice. Your policy's specific terms, conditions, and endorsements control. Menlo Insurance Services (CA license 6020106) does not guarantee that any coverage or price will be available; talk to a licensed broker about your actual exposures.* ## The Bottom Line [#the-bottom-line] Annex Risk sells through brokers, and it's built for homes the admitted market has walked away from. It writes HO-3 homeowners and residential flood, prices them by algorithm, and has partner carriers issue the policies. In California it's open to well-maintained homes near the wildland-urban interface. Send it a submission before you accept the FAIR Plan. Before you bind, find out who the carrier is, whether the policy is admitted or surplus lines, how the carrier is rated, and what the deductibles are. Those answers tell you what you're actually buying. ## References . [Annex Risk. Annex Risk: Modern insurance for high-risk areas]() . [Annex Risk. About Us]() . [Annex Risk. Homeowners Insurance]() . [Annex Risk. Flood Insurance]() . [Annex Risk. Contact]() . [Annex Risk (LinkedIn company page). Annex Risk company profile and announcements]() # Best Builders Risk Insurance in California: Programs for Contractors and Owner-Builders Compared (https://www.menloinsurance.com/library/guides/best-builders-risk-insurance-california) The builders risk programs that write California projects, compared on who they insure, project size, terms and published minimums. Alchemy ($400 minimum, licensed GCs), Blitz (owners and GCs up to $5M, 3 to 12 months), Green Shield (up to $4M, no owner-builders), the FAIR Plan's course of construction as a last resort, and Tokio Marine's ArtisanEdge, with which ones Menlo can quote. Markdown version: https://www.menloinsurance.com/library/guides/best-builders-risk-insurance-california.md The best builders risk program in California depends mostly on who does the work and how big the project is. For a licensed general contractor, Alchemy's national program is built around that applicant, with a $400 minimum per term and projects from $150,000 to $5 million. For an owner or a mixed team, Blitz insures the owner, a GC, a developer or a tenant up to $5 million per location. For larger ground-up residential work with a licensed contractor, Green Shield writes up to $4 million but excludes owner-builders. Tokio Marine's ArtisanEdge insures GCs and building owners up to $2.5 million from a $250 minimum. Menlo quotes Alchemy, Blitz, Green Shield and, as a last resort, the California FAIR Plan's course of construction policy, but not ArtisanEdge today. Scaffolding on a building under construction, the stage of a project builders risk insurance covers This list is for a California owner, owner-builder, developer or contractor who needs builders risk (course of construction) coverage before a lender or contract will move. For prices, read [how much builders risk costs in California](https://www.menloinsurance.com/library/guides/builders-risk-insurance-cost-california). For the owner's side in depth, read [builders risk for homeowners and owner-builders](https://www.menloinsurance.com/library/guides/builders-risk-for-homeowners-owner-builders). To get quotes, start on our [builders risk page](https://www.menloinsurance.com/builders-risk-insurance). ## Key takeaways * **For licensed GCs: Alchemy.** A $400 minimum per term, new construction to $5 million per structure, renovations from $10,000 of work, admitted and surplus lines paper. * **For owners: Blitz.** It names owner, general contractor, developer and tenant as eligible insureds, with 3- to 12-month terms and options beyond a year. * **For long ground-up builds: Green Shield.** New construction up to $4 million and single-project terms of up to 30–36 months, but no owner-builders. * **When everything else declines: the FAIR Plan.** Its commercial policy writes course of construction, including a homeowner's renovation, on named perils. * **Worth knowing, not placed by Menlo today: Tokio Marine's ArtisanEdge.** It insures GCs and building owners up to $2.5 million with minimums from $250. Its California availability needs confirming. ## Which builders risk programs write California projects? [#which-builders-risk-programs-write-california-projects] Five programs write California projects that I can document from their own materials. The table compares the points that decide whether you qualify. | Program | Paper | Who can be insured | Project size | Terms | Published minimum | Menlo quotes it? | | -------------------------------------- | -------------------------------------------------- | -------------------------------------------------------------- | -------------------------------------------------------------- | --------------------------------------------------- | --------------------------- | ----------------------- | | Alchemy National Builders Risk | Admitted and surplus lines | Built around a licensed GC with 3+ years | New $150K–$5M per structure. Renovation $10K–$1M | 12 months new. 1–12 months renovation | $400 per term | Yes | | Blitz Builder's Risk | Surplus lines | Owner, GC, developer or tenant | Up to $5M per location, one structure per policy | 3, 6, 8, 10, 12 months and longer | Not published | Yes | | Green Shield Course of Construction | A-rated markets through Green Shield | No owner-builders. Contractor with $1M liability | New construction up to $4M, up to 3 stories | Single project up to 30–36 months | Not published | Yes | | California FAIR Plan Commercial Fire | State insurer of last resort | Individual owners and businesses | Up to $20M per structure | Not published | Not published | Yes, last resort | | Tokio Marine ArtisanEdge Builders Risk | Tokio Marine HCC (AM Best A++) | General contractors and building owners | Up to $2.5M, including frame | Not published | From $250 | No, appointment pending | Menlo also sends projects that don't fit these online programs to a wholesale broker, Insur-Fi, by ACORD application. Those quotes take longer, and the wholesaler doesn't name its markets in advance. ## Which builders risk is best for a licensed general contractor? [#which-builders-risk-is-best-for-a-licensed-general-contractor] Alchemy, for most residential and light commercial work. It writes 1–4 family and high-value residential new construction, light commercial projects, renovations and projects already under way, and its underwriting sheet asks for a licensed general contractor with at least three years of experience. Its $400 minimum per term is the lowest published floor among the programs Menlo quotes. The catch is location. Alchemy's national program doesn't take wildfire hazard groups D and F, sites under a mile from the West Coast, or projects over water. Green Shield is the next call for ground-up work in those places, since it writes wildfire, earthquake and flood exposures through select markets. ## Which builders risk is best for an owner-builder or a homeowner? [#which-builders-risk-is-best-for-an-owner-builder-or-a-homeowner] Blitz, because it names the owner as an eligible insured. When the owner is the insured, Blitz's application asks that the contractor carry $1 million per occurrence and $2 million per project of general liability and name the owner as additional insured, so there still needs to be a contractor's policy behind the job. Tokio Marine's ArtisanEdge also lists building owners as eligible, from a $250 minimum, though Menlo can't quote it yet. Green Shield's ground-up program excludes owner-builders outright. The FAIR Plan's commercial policy accepted an individual owner's renovation of a 1–4 unit home in our walk of its application, which makes it the fallback when the online programs say no. ## Which is best for a large or long project? [#which-is-best-for-a-large-or-long-project] Green Shield, for time and capacity. Its course of construction sheet writes new construction up to $4 million and three stories, and its broader builders risk appetite describes single-project terms of up to 30–36 months, monthly reporting and blanket policies for volume builders. Alchemy also writes subdivisions up to $10 million with underwriting review. Bigger projects than that go to the wholesale market. ## Which is best for a renovation? [#which-is-best-for-a-renovation] It depends on whether the work is structural. Alchemy writes renovations from $10,000 of work, with the existing structure from $150,000 to $1,000,000, and renovation terms in one-month steps. Blitz separates additions and minor remodels, significant non-structural renovations and structural renovations, and it sends load-bearing work to an underwriter. If the house is also empty, a vacant home program may cover cosmetic work, but not structural work. See [the best vacant home insurance in California](https://www.menloinsurance.com/library/guides/best-vacant-home-insurance-california). ## Where does the FAIR Plan fit? [#where-does-the-fair-plan-fit] As the last resort, and on narrower terms. The FAIR Plan's commercial policy writes course of construction on named perils, up to $20 million per structure, and its dwelling application sends any home under construction or significant remodel to the commercial application. Menlo quotes it only after the other builders risk markets have declined or referred the project. Its covered perils are named ones, such as fire, extended coverage and vandalism, so ask what it leaves out, like theft, before you rely on it. ## What about Tokio Marine's ArtisanEdge? [#what-about-tokio-marines-artisanedge] It's a strong option on paper, with the lowest published minimum here, though Menlo's appointment is still pending. Tokio Marine HCC's ArtisanEdge builders risk insures general contractors and building owners on commercial and residential projects, includes scaffolding and temporary fencing, goes up to $2.5 million including frame, and quotes minimums from $250. Its sheet says not every product is available in every jurisdiction, so confirm California with its agent. ## Frequently Asked Questions ### Who is the best builders risk insurance company in California? It depends on the project. For licensed GCs, Alchemy ($400 minimum, up to $5 million). For owners, Blitz or Tokio Marine's ArtisanEdge. For long ground-up builds, Green Shield. For projects nobody else takes, the FAIR Plan's course of construction policy. ### Can an owner-builder get builders risk in California? Sometimes. Blitz lists the owner as an eligible insured, but still expects a contractor's liability policy on the job, and Green Shield excludes owner-builders. ### Which builders risk programs can Menlo quote? Alchemy, Blitz, Green Shield and the California FAIR Plan (as a last resort), plus wholesale submissions through Insur-Fi. Tokio Marine's ArtisanEdge appointment is pending. ### What is the cheapest builders risk policy? The lowest published floors are $250 at Tokio Marine's ArtisanEdge and $400 per term at Alchemy. The real price depends on the project. See [our cost guide](https://www.menloinsurance.com/library/guides/builders-risk-insurance-cost-california). *This guide is for educational purposes and summarizes carrier program guides dated 2024–2026, the California FAIR Plan's application and Menlo's walks of carrier applications in September 2026. Programs, eligibility and availability change, and your policy's terms control. Menlo Insurance Services (CA license 6020106) is a licensed broker that may earn a commission on a placement and does not guarantee that any coverage or price will be available. Surplus lines policies are written by non-admitted insurers, which are not backed by the California Insurance Guarantee Association.* ## The Bottom Line [#the-bottom-line] Match the program to the project: Alchemy for a licensed general contractor, Blitz or Tokio Marine's ArtisanEdge when the owner is the insured, Green Shield for a long or larger ground-up build, and the FAIR Plan's course of construction policy for projects nobody else will write. Confirm California availability with ArtisanEdge's agent, since Menlo can't quote it yet. Tell the broker early who does the work, whether it is structural and whether work has started, because those three answers pick the program. ## References . [Alchemy Insurance Solutions. Builders Risk National Program (Admitted & E&S) Quick Reference Sheet]() (2025) . [Blitz Insurance. Builder's Risk Appetite]() (2025) . [Green Shield Risk Solutions. Course of Construction, Specialty Lines]() (2026) . [California FAIR Plan Association. Broker policy system, Commercial Fire course of construction application for a 1-4 unit renovation, walked by Menlo]() (accessed 2026-09-26) . [Green Shield Risk Solutions. Builders risk / course of construction appetite summary provided to Menlo]() (2026) . [California FAIR Plan Association. Plan of Operation, Ed. 9/3/25]() (2025) . [Tokio Marine HCC. ArtisanEdge Builders Risk (TMHCC24010)]() (2024) . [Alchemy Insurance Solutions. BR N Program QRC (applicant and eligibility rules)]() (2025) . [Alchemy Insurance Solutions. National Builders Risk (program one-pager)]() (2025) . [Blitz Insurance. Builder's Risk program; owner's interest contractor requirements as shown in the Blitz application walked by Menlo, September 2026]() (accessed 2026-09-27) . [California FAIR Plan Association. Dwelling Application Checklist (ACORD 854 CA)]() (2020) # Best Ways to Add Coverage to the California FAIR Plan: DIC Options and FAIR Plan Add-Ons Compared (https://www.menloinsurance.com/library/guides/best-dic-insurance-california-fair-plan) The FAIR Plan covers fire, lightning, internal explosion and smoke, and leaves out theft, water damage and liability. The best ways to fill the gap, from a broker's view, are the FAIR Plan's own options (extended coverage, vandalism, replacement cost), a DIC policy from Aegis (up to $3M) or Green Shield, the 18 admitted DIC insurers on the Department of Insurance's list, and earthquake through the CEA. Markdown version: https://www.menloinsurance.com/library/guides/best-dic-insurance-california-fair-plan.md The best way to add coverage to the California FAIR Plan is usually two steps: buy the FAIR Plan's own optional coverages first, then add a difference in conditions (DIC) policy for what the FAIR Plan never covers. The FAIR Plan dwelling policy covers fire, lightning, internal explosion and smoke, with extended coverage and vandalism as options, and it leaves out theft, water damage and liability. For the DIC, Menlo quotes Aegis, whose stand-alone DIC goes up to $3 million of dwelling value, and Green Shield. The Department of Insurance also lists 18 admitted insurers that sell a DIC built to pair with the FAIR Plan, most of them through their own agents. Aerial view of dry rolling hills at golden hour in California, the kind of wildfire country where homes end up on the FAIR Plan This list is for a California homeowner or landlord who is on the FAIR Plan, or about to be, and wants the gaps filled. How a DIC works in a claim is in our [DIC guide](https://www.menloinsurance.com/library/guides/difference-in-conditions-insurance). To get both policies quoted together, start on our [FAIR Plan and DIC page](https://www.menloinsurance.com/dic-insurance-california). ## Key takeaways * **Step one is inside the FAIR Plan.** Choose "Fire, ECE and VMM" for the widest named perils, and consider dwelling replacement cost, extended dwelling coverage and fair rental value. * **Step two is a DIC.** Aegis's stand-alone DIC is built to sit on top of a FAIR Plan policy, with dwelling values up to $3 million and liability up to $500,000. * **Green Shield is the second DIC Menlo quotes.** Its California DIC offers liability limits from $100,000 to $1 million. * **18 admitted insurers sell FAIR Plan DICs.** The Department of Insurance's list includes Mercury's California Automobile Insurance Company, CSAA, Farmers, Nationwide, Foremost, Zurich American and Aegis's DB Insurance and Seaview. * **Earthquake and flood stay separate.** A CEA earthquake policy can be added through the FAIR Plan itself. ## What are the ways to add coverage to a FAIR Plan policy? [#what-are-the-ways-to-add-coverage-to-a-fair-plan-policy] There are three kinds: the FAIR Plan's own options, a DIC policy from one of several insurers, and earthquake coverage. Most homes need the first two. The table shows what each one adds and who sells it. | Option | What it adds | Who sells it | Menlo quotes it? | | ------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------- | ------------------------------------- | | FAIR Plan options | Extended coverage (wind, hail, explosion, riot, aircraft, vehicles, volcanic eruption) and vandalism, replacement cost, extended dwelling coverage, fair rental value | The FAIR Plan, through a broker | Yes, as a registered FAIR Plan broker | | Aegis DIC | Water damage, collapse, theft and liability. Dwelling values up to $3M, liability up to $500K, all occupancies | Aegis General, whose admitted California programs have been written by DB Insurance | Yes | | Green Shield DIC | California-only DIC wrap, liability $100K to $1M, medical payments up to $10K | Green Shield | Yes | | Admitted DIC insurers on the CDI list | A DIC "that complements a FAIR Plan policy" for coverage similar to homeowners | 18 insurers, mostly through their own agents | Aegis (DB Insurance) only | | CEA earthquake | Earthquake damage, which the FAIR Plan and most DICs exclude | The FAIR Plan, with an in-force FAIR Plan policy | Yes | ## What should I add inside the FAIR Plan first? [#what-should-i-add-inside-the-fair-plan-first] The widest named-peril option, because a peril you didn't choose is a claim you can't make. The FAIR Plan's dwelling application offers three peril choices: Fire Only, Fire and ECE, and Fire, ECE and VMM. Extended coverage adds windstorm, hail, explosion, riot or civil commotion, aircraft, vehicles and volcanic eruption, and vandalism is added on top. The same application offers extended dwelling coverage of 25%, dwelling replacement cost (a house over 25 years old needs a roof replaced in the last 25 years), personal property replacement cost and fair rental value up to half the dwelling limit. If the home is vacant, vandalism also needs the FAIR Plan's vacancy permit endorsement. ## Which DIC is best to pair with the FAIR Plan? [#which-dic-is-best-to-pair-with-the-fair-plan] It depends on the home, and the admitted insurers on the Department of Insurance's list deserve the same look as the two DICs Menlo quotes. Aegis describes its product as "the only true stand-alone DIC insurance program in the market," designed as a companion to a FAIR Plan policy, and it takes all occupancies with dwelling values up to $3 million. It offers personal liability up to $500,000, includes evacuation reimbursement for primary homes, offers equipment breakdown, and accepts all dog breeds, trampolines and pools with slides or diving boards, with liability limitations. Aegis's DIC is written for wildfire-exposed homes. In our walk of its application, addresses with a Fireline wildfire score of 0N or 0Y were refused. Green Shield is the second DIC we quote, and the one to try when the house doesn't fit Aegis. Its California DIC offers liability limits of $100,000, $300,000, $500,000 or $1,000,000 and medical payments up to $10,000, and it defaults to actual cash value on the dwelling, so ask for replacement cost if you want it. Green Shield's DIC insurer is not one of the 18 on the Department of Insurance's admitted list, so check the admitted status shown on the quote. ## What about the admitted DIC insurers on the Department of Insurance list? [#what-about-the-admitted-dic-insurers-on-the-department-of-insurance-list] They are a real option, and most FAIR Plan households can check them through the insurer's own agent. The Department of Insurance lists 18 insurers whose DIC "complements a FAIR Plan policy so that the consumer (who buys both) has the same or similar coverage as a traditional homeowners' (HO) policy." The list includes California Automobile Insurance Company (Mercury), California Capital, California Mutual, CSAA Insurance Exchange, DB Insurance (U.S. Branch), Foremost, Pacific Specialty, Standard Fire, Zurich American, Seaview (Aegis Group), Farmers Insurance Exchange and Nationwide Mutual, among others. Menlo quotes Aegis, whose admitted California programs have been written by DB Insurance, one of the companies on that list. Our Foremost appointment is pending, and we don't represent the others, so for those you'd go to their own agents. ## Which DIC is best for liability? [#which-dic-is-best-for-liability] Green Shield, if you need more than $500,000. Its DIC offers up to $1 million of liability, against up to $500,000 at Aegis. Either way the FAIR Plan itself carries no liability at all, so a landlord or an owner with a pool shouldn't go without one. ## How do I cover earthquake and flood? [#how-do-i-cover-earthquake-and-flood] With separate policies. The FAIR Plan excludes earthquake and most DIC forms exclude it too, so earthquake comes from a CEA policy through the FAIR Plan or a private quake program. Read our guide to [earthquake coverage with the FAIR Plan](https://www.menloinsurance.com/library/guides/earthquake-insurance-with-california-fair-plan) for the choices. ## How do I make the FAIR Plan and the DIC work together? [#how-do-i-make-the-fair-plan-and-the-dic-work-together] Match them. Use the same dwelling and contents limits, the same named insured (including a trust), the same address and the same start date, and ask in writing whether the DIC pays living expenses when a FAIR Plan peril, like fire, forces you out. Our [DIC guide](https://www.menloinsurance.com/library/guides/difference-in-conditions-insurance) explains why those points decide claims. For homes in the hardest wildfire areas, our page on [home insurance in high fire risk areas](https://www.menloinsurance.com/home-insurance-high-fire-risk-california) explains how we quote both together. ## Frequently Asked Questions ### What is the best DIC insurance company in California? There isn't one. For a high-value wildfire-area home, Aegis's stand-alone DIC goes to $3 million of dwelling value. For higher liability limits, Green Shield goes to $1 million. For an admitted policy from a household name, compare the 18 insurers on the Department of Insurance's list. Menlo quotes Aegis and Green Shield. ### Can I add theft and water damage to the FAIR Plan itself? No. The FAIR Plan's options add named perils such as extended coverage and vandalism. Theft, water damage and liability come from a DIC. ### Does a DIC policy include liability? The ones Menlo quotes do: Aegis offers up to $500,000, and Green Shield offers $100,000 to $1 million. ### Which DIC insurers can Menlo quote? Aegis and Green Shield. Menlo is also a registered FAIR Plan broker, so both policies can be quoted together. *This guide is for educational purposes and summarizes the California FAIR Plan's policy and application, the Department of Insurance's DIC list (checked 2026-09-27), carrier program documents dated 2020–2026 and Menlo's walks of carrier applications in September 2026. Programs, eligibility and availability change, and your policy's terms control. Menlo Insurance Services (CA license 6020106) is a licensed broker and registered FAIR Plan broker that may earn a commission on a placement and does not guarantee that any coverage or price will be available. Non-admitted insurers are not backed by the California Insurance Guarantee Association.* ## The Bottom Line [#the-bottom-line] Fill the FAIR Plan's gaps in order. First, choose its widest perils and replacement cost options. Then add a DIC for theft, water and liability, such as Aegis (up to $3 million, liability up to $500,000) or Green Shield (liability up to $1 million), or an admitted insurer from the Department of Insurance's list. Then add earthquake if you want it. Match the policies on limits, names and dates so nothing falls between them. ## References . [California FAIR Plan Association. Dwelling Fire Policy (sample), effective 3/17/2026]() (2026) . [California FAIR Plan Association. Broker policy system, Dwelling Fire application (covered perils, dwelling coverage options), reviewed by Menlo]() (accessed 2026-09-25) . [Aegis General Insurance Agency. Aegis General Product Overview (CA)]() (2026) . [Green Shield Risk Solutions. California DIC application (liability, medical payments, loss settlement options) as walked by Menlo, September 2026]() (accessed 2026-09-23) . [California Department of Insurance. List of Insurers that Sell Difference in Conditions (DIC) Policies]() (accessed 2026-09-27) . [California FAIR Plan Association. Earthquake]() (accessed 2026-09-27) . [California FAIR Plan Association. Dwelling Application Checklist (ACORD 854 CA)]() (2020) . [Aegis General Insurance Agency. DIC sell sheet (CA only)]() (2020) . [Aegis General Insurance Agency. DIC application, wildfire score eligibility as shown in the Aegis application walked by Menlo, September 2026]() (accessed 2026-09-25) . [Aegis General Insurance Agency. California Dwelling Fire Update (archived)]() (2020) # Best Vacant Home Insurance in California: Six Programs Compared by a Broker (https://www.menloinsurance.com/library/guides/best-vacant-home-insurance-california) The vacant home programs that actually write empty California houses, compared on how long the house can sit empty, dwelling limits, forms and published minimums. The FAIR Plan (up to a year vacant), Delos ($1,500 minimum, up to 36 months), Green Shield (up to 48 months, $4M), Aegis, Foremost and American Modern, and which ones Menlo can quote today. Markdown version: https://www.menloinsurance.com/library/guides/best-vacant-home-insurance-california.md There is no single best vacant home insurance in California. The right program depends on how long the house will be empty, what it is worth and who owns it. Six programs write empty California homes: the California FAIR Plan (homes vacant up to a year), Delos on Lloyd's paper (up to 36 months, $1,500 minimum premium), Green Shield (up to 48 months and $4 million), Aegis, Foremost (no limit based only on time vacant) and American Modern (3- to 12-month terms). Menlo can quote the first four. Foremost and American Modern are sold through their own agents. Empty, bright living room with bare wood floors and no furniture, the kind of vacant house these policies insure This list is for an owner, heir or trustee with an empty house in California: between tenants, in probate, listed for sale or waiting on work. For the vacancy clause itself and how to name an estate, read our guide to [insuring a vacant or inherited home](https://www.menloinsurance.com/library/guides/vacant-inherited-home-insurance-california) first. When you're ready for quotes, start on our [vacant property insurance page](https://www.menloinsurance.com/vacant-property-insurance). ## Key takeaways * **Longest vacancy: Green Shield.** Its program accepts residential vacancies of up to 48 months, against 36 months at Delos and one year at the FAIR Plan. * **Highest limit: Green Shield.** Buildings up to $4 million ($750,000 in protection class 9 or 10), against $1.5 million at Delos and $3 million per location at the FAIR Plan. * **A published minimum: Delos.** $1,500 a year before taxes and fees, with 25% earned at the start. * **Last resort that still says yes: the FAIR Plan.** Named perils only, so it is often paired with a DIC policy for theft, water and liability. * **Menlo quotes four of the six.** The FAIR Plan, Delos, Green Shield and Aegis. Foremost's appointment is pending and American Modern isn't one of our markets. ## Which vacant home programs write California houses? [#which-vacant-home-programs-write-california-houses] Six programs write empty California homes that I can document from their own materials. The table compares what matters most on a vacant house. | Program | Insurer and status | How long vacant | Dwelling limit | Form | Published minimum | Menlo quotes it? | | ---------------------------- | ---------------------------------------------------------------------------------- | ------------------------------------------------- | ------------------------------------------- | ------------------------------------------------------- | --------------------------- | ----------------------- | | California FAIR Plan | California FAIR Plan Association, the state's insurer of last resort | Up to one year | Up to $3M per location | Named perils, vandalism by vacancy permit | Not published | Yes | | Delos Vacant Home | Lloyd's, non-admitted | Up to 36 months | $100,000 to $1.5M | DP-3, open perils on the dwelling | $1,500 a year | Yes | | Green Shield Vacant Property | A-rated markets through Green Shield | Up to 48 months residential | Up to $4M | DP-1 or DP-3 | Not published | Yes | | Aegis dwelling fire | DB Insurance (admitted) or Lloyd's via Hiscox, through Aegis General | Vacant is a listed occupancy | Up to $750,000 on DP-1 | DP-1 or DP-3 | Not published | Yes | | Foremost Choice Vacant | Foremost (Farmers), licensed in California since 1961 | No limit based only on time vacant | $5,000 to $1M in most states | Named perils, broader by endorsement | Not published | No, appointment pending | | American Modern vacant | American Modern Insurance Group | Terms of 3, 6 or 12 months | Not published | Dwelling Basic or Dwelling Special | Not published | No | ## Which vacant home insurance is best for a long vacancy? [#which-vacant-home-insurance-is-best-for-a-long-vacancy] Green Shield is the one to try first when a house will sit empty for years. Its program takes residential vacancies up to 48 months. Delos stops at 36 months, and the FAIR Plan declines a building that has been vacant more than a year unless it is under construction. Foremost says it has no restrictions based only on the time a home has been vacant, which makes it worth a call through a Foremost agent if the vacancy has no end date. ## Which is best for a high-value empty house? [#which-is-best-for-a-high-value-empty-house] Green Shield again, for limits. It writes buildings up to $4 million, with $750,000 as the cap in protection class 9 or 10, and it asks for an inspection above $500,000. The FAIR Plan goes to $3 million per location, but on named perils only. Delos tops out at $1.5 million of dwelling, and an inspection that finds a higher replacement cost leads to cancellation, so don't under-insure to squeeze in. ## Which is best when the house is in a trust, an LLC or an estate? [#which-is-best-when-the-house-is-in-a-trust-an-llc-or-an-estate] Delos and Foremost both say plainly that they write in the name of a trust or LLC. Delos requires the deed to "exactly match the name of the respective entity," and Foremost says it will "write homes in the name of an LLC or a trust." The FAIR Plan's application lists Estate and Trust among its applicant types, which helps during probate. Our [inherited home guide](https://www.menloinsurance.com/library/guides/vacant-inherited-home-insurance-california) walks through naming the owner. ## Which is best for a short vacancy, like a sale in a few months? [#which-is-best-for-a-short-vacancy-like-a-sale-in-a-few-months] American Modern is the program built around short terms. It writes vacant property for 3, 6 or 12 months and refunds unused premium pro rata when the house sells or someone moves in. Its own materials don't confirm California availability for the vacant program, so ask its agent before you count on it. Our [American Modern guide](https://www.menloinsurance.com/library/guides/american-modern-vacant-home-insurance) has the details. Among the programs Menlo quotes, Delos keeps 25% of the premium as earned from day one, so a very short vacancy costs relatively more there. ## Which is best in a wildfire area or after other insurers said no? [#which-is-best-in-a-wildfire-area-or-after-other-insurers-said-no] The FAIR Plan, because it is designed to take homes the regular market declines. It writes 1–4 unit dwellings vacant for up to a year, with fire, lightning and internal explosion as the base and extended coverage and vandalism as options. It leaves out theft, water damage and liability, so most owners add a DIC policy on top. See our comparison of [the best ways to add coverage to the FAIR Plan](https://www.menloinsurance.com/library/guides/best-dic-insurance-california-fair-plan). Delos adds its own wildfire model and may require double-paned windows and flame-resistant fences and decks. ## Which covers vandalism, theft and water best? [#which-covers-vandalism-theft-and-water-best] None of the program sheets shows all three included automatically, so this is where quotes differ most. Delos offers vandalism, theft of the dwelling's fixtures, theft of building materials and water from plumbing and freezing as paid endorsements. Green Shield has vandalism available and a $10,000 sublimit for theft of building materials. The FAIR Plan needs its vacancy permit endorsement for vandalism. Aegis's 2020 California guidelines capped vandalism at $50,000 on a vacant DP-1 and offered no theft on vacant homes, which I'd confirm on a current quote. ## What about vacant commercial buildings and land? [#what-about-vacant-commercial-buildings-and-land] They go to different programs. Blitz's vacant building program, for example, writes empty stores, offices and warehouses but excludes vacant habitational buildings. Land with no building is a liability policy. See [what vacant land insurance costs](https://www.menloinsurance.com/library/guides/vacant-land-insurance-cost-california). ## Frequently Asked Questions ### What is the best vacant home insurance company in California? It depends on the house. For long vacancies and high values, Green Shield (up to 48 months and $4 million). For a published price floor, Delos ($1,500 a year). For a home other insurers declined, the FAIR Plan. ### Does State Farm or Allstate insure vacant homes in California? I can't document a vacant-home program from either one in their public materials, so they are not on this list. Ask their agents directly. ### Which vacant home programs can Menlo quote? The California FAIR Plan, Delos, Green Shield and Aegis. Foremost's appointment is pending, and American Modern is not one of our markets. ### Is a surplus lines vacant policy safe? It can be a good policy, but non-admitted insurers such as Lloyd's are not backed by the California Insurance Guarantee Association. Each quote says whether the insurer is admitted. *This guide is for educational purposes and summarizes carrier program guides and public materials dated 2020–2026 and California FAIR Plan documents. Programs, availability and eligibility change, and your policy's terms control. Menlo Insurance Services (CA license 6020106) is a licensed broker and registered FAIR Plan broker that may earn a commission on a placement and does not guarantee that any coverage or price will be available. Menlo is appointed with Delos, Green Shield and Aegis. It is not appointed with American Modern, and its Foremost appointment was pending in September 2026.* ## The Bottom Line [#the-bottom-line] Match the program to the house: Green Shield for long vacancies and high values, Foremost for a vacancy with no end date, American Modern for a short hold, Delos for a documented $1,500 floor and trust or LLC owners, and the FAIR Plan when other markets say no. Menlo quotes the FAIR Plan, Delos, Green Shield and Aegis. Foremost and American Modern are sold through their own agents. Whatever you choose, check vandalism, theft and water on the quote. That's where vacant policies differ. ## References . [California FAIR Plan Association. Plan of Operation, Ed. 9/3/25, section IV.A]() (2025) . [Delos Insurance Solutions. Delos Vacant Home Product & Underwriting Overview, v1.1]() (2024) . [Green Shield Risk Solutions. Vacant Property, Specialty Lines]() (2026) . [Aegis General Insurance Agency. Aegis Specialty Division Adds Hiscox E&S Capacity for California Home and Fire Programs]() (2025) . [Foremost Insurance Group. Vacant Home Insurance]() (accessed 2026-09-27) . [American Modern Insurance Group. Vacant Property Details]() (accessed 2026-09-27) . [California FAIR Plan Association. Broker policy system, Dwelling Fire application (applicant types, coverages, limits), reviewed by Menlo]() (accessed 2026-09-25) . [California FAIR Plan Association. Dwelling Application Checklist and Application for Dwelling Insurance (ACORD 854 CA)]() (2020) . [Aegis General Insurance Agency. Aegis General Product Overview (CA)]() (2026) . [Foremost Insurance Group. Foremost Choice for Vacant Properties (9024284)]() (2023) . [Aegis General Insurance Agency. California Secondary Residence Insurance Program, Policy Forms DP-1 & DP-3, DP-GDL-CA (Ed. 8) (archived)]() (2020) . [Blitz Insurance. Vacant Commercial Building]() (2026) . [California Department of Insurance. Company Profile: Foremost Insurance Company Grand Rapids, Michigan]() (accessed 2026-09-27) . [American Modern Insurance Group. Vacant Homes]() (accessed 2026-09-27) # Bid Bonds in California: The 10% Rule and How to Get One (https://www.menloinsurance.com/library/guides/bid-bond-california) California public bids need bidder's security of at least 10% of the bid. How a bid bond works, what it costs (often nothing) and how to get one. Markdown version: https://www.menloinsurance.com/library/guides/bid-bond-california.md A bid bond is a surety's assurance that if your bid is selected, you will sign the contract and provide the required performance and payment bonds. California public agencies require bidder's security equal to at least 10% of the amount bid, and a bid bond from an admitted surety insurer is one of the allowed forms, alongside cash and cashier's or certified checks. A bid bond usually costs nothing by itself. The National Association of Surety Bond Producers (NASBP) notes that "bid bonds typically have no fee," since the surety is really evaluating you for the final bonds. This guide is for a California contractor preparing a first public bid, or a private bid that requires security. It covers what a bid bond guarantees, the amounts required under California and federal law, how to get one in time, what it costs, and what happens if you are awarded the contract but cannot proceed. When you have the bid documents, [send the bond requirement to us](https://www.menloinsurance.com/surety-bonds) and a bond specialist will review them. ## Key takeaways * **10% is the California floor.** State agency and city bids need bidder's security equal to at least 10% of the bid. * **Federal bids need 20%.** FAR sets the bid guarantee at at least 20% of the bid price, not over $3 million. * **Usually free.** Bid bonds typically carry no fee. The premium comes with the performance and payment bonds. * **Walking away costs the security.** If the winning bidder fails to sign, a city keeps the bidder's security. * **Mistakes have a five-day window.** Relief for a bid mistake requires written notice within five working days after bid opening. ## What does a bid bond guarantee? [#what-does-a-bid-bond-guarantee] That the winning bidder will follow through. NASBP explains the bid bond as the owner's way to recover the cost of rebidding, or the difference between the low bidder and the next low bidder, when the winner "fails to sign the contract or provide the required performance and payment bonds." It does not guarantee any part of the construction itself. | | Bid bond | Performance bond | Payment bond | | ------------------------ | --------------------------------------------------- | ---------------------------------------------- | ------------------------------------------------------------------------ | | When | With the bid | At contract signing | At contract signing | | Guarantees | You sign and furnish the final bonds | The work is completed | Subs and suppliers are paid | | California public amount | At least 10% of the bid | Set by the agency | At least 100% of the contract on public works over $25,000 | | Typical cost | Typically no fee | About 0.5% to 3% of the contract | Usually included with the performance bond | For the bonds that follow the award, see our guide to [performance and payment bonds in California](https://www.menloinsurance.com/library/guides/performance-and-payment-bonds-california). ## How much bid security does California require? [#how-much-bid-security-does-california-require] At least 10% of the amount bid for cities and state agencies. For state agency contracts, Public Contract Code section 10167 requires every bid to be sealed and submitted with bidder's security "in an amount equal to at least 10 percent of the amount bid," and provides that a bid without it will not be considered. The accepted forms are an electronic bidder's bond from an admitted surety through an approved registry, a signed bidder's bond from an admitted surety, or cash, a cashier's check or a certified check. Cities also follow the same 10% rule. Section 20170 lists cash, a cashier's check, a certified check or a bidder's bond from an admitted surety, and section 20171 states that the amount must be at least 10% of the bid. Counties, school districts and special districts have their own sections, so the instructions to bidders are the document to follow. Federal work asks for more. FAR requires a bid guarantee of at least 20% of the bid price, but not more than $3 million, on contracts that need performance bonds. Most contractors use a bond rather than cash, because a 10% check ties up working capital until the award. ## How much does a bid bond cost? [#how-much-does-a-bid-bond-cost] Usually nothing on its own. "Bid bonds typically have no fee," according to NASBP. The surety earns its premium on the performance and payment bonds if you win, and the usual rate is around 1% of the contract. The SBA's surety bond guarantee program also charges small businesses no fee for bid bond guarantees. The real cost is in the underwriting. A surety issues a bid bond only if it is willing to write the final performance and payment bonds, so it reviews your finances and experience at the bid stage. ## How do I get a bid bond? [#how-do-i-get-a-bid-bond] Open a surety account before the bid, not on the day it's due. The surety prequalifies you once for a limit and then issues bid bonds as needed for each project within that limit. Expect it to review your credit history and financial strength, experience, equipment, work in progress, management capacity and character, and to ask the owners to sign a general agreement of indemnity. For each bid, send the surety: 1. The bid documents, or at least the invitation to bid and the bid bond form the agency requires. 2. The bid amount (or a range) and the bid date. 3. The estimated job cost, your planned subcontractors and the schedule. 4. Your current work-in-progress schedule. Small and new contractors have programs established for them. RLI Surety writes bid, performance and payment bonds for small contractors through its First Step and Next Step programs. The SBA guarantees bonds on contracts of up to $9 million for non-federal projects and up to $14 million for federal projects. ## What happens if I win the bid and can't sign? [#what-happens-if-i-win-the-bid-and-cant-sign] The public entity keeps the security, or claims on the bond. For cities, when the successful bidder fails to execute the contract, "the amount of the bidder's security shall be forfeited to the city." For state agencies, the director may award the contract to the second or third-lowest bidder, and if a bidder refuses, its security is forfeited. If you used a bond, the surety pays and then recovers from you under the indemnity agreement. A genuine clerical mistake can be relieved, but only on strict terms. The bidder must prove that a mistake occurred, that it gave the public entity written notice within five working days after bid opening, that the mistake made the bid materially different, and that it happened in completing the bid form, not from an error in judgment or a careless reading of the plans. Once you have identified a mistake, send your written notice immediately. ## Frequently Asked Questions ### What is a 10% bid bond? A bid bond whose penal sum is 10% of your bid. It is the minimum bidder's security for California state agency and city public works bids. ### Do I pay for a bid bond? Usually not. NASBP notes that bid bonds typically have no fee, and the premium is charged on the performance and payment bonds if you win. ### How fast can I get a bid bond? Once a surety has prequalified you, a bid bond within your limits can be issued quickly. A first-time applicant needs time for the surety to review financials and experience, so start well before the bid date. ### Is a bid bond the same as a performance bond? No. A bid bond guarantees you'll sign and provide the final bonds. A performance bond guarantees the work is completed. *This guide is general information based on California and federal law and industry sources dated 2021–2026. Bid security rules come from the bid documents and the code that governs the agency, which control. Menlo Insurance Services (CA license 6020106) is a licensed broker that may earn a commission on a placement and does not guarantee that a surety will issue any bond.* ## References . [California Legislative Information. Public Contract Code section 10167]() (accessed 2026-09-27) . [California Legislative Information. Public Contract Code section 20171]() (accessed 2026-09-27) . [National Association of Surety Bond Producers. What Are Surety Bonds?]() (2024) . [Acquisition.gov. Federal Acquisition Regulation Part 28, Bonds and Insurance]() (accessed 2026-09-27) . [California Legislative Information. Public Contract Code section 20172]() (accessed 2026-09-27) . [California Legislative Information. Public Contract Code section 5103]() (accessed 2026-09-27) . [California Legislative Information. Civil Code section 9554]() (accessed 2026-09-27) . [California Legislative Information. Public Contract Code section 20170]() (accessed 2026-09-27) . [U.S. Small Business Administration. Surety bonds]() (accessed 2026-09-27) . [RLI Surety. Transactional Commercial Surety (SD-MK510)]() (2021) . [California Legislative Information. Public Contract Code section 10182]() (accessed 2026-09-27) # Blitz Insurance: Who It Is, What Its Builders Risk and Vacant Building Programs Cover, and How to Get a Quote (https://www.menloinsurance.com/library/guides/blitz-insurance) What Blitz Insurance is (a full-stack E&S managing general underwriter), what its builders risk, vacant commercial building, special events and contractors programs offer, who fits them, and how a California business gets a quote through a broker. Markdown version: https://www.menloinsurance.com/library/guides/blitz-insurance.md Blitz Insurance is a managing general underwriter. It builds, prices and binds small commercial excess and surplus lines programs, and a rated insurance carrier issues the actual policies. The company describes itself as a "full-stack MGU" based in Lakewood, New Jersey, offering nine programs, and says its policies are "issued on A- (Excellent) XV rated insurance paper." Trade coverage describes it as a technology-driven platform "specializing in small commercial property and casualty risks," with an automated system that "generates bindable quotes in under five minutes." You can't buy from Blitz directly. It works through appointed brokers, and in California it does business through Blitz Insurance Agency, LLC, California license number 6003828. If you're a California owner, developer or contractor, Blitz is mostly useful for two things. One is builders risk on new construction and renovation, up to $5 million per location. The other is vacant commercial buildings. The standard market turns down both of these more than almost anything else. Menlo Insurance Services is a licensed California broker with access to multiple markets, including Blitz's builders risk and vacant commercial building programs. Got a project or an empty building to insure? [Request a builders risk quote](https://www.menloinsurance.com/f/builders-risk) and we'll shop Blitz along with the other markets that fit. ## Key takeaways * **An MGU, not the carrier**: Blitz underwrites and binds on behalf of an insurer whose paper backs the policy; the issuing carrier, not Blitz, is who ultimately pays a claim. * **E\&S paper**: the policies are surplus lines, which means non-admitted carriers, surplus lines taxes and fees, and no California guaranty fund backing; Blitz says it handles the surplus lines filings. * **Speed is the pitch**: the company advertises "Quote in 5 minutes. Bind in 10 minutes," and its published programs list minimum premiums and hard eligibility limits rather than bespoke underwriting. * **Builders risk to $5M TIV**: residential and light commercial, ground-up through structural renovation, one structure per policy, terms from 3 to 12 months with options beyond a year. * **Not everything is eligible**: projects already under way, previously damaged structures and buildings in poor protection classes trigger referral; habitational, condemned and abandoned buildings are ineligible on the vacant program. ### Managing general underwriter (MGU) An organization granted authority by one or more insurers to underwrite and administer insurance programs on their behalf, often including appointing agents, binding and issuing policies, collecting premiums and handling claims. IRMI notes MGUs are typically used for specialty lines and operate within the surplus lines market. ## Who is Blitz Insurance? [#who-is-blitz-insurance] Blitz writes small commercial business in the excess and surplus lines market. Its website lists nine programs: Commercial Lessor's Risk, Builder's Risk, Contractors, Retail & Services, Special Events, Auto Services, Cannabis Operators, Vacant Commercial Buildings and Restaurant. The company says it works with "33,000+" producers, offers agency bill or direct bill, and handles surplus lines taxes and filings for the broker. Its office is at 1985 Cedar Bridge Avenue, Lakewood, New Jersey. There isn't much public reporting on Blitz, so here is what can and can't be checked. A July 2023 announcement of a payments partnership with Ascend described Blitz as "a specialty insurance carrier" funded "with $25M from its founder & CEO," and quoted Brandon Murphy as Chief Distribution Officer; the founder was described as a Forbes-listed serial entrepreneur but not named. A January 2025 announcement covered wholesale broker London Underwriters adding Blitz to its LU ONE platform for cannabis, lessor's risk, contractors and builders risk business. Blitz's own site does not publish a founding year or the name of the carrier behind its "A- (Excellent) XV" paper. ### Company claims are company claims The rating, the quote speed and the producer count above come from Blitz's website and partner press releases, not from an audit or regulator. Before binding, ask your broker for the name of the issuing carrier on your specific quote and check its rating yourself; our [AM Best ratings guide](https://www.menloinsurance.com/library/guides/am-best-insurance-ratings-explained) explains how to read one. The 2023 release calls Blitz a "carrier," but its own site says "MGU." Go with the MGU description. Someone else's paper is behind the policy. ## What does the Blitz builders risk program cover? [#what-does-the-blitz-builders-risk-program-cover] For California owners and contractors, this is the Blitz program that matters most. Ground-up builds and renovations are usually what send people to the E\&S market to begin with. Our [builders risk insurance guide](https://www.menloinsurance.com/library/guides/builders-risk-insurance-guide) explains how the coverage works in general. Here's what Blitz publishes about its own program. | Feature | What Blitz publishes | | -------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | | Eligible projects | Residential and light commercial: new construction, additions and minor remodels, non-structural and structural renovation, with existing-structure coverage available | | Eligible insureds | Property owners, general contractors, developers and tenants | | Maximum values | Up to $5 million total insured value per location; one structure per policy | | Liability option | General liability at $1 million per occurrence / $2 million aggregate, with premises liability including or excluding construction operations | | Structure | Monoline property, monoline GL or a package; property written on inland marine forms | | Policy terms | 3, 6, 8, 10 or 12 months, with options for terms over one year | | Minimum premium | From $500 | | Optional coverages | Contractors equipment, installation floater, delay in completion, business income, rental value, soft costs, ordinance or law (A, B and C), enhanced catastrophe wind and hail | | Mortgagees and loss payees | Added at no charge | | States | 47 states, excluding Hawaii, Idaho and Louisiana | Blitz also lists the situations that pull a submission out of the automated quote and send it to an underwriter: construction already started, a delayed or stalled project, occupancy before completion, existing structural damage, claims in the past three years, temporary storage above 15 percent of values, protection class 5 or worse, load-bearing renovation, and permission to occupy. None of these gets you declined automatically. But answer each one up front in the submission. You don't want to find out about it when a quote falls apart. For the optional coverages, our guides on [ordinance or law coverage](https://www.menloinsurance.com/library/guides/ordinance-or-law-coverage), [business income insurance](https://www.menloinsurance.com/library/guides/business-income-insurance-explained), [contractors equipment insurance](https://www.menloinsurance.com/library/guides/contractors-equipment-insurance) and [inland marine insurance](https://www.menloinsurance.com/library/guides/what-is-inland-marine-insurance) explain what each add-on does. ## What do the vacant building, special events and contractors programs offer? [#what-do-the-vacant-building-special-events-and-contractors-programs-offer] **Vacant Commercial Buildings.** Blitz writes vacant commercial property as a package or monoline, with general liability at $1 million or $2 million aggregate and a maximum TIV of $5 million per location, on 3- to 12-month terms, in all states and the District of Columbia except Hawaii, Idaho and Louisiana. It lists blanket and scheduled additional insured and primary and noncontributory wording at no charge. Ineligible risks include habitational buildings, condemned, foreclosed, abandoned or scheduled-for-demolition buildings, modular structures and trailers, contamination exposures, vacant land, and parcels over five acres. If your empty building is a house or an apartment building, this program won't work for you. Our [surplus lines insurance guide](https://www.menloinsurance.com/library/guides/surplus-lines-insurance) explains how the vacant dwelling market works. **Special Events.** Commercial general liability for events of up to five days including set-up and tear-down, at $1 million per occurrence / $2 million aggregate, with premiums starting at $65 plus taxes and fees, in all states except Idaho, Louisiana and Hawaii. **Contractors.** General liability up to $1 million / $2 million for paper general contractors (those subcontracting all work) and artisan trades, with a $1 million follow-form excess option, an additional insured bundle (blanket additional insured, primary and noncontributory, waiver of subrogation) at no charge, and eligibility limits of $3 million payroll, $15 million sales and $5 million TIV per location. Minimum premiums are $500 for GL and $750 for a package, plus taxes and fees, and the program limits residential builders to 25 new homes per year (15 in states Blitz designates for construction defect exposure), with limited availability in Colorado and New York. Our [waiver of subrogation guide](https://www.menloinsurance.com/library/guides/waiver-of-subrogation) explains why that bundle matters on a subcontract. ## Who is Blitz a good fit for? [#who-is-blitz-a-good-fit-for] You get the same trade-off as with any surplus lines placement. It's faster and more flexible, but the paper is non-admitted. IRMI describes E\&S as coverage "placed with a nonadmitted insurer," typically for risks "difficult to place in the standard market." Our [admitted vs non-admitted carriers guide](https://www.menloinsurance.com/library/guides/admitted-vs-non-admitted-carriers) explains what that means if you have a claim. On a builders risk policy for a 9-month project, most owners are fine with it. For a permanent property policy, think harder. ## How do you get a Blitz quote? [#how-do-you-get-a-blitz-quote] Blitz signs up brokers, not policyholders. Its broker onboarding page describes a 15-minute call, an application, a copy of the broker's license and errors and omissions certificate, a producer agreement, and credentials issued within 24 to 48 hours of approval. So as a business owner, you go through an appointed broker. The broker submits your risk on Blitz's platform and brings you back the quote. ### Steps ### Gather the project facts Address, construction type, total insured value including materials, start and completion dates, whether work has begun, whether the structure has existing damage, and any claims in the last three years. These are the same things that trigger a Blitz referral. Answer them up front and your submission stays in the automated quote. ### Decide on the structure and add-ons Monoline property, monoline GL or package; policy term; and which optional coverages (soft costs, delay in completion, ordinance or law, equipment) the lender or the project budget requires. ### Submit through a broker with Blitz access Menlo can quote the Blitz builders risk and vacant commercial building programs. We shop them next to other builders risk markets, so you see a comparison instead of one number. [Start the builders risk form](https://www.menloinsurance.com/f/builders-risk) to begin. ### Review the issuing carrier and the surplus lines disclosures Confirm the carrier name and rating on the quote, the surplus lines taxes and fees, and the non-admitted disclosure your broker is required to give you in California. ### Bind before work starts Blitz refers projects that have already started, and your lender will usually want the certificate before the first draw. Time the binder to your construction schedule. ## What should you ask before you bind? [#what-should-you-ask-before-you-bind] * **Who is the issuing carrier, and what is its rating today?** Blitz publishes the rating class of its paper but not the carrier's name. Ask for the name and look it up. * **Is the policy admitted or non-admitted in California?** Blitz states that its non-admitted insurers are not licensed in California and New York; know what that means for guaranty fund protection. * **What are the surplus lines taxes and fees on this quote?** They're added on top of the premium. Blitz says it handles the filings, but you pay the cost. * **Which referral triggers apply to my project, and how were they resolved?** If work has started, or the building is damaged or occupied, say so and let the underwriter price it. Don't leave it for a claims adjuster to find. * **Does the term match the schedule, and what happens if the project runs long?** Blitz offers terms from 3 to 12 months and options beyond a year; ask how extensions work before you need one. * **Which optional coverages does the lender require?** Soft costs, delay in completion and ordinance or law are optional on the Blitz program, not automatic. Comparing Blitz with a FAIR Plan policy, or trying to get past a standard-market decline on a renovation? The [builders risk insurance guide](https://www.menloinsurance.com/library/guides/builders-risk-insurance-guide) and our [builders risk insurance page](https://www.menloinsurance.com/builders-risk-insurance) walk through the alternatives. When you're ready, [request a builders risk quote](https://www.menloinsurance.com/f/builders-risk) and we'll include Blitz if the project fits. ## Frequently Asked Questions ### Is Blitz Insurance an insurance company? Blitz describes itself as a full-stack managing general underwriter. It underwrites, prices and binds programs on behalf of an insurance carrier whose paper issues the policy, and that carrier pays the claims. A 2023 partner release called it a carrier, but the company's own description is the MGU one. ### Is Blitz admitted in California? Blitz says the insurers it uses are non-admitted and not licensed in California and New York, and that it transacts in California through Blitz Insurance Agency, LLC, license 6003828. Its policies are surplus lines placements. ### What does Blitz builders risk cover? Residential and light commercial new construction and renovation up to $5 million total insured value per location, with an optional $1 million / $2 million general liability, on inland marine forms, for 3- to 12-month terms with longer options and a range of optional coverages such as soft costs and delay in completion. ### Can I buy a Blitz policy directly? No. Blitz appoints brokers and issues them platform credentials; a business buyer submits through an appointed broker. Menlo can quote Blitz builders risk and vacant commercial building programs through its market access. ### Does Blitz write vacant houses? Its vacant program is for commercial buildings, and habitational buildings are listed as ineligible. A vacant house or apartment needs a different market. *This guide is for educational purposes and summarizes public company statements and California market context. Program details, eligibility and pricing are set by Blitz and its issuing carriers and can change without notice; your policy's specific terms, conditions, and endorsements control. Menlo does not guarantee that any risk will be accepted or any price offered. Talk to a licensed broker about your actual exposures.* ## The Bottom Line [#the-bottom-line] Blitz Insurance is an E\&S managing general underwriter. It quotes and binds small commercial programs fast, on rated non-admitted paper. For California owners and contractors, the two programs worth knowing are builders risk (residential and light commercial up to $5 million TIV) and vacant commercial buildings. Blitz publishes its eligibility rules, so you can tell ahead of time whether your project will quote automatically or go to an underwriter. Buy through a broker and get the issuing carrier's name and rating. Make sure you're comfortable with the surplus lines trade-off. And bind before anyone breaks ground. ## References . [Blitz Insurance. Blitz Insurance: Specialty E&S Insurance Platform]() . [Blitz Insurance. About Us]() . [Coverager. London Underwriters Partners with Blitz Insurance to Provide a Simpler Way to Secure Specialty E&S Coverage]() (2025) . [Blitz Insurance. Builder's Risk Program]() . [Blitz Insurance. Vacant Commercial Buildings Program]() . [IRMI. Managing General Underwriter (MGU)]() . [IRMI. Excess and Surplus Lines Insurance]() . [Coverager. Blitz Insurance Partners with Ascend to Expand Payment and Financing Offerings]() (2023) . [Blitz Insurance. Special Events Program]() . [Blitz Insurance. Contractors Program]() . [Blitz Insurance. Become a Broker]() # What Is a BOP? The Business Owners Policy Explained (https://www.menloinsurance.com/library/guides/bop-business-owners-policy-guide) A businessowners policy (BOP) bundles property, liability and business income. Who qualifies, what it excludes, and what it costs ($83/month average). Markdown version: https://www.menloinsurance.com/library/guides/bop-business-owners-policy-guide.md A [business owners policy](https://www.menloinsurance.com/business-owners-policy) (BOP) is a package policy that combines the three coverages most small and mid-sized businesses need: commercial property, general liability and business income. It usually costs less than buying those coverages separately and includes several extra coverages as standard. Only lower-risk businesses within set size limits can buy one. If you run a shop, office, restaurant or small contracting business, a BOP is usually the first policy a broker quotes. Many owners assume it covers their whole business. It never does. Here is what is inside the package, which businesses insurers accept, and where a BOP falls short. ## Key takeaways * **One policy, three core coverages**: a BOP covers your building, business personal property, liability and business income under one policy with one premium. * **Eligibility is limited**: insurers restrict BOPs by type of business, building square footage and annual revenue. Larger or higher-hazard businesses need a commercial package policy (CPP). * **Big gaps remain**: a BOP never covers commercial auto or workers compensation, and the form excludes professional liability. * **Endorsements do the tailoring**: coverages such as equipment breakdown, hired and non-owned auto and employment practices liability can be added to the basic BOP. ### Businessowners Policy (BOP) A BOP is a package insurance policy that combines commercial property, general liability and business income coverage. Eligible small and mid-sized businesses can buy it, and it is generally cheaper and broader than buying those coverages separately. ## What does a BOP cover? [#what-does-a-bop-cover] A BOP covers your property, your liability and your lost income after a covered property loss, all on one form: ISO's Businessowners Coverage Form, BP 00 03. The property section covers your building, if you own it, and your business personal property, including furniture, equipment, inventory and improvements you made to leased space. The liability section works much like a standalone general liability policy. It pays for injuries to customers on your premises and for damage your operations or products cause to other people's property. For more on this part of the BOP, see our guide to [what general liability insurance covers](https://www.menloinsurance.com/library/guides/what-does-general-liability-insurance-cover). The third coverage is [business income](https://www.menloinsurance.com/library/glossary/business-income): lost profits and continuing expenses such as rent and payroll while you recover from a covered property loss. Many BOPs include this coverage without a separate dollar limit, a real advantage over a traditional commercial property policy. ## Who qualifies for a BOP? [#who-qualifies-for-a-bop] Under ISO's filed eligibility rules, a business qualifies for a BOP if no single location has more than 35,000 square feet of total floor space or more than $6 million in annual gross sales. IRMI uses the same baseline figures in its Businessowners Policy Basics. The type of business matters as much as size. Typical BOP classes are offices, retail stores, restaurants, small wholesalers, apartment buildings and artisan contractors. Higher-hazard businesses, such as manufacturers, bars, auto dealers and large contractors, are excluded. Those figures are a baseline, not a hard ceiling. Each carrier files its own program, and some go beyond those limits to win a good account. A business that outgrows BOP eligibility can buy a commercial package policy (CPP), which combines a commercial property form (such as [CP 00 10](https://www.menloinsurance.com/library/forms/cp-00-10)), a CGL policy and any other coverage the business needs. A CPP takes more work to put together than a BOP, but it has no eligibility ceiling. ## What does a BOP not cover? [#what-does-a-bop-not-cover] A BOP never covers commercial auto, workers compensation or professional liability. It is a package, not a force field. A retailer who expects the BOP to cover an injured warehouse employee, a damaged delivery van and bad advice given to a customer would be wrong on all three. The Insurance Information Institute lists these among the things a BOP does not cover: * **Commercial auto**: every vehicle your business owns needs a commercial auto policy. Some BOPs can be endorsed to add hired and non-owned auto liability, but that covers only rented, borrowed and employee-owned vehicles, never vehicles titled to your business. * **Workers compensation**: work injuries to employees fall under workers compensation, which nearly every state requires once you hire an employee. * **Professional liability**: a BOP covers bodily injury and property damage, not the financial harm caused by bad professional advice. Our guide to [professional liability insurance](https://www.menloinsurance.com/library/guides/what-is-professional-liability-insurance) explains the policy that covers it. * **Cyber**: some BOPs can be endorsed with basic cyber coverage, but the limits and covered events are narrow. A business that holds customer data should price a [standalone cyber policy](https://www.menloinsurance.com/library/guides/cyber-insurance-small-business). ## BOP vs buying separate policies: which is better? [#bop-vs-buying-separate-policies-which-is-better] For a business that qualifies, the BOP is usually the better buy. Here is how the options compare: Buy the BOP if you qualify and your exposures are ordinary. Move to a package policy when you need higher property limits or unusual coverage forms, or when your operations no longer fit the eligibility rules. ## How much does BOP insurance cost? [#how-much-does-bop-insurance-cost] Small businesses buying a BOP through Insureon pay an average of about $83 a month, and about a quarter of its customers pay under $50. Underwriters price a BOP with the same factors used for each coverage inside it and combine them into one premium. On the property side, the factors are building and personal property limits, construction type, location, fire protection class and roof age. On the liability side, they are the class code and a rating basis such as gross sales or square footage. An office is a low-hazard risk and costs much less than a restaurant with similar revenue, which has far more fire and liability exposure. BP 00 03 carries a $500 base property deductible, and raising it toward ISO's higher deductible options is the fastest way to lower the property premium. - $83/mo — Average BOP premium paid by small businesses — [Insureon, 2026]() - Under $50/mo — What about a quarter of BOP buyers pay — [Insureon, 2026]() Get quotes from at least two or three carriers that want your class of business. Because the liability side is often rated on gross sales, many BOPs have a year-end premium audit, so a strong sales year can bring an extra premium bill after the policy ends. Sometimes the cheapest quote is cheap because its filed form covers less, not because the pricing is sharp. Read the actual form before you accept it. ## Frequently Asked Questions ### What does BOP stand for in insurance? BOP stands for businessowners policy. It is a package policy that combines commercial property, general liability and business income coverage in one policy for small and mid-sized, lower-risk businesses. ### Is a BOP the same as general liability insurance? No. A BOP includes general liability plus commercial property and business income, so a business with a BOP does not need a separate general liability policy. A business that buys only general liability has no coverage for its property or lost income. ### Does a BOP cover workers compensation or commercial auto? No. Workers compensation and commercial auto are separate policies. A BOP can add hired and non-owned auto liability by endorsement, but vehicles the business owns and employees' work injuries need their own policies. ### Who is not eligible for a BOP? Businesses over the program's square footage or revenue limits, and higher-hazard classes such as manufacturers, bars, auto dealers and large contractors, are not eligible. They buy a commercial package policy (CPP) instead, which has no size or revenue limit. *This guide is for educational purposes and summarizes standard ISO policy language. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## Is a BOP right for your business? [#is-a-bop-right-for-your-business] A businessowners policy bundles commercial property, liability and business income into one package that usually costs less than buying each separately, if your business qualifies. For many small businesses, the BOP wins on price and simplicity. It never covers commercial auto, workers compensation or professional liability, so before you sign, ask your broker which endorsements and separate policies fill the gaps in your operations. ## References . [IRMI. Businessowners Policy Basics]() . [Insurance Information Institute. What Does a Businessowners Policy (BOP) Cover?]() . [Insureon. Business Owner's Policy (BOP) Insurance Cost]() # Broker of Record Letter: How a BOR Change Works (https://www.menloinsurance.com/library/guides/broker-of-record-letter) A broker of record letter switches your insurance broker without changing your policy. What happens after you sign, the 10-day window and when to switch. Markdown version: https://www.menloinsurance.com/library/guides/broker-of-record-letter.md A broker of record (BOR) letter is a short signed letter that names a new insurance broker as your representative with your insurance company. Once the carrier accepts it, the new broker can quote, service and negotiate renewals for every policy the letter lists, the commission moves to the new broker, and the old broker's authority ends. The letter changes only who represents you: your policy, your carrier and your premium stay the same. Many businesses don't realize how easy this is. If your broker stopped returning calls, missed a renewal deadline or never shopped your account, you do not have to cancel your policies to leave. You appoint a replacement with one page. This guide covers what the letter does legally, what happens after you sign, and when a BOR change makes sense. ## Key takeaways * **Appointment, not a policy change**: a BOR letter tells the carrier to replace your current representative with a new one. Your coverage, limits and premium stay exactly as they were. * **Rescind window**: the carrier notifies your current broker and holds the change open for 10 business days under the standard producer of record clause. You can cancel the BOR in writing during that time. * **Everything moves at once**: once the carrier processes the letter, the new broker controls the carrier relationship and receives the commission. The old broker loses portal access and all servicing rights. * **Signing costs nothing**: carriers process BOR letters at no charge, and the commission the carrier pays moves from the old broker to the new one. Separate brokerage fee agreements do not transfer automatically. ### Broker of Record (BOR) Letter A broker of record letter is a document signed by the policyholder that names one broker as its sole representative with an insurance carrier for the policies the letter lists. Carriers use it to decide which broker may access the client's account, negotiate terms and collect commissions. ## What is a broker of record? [#what-is-a-broker-of-record] The broker of record is the broker your insurance company recognizes as your representative on a particular policy. "BOR" is industry shorthand for that designation, so "signing a BOR" means signing the letter that appoints a new broker of record. Carriers do not let two brokers give instructions on the same account, so each policy has only one broker of record. That broker receives your policy documents, endorsements and cancellation notices, negotiates with the underwriter at each renewal, and earns the commission built into your premium. An agent of record letter works the same way. The only difference is whom the producer legally represents. An [agent and a broker](https://www.menloinsurance.com/library/guides/insurance-agent-vs-broker) sit on opposite sides of the transaction, so carriers call it an agent of record (AOR) letter when the producer is an appointed agent and a broker of record letter when the producer is a broker. For you, the paperwork and the confirmation process are identical. ## What does a broker of record letter do? [#what-does-a-broker-of-record-letter-do] A broker of record letter is your written instruction to the carrier to replace one broker with another. Most carriers want it on your company letterhead, dated, signed by an owner or officer, and listing the lines or policies it covers. When the carrier accepts the letter, three things move at once. First, the new broker can request endorsements, issue certificates and negotiate renewal terms. Second, the carrier's portal and underwriters start working with the new broker, and the old broker loses access. Third, the commission payments go to the new broker of record. Who signs matters. Carriers generally want the signature of someone who can legally bind the [named insured](https://www.menloinsurance.com/library/glossary/named-insured): an owner, an officer, or usually the person who signed the application. A letter signed by an office manager on plain paper often comes back for a proper signature, which costs days you may not have before the policy expires. The letter cannot cancel, rewrite or requote a policy, because your contract is with the carrier, not the broker. Your coverage, limits and premium stay in place until the new broker actually markets your renewal. ## What happens after you sign a BOR letter? [#what-happens-after-you-sign-a-bor-letter] After you sign, the new broker sends the letter to the carrier, and the carrier notifies your current broker before processing it. Under the standard producer of record provision, the incumbent broker typically has 10 business days after that notice to confirm your intent. Some carriers use shorter windows under their own agreements. During the window, the incumbent can ask you to reconsider, and if you send the carrier signed revocation instructions before it closes, nothing changes. If the window passes quietly, the change becomes binding on both brokers. Not every letter goes through. Carriers process BOR letters under their contracts with producers, so if the new brokerage has no contract (appointment) with your carrier, the carrier will reject the letter. Most states have adopted the NAIC Producer Licensing Model Act, under which an insurer has up to 15 days after the agency contract or first application to file a notice of appointment with the regulator. Direct writers do not accept BOR letters at all, because they sell only through their own producers. Before you sign, confirm that the new brokerage can access your current carrier. Expect a call from your old broker after you sign. Almost every incumbent makes one, and it is often the first call the account has had in years. The 10 business day window looks like a regulation, but it is really a term carriers wrote into their producer agreements, which is why it varies by company. As the Independent Insurance Agents of Texas (IIAT) put it, there are "no regulations covering the use of AOR letters" at all. Commission timing is the part brokers argue about. Many producer contracts say the old brokerage keeps the commission on premium already written until the policy ends by cancellation, expiration or its renewal anniversary, and only then does commission go to the new brokerage. The IIAT is direct about the mid-term case: the new agent services the account without commission until the policy renews. Your new broker takes on the work either way, which is why brokerages weigh a mid-term BOR carefully. Here is what a processed BOR letter changes and what it leaves alone: | Item | After the BOR takes effect | | ------------------------------------------- | ----------------------------------------------------------------------- | | Your representative | **Changes** to the new broker of record | | Servicing and portal access | **Changes**, incumbent is locked out | | Commission | **Changes** brokers, timing is dependent upon the producer's agreements | | Details and limits of policy terms | Unchanged | | Carrier name and policy # | Unchanged | | Premium amount and type of premium payments | Unchanged | Open claims need their own plan. The adjuster works for the carrier, so a claim in progress continues without interruption, but the old broker's advocacy ends the day the change becomes final. If you have a large open claim, confirm that the new broker takes over follow-up on it from day one. ## When should you change your broker of record? [#when-should-you-change-your-broker-of-record] Change brokers when staying costs you more than switching. The warning signs repeat: renewals that arrive days before the effective date with no marketing summary, certificates that take a week instead of an hour, no yearly review of how your operations have changed, and the same carrier every year even as the premium climbs. Market access matters as much as effort. If your business has outgrown standard markets, you need a broker who can reach both [admitted and non-admitted carriers](https://www.menloinsurance.com/library/guides/admitted-vs-non-admitted-carriers), not one who quotes the same two companies every year. Watch one wrinkle with [surplus lines placements](https://www.menloinsurance.com/library/guides/surplus-lines-insurance). E\&S business runs through a wholesale broker, so the record sits with the wholesaler, and a retail BOR may not move the account if your incumbent controls that relationship. A second BOR at the wholesale level is often needed. Timing matters too. Carriers process BOR letters mid-term, but most buyers sign 60 to 90 days before renewal so the new broker has time to market the account. When you are ready, follow this order: ### Steps ### Interview the replacement before signing anything Ask which carriers the new broker is appointed with, how they will handle day-to-day service, and how they run the renewal. A capable broker reviews your current policies and loss history before promising anything. ### Sign the BOR letter the new broker prepares Put the letter on company letterhead, list the carrier and the policy numbers that are moving, state the effective date, and have an authorized officer or owner sign it. You need one letter per carrier. ### Wait out the carrier's confirmation window The carrier notifies your current broker and holds the change open for the period in the standard producer of record clause, typically 10 business days. Expect a retention call from the incumbent, and revoke in writing only if they genuinely change your mind. ### Move the account file to the new broker Once the change is final, the new broker pulls your policies, endorsements and loss runs from the carrier and rebuilds your certificate holder list so proof of coverage continues without a gap. ### Set the renewal strategy with your new broker Agree on which markets to approach, what parts of your program need work, and when the submissions are due. That plan is why you changed brokers. A broker who asks for your recent [loss runs](https://www.menloinsurance.com/library/guides/how-to-read-loss-runs) before promising savings is a good sign, because real marketing starts with underwriting information, not a guess. If the switch follows this order, your first renewal should come with a marketing summary listing the carriers approached and the quotes they gave, weeks before the effective date instead of days. ## Frequently Asked Questions ### Does a broker of record letter change my insurance policy or premium? No. A BOR letter changes only who represents you with the carrier. Your policy number, coverage, limits and premium stay the same, because your contract has always been with the carrier. Any better price or terms come later, once the new broker negotiates the renewal or markets the account. ### Can I cancel a broker of record letter after I sign it? Usually, if you act quickly. The carrier notifies your current broker and holds the change open for 10 business days under the standard producer of record clause, though some carriers use shorter windows. During that window you can revoke the letter by sending the carrier signed written instructions. After it closes, the change is binding, but you can always send a new letter naming a different broker. ### How long does a broker of record change take? Allow about two to three weeks in total. The standard confirmation window is 10 business days from the carrier's notice to your current broker under the producer of record clause, and carrier processing time before and after that window varies. Buyers who want a full remarketing usually sign with the new broker 60 to 90 days before the policy expires, which gives the new broker enough time. ### Does it cost anything to sign a BOR letter? No. Carriers do not charge to process a broker of record change, and the letter does not change your premium. The commission is already built into what you pay, so after the change it goes to the new broker when the carrier's producer agreement allows. The exception is large or surplus lines accounts with broker fees outside the carrier's commission; those fees do not transfer automatically. Ask the new broker how they are paid. *This guide is for educational purposes and describes common carrier practice. Your carrier's producer agreements and your policy's terms control. Talk to a licensed broker about your situation.* ## Before you sign a BOR letter [#before-you-sign-a-bor-letter] A broker of record letter names a different broker to represent you with a carrier without changing your policy, premium or carrier. Signing costs nothing, and you usually have about 10 business days to take it back. After that window, everything moves at once. Before you sign, confirm that the new broker can actually access your carrier, and then hold them to a real marketing summary at renewal. ## References . [NAIC. Producer Licensing Model Act (Model 218)]() . [Independent Insurance Agents of Texas. Agent of Record Letters]() # Builders Risk for Homeowners and Owner-Builders in California, Including an ADU (https://www.menloinsurance.com/library/guides/builders-risk-for-homeowners-owner-builders) Can a California homeowner buy builders risk for a new house, a remodel or an ADU? Yes, when a market accepts the owner as the insured. Blitz insures owners (with the contractor's $1M/$2M liability behind them), Alchemy writes around a licensed general contractor with 3+ years, and Green Shield's ground-up program excludes owner-builders. What each needs and what to prepare. Markdown version: https://www.menloinsurance.com/library/guides/builders-risk-for-homeowners-owner-builders.md Yes, a California homeowner can buy builders risk, but not from every program. Whether a market will take you depends mostly on who does the work. Blitz's builders risk program insures the owner, a general contractor, a developer or a tenant, one structure per policy up to $5 million. Alchemy's program is written around a licensed general contractor with at least three years of experience. Green Shield's ground-up course of construction program says plainly: "no owner-builders." This guide is for an owner building a house, adding an accessory dwelling unit (ADU) or doing a large remodel, whether you hired a general contractor, are hiring the trades yourself, or are swinging the hammer. It explains which programs fit each case, what they ask of your contractor, and what to have ready. To start a request, open our [builders risk page](https://www.menloinsurance.com/builders-risk-insurance). For work on an existing home, the [renovation insurance page](https://www.menloinsurance.com/builders-renovation-insurance) goes straight to the remodel questions. ## Key takeaways * **Who does the work picks the market.** A licensed general contractor opens the most programs. An owner hiring licensed trades has fewer. An owner doing the work has the fewest. * **Blitz can insure the owner.** Its program lists owner, general contractor, developer and tenant as insureds, with 3- to 12-month terms and up to $5 million per location. * **The owner's policy leans on the contractor's.** When the owner is insured on Blitz, the application requires the contractor to carry $1 million per occurrence and $2 million per project in general liability, name the owner as additional insured (CG 20 10 and CG 20 37), waive subrogation and keep completed operations for two years. * **Alchemy and Green Shield want a contractor.** Alchemy's applicant is a licensed general contractor with 3+ years. Green Shield's ground-up program excludes owner-builders and requires the contractor to carry at least $1 million of liability. * **An ADU is asked about directly.** Green Shield's application asks whether the property is an ADU to a primary residence, so say so up front. ### Owner-builder A property owner who builds or improves a structure on their own land without a general contractor. California's Business and Professions Code section 7044 lets an owner do the work personally (or with wage employees) when the improvements are not "intended or offered for sale," or contract directly with licensed trade contractors. ## Can a homeowner buy builders risk insurance? [#can-a-homeowner-buy-builders-risk-insurance] Yes. Builders risk covers the structure and materials while they are being built or renovated, and the owner has an insurable interest in both. The limit is the market's appetite, not the law. Here is how the programs available to Menlo in California treat an owner: | Program | Owner as the insured | Who must do the work | Size and term | What it asks about the contractor | | ----------------------------------------------------------- | ------------------------------------------------- | ------------------------------------------------------- | --------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------- | | Blitz builders risk (surplus lines) | Yes: owner, GC, developer or tenant | Not limited to a GC | Up to $5M per location, one structure per policy. 3, 6, 8, 10 or 12 months | Contractor carries $1M/$2M per project GL, AI on CG 20 10 and CG 20 37, waiver of subrogation, 2 years completed operations | | Alchemy national builders risk (admitted and surplus lines) | Application is built around the builder | Licensed general contractor with 3+ years | New construction $150K–$5M per structure. Renovations $10K–$1M. $400 minimum per term | Builder experience and 5 years of loss runs | | Green Shield course of construction | Owner-builders ineligible | A contractor with at least $1M liability | New construction up to $4M, up to 3 stories | Contractor license, prior project experience, budget and timeline | Blitz refers a project to an underwriter when construction has already started, the building will be occupied before completion, or the work is load-bearing. Those aren't refusals, but they slow the quote, so mention them at the start. ## What if I'm the owner-builder doing the work myself? [#what-if-im-the-owner-builder-doing-the-work-myself] Expect fewer options and more questions. Green Shield's ground-up program won't take you, and Alchemy's program expects a licensed general contractor as the builder. Blitz is the program in our files that names the owner as an eligible insured, and its application still asks about the contractor's liability. If nobody holds a contractor's liability policy, tell the broker. That answer decides whether the application goes further online or to a hand review. The law has its own conditions on being an owner-builder. Section 7044 covers an owner whose improvements are not intended or offered for sale. Selling the structure within one year of completion creates a presumption that it was built for sale, and selling five or more in a year makes that presumption conclusive. If you plan to sell, talk to the Contractors State License Board or a lawyer before you start, because it also affects how an insurer sees the project. ## What if I hire a licensed general contractor? [#what-if-i-hire-a-licensed-general-contractor] Then the builders risk markets open up. Alchemy writes 1–4 family new construction and remodels of existing homes when the builder is a licensed general contractor with at least three years of experience. Green Shield writes ground-up residential projects when the contractor carries at least $1 million of liability. Our application keeps the builder and the insured as separate roles, so you can be named as the owner while the contractor's company is listed as the builder. Who buys the policy is a contract question. Many construction contracts say whether the owner or the contractor carries builders risk. Read yours, and make sure only one policy is bought and that both of you are named on it. ## How do I insure an ADU while it's being built? [#how-do-i-insure-an-adu-while-its-being-built] Treat a new detached ADU like any other new building, and a garage conversion or attached ADU like a renovation. Green Shield's ground-up application asks, "Is the property to be insured an Accessory Dwelling Unit (ADU) to a primary residence?", so the program looks at ADUs specifically. Alchemy writes renovations of existing residential structures with a separate limit for the existing building, from $150,000 to $1,000,000. Two practical points. First, the main house stays on its own homeowners or dwelling policy during the build, so tell that insurer about the project and ask how it treats construction on the lot. Second, if the main house is on the California FAIR Plan, its application checklist says a dwelling in course of construction or undergoing a significant remodel needs a commercial application, not a dwelling one. ## What does builders risk cover for a homeowner? [#what-does-builders-risk-cover-for-a-homeowner] The building and materials, not people. Builders risk pays for direct damage to the work in progress and the materials on site, in transit or in storage, within the limits you choose. Alchemy's program includes, for example, $10,000 for materials in transit and at temporary storage locations and offers soft costs from $5,000 to $100,000. Green Shield sublimits theft of building materials at $25,000 on its ground-up program. Injuries and damage to other people are general liability. Blitz can package premises liability with builders risk, and it can be written with or without construction operations. The contractor's own general liability is the policy that answers for their work. Our guide to [what general liability covers](https://www.menloinsurance.com/library/guides/what-does-general-liability-insurance-cover) explains the difference. ## What should I prepare before I apply? [#what-should-i-prepare-before-i-apply] ### Steps ### Who does the work The contractor's company name and license number, or a note that you are the owner-builder. Have the contractor's certificate of insurance if you have one. ### The project New build, ADU, addition, or structural or non-structural renovation. For a renovation, the cost of the work and the value of the existing house. ### Values and schedule Completed value, start date, how long it will take, and whether work has already started. ### The site Address, construction type, number of stories, distance to a hydrant, and site security such as fencing, lighting or an alarm. ### Your history Any property claims in the last few years, and the current homeowners or FAIR Plan policy on the lot. Then [request builders risk quotes](https://www.menloinsurance.com/builders-risk-insurance). For what it costs, see [how much builders risk insurance costs in California](https://www.menloinsurance.com/library/guides/builders-risk-insurance-cost-california). ## Frequently Asked Questions ### Can I get builders risk as an owner-builder in California? Sometimes. Blitz lists the owner as an eligible insured. Green Shield's ground-up program excludes owner-builders, and Alchemy's expects a licensed general contractor. A broker can tell you quickly whether your project fits. ### Does my homeowners policy cover a remodel or ADU under construction? Ask your insurer in writing before work starts. Homeowners policies are written for an occupied, finished home, and the California FAIR Plan sends significant remodels and course of construction to its commercial application. ### Who should buy builders risk, me or my contractor? Whoever the contract names. Owners often buy it when a lender requires it or when they hire the trades themselves. Make sure both of you are named on the one policy. ### What liability does my contractor need for my builders risk policy? On Blitz, when the owner is the insured, the application asks for the contractor's general liability of $1 million per occurrence and $2 million per project, the owner as additional insured on CG 20 10 and CG 20 37, a waiver of subrogation, primary coverage and two years of completed operations. Green Shield requires the contractor to carry at least $1 million. *This guide is for educational purposes and summarizes California law, carrier program guides dated 2025–2026 and the carrier applications as Menlo walked them in September 2026. Programs, eligibility and forms change, and your policy's terms, conditions and endorsements control. Menlo Insurance Services (CA license 6020106) is a licensed broker that may earn a commission on a placement and does not guarantee that any coverage or price will be available. Blitz places business with non-admitted insurers, which are not backed by the California Insurance Guarantee Association.* ## The Bottom Line [#the-bottom-line] A homeowner can buy builders risk in California, and the key question is who does the work. With a licensed general contractor, Alchemy, Green Shield and Blitz can all look at the project. As an owner hiring the trades or doing the work, Blitz is the program in our files that names the owner as insured, and it still expects a contractor's liability behind the job. Green Shield's ground-up program won't write owner-builders. Tell the broker about an ADU, work already started and load-bearing changes at the start. ## References . [Blitz Insurance. Builder's Risk Appetite]() (2025) . [Alchemy Insurance Solutions. BR N Program QRC (applicant and eligibility rules)]() (2025) . [Green Shield Risk Solutions. Course of Construction, Specialty Lines]() (2026) . [Blitz Insurance. Builder's Risk program; owner's interest contractor requirements as shown in the Blitz application walked by Menlo, September 2026]() (accessed 2026-09-27) . [Green Shield Risk Solutions. Course of Construction program; ADU eligibility question as shown in the Green Shield application walked by Menlo, September 2026]() (accessed 2026-09-27) . [California Legislative Information. Business and Professions Code section 7044 (owner-builder exemption)]() (accessed 2026-09-27) . [Alchemy Insurance Solutions. Builders Risk National Program (Admitted & E&S) Quick Reference Sheet]() (2025) . [Alchemy Insurance Solutions. National Builders Risk (program one-pager)]() (2025) . [California FAIR Plan Association. Dwelling Application Checklist (ACORD 854 CA)]() (2020) # How Much Does Builders Risk Insurance Cost in California? Minimums, Rate Drivers and a Real Quote (https://www.menloinsurance.com/library/guides/builders-risk-insurance-cost-california) Builders risk in California starts at a published $400 minimum premium per term on Alchemy's national program, and a recent non-structural renovation quote we received came to $7,407 for the term, including a $200 policy fee and surplus lines tax. What sets the price, how new builds and renovations differ, and how term length works. Markdown version: https://www.menloinsurance.com/library/guides/builders-risk-insurance-cost-california.md Builders risk in California has no single price, but the floor is published. Alchemy's national builders risk program sets a minimum premium of $400 per policy term, and its terms are fully earned. Above that floor the premium follows the project: the completed value (or the renovation cost plus the existing building), the construction type, the address's wildfire and coastal exposure, the deductibles and the months the project runs. For a sense of scale, one builders risk quote Menlo received in September 2026, for a non-structural renovation with $50,000 of soft costs, came to $7,407.12 for the term, including a $200 policy fee and surplus lines tax, and it was subject to underwriter review. This guide is for a California owner, builder or general contractor pricing a project before the lender or the contract asks for proof of coverage. It covers what sets the price, how new construction and renovations are rated differently, what a term costs, and what lands on top of the premium. When you're ready, [request builders risk quotes](https://www.menloinsurance.com/builders-risk-insurance) and we'll send the project to several construction markets. ## Key takeaways * **Published floor: $400 a term.** Alchemy's national program (admitted and surplus lines) has a $400 minimum premium per policy term. * **One real quote: about $7,400.** A September 2026 non-structural renovation quote from Alchemy came to $7,407.12: $6,985 premium, a $200 policy fee, $209.55 surplus lines tax and a $12.57 stamping fee. It is one quote, not an average. * **The premium is usually earned in full.** Alchemy's terms are fully earned, and the quote above showed a minimum earned premium equal to the whole premium. * **Term length is a pricing choice.** Renovations are written in 1-month steps up to 12 months on Alchemy. Blitz offers 3, 6, 8, 10 and 12 months. Green Shield offers single-project terms of up to 30–36 months. * **Location can end the quote before price matters.** Alchemy's national program is closed to wildfire hazard groups D and F and to sites under 1 mile from the West Coast. ## What is the minimum premium for builders risk in California? [#what-is-the-minimum-premium-for-builders-risk-in-california] The only California-open program that publishes one in our carrier files is Alchemy, at $400 per policy term. That is the least you can pay for a policy of any size on that program, before fees and taxes. Blitz and Green Shield don't publish a builders risk minimum in their program sheets. The minimum matters most on small jobs. A $30,000 kitchen remodel rated on its own value might come out below the floor, and then the floor is the premium. ## What sets the price of a builders risk policy? [#what-sets-the-price-of-a-builders-risk-policy] The insurer rates what could be lost, for how long, and where. The factors the California programs ask about: | Factor | Why it moves the price | What the programs publish | | ---------------------------------- | ------------------------------------------------------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------- | | Completed value or renovation cost | The limit is the most the policy could pay | Alchemy: new construction $150,000–$5,000,000 per structure. Renovation $10,000–$1,000,000 per job site | | Existing building (renovations) | Covering the old structure adds a second limit | Alchemy: existing structure $150,000–$1,000,000 | | Construction type | Frame burns faster than masonry | Green Shield lists frame, joisted masonry, masonry non-combustible and superior | | Wildfire, wind and coast | Catastrophe exposure is rated or excluded | Alchemy closes wildfire hazard groups D and F and sites under 1 mile from the West Coast. A 2% wind/hail deductible applies in high hazard levels | | Term | More months under construction, more exposure | Alchemy: 12 months new construction, 1–12 months renovation | | Deductibles | A higher deductible lowers the premium | The renovation quote we received used a $2,500 all-other-perils deductible and a 5% windstorm deductible | | Soft costs and add-ons | Delay costs, transit and cost increases add limits | Alchemy: soft costs $5,000–$100,000. Transit and temporary storage $10,000 each | | Builder experience and claims | Underwriters price the builder as much as the building | Alchemy asks for 5 years of loss runs or a no-loss statement | | Work already done | A half-built project has more value at risk on day one | Alchemy accepts up to 30% complete without underwriting review. Blitz refers construction already started | The distance to a fire hydrant and the fire protection class also feed the rate, which is why the application asks for them. ## How is a renovation priced differently from a new build? [#how-is-a-renovation-priced-differently-from-a-new-build] A new build is rated on its completed value. A renovation is rated on two pieces: the cost of the work and, if you want it covered, the existing building. Alchemy writes the renovation from $10,000 of work and the existing structure from $150,000 to $1,000,000, and it adds them together as the completed value limit. The kind of renovation matters too. Blitz rates an addition or minor remodel, a significant non-structural renovation and a structural renovation as separate project types, and it refers load-bearing work to an underwriter. Green Shield writes structural and non-structural renovations depending on the market. Tell the broker if walls, the roof structure or the foundation are being changed. It changes both the market and the price. ## How does the policy term affect cost? [#how-does-the-policy-term-affect-cost] Builders risk is bought for the length of the project, and most programs keep the whole premium once the policy starts. Alchemy writes new construction on a standard 12-month term and renovations in 1-month increments up to 12 months, all fully earned, and the policy expires on its own without a non-renewal notice, with extensions by request. Blitz offers 3, 6, 8, 10 and 12 months, with options beyond a year. Green Shield writes single projects for up to 30–36 months. So pick the term from a realistic schedule. A term that is too short means buying an extension at the end. A term that is too long means paying for months you didn't need, because a fully earned premium isn't refunded when you finish early. ## What gets added on top of the premium? [#what-gets-added-on-top-of-the-premium] Fees and, on surplus lines paper, state taxes. In the quote we received, a $6,985 premium became $7,407.12 after a $200 policy fee, $209.55 of surplus lines tax (3%) and a $12.57 stamping fee (0.18%). Those are California's surplus lines tax and Surplus Line Association stamping fee rates. An admitted policy doesn't carry the surplus lines tax. Our [surplus lines tax table](https://www.menloinsurance.com/library/guides/surplus-lines-tax-by-state) shows how it is figured. ## What does a real California builders risk quote look like? [#what-does-a-real-california-builders-risk-quote-look-like] Here is the one builders risk quote published to a Menlo customer so far, with nothing that identifies the customer or the address. We show it because it is real, not because it is typical: one quote can't tell you an average. | Item | Amount | | -------------------------------------------------- | ---------------------------------------------------------------------------------------------------------- | | Project type | Non-structural renovation | | Insurer program | Alchemy builders risk (Cornerstone Insurance Producers) | | Coverage premium (also the minimum earned premium) | $6,985.00 | | Policy fee | $200.00 | | Surplus lines tax | $209.55 | | Stamping fee | $12.57 | | **Total for the term** | **$7,407.12** | | Deductibles | $2,500 all other perils, 5% windstorm or hail | | Options included | $50,000 soft costs, 10% construction cost increase, $10,000 property in transit or at a temporary location | Source: Menlo quote record, September 2026. The carrier flagged the quote for underwriter review before binding, listing wildfire exposure, the share of construction already complete and the value of the existing structure among its referral conditions. A referral can change the terms or the price. ## How can I lower the cost? [#how-can-i-lower-the-cost] * **Raise the deductible.** It is the most direct lever the application gives you. * **Match the term to the schedule.** Don't buy 12 months for a 5-month job when the program sells monthly terms. * **Only add the soft costs you need.** Soft costs protect loan interest and delay costs, but each limit adds premium. * **Buy before work starts.** Alchemy's national program takes projects up to 30% complete without review, and Blitz refers any project already started. * **Secure the site.** Blitz's application asks for fencing and lighting on new construction and reviews other safeguards, such as alarms and security services. If you're an owner rather than a contractor, read our guide to [builders risk for homeowners and owner-builders](https://www.menloinsurance.com/library/guides/builders-risk-for-homeowners-owner-builders) first. Which market takes you depends on who does the work. Our [builders risk guide](https://www.menloinsurance.com/library/guides/builders-risk-insurance-guide) explains what the policy covers. ## Frequently Asked Questions ### How much is builders risk insurance for a small remodel? At least the program minimum. Alchemy's is $400 per policy term, before fees and taxes. A larger remodel or one that also covers the existing house costs more. The one renovation quote we've published came to $7,407.12 for the term, including fees and tax. ### Is builders risk priced per year or per project? Per term, set to the project. Alchemy writes renovations in 1-month steps up to 12 months and new construction on 12 months. Blitz and Green Shield offer other terms. ### Do I get money back if the project finishes early? Usually not. Alchemy's terms are fully earned, so the premium is kept once the policy starts. ### Why was my project declined before it was priced? Location is the usual reason. Alchemy's national program doesn't write wildfire hazard groups D and F, sites under a mile from the West Coast, or projects over water. Another market may still take it. ### Is builders risk cheaper from an admitted insurer? An admitted policy avoids the 3% surplus lines tax and 0.18% stamping fee, but the premium itself depends on the program and the project. Compare total cost, deductibles and limits, not just the premium line. *This guide is for educational purposes and summarizes carrier program guides dated 2025–2026 and one quote record from September 2026. Programs, eligibility and prices change, and your policy's terms, conditions and endorsements control. Menlo Insurance Services (CA license 6020106) is a licensed broker that may earn a commission on a placement and does not guarantee that any coverage or price will be available. Surplus lines policies are written by non-admitted insurers, which are not backed by the California Insurance Guarantee Association.* ## The Bottom Line [#the-bottom-line] Builders risk in California starts at a published $400 minimum per term on Alchemy's national program, and it rises with the project's value, construction, location, deductibles and term. The one real renovation quote we can share came to $7,407.12 for the term including fees and tax. Because most terms are fully earned, pick the term from a realistic schedule, buy before work starts, and compare the total, not just the premium. ## References . [Alchemy Insurance Solutions. Builders Risk National Program (Admitted & E&S) Quick Reference Sheet: Coverage Options & Limits]() (2025) . [Blitz Insurance. Builder's Risk Appetite]() (2025) . [Green Shield Risk Solutions. Course of Construction, Specialty Lines, and builders risk appetite summary]() (2026) . [Alchemy Insurance Solutions. Builders Risk National Program QRC: Catastrophe Risk Exposure and Ineligible Risks]() (2025) . [Alchemy Insurance Solutions. BR N Program QRC (mid-completion and applicant rules)]() (2025) . [Alchemy Insurance Solutions. National Builders Risk (program one-pager)]() (2025) . [Surplus Line Association of California. Broker Taxes and Fees]() (accessed 2026-09-27) # Builders Risk Insurance: Who Needs It and What It Covers (https://www.menloinsurance.com/library/guides/builders-risk-insurance-guide) What builders risk insurance covers, who buys it, what it costs (1% to 4% of completed value), when coverage ends, key exclusions and delay coverage. Markdown version: https://www.menloinsurance.com/library/guides/builders-risk-insurance-guide.md Builders risk insurance covers a building, its materials and temporary works while the project is being built or renovated. The owner or the general contractor buys it, whichever the construction contract names, and it ends at the first trigger in the policy, such as the building being occupied without permission or 90 days passing after completion. For a California project, [start a builders risk quote](https://www.menloinsurance.com/builders-risk-insurance) with the project value, construction type and schedule. The policy also covers foundations, site work and materials waiting to be installed, and it usually insures everyone working on the project under one policy. A standard commercial property policy fits construction poorly, which is why builders risk is written as a [specialized inland marine policy](https://www.menloinsurance.com/library/guides/what-is-inland-marine-insurance). ## Key takeaways * **Open perils on the project**: it covers property a standard property policy does not, such as foundations, grading and materials stored on site. * **The contract picks the buyer**: the construction contract says who buys the policy and which parties (owner, contractor, subcontractors) are insureds. * **Coverage ends on a trigger**: the first of several events ends it, for example occupancy without permission or 90 days after completion. * **Delays are separate**: delay in completion coverage pays lost rent, lost income and soft costs when a covered loss delays the project. ### Builders Risk Insurance Builders risk insurance covers buildings and structures during their construction, renovation or fabrication, including materials that will become a permanent part of the project, and insures the owner, general contractor and any other parties listed on the policy. ## What is builders risk insurance? [#what-is-builders-risk-insurance] Builders risk insurance, also called course of construction insurance, is an inland marine policy that covers a project from the start of construction until the owner accepts the work. This guide follows the AAIS Builders' Risk Coverage, Scheduled Jobsite Form, Comprehensive Form (IM 7050 07 20). It is an "open perils" policy: any direct physical loss is covered unless the form excludes it. The limit is normally set at the project's final completed value. ## Who needs builders risk insurance, and who pays? [#who-needs-builders-risk-insurance-and-who-pays] Anyone with money at risk in a construction project needs it, including owners building new, adding on or renovating. The project owner or the general contractor usually buys it. The construction contract says who is responsible for buying it and normally names every party the policy covers: the owner, the contractor, subcontractors of every tier, construction managers and lenders. One policy for everyone makes a claim much simpler than sorting it out across each party's own insurer. There is also a legal reason for one shared policy: an insurer cannot subrogate against its own insured. The AIA A201 General Conditions build on this rule. The owner and contractor waive their rights against each other and their subcontractors for damage covered by the project's property insurance. ## What does builders risk insurance cover, and what is excluded? [#what-does-builders-risk-insurance-cover-and-what-is-excluded] Builders risk covers the permanent structure and the materials that go into it (buildings, foundations, grading, fixtures), plus temporary works such as scaffolding and forms, often with a sublimit. It reaches further than a standard property policy: The common exclusions are earth movement, flood, [ordinance or law](https://www.menloinsurance.com/library/guides/ordinance-or-law-coverage), defects and errors in design or workmanship, and delay in completion. Contracts often require earthquake and flood coverage, which is added back by endorsement, usually with a higher deductible. The defective work exclusion confuses people most. The contractor's defective work itself is excluded, but damage that the defective work causes is often still covered. A badly welded beam that starts a fire is a good example: the fire damage can be covered even though the beam is not. ## When does coverage begin and end? [#when-does-coverage-begin-and-end] Coverage runs while the building is under construction, and it ends at the first of these events: the policy expires or is canceled, the owner accepts the building, your insurable interest ends, you abandon construction, or 90 days pass after completion. The end date is where projects most often lose coverage. Under the Occupancy and Use Limitation, there is no coverage once the building is occupied or put to its intended use without the insurer's prior written consent, unless Permission To Occupy is shown on the schedule. A developer who lets a tenant move in before completion can void coverage on the whole building. Set the policy term to cover the whole construction period plus a buffer for delays, instead of buying an annual policy and planning to renew it. Insurers can refuse to extend a policy or extend it only at a much higher rate. As IRMI puts it: "Imagine asking for a policy extension during hurricane season or after the insurance company just paid out a sizable loss!" ## How much does builders risk insurance cost? [#how-much-does-builders-risk-insurance-cost] Builders risk usually costs 1% to 4% of the total completed project value, which is $1.00 to $4.00 per $100 of value, according to Insureon, a small business insurance marketplace. On a completed value policy, the premium is the estimated completed value multiplied by a rate per $100, and the rate already accounts for the exposure growing as the building goes up. Construction type and location decide where a project falls in that range. For example, a $2,000,000 completed value at a $1.00 rate gives a term premium of $20,000. For California minimum premiums and examples, see [builders risk insurance cost in California](https://www.menloinsurance.com/library/guides/builders-risk-insurance-cost-california). A higher base deductible lowers the premium. Tell the insurer about change orders during the project so the limit keeps pace with the real value, because losses are paid at the replacement cost of the damaged work, including overhead and profit. ## Does builders risk cover delays and lost income? [#does-builders-risk-cover-delays-and-lost-income] Not automatically. The base policy does not cover delay losses, apart from a small Expediting Expenses coverage. Delay in completion coverage, added by endorsement, pays the owner's lost rent on a leased project, lost net income (like [business income coverage](https://www.menloinsurance.com/library/guides/business-income-insurance-explained)) and soft costs such as interest, taxes and insurance premiums. A waiting period shown on the Delay In Completion Schedule (IM 7080 07 20) applies first, and the deductible is measured in days, not dollars. ## Frequently Asked Questions ### Who pays for builders risk insurance? The construction contract decides, and it is usually the general contractor or the project owner. The contract also says who else must be named as an insured on the same policy, typically subcontractors, construction managers and lenders. ### Does builders risk cover the contractor's tools and equipment? No. Builders risk covers the project, the materials that become part of it and temporary works. The contractor's tools and equipment belong on a separate [contractors equipment policy](https://www.menloinsurance.com/library/guides/contractors-equipment-insurance). ### Does builders risk cover a renovation of an existing building? It can. AAIS publishes a Rehabilitation and Renovation form (IM 7054) that can insure the existing building at its actual cash value or a stated value. Watch the vacancy limit: a vacant building may be covered for only 60 days after the policy starts unless permits have been issued and work has begun. Homeowners building their own house or an ADU can read [builders risk for owner-builders](https://www.menloinsurance.com/library/guides/builders-risk-for-homeowners-owner-builders). Building on the Texas coast? Our [Texas builders risk guide](https://www.menloinsurance.com/library/guides/builders-risk-insurance-texas) explains TWIA's builders risk forms and windstorm inspections. *This guide is for educational purposes and summarizes standard ISO and AAIS policy language. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## Setting the right builders risk term [#setting-the-right-builders-risk-term] Builders risk covers a project and its materials on an open perils basis from groundbreaking until the owner accepts the work, which no standard property policy does. The contract decides who buys it and who is insured, and coverage ends at the first trigger, not on the expiration date. Check each trigger against your build schedule and set the term long enough to outlast your worst-case delay. ## References . [AIA Contract Documents. Waivers of Subrogation in Construction Insurance: How to Manage Risk]() . [IRMI. Beware of Builders Risk Additional Premiums and Policy Expirations]() . [Insureon. Builder's Risk Insurance Cost]() # Builders Risk Insurance in Texas: Coastal Wind, Hail and Renovations (https://www.menloinsurance.com/library/guides/builders-risk-insurance-texas) Builders risk in Texas insures a building while it goes up or is renovated, but on the coast wind and hail often need their own answer. TWIA writes wind and hail builders risk on forms TWIA-21 and TWIA-18 for projects that get a TDI windstorm certificate, and renovations are valued differently from new builds. Markdown version: https://www.menloinsurance.com/library/guides/builders-risk-insurance-texas.md Builders risk in Texas insures a building while it is being built or renovated, from the day work starts until the structure is finished. The Texas twist is wind and hail. Inland, they are normally part of the builders risk policy with their own deductible. On the coast, a private policy may exclude them or need underwriter approval, and the Texas Windstorm Insurance Association (TWIA) writes wind and hail builders risk only for projects that will be certified to the windstorm building code by the Texas Department of Insurance (TDI). This guide is for a Texas owner, builder or contractor preparing for a new home, an addition or a remodel. It explains how the coastal rules work, which of TWIA's two builders risk forms fits your project, why a renovation is insured differently from a new build, and what you should have ready. Our [builders risk page](https://www.menloinsurance.com/builders-risk-insurance) explains the coverage itself and the questions we ask about a project. ## Key takeaways * **The coast is its own market.** TWIA's area is the 14 first-tier coastal counties and the part of Harris County east of Highway 146. * **TWIA needs a certificate.** A project must be certified as built to the windstorm code (WPI-8 during construction, WPI-8-E after) to be eligible, with limited exceptions. * **Two TWIA forms.** TWIA-21 fits a project bound before work starts and within TWIA's limit. TWIA-18 is used when work has started, the cost exceeds the limit, or the old building is covered too. * **Coverage ends at completion.** Both TWIA forms end when the building is finished, and no later than 30 days after the main building is completed. * **Renovations are valued in two parts.** One published Texas program pays replacement cost on the renovation and actual cash value on the existing structure. ## Does a Texas builders risk policy cover wind and hail? [#does-a-texas-builders-risk-policy-cover-wind-and-hail] Inland, usually yes. TDI's consumer guidance says that anywhere in Texas except the coast, a home policy normally includes wind and hail, sometimes with a different deductible. Builders risk follows the same pattern. The Florida and Texas builders risk card that Alchemy publishes allows wind and hail deductibles from $1,000 to $50,000, or 1%, 2%, 5% or 10% of the value, next to a separate all-other-perils deductible. On the coast, the answer depends on the policy. The same card shows "X-Wind" as a deductible choice, which means the policy excludes wind, and it states that "Wind & Hail requires underwriting approval in wind pool", meaning the coastal counties TWIA serves. So a coastal builder may end up with a private builders risk policy for perils such as fire, theft and vandalism, and a separate wind and hail policy from TWIA. Check your declarations page, the front of your policy, for a windstorm exclusion before you assume a storm loss is covered. ## Where does TWIA write builders risk? [#where-does-twia-write-builders-risk] TWIA writes only in its designated area. The area includes Aransas, Brazoria, Calhoun, Cameron, Chambers, Galveston, Jefferson, Kenedy, Kleberg, Matagorda, Nueces, Refugio, San Patricio and Willacy counties, as well as the part of Harris County east of Highway 146. To qualify, the applicant must have been turned down for wind and hail by at least one insurer actively writing it in that area, the structure must be certified to the windstorm code, and the property must be in insurable condition. Two other rules affect builders. A property in flood zones V, VE or V1-30 that was built, altered, remodeled or enlarged on or after September 1, 2009 must show proof of flood insurance when NFIP coverage is available. And TWIA won't issue a new policy while a hurricane is in the Gulf of Mexico, so buy before the season rather than waiting until a storm is forecast. ## How do TWIA's builders risk forms work? [#how-do-twias-builders-risk-forms-work] TWIA has two wind-and-hail-only builders risk forms, and the manual tells you which one to use. Here is the choice in one table: | | TWIA-21, Actual Completed Value | TWIA-18, Stated Value | | -------------------- | ----------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------- | | When it fits | Bound on or before the day construction begins, with no lapse | Construction already started, or coverage lapsed | | Project size | Estimated completed cost within TWIA's limit | Estimated completed cost above the limit (coinsurance must be waived) | | Existing building | Can't cover the original structure on a repair or improvement job | Covers the original structure and the improvements together | | How the amount works | Covers the value actually put into the building, which rises as work goes on, up to the estimated completed cost | A stated amount of insurance | | Premium | Rate applied to one-half of the estimated completed cost, adjustable to the actual cost | Not set out in the form. Ask for the rating basis with the quote | | When it ends | At expiration or cancellation, or when the building is finished, no later than 30 days after the main building is completed | Same | Both forms cover materials, supplies, temporary structures and builders' machinery and tools that become part of the building or are within 100 feet of it, including property in the open next to the site. TWIA's manual says construction "officially begins when materials are delivered to the building site, exclusive of fill dirt and the grading of land", so a TWIA-21 policy has to be in place before the first delivery. Along with the start date, the application asks for a photograph of the structure (or of the vacant land if work hasn't begun), whether the job is repairs or improvements, and whether an addition exceeds 10% of the original ground floor area. Each location needs its own TWIA policy, so a builder with three lots buys three policies. TWIA's current maximum is $1,773,000 for a dwelling and $4,424,000 for a commercial structure with its contents. A custom home whose completed cost is above the dwelling limit goes on TWIA-18. TWIA still won't insure more than its limit, so the value above it needs wind and hail from another market. ## What windstorm inspections does a coastal project need? [#what-windstorm-inspections-does-a-coastal-project-need] Most new construction, roof replacements, major repairs and other alterations in the coastal area need an inspection and a certificate of compliance to be eligible for TWIA. TDI issues two kinds: * **WPI-8, for work in progress.** An engineer appointed by TDI or a TDI windstorm inspector inspects while the work is underway. * **WPI-8-E, for completed work.** A Texas licensed professional engineer inspects the finished structure. TDI warns this can cost more, because code compliance is harder to check once walls are closed. Small jobs don't need this. TDI's examples include roof repairs under 100 square feet that don't involve decking, painting, cabinets, fences and gutters, plumbing and electrical repairs, and replacing glass. Ask your contractor before work starts how they plan to get the inspections done and the certificate issued. A project finished without inspections can still be certified through the WPI-8-E route, which is slower and more expensive, and until a certificate exists the building may not qualify for TWIA. ## How is a renovation insured differently from a new build? [#how-is-a-renovation-insured-differently-from-a-new-build] A new build has one value, the finished building. A renovation has two, the work being done and the building that was already there, and Texas policies treat them differently. | | New construction | Renovation or addition | | ------------------------------------------- | ---------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------- | | What is insured | The building as it goes up, to its completed value | The renovation, and the existing structure only if the policy includes it | | Loss settlement (Alchemy FL and Texas card) | Replacement cost | Replacement cost on the renovation value, actual cash value on the existing structure | | Reporting-form option (same card) | Available for builders | Not available, one-shot policy only | | TWIA form | TWIA-21 if bound before work starts and within the limit | TWIA-18 if the old structure is covered too | | Coastal windstorm certificate | Needed for the new structure | Needed for most major repairs and alterations | In practice, the existing house is what matters. If it already has a homeowners or dwelling policy, ask that insurer whether the policy stays in force during the work and whether it covers the renovation. If it doesn't, the builders risk policy has to pick up the old structure, and on the coast that means TWIA-18 rather than TWIA-21. Actual cash value on the existing structure means depreciation is subtracted from a claim on the old part of the building. ## What will the application ask for? [#what-will-the-application-ask-for] Expect questions about the project, the builder and the site. Alchemy's Florida and Texas card is typical of what a private market asks for: * The signed application, with the insured's and the agent's signatures. * Currently valued builders risk loss runs for the builder, or a dated no-loss statement for the prior 3 years. * A detailed resume if the builder has been in business less than 3 years. * No bankruptcies in the past 5 years and no licensing-board discipline in the past 5 years. A property loss in the past 3 years needs home-office approval. A coastal project adds the TWIA items: the site photo, the start date, the scope of any renovation or addition and, before the policy can continue, the windstorm certificate. For what a builders risk policy covers in general, read our [builders risk guide](https://www.menloinsurance.com/library/guides/builders-risk-insurance-guide). For how TWIA and the Texas FAIR Plan fit with a finished home's insurance, see our [Texas windstorm and FAIR Plan guide](https://www.menloinsurance.com/library/guides/texas-windstorm-insurance-twia-fair-plan). ## Frequently Asked Questions ### Is builders risk insurance required in Texas? A lender or a construction contract usually requires it. On the coast, a mortgage lender will also likely require windstorm coverage, which is why builders buy TWIA or a private policy that includes wind. ### Can I buy TWIA builders risk after construction has started? Yes, but on the Stated Value form, TWIA-18, not TWIA-21. TWIA-21 has to be bound on or before the day construction begins. ### Does builders risk cover flood on the Texas coast? TWIA's builders risk forms cover windstorm and hail, not flood. Flood needs its own policy, and TWIA requires proof of flood insurance for property in zones V, VE or V1-30 built or altered on or after September 1, 2009, where NFIP coverage is available. ### What is a WPI-8 certificate? It is TDI's certificate of compliance for work inspected while it was underway, showing the structure meets the windstorm building code. A WPI-8-E is the certificate for work inspected after it was finished. ### When does builders risk coverage end? On TWIA's forms, when the policy expires or is canceled, or when the building is finished, and no later than 30 days after the main building is completed. After that, the finished building needs a homeowners, dwelling or commercial property policy. *This guide is for educational purposes. It summarizes TDI consumer guidance, TWIA's forms, manual and fact book, and one carrier program card dated 2025, all as of September 2026. Rules, limits and programs change, and your policy's terms, conditions and endorsements control. Menlo Insurance Services is a licensed property and casualty broker in Texas and California that may earn a commission on a placement. Naming a program here doesn't mean we place it in Texas or that any coverage or price will be available.* ## The Bottom Line [#the-bottom-line] A Texas builders risk policy covers the project until it is finished, and inland it normally includes wind and hail. On the coast, check whether the private policy excludes wind, and plan for TWIA: bind TWIA-21 before the first delivery if you can, use TWIA-18 once work has started or when the old building is covered, and get the WPI-8 inspections done while the walls are still open. ## References . [Texas Department of Insurance. What you need to know about windstorm inspections]() (accessed 2026-09-29) . [Texas Windstorm Insurance Association. Coverage & Eligibility]() (accessed 2026-09-29) . [Texas Windstorm Insurance Association. Instructions and Guidelines Manual (effective April 18, 2022): Builder's Risk Coverage, Multiple Risk Items]() (2022) . [Texas Windstorm Insurance Association. Form TWIA-21, Builders Risk: Actual Completed Value Form]() (1999) . [Texas Windstorm Insurance Association. Form TWIA-18, Builders Risk: Stated Value Form]() (1999) . [Texas Windstorm Insurance Association. Fact Book, Data & Information as of Q1 2026: Maximum Liability Limits]() (2026) . [Alchemy Insurance Solutions (Cornerstone Insurance Producers). Florida & Texas Builders Risk Quick Reference Card]() (2025) . [Texas Department of Insurance. What is windstorm insurance?]() (accessed 2026-09-29) # Business Income Insurance: How It Works After a Loss (https://www.menloinsurance.com/library/guides/business-income-insurance-explained) How business income insurance replaces lost net income and pays continuing expenses after covered damage: period of restoration, waiting period, limits. Markdown version: https://www.menloinsurance.com/library/guides/business-income-insurance-explained.md Business income insurance replaces the net income your business would have earned and pays the operating expenses that continue, such as payroll, while operations are suspended by direct physical damage from a covered cause of loss. Think of it as disability insurance for the business: the [commercial property policy](https://www.menloinsurance.com/commercial-property-insurance) repairs the building, and business income coverage keeps the business financially alive until it reopens. It pays during the period of restoration, which ends when the damaged property should reasonably be repaired. This guide explains how the most widely used form works: the ISO Business Income (And Extra Expense) Coverage Form, [CP 00 30](https://www.menloinsurance.com/library/forms/cp-00-30). ## Key takeaways * "Business income" has two parts: the net income your business would have earned, and its continuing normal operating expenses, including payroll. A common memory aid is NICE: net income plus continuing expenses. * Payment runs through the period of restoration. Extra expense coverage starts immediately after the loss; business income coverage may start immediately or after a 72-hour waiting period, depending on the form edition and the CP 15 56 endorsement. * Operations do not have to stop completely: a slowdown counts as a suspension under the form. * The coinsurance condition applies unless you choose one of three optional coverages that replace it: Monthly Limit of Indemnity, Maximum Period of Indemnity or Agreed Value. ### Business Income Insurance Business income insurance replaces net income a business would normally earn and pays normal operating expenses, including payroll, that continue while operations are suspended by direct physical damage from a covered cause of loss. Coverage runs through the period of restoration. ## What is business income insurance and why does it matter? [#what-is-business-income-insurance-and-why-does-it-matter] Business income coverage puts a business back where it would have been if the loss had not happened. After a disaster damages a business's property, the repair bill is only half the financial loss. The other half is revenue that stops or slows while fixed costs such as rent, loan payments, key employees' pay and taxes keep coming. Business income insurance, often called business interruption insurance, fills that gap. Many owners go without it. The National Association of Insurance Commissioners (NAIC) says only 30 to 40 percent of small business owners carry business interruption insurance. That matters because FEMA reports that 40 percent of businesses never reopen after a disaster. Time-related losses are hard to picture before they happen, which is why this is the piece most often missing from otherwise solid commercial insurance programs. - 30-40% — Small business owners who carry business interruption insurance — [NAIC]() - 40% — Companies that never reopen after a disaster — [FEMA]() ## What does business interruption insurance cover? [#what-does-business-interruption-insurance-cover] Business interruption insurance covers the income you actually lose during the period of restoration plus the extra costs of keeping the business running. Under CP 00 30, business income means: * **Net income**: the net profit or loss before income taxes that would have been earned, and * **Continuing normal operating expenses**, including payroll. Note the word "loss" in that definition. A business that was running at a loss can still recover, because the policy pays continuing expenses minus the net loss, leaving the insured where it would have been. For a manufacturer, net income includes the net sales value of production lost during the shutdown. Coverage has three requirements: 1. A suspension of operations, meaning a slowdown or stop of business activity (operations do not have to cease completely). 2. Caused by direct physical loss or damage at the described premises from a "covered cause of loss", usually the same causes of loss as your [commercial property coverage](https://www.menloinsurance.com/library/guides/commercial-property-insurance-explained). 3. Loss sustained during the period of restoration. ## How does the period of restoration work? [#how-does-the-period-of-restoration-work] The period of restoration is the time the policy pays for: it runs from the loss until the property should be repaired or the business moves to a new permanent location. For extra expense coverage, it begins immediately after the direct physical loss. For business income coverage, many CP 00 30 editions start it 72 hours after the loss, a waiting period that works like a deductible measured in time. It ends on the earlier of the date the property should be repaired, rebuilt or replaced with reasonable speed and similar quality, or the date the business resumes at a new permanent location. "Should be" matters. Dragging your feet on repairs does not extend the coverage, and the period is not cut short by the policy's expiration date. ### The waiting period is set by endorsement The Business Income Changes, Beginning Of The Period Of Restoration endorsement (CP 15 56) controls when business income coverage starts. Where a policy has a 72-hour waiting period, this endorsement can reduce it to 24 hours or remove it. For a business where even a two-day closure is expensive, it is a cheap thing to check on your declarations. ## What is extra expense coverage? [#what-is-extra-expense-coverage] Extra expense is the necessary cost you incur during the period of restoration to keep operating that you would not have had without the loss: renting temporary space, equipping a replacement location, moving costs and overtime. Under CP 00 30, extra expense is paid to avoid or reduce the suspension whether or not it reduces the business income loss, but the cost to repair or replace property is covered only to the extent it reduces the loss. Extra expense shares the single limit shown on the declarations, and coinsurance does not apply to it. Some businesses simply cannot close: hospitals, law firms, insurance agencies, newspapers. Their loss is almost entirely extra expense rather than lost income. ISO offers a separate Extra Expense Coverage Form (CP 00 50) for them, and a business income form without extra expense (CP 00 32) for the opposite case. ## What additional coverages are built in? [#what-additional-coverages-are-built-in] CP 00 30 includes four additional coverages worth knowing: | Additional coverage | What it does | Key numbers | | ----------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------ | | Civil Authority | Pays when a government order prohibits access to your premises because of damage to *other* property, provided your premises sit within the prohibited area and not more than one mile from the damaged property | Business income starts 72 hours after the order, up to 4 weeks, while extra expense starts immediately | | Alterations and New Buildings | Covers income lost when damage to a building under construction delays your opening | Period of restoration starts on the date operations would have begun | | Extended Business Income | Keeps continuous coverage after reopening for customers trying to locate your business again | Up to 60 days after operations resume, extendable by option | | Interruption of Computer Operations | Limited give-back for suspensions caused by destruction or corruption of electronic data | $2,500 annual aggregate unless increased | Reopening day is rarely a back-to-normal day. If income is still down after repairs are finished, the Extended Period of Indemnity optional coverage can extend Extended Business Income in 30-day steps up to 730 days. ## How much coverage do I need, and what about coinsurance? [#how-much-coverage-do-i-need-and-what-about-coinsurance] You need a limit at least equal to the coinsurance percentage on your declarations times your net income and operating expenses for the 12 months after the policy starts, or the insurer pays only a proportional share of the loss. That is CP 00 30's coinsurance condition. Choosing the percentage is really choosing how long a worst-case shutdown would last. Sizing the limit takes four steps: ### Steps ### Work through the financials Start with net sales, cost of goods sold, operating expenses and net profit. The Business Income Report/Work Sheet (CP 15 15), which your underwriter will ask for, walks through the calculation. ### Estimate the worst-case restoration period Estimate how long it would take to rebuild, restock and rehire, plus the time to get back to normal income after reopening. Add time for permit delays, code upgrades a building official may require, and contractor shortages after a regional disaster. ### Separate continuing from non-continuing expenses Rent, insurance, key payroll and loan payments usually continue, while some utilities and ordinary payroll may not. Only continuing expenses belong in the estimate. ### Pick a coinsurance strategy, or opt out Maximum Period of Indemnity pays for up to 120 days, Monthly Limit of Indemnity caps each 30-day period at 1/3, 1/4 or 1/6 of the limit, and Agreed Value suspends coinsurance for 12 months once the underwriter has a current CP 15 15 worksheet. Skip the renewal worksheet and coinsurance applies again. One exclusion is hidden in the definitions rather than the exclusions list. The period of restoration specifically leaves out any extra time needed to comply with an ordinance or law that regulates construction, so the extra months spent bringing an older building up to current code are uninsured unless you add the Ordinance Or Law Increased Period Of Restoration endorsement (CP 15 31). It pairs with the direct damage side of [ordinance or law coverage](https://www.menloinsurance.com/library/guides/ordinance-or-law-coverage), which pays for the upgrade costs themselves. ## Frequently Asked Questions ### Is business income insurance the same as business interruption insurance? Yes. "Business interruption" is the common name and "business income" is the formal name in the ISO forms. Both describe time element insurance, which measures the loss by how long you cannot do business. ### Does my business have to shut down completely to collect? No. The form defines "suspension" to include a slowdown as well as a full stop. A restaurant running at half capacity after a kitchen fire has a covered suspension. ### Does business income coverage pay if a road closure or evacuation order shuts me down? Only through the Civil Authority additional coverage, and only if the order results from direct physical damage to other property by a covered cause of loss. Your premises must be inside the prohibited area and no more than one mile from the damaged property. Business income is paid starting 72 hours after the order, for up to four weeks. An endorsement (CP 15 32) can change the time and distance limits. ### Does the policy cover losses from a cyber attack or data corruption? Essentially, no. Suspensions caused by destruction or corruption of electronic data are excluded, apart from the small Interruption of Computer Operations coverage of $2,500 a year unless increased. For meaningful protection, you need a cyber policy. *This guide is for educational purposes and summarizes standard ISO policy language. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## Testing your business income limit [#testing-your-business-income-limit] Business income insurance replaces your net income and pays continuing expenses, including payroll, while a covered shutdown keeps you from earning, and it pays through the period of restoration. Check on your declarations whether business income starts immediately or after a 72-hour waiting period. How much the insurer pays then depends on the coinsurance percentage you chose and the length of your Extended Business Income period. Before your next renewal, use the CP 15 15 worksheet to test your limit against a worst-case rebuild. ## References . [NAIC. Business Interruption and Business Owner Policy]() . [Insurance Information Institute. When Disaster Strikes: Preparation, Response and Recovery (citing FEMA)]() # California Cannabis License: The $5,000 DCC Bond and the Insurance You Need (https://www.menloinsurance.com/library/guides/california-cannabis-license-bond-insurance) Every annual California cannabis license needs a surety bond of at least $5,000 per licensed premises, payable to the State on DCC Form 8113. Distributors must also carry general liability of at least $1 million per loss and $2 million aggregate. Event organizers are exempt from the bond. What each license type needs and how to keep it in force at renewal. Markdown version: https://www.menloinsurance.com/library/guides/california-cannabis-license-bond-insurance.md To get an annual cannabis license from California's Department of Cannabis Control (DCC), you have to show proof of a surety bond of at least $5,000, payable to the State of California, for each licensed premises. The bond has to come from a corporate surety licensed to write surety business in California, and a business holding several licenses may use one aggregated bond. The only state insurance minimum in DCC's regulations is for distributors, who must carry commercial general liability of at least $1,000,000 for each loss and $2,000,000 in the aggregate, at all times. A cannabis event organizer license is the one annual license that doesn't need the bond. So the bond is paperwork for the license, and it protects the State. Insurance is what protects your business when someone sues, a fire takes the building, or a van is stolen with inventory in it. The state only forces the second on distributors, but most operators need it anyway. If you are already licensed or applying now, our [cannabis business insurance application](https://www.menloinsurance.com/cannabis-business-insurance) covers property, liability, stock, crop, transit and more in one request. ## Key takeaways * **$5,000 per licensed premises.** The annual application needs proof of a bond of at least $5,000 for each premises, payable to the State, written by a corporate surety licensed in California. DCC's bond form is DCC-8113. * **The bond pays the State, not you.** It covers the cost of destroying cannabis after a violation, including DCC's administrative, investigatory and enforcement costs, and money owed to the State under the cannabis law. * **Distributors carry $1M / $2M liability.** Type 11 and Type 13 distributors, and microbusinesses that distribute, must keep general liability of at least $1 million per loss and $2 million aggregate, from an insurer type the regulation lists. * **Event organizers skip the bond.** The event organizer license is exempt from the bond, and DCC sets no insurance minimum for events. Venues and cities set their own. * **Both run with the license.** The bond is continuous across renewals until the surety cancels it on 30 days' notice, and a change to the bond must be reported to DCC within 14 calendar days. ### Commercial cannabis licensee bond A surety bond of $5,000 on DCC Form DCC-8113, in which a licensed surety guarantees to the State of California that the licensee will follow the cannabis law and DCC's rules, including properly destroying cannabis if a violation requires it, and will pay the State any money owed under that law. ## California cannabis license bond and insurance: the short answers [#california-cannabis-license-bond-and-insurance-the-short-answers] Here are the facts most applicants need, each with its source. The sections below explain them. * **How much is the bond?** At least $5,000 for each licensed premises, payable to the State of California. * **Who needs it?** Every annual license applicant under section 15002: cultivators, manufacturers, distributors, retailers, microbusinesses and testing labs. * **Who is exempt?** Cannabis event organizers. * **What insurance does the state require?** Only distributors (Type 11 and Type 13, and microbusinesses that distribute) must carry commercial general liability of at least $1,000,000 per loss and $2,000,000 aggregate, at all times. * **What form is the bond on?** DCC Form DCC-8113, written by a surety admitted to write surety insurance in California. * **What does the bond cost?** The surety sets the premium. DCC's form leaves it blank, so it is quoted per applicant. * **How do I get both?** Request the bond from a licensed surety (Menlo takes [surety bond requests](https://www.menloinsurance.com/f/bonds)), and request the insurance separately (our [cannabis business insurance application](https://www.menloinsurance.com/cannabis-business-insurance) also asks whether you need the bond). * **What if the bond changes?** Tell DCC within 14 calendar days. ## Which California cannabis licenses need the $5,000 bond? [#which-california-cannabis-licenses-need-the-5000-bond] Every annual license DCC issues under section 15002 of its regulations, except the event organizer license. Section 15002(c)(22) puts the bond on the list of things an annual application must include, and section 15002(d) takes it off the list for event organizer applicants. DCC's application checklist says the same thing in plain words: "Proof of a surety bond of at least $5,000 per premises payable to the State of California. An aggregated bond may be used when multiple licenses are held by the same commercial cannabis business." The requirement starts in the statute. Business and Professions Code section 26051.5(a)(10) requires every applicant for a state cannabis license to "provide proof of a bond to cover the costs of destruction of cannabis or cannabis products if necessitated by a violation" of the cannabis law. For distributors, section 26070 adds that a distributor "shall be bonded and insured at a minimum level established by the department." DCC set that level in its regulations. Here is how it lays out by license type, using DCC's license-type names and the regulations in effect July 1, 2026. | License type (DCC) | State surety bond | State insurance requirement in DCC regulations | | ----------------------------------------------------- | --------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------- | | Cultivation | At least $5,000 per licensed premises | None set | | Manufacturing | At least $5,000 per licensed premises | None set | | Type 11 distributor | At least $5,000 per licensed premises | CGL of at least $1M each loss and $2M aggregate, at all times. Proof of insurance for transport vehicles on request | | Type 13 distributor transport only | At least $5,000 per licensed premises | Same as Type 11. Transport-only licensees follow every distributor rule except those on quality assurance and testing | | Type 9 non-storefront and Type 10 storefront retailer | At least $5,000 per licensed premises | None set | | Type 12 microbusiness | At least $5,000 per licensed premises | Distributor CGL applies if it distributes | | Type 8 testing laboratory | At least $5,000 per licensed premises | Proof of insurance for each vehicle that carries samples, on request | | Cannabis event organizer | Not required | None set | | Temporary cannabis event | Issued only to a licensed event organizer, no separate bond in the application | None set. Venue and local rules apply | "None set" means DCC's regulations don't name a minimum. It doesn't mean the business can go without. A retailer with no liability policy still gets sued when a customer falls in the store, and a cultivator with no property policy still loses the crop in a fire. The state just leaves those choices to you, your landlord and your city. ## What does the DCC bond actually cover? [#what-does-the-dcc-bond-actually-cover] It covers the State's costs, not yours. DCC's own form, DCC-8113, spells it out. The licensee is the principal, the surety is a company "admitted to transact surety insurance in the State of California," and both are bound to the State of California for $5,000. The bond stays good as long as the licensee and its agents and employees "faithfully comply" with the cannabis law and DCC's rules, "including but not limited to properly and legally destroying all cannabis and cannabis products if necessitated by a violation," and pay the State "any and all monies that may become due or owing." The statute says the destruction costs include "all administrative, investigatory, and enforcement costs incurred by the department." This is why the bond isn't insurance. Insurance is a deal between two parties, you and the insurer, and it pays for losses you're covered for. A surety bond has three parties. The surety guarantees your obligations to someone else, here the State. When the surety pays, California Civil Code section 2847 binds the principal to reimburse it, including necessary costs and expenses. We walk through that three-party setup in more detail in our [California contractor license bond guide](https://www.menloinsurance.com/library/guides/california-contractor-license-bond). The cannabis bond works the same way. It's much smaller, and it has one beneficiary, the State. Two limits on the form matter. The surety's total liability on all claims can't exceed the $5,000 penal sum, and the bond is subject to California's Bond and Undertaking Law. So the bond doesn't pay a customer who gets sick, a landlord whose building burns, or you for stolen inventory. Those are insurance questions. ## Can one bond cover several licenses? [#can-one-bond-cover-several-licenses] Yes. Section 15002(c)(22) allows "an aggregated bond" when "multiple licenses are held by the same commercial cannabis business." The regulation doesn't spell out how the aggregated bond's amount is figured for several premises, so ask DCC or your surety how the bond should read before it's signed. Your city or county may want its own bond on top of the state's. The City of Coalinga's bond form, for example, is a $25,000 bond to cover the cost of destroying cannabis, written by a surety admitted in California and rated at least "A" by A.M. Best. A local bond is separate from DCC-8113 and doesn't replace it. Read the conditions of your local permit to see if one applies. ## What insurance does a cannabis distributor need? [#what-insurance-does-a-cannabis-distributor-need] Commercial general liability of at least $1,000,000 for each loss and $2,000,000 in the aggregate, which the distributor "shall at all times carry and maintain." That's section 15308(a). It applies to Type 11 distributors, to Type 13 transport-only distributors, which follow all distributor rules except those on quality assurance and testing, and to microbusinesses when they distribute. DCC can ask a distribution applicant for proof of that insurance. Section 15308(b) limits who the policy can come from. There are three options: 1. A non-admitted insurer that meets Insurance Code section 1765.1 or 1765.2, placed under section 1763 through a licensed surplus line broker. 2. An insurer qualified to do business in California and authorized by the Insurance Commissioner to write liability and property insurance. 3. A registered risk retention group that complies with the California Risk Retention Act of 1991. Admitted insurers and risk retention groups must also show at least $10,000,000 in capital. The first option is how a policy from a non-admitted insurer can meet the rule, as long as a licensed surplus line broker places it. Our [guide to surplus lines insurance](https://www.menloinsurance.com/library/guides/surplus-lines-insurance) explains what that means for guaranty fund protection and taxes. The regulation's wording is "for each loss" and "in the aggregate." A standard commercial general liability policy, the [CG 00 01](https://www.menloinsurance.com/library/forms/cg-00-01) form, sets its limits as an each occurrence limit and a general aggregate limit, and our glossary entry on the [aggregate limit](https://www.menloinsurance.com/library/glossary/aggregate-limit) explains how that cap works. If a policy's limits are built differently, for example with a separate aggregate for products, check with DCC before you rely on it. Take a distributor running one warehouse and two vans. At a minimum, the state requires a $5,000 bond on Form DCC-8113 for the warehouse premises, a general liability policy of at least $1 million per loss and $2 million aggregate from one of the three insurer types above, and proof of insurance on both vans if DCC asks. What the state doesn't require, and what the business will likely still want, is property and stock coverage for the warehouse, cargo coverage for goods in transit, workers' compensation for employees and [commercial auto insurance](https://www.menloinsurance.com/commercial-auto-insurance) for the vans themselves. ## Do cannabis events need a bond or insurance? [#do-cannabis-events-need-a-bond-or-insurance] Not from DCC. A temporary cannabis event takes two licenses. The organizer first gets a cannabis event organizer license, then applies for a temporary cannabis event license for each event. The organizer license is exempt from the bond. The event application under section 15002.1 asks for things like the venue, a premises diagram and the list of participating licensees, but not a bond. What DCC does require is operational. The event license application goes in at least 60 calendar days before the first day, and an event license runs one day or up to 30 consecutive days. The event has to be at a county fair event, a district agricultural association event, or another venue a local jurisdiction has expressly approved for temporary cannabis events. It can't be at a premises licensed to sell alcohol or tobacco. The organizer must hire licensed security that stays on site whenever cannabis is sold or used. Informational or educational events with no sales and no consumption don't need a DCC license at all. Insurance for an event comes from the venue contract and the local permit, not from DCC. A fairground or city that approves the event may set its own liability limit and ask to be named as an additional insured. Our [one-day event insurance guide](https://www.menloinsurance.com/library/guides/one-day-event-insurance-california) explains how those venue requirements work. Tell the broker up front that cannabis will be sold or used at the event, because the insurer needs to know. ## What about my landlord? [#what-about-my-landlord] The state doesn't set insurance rules for landlords, but it does involve them. If you don't own the property, DCC's section 15007 requires a document from the landowner or the landowner's agent saying you have the right to occupy the property and acknowledging that you may use it for the cannabis activity you're licensing. You also provide a copy of the rental agreement. Insurance terms, if there are any, live in the lease. Your lease may require a set liability limit, the landlord named as an additional insured, property coverage on your improvements, or a certificate each year. Read it before you shop, and send it to your broker with the application, so the quote matches what you signed. ## Do the bond and insurance carry over at renewal? [#do-the-bond-and-insurance-carry-over-at-renewal] It should, if nothing lapses. DCC-8113 is written as "continuous in form" and runs with the license period "and each and every succeeding renewal period or periods, or until the bond is canceled by the Surety." The surety can cancel on 30 days' written notice to DCC and to you. The distributor insurance rule says "at all times," so a policy that lapses mid-year breaks it even if it was in place when you applied. Renewal itself is a set window. The renewal form and annual fee must reach DCC no earlier than 60 calendar days before the license expires and no later than the last business day before it expires. A late renewal is possible for 30 days after expiration with a 50 percent late fee. After that the business has to file a new application. On the renewal form you attest that everything in your original application, which includes the bond, is "accurate and current," and you document any change you haven't already reported. Changes can't wait for renewal. Section 15023(e)(4) requires you to notify DCC within 14 calendar days of any change in the bond. DCC's Form 8113 page says to email Form 27, a copy of the new or changed bond and Form 8113 to [licensechange@cannabis.ca.gov](mailto:licensechange@cannabis.ca.gov). ### Steps ### Match the bond to the premises Count your licensed premises and decide whether you want one bond per premises or one aggregated bond for several licenses. Get it written on DCC-8113 by a surety licensed in California. ### Check the insurance before you apply If you distribute, including as a microbusiness, have general liability of at least $1 million per loss and $2 million aggregate in place from one of the three allowed insurer types, and keep vehicle insurance proof ready. ### Put the lease and local permit next to it Add whatever your lease and your city or county permit require. They can be larger than the state minimums. ### Watch for cancellation notices A surety cancellation arrives with 30 days' notice. Replace the bond inside that window and send DCC the change within 14 calendar days. ### Renew in the 60-day window File the renewal no earlier than 60 days before expiration, confirm the bond and insurance are still current, and report anything that changed. Need the bond for a new application or a replacement? [Start a surety bond request](https://www.menloinsurance.com/f/bonds), choose a license bond, and tell us it's the DCC-8113 bond for your premises. For the insurance side, the [cannabis business insurance application](https://www.menloinsurance.com/cannabis-business-insurance) takes each location on its own and lets you pick only the coverages you need. You can check any state cannabis license, yours or a partner's, on DCC's [Cannabis Unified License Search](https://search.cannabis.ca.gov/). ## Frequently Asked Questions ### How much is the California cannabis license bond? The bond amount is at least $5,000 for each licensed premises, payable to the State of California, under section 15002(c)(22) of DCC's regulations. What you pay for it is the surety's premium, which the surety sets. DCC's form leaves a blank for the premium. ### Is the DCC bond the same as cannabis insurance? No. The bond guarantees your obligations to the State, such as paying to destroy cannabis after a violation, and the surety expects to be repaid if it pays. Insurance pays covered claims against your business and your own covered losses. ### Does a cannabis retailer need insurance to get a DCC license? DCC's regulations don't set an insurance minimum for retailers. The $1 million per loss and $2 million aggregate requirement in section 15308 applies to distributors. A retailer's landlord, city or lender may still require coverage. ### Do I need a bond for a cannabis event? Not from DCC. The event organizer license is exempt from the bond, and the temporary event application doesn't ask for one. Check the venue contract and local permit, which may require insurance. ### What happens if my surety cancels the bond? The surety must give DCC and you 30 days' written notice, and it stays liable for anything that happened before the cancellation date. Get a replacement bond in place and report the change to DCC within 14 calendar days. *This guide is general information, not legal advice. It summarizes California statutes, DCC regulations in effect July 1, 2026 and DCC forms as of September 25, 2026. Your bond form, policy terms and license conditions control, and local rules vary. Menlo Insurance Services is a licensed California insurance broker (CA License #6020106) and may earn a commission on bonds and policies it places. A policy from a non-admitted surplus lines insurer is not backed by the California Insurance Guarantee Association. Confirm current licensing rules with the Department of Cannabis Control.* ## References . [Department of Cannabis Control. Medicinal and Adult Use Cannabis Regulations (July 2026), Cal. Code Regs. tit. 4, § 15002(c)(22)]() (accessed 2026-09-25) . [Department of Cannabis Control. Medicinal and Adult Use Cannabis Regulations (July 2026), § 15308 Insurance Requirements]() (accessed 2026-09-25) . [Department of Cannabis Control. Medicinal and Adult Use Cannabis Regulations (July 2026), § 15002(d)]() (accessed 2026-09-25) . [Department of Cannabis Control. Annual license application checklist]() (accessed 2026-09-25) . [California Legislative Information. Business and Professions Code section 26051.5]() (accessed 2026-09-25) . [California Legislative Information. Business and Professions Code section 26070]() (accessed 2026-09-25) . [Department of Cannabis Control. Medicinal and Adult Use Cannabis Regulations (July 2026), § 15312 Required Transport Vehicle Information]() (accessed 2026-09-25) . [Department of Cannabis Control. Medicinal and Adult Use Cannabis Regulations (July 2026), § 15315(d) Distributor Transport Only License]() (accessed 2026-09-25) . [Department of Cannabis Control. Medicinal and Adult Use Cannabis Regulations (July 2026), § 15500(f) Microbusiness]() (accessed 2026-09-25) . [Department of Cannabis Control. Medicinal and Adult Use Cannabis Regulations (July 2026), § 15708(b)(3)]() (accessed 2026-09-25) . [Department of Cannabis Control. Medicinal and Adult Use Cannabis Regulations (July 2026), § 15002.1 Temporary Cannabis Event Application]() (accessed 2026-09-25) . [Department of Cannabis Control. Form DCC-8113, Commercial Cannabis Licensee Bond (New 10/2023)]() (accessed 2026-09-25) . [California Legislative Information. Civil Code section 2847]() (accessed 2026-09-25) . [City of Coalinga. Commercial Marijuana Operations Bond Requirements]() (accessed 2026-09-25) . [Department of Cannabis Control. Medicinal and Adult Use Cannabis Regulations (July 2026), § 15011(c)(2) Additional Information]() (accessed 2026-09-25) . [Department of Cannabis Control. Events: License types]() (accessed 2026-09-25) . [Department of Cannabis Control. Medicinal and Adult Use Cannabis Regulations (July 2026), § 15601 Temporary Cannabis Event Requirements]() (accessed 2026-09-25) . [Department of Cannabis Control. Medicinal and Adult Use Cannabis Regulations (July 2026), § 15604 Informational or Educational Cannabis Events]() (accessed 2026-09-25) . [Department of Cannabis Control. Medicinal and Adult Use Cannabis Regulations (July 2026), § 15007 Landowner Approval]() (accessed 2026-09-25) . [Department of Cannabis Control. Medicinal and Adult Use Cannabis Regulations (July 2026), § 15020 Renewal of License]() (accessed 2026-09-25) . [Department of Cannabis Control. Medicinal and Adult Use Cannabis Regulations (July 2026), § 15023(e)(4) Business Modifications]() (accessed 2026-09-25) . [Department of Cannabis Control. Form 8113: Commercial Cannabis Licensee Bond]() (accessed 2026-09-25) . [Department of Cannabis Control. License types]() (accessed 2026-09-25) . [The Surety & Fidelity Association of America. What Is Surety?]() (accessed 2026-09-25) # California Contractor License Bond: The $25,000 CSLB Bond, LLC and Qualifier Bonds, and What They Cost (https://www.menloinsurance.com/library/guides/california-contractor-license-bond) What the California contractor license bond is, the $25,000 amount set by Business and Professions Code section 7071.6, the extra LLC worker bond and bond of qualifying individual, who can claim against it, why credit drives the premium, and how a surety bond differs from insurance. Markdown version: https://www.menloinsurance.com/library/guides/california-contractor-license-bond.md Every active California contractor license must be backed by a $25,000 contractor's bond. Business and Professions Code section 7071.6 makes the bond a condition of issuing, reinstating, reactivating, renewing or maintaining a license, and the amount rose to $25,000 for all three CSLB bond types on January 1, 2023 under Senate Bill 607. The bond doesn't insure you, the contractor. It's a guarantee between three parties. The surety promises the State of California that if you break the license law and hurt a homeowner, defraud a customer or don't pay wages, the person harmed can collect from the bond. Then you owe the surety whatever it paid out. Plenty of licensees need one or two more bonds. An LLC must also file a $100,000 LLC employee/worker bond, and a license qualified by someone who does not own enough of the company needs a separate $25,000 bond of qualifying individual. Need a bond to activate or renew your license? [Request a contractor bond quote](https://www.menloinsurance.com/f/bonds) and we'll match the bond to how your license is set up, before the CSLB deadline. ## Key takeaways * **$25,000 is the statutory amount**: section 7071.6(a) sets the contractor's bond at $25,000, operative January 1, 2023, and CSLB requires it before it will issue an active license. * **The bond protects the public, not you**: beneficiaries are homeowners and owners of single-family dwellings harmed by license-law violations, anyone harmed by a willful violation or fraud, and employees owed wages or fringe benefits. * **LLCs carry a second $100,000 bond**: section 7071.6.5 requires an LLC licensee to file an additional $100,000 bond for the benefit of its employees. * **The premium is driven by credit**: the surety is guaranteeing you, so it prices the bond on your personal credit and history; CSLB confirms sureties use credit scores and that the Department of Insurance, not CSLB, regulates that. * **Gaps suspend the license**: the bond stays in force until CSLB receives the surety's cancellation notice, and failure to keep continuous coverage results in suspension, with work performed while suspended treated as unlicensed. ### Contractor's bond (California) A surety bond executed by an admitted surety in favor of the State of California, filed with the Registrar of Contractors, that guarantees payment to specified beneficiaries who are damaged by a licensee's violation of the Contractors State License Law, up to the bond's penal sum of $25,000. ## What is a surety bond, and how is it different from insurance? [#what-is-a-surety-bond-and-how-is-it-different-from-insurance] A surety bond is a written guarantee, often required by law, that one party will do what it owes another. There are three parties. You, the contractor, are the principal. The State of California, acting for the public, is the obligee that gets the guarantee. The surety is the company that gives it. IRMI classifies the contractor license bond as a license and permit bond, a bond "required by a municipality or other public body as a condition to granting a license or permit," which assures compliance with the governing laws and can compensate third parties harmed by the licensed activity. Other California licenses carry their own license bonds. Cannabis businesses, for example, file a $5,000 bond with the Department of Cannabis Control, which we cover in our [California cannabis license bond and insurance guide](https://www.menloinsurance.com/library/guides/california-cannabis-license-bond-insurance). The Surety & Fidelity Association of America describes the process as one in which "surety companies conduct an extensive underwriting process to prequalify" the principal, which is the opposite of an insurer pricing expected losses. That's why a bond application asks about you, your credit and your business history, and not about your job sites. California law also requires that the bond be written by an admitted surety insurer, meaning one the Insurance Commissioner has authorized to transact surety insurance in the state. ## Which CSLB bonds does your license need? [#which-cslb-bonds-does-your-license-need] CSLB recognizes three bond types, plus a fourth requirement that applies only to LLCs. | Bond | Amount | Who must file it | Statute | | ----------------------------- | -------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ---------------------------- | | Contractor's bond | $25,000 | Every active licensee, as a condition of issuance, reinstatement, reactivation, renewal or continued maintenance | B\&P §7071.6 | | Bond of qualifying individual | $25,000 | A license whose qualifier (RME or RMO) is not the proprietor, a general partner or a joint licensee; exempt if an RMO owns 10 percent or more of the voting stock, or an LLC qualifier owns at least a 10 percent membership interest and certifies it | B\&P §7071.9 | | LLC employee/worker bond | $100,000 | Every limited liability company licensee, in addition to the contractor's bond, for the benefit of employees owed wages, interest and fringe benefits | B\&P §7071.6.5 | | Disciplinary bond | Set by the Registrar, at least $25,000 and up to ten times the contractor's bond | A licensee whose license was revoked for a license-law violation and is being reinstated or reissued; must stay on file at least two years | B\&P §7071.8 | Some details in the statutes trip people up. A bond is not required while a license is inactive. An applicant previously convicted of, or cited for, contracting without a license may be required to post a contractor's bond at twice the normal amount until the first renewal. Each RME or RMO on a license must separately meet the qualifier bond requirement, and CSLB says the qualifier's name, business name and license number on the bond must exactly match its records. LLC licensees must also carry liability insurance under section 7071.19, with an aggregate limit of at least $1 million for five or fewer personnel of record and an additional $100,000 per additional person, capped at $5 million, written by an admitted insurer or an eligible surplus line insurer. You need that insurance on top of the bond, not instead of it. See our [general liability overview](https://www.menloinsurance.com/library/guides/what-does-general-liability-insurance-cover) for what the policy covers. ## Who can claim against the bond, and for how much? [#who-can-claim-against-the-bond-and-for-how-much] Section 7071.5 lists the beneficiaries of the contractor's bond: * a homeowner contracting for home improvement on their personal family residence, damaged by the licensee's violation of the license law; * a property owner contracting for construction of a single-family dwelling, if the dwelling was not intended or offered for sale when the damage occurred; * any person damaged by the licensee's willful and deliberate violation of the license law, or by fraud in executing or performing a construction contract; * an employee damaged by the licensee's failure to pay wages; and * a person or entity owed fringe-benefit payments on behalf of the licensee's employees. Not every claimant can go after the full $25,000. Section 7071.6(b) reserves the amount above $7,500 for homeowner claimants; other claimants share an aggregate of $7,500. Section 7071.11 caps a surety's aggregate liability for wage and fringe-benefit claims at $4,000 on any bond other than a disciplinary bond, distributes an insufficient bond proportionally among claimants, and generally requires actions on the bond to be brought within two years after the license period in which the act occurred. Consumers file with the surety directly. CSLB says it doesn't handle claims against surety companies. When a surety pays, it must notify the Registrar within 30 days, and the licensee has at least 15 days before a good-faith settlement to file a written protest. A license cannot be renewed, reissued or reinstated while a judgment or admitted claim exceeding the bond remains unsatisfied. A payout shrinks the bond, so it can also get your license suspended. CSLB lists "a judgment or payment of claim reduces the amount of a required bond" as one of the events that suspend a license. ### A bond claim is a debt, not a covered loss The surety is vouching for you. It isn't covering your mistakes. Once it pays a claimant, it will come to you to be paid back, and you can't renew while the claim is unresolved. Take a bond claim as seriously as a lawsuit. Answer the surety inside the protest window, put your side in writing, and get it settled before your license cycle ends. ## How much does a California contractor license bond cost? [#how-much-does-a-california-contractor-license-bond-cost] The bond amount is always $25,000. What you actually pay is the surety's yearly premium for backing you, and that changes from one contractor to the next. CSLB got enough pricing questions that it put up a page about it. It says that it was asked about "the use of credit scores by bond companies as a means to help determine the cost of a contractors' bond" and that CSLB "does not have any authority in this area" because the California Department of Insurance regulates sureties. Put simply, the premium is a credit decision by a regulated surety. The same $25,000 bond can cost one contractor a small fraction of what another pays. What moves the price: your personal credit history, time in business, prior bond claims, license discipline, and whether the bond is written for a corporation, an LLC or a sole proprietor. A prior bond that got cancelled looks bad, because sureties cancel for unpaid premium or after paying out the full bond. Get quotes from more than one admitted surety, and ask what a multi-year term costs. CSLB points out that bond and license cycles rarely line up. If you pick a term that matches your renewal, you have one less deadline to track. Don't want to pay a premium? The statute lets you post a cash deposit instead. CSLB takes cashier's checks, certificates of deposit and similar instruments. The catch is that the money is locked up for as long as you hold the license, and only a court order releases it. For a working contractor, paying the surety premium usually costs less than tying up that cash. ## How do you file, renew and replace a bond without a gap? [#how-do-you-file-renew-and-replace-a-bond-without-a-gap] ### Steps ### Confirm which bonds your license structure needs Sole proprietor or partnership: the $25,000 contractor's bond, plus a qualifier bond if an RME qualifies the license. Corporation: the contractor's bond, plus a qualifier bond unless the RMO holds 10 percent or more of the voting stock. LLC: the contractor's bond, the $100,000 LLC bond and section 7071.19 liability insurance, plus a qualifier bond unless the qualifier owns at least 10 percent. ### Buy from an admitted surety on the approved form CSLB requires the surety to be licensed through the California Department of Insurance, the bond to be on a form approved by the Attorney General's office, and the attorney-in-fact to sign it. ### File within 90 days of the bond's effective date CSLB must receive an acceptable bond at its headquarters within 90 days of the bond's effective date. Bonds accepted for an active license cannot be returned or transferred to another license or qualifier. ### Track cancellation notices A bond remains in effect until CSLB receives the surety's cancellation notice; failure to keep coverage continuous results in suspension, and any work performed while suspended is treated as unlicensed. Keep your address and email up to date with CSLB so you actually get the notice. ### Replace before the old bond ends The new bond's effective date should match the old bond's cancellation date. CSLB suggests arranging a new bond about four weeks before the current one expires, since processing times vary. ### If suspended, cure within 90 days A bond suspension lifts when CSLB receives either a rescission notice from the surety within 90 days of the cancellation date or a replacement bond within 90 days of its effective date. A new bond lifts a bond suspension but not a suspension caused by an unpaid judgment or claim payment. New license, renewal, switching to an LLC, or changing qualifiers? [Start a bond quote](https://www.menloinsurance.com/f/bonds) and give us your license number and entity type. We quote the contractor's bond, the LLC bond and the qualifier bond together, so your CSLB filing goes in complete. Our [surety bonds page](https://www.menloinsurance.com/surety-bonds) covers the other bond types contractors run into, and if the license also needs liability coverage, our [general liability quote form](https://www.menloinsurance.com/f/general-liability) handles that side. ## Frequently Asked Questions ### How much is the California contractor license bond? $25,000. Business and Professions Code section 7071.6(a) sets the amount, operative January 1, 2023, and CSLB confirms that the contractor's bond, the bond of qualifying individual and the disciplinary bond all increased to $25,000 on that date under SB 607. Your premium is a fraction of that amount, set by the surety. ### Does an LLC contractor need a bigger bond? An LLC files the same $25,000 contractor's bond plus a separate $100,000 LLC employee/worker bond, and must also carry liability insurance with at least a $1 million aggregate limit under section 7071.19. ### Who does the contractor license bond protect? Homeowners and single-family owners harmed by a license-law violation, anyone harmed by a willful violation or fraud, and employees and benefit funds owed wages or fringe benefits. It does not pay the contractor's own losses. ### Can I use a cash deposit instead of a surety bond? Yes. CSLB accepts cashier's checks, certificates of deposit and similar alternatives, but the deposit is released only by court order, so most contractors find the annual surety premium cheaper than tying up $25,000. ### What happens to my license if my bond is cancelled? The license is suspended once continuous coverage lapses, and work performed while suspended is unlicensed work. The suspension lifts when CSLB accepts a rescission notice or replacement bond within the 90-day windows. ### Is a surety bond the same as contractor insurance? No. A bond is a three-party guarantee that protects the public and must be repaid to the surety after a claim; insurance is a two-party contract that pays the policyholder's covered losses. Most contractors need both. *This guide is for educational purposes and summarizes California statutes and Contractors State License Board publications as of its publication date. Bond terms, surety underwriting and CSLB procedures control, and statutory amounts can change. Talk to a licensed broker about your bond and insurance requirements and confirm current rules with CSLB.* ## The Bottom Line [#the-bottom-line] California requires a $25,000 contractor's bond for every active license, a separate $100,000 bond for LLC licensees, and a $25,000 qualifier bond when the person qualifying the license does not own enough of the business. The bond is there for homeowners, customers who were defrauded, and workers who weren't paid. Whatever the surety pays them, it expects you to pay back. The surety is vouching for you, so your credit sets the price. File the bond within 90 days and never let it lapse. Get the replacement in place before the old one cancels. A gap suspends your license, and every job you have going becomes unlicensed work. ## References . [California Legislative Information. Business and Professions Code section 7071.6]() . [Contractors State License Board. Bond Requirements]() . [California Legislative Information. Business and Professions Code section 7071.5]() . [California Legislative Information. Business and Professions Code section 7071.6.5]() . [California Legislative Information. Business and Professions Code section 7071.9]() . [Contractors State License Board. Bond Ratings and Premium Costs]() . [Contractors State License Board. Bond General Information]() . [The Surety & Fidelity Association of America. What Is Surety?]() . [IRMI. Surety Bond]() . [IRMI. License and Permit Bond]() . [California Legislative Information. Code of Civil Procedure section 995.120]() . [Contractors State License Board. Bond Information]() . [California Legislative Information. Business and Professions Code section 7071.8]() . [California Legislative Information. Business and Professions Code section 7071.19]() . [California Legislative Information. Business and Professions Code section 7071.11]() . [Contractors State License Board. Know Your Bond Basics]() . [Contractors State License Board. Bond Suspensions]() # California FAIR Plan Commercial Policy: Who Qualifies, What It Covers, and the $100 Million Limit (https://www.menloinsurance.com/library/guides/california-fair-plan-commercial) The California FAIR Plan commercial policy insures business-owned buildings, apartment buildings with 5 or more units, HOAs, farms and wineries against fire, lightning and internal explosion, up to $20 million per building and $100 million per location until the high value program sunsets in 2028. What it leaves out and what to buy with it. Markdown version: https://www.menloinsurance.com/library/guides/california-fair-plan-commercial.md The [California FAIR Plan](https://www.menloinsurance.com/california-fair-plan-insurance) commercial policy is basic property insurance for business-owned buildings that the regular market will not write. It covers fire, lightning and internal explosion, with vandalism and other perils available at extra cost. The plan writes apartment buildings with five or more units, hotels and motels, retail shops, manufacturers, offices, buildings under construction, and farms and wineries. The limit is $20 million per structure, with a total of $100 million per location. Limits above $20 million per location come from a high value program that is set to end in 2028. The policy does not include general liability, and it does not pay for lost rents or business income. Most owners need at least two other policies alongside it. This guide is for the owner or property manager whose broker has just said "the FAIR Plan is what's left." We cover who qualifies, what the commercial form pays for and what it leaves out, how the limits work for a condo association or a multi-building site, and what to buy with it. The regular market should be checked first, so if you haven't had your building shopped yet, start with a [commercial property quote](https://www.menloinsurance.com/commercial-property-insurance). ## Key takeaways * **Named perils only.** Fire, lightning and internal explosion are standard. Windstorm, smoke, vandalism and sprinkler leakage cover you only if your declarations show them. * **$20 million per structure, $100 million per location.** For a condominium project, one location includes every unit on the recorded map. * **The high value tier is temporary.** Limits above $20 million per location end three years after the July 2025 rollout. The Assembly Insurance Committee puts the sunset in 2028. * **No liability, no income coverage.** The commercial property form has no business income or rental income section, and liability has to come from another policy. * **Vacancy voids coverage.** Once 70 percent or more of the floor area has been vacant for 60 days, the policy stops paying (30 days for vandalism) unless a vacancy permit is attached. ### California FAIR Plan commercial policy A named-peril commercial property policy issued by the California FAIR Plan Association, the pool of all insurers licensed to write property insurance in California, for business-owned buildings and their contents when coverage is not available in the regular market. The plan's rules call it a Division I commercial property policy. ## Who qualifies for a FAIR Plan commercial policy? [#who-qualifies-for-a-fair-plan-commercial-policy] A building qualifies if it is business-owned or a habitational building with five or more units, and the regular market won't insure it. The plan's policies page describes commercial coverage as "business owned buildings including habitational units, retail mercantile, manufacturing risks, farms, wineries, and office buildings," plus individually owned buildings with five or more units. The commercial page lists these classes: * Habitational buildings with five or more units, such as [apartment buildings](https://www.menloinsurance.com/apartment-building-insurance-california), hotels and motels * Retail shops such as boutiques, salons, dry cleaners and convenience stores * Manufacturers of most types of products * Office buildings for professionals such as doctors, lawyers and consultants * Residential and commercial buildings under construction from the ground up * Commercial [farms, wineries](https://www.menloinsurance.com/farm-winery-insurance-california) and ranches (buildings only, not crops or livestock) Homeowners associations and condominium associations are also written on the commercial program. Farms became eligible under SB 11 in 2021. Anything with one to four units goes on the plan's dwelling program. Our guide to the [FAIR Plan for rental properties and condos](https://www.menloinsurance.com/library/guides/california-fair-plan-rental-property) covers that side. Some property is not eligible under any program. The plan's Plan of Operation excludes buildings vacant or unoccupied for more than a year (unless because of ongoing construction), buildings condemned or declared uninhabitable, property intended to be demolished, lender-owned property, and farm commodities, livestock and farm equipment. ## What does the FAIR Plan commercial policy cover? [#what-does-the-fair-plan-commercial-policy-cover] It covers direct physical loss to the building and your business personal property from the perils your declarations list. The plan's commercial page names fire, lightning and internal explosion as the covered perils, with optional coverages such as vandalism at additional cost. The sample policy the plan publishes (form CP 00 99) covers three kinds of property: the building, your business personal property within 100 feet of it, and other people's property in your care. The rest of the form is built from add-ons. On the sample policy, windstorm or hail, smoke, aircraft and vehicles, riot, sinkhole collapse and volcanic action apply only if the declarations show a premium for "Extended Coverage." Vandalism and sprinkler leakage apply only if the declarations show them as "Included." So when you get the quote, read the premium column line by line. A blank line means you don't have that peril. The table below sums up the sample commercial form and its July 2025 amendatory endorsement (CFP 300 0725). Your own declarations and endorsements control. | Item | FAIR Plan commercial policy | Where to look | | ----------------------------------------- | ------------------------------------------------------------------------------------------- | ------------------------------------------------------------- | | Fire, lightning, internal explosion | Covered | Commercial page and form CP 00 99 | | Windstorm, hail, smoke, riot, vehicles | Only with Extended Coverage premium | Covered Causes of Loss | | Vandalism | Only if shown as included | Covered Causes of Loss | | Sprinkler leakage | Only if shown as included | Covered Causes of Loss | | Theft | Not a covered cause of loss (except burglar damage to the building under vandalism) | Vandalism peril | | Flood, mudflow, sewer backup, earthquake | Excluded | Exclusions | | Burst pipes and water leaks | Excluded unless a covered peril caused them | Exclusions | | Building code upgrades (ordinance or law) | Excluded | Exclusions | | Business income or lost rents | No coverage section in the form | Form CP 00 99 | | Liability to others | Not part of the property policy | Plan of Operation, Division I | | Building valuation | Actual cash value (repair or replacement cost less depreciation) | Valuation condition | | Vacancy | No coverage after 60 days with 70% or more of the floor area vacant (30 days for vandalism) | Endorsement CFP 300 0725 | The valuation line matters for older buildings. The sample form pays building losses at [actual cash value](https://www.menloinsurance.com/library/glossary/actual-cash-value), so depreciation comes off the check. If a [coinsurance](https://www.menloinsurance.com/library/glossary/coinsurance) percentage appears on your declarations, the form also cuts the payment when the limit is less than that percentage of the building's value. Before you set the limit, ask your broker what valuation and coinsurance terms the quote carries. ## What are the FAIR Plan commercial limits? [#what-are-the-fair-plan-commercial-limits] The maximum is $20 million per structure, with a total of $100 million per location, no matter how many structures are on it. The declarations have to list each structure and its limit separately. The Department of Insurance approved this expansion on March 28, 2025, and aimed it at homeowners associations, affordable housing developers, farmers, builders and business owners. The plan started offering it in July 2025. The limits went up in steps. The commercial program was capped at $8.4 million per location in 2021. It rose to $20 million per location in 2023, then to $20 million per structure with a $100 million cap, finalized in July 2025. | Program | Maximum limit | Status | | ---------------------------------- | ---------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------- | | Dwelling (1 to 4 units) | $3 million at one location | Standing limit | | Commercial property, Division I | $20 million per structure, $100 million per location | Per-structure limit is standing. Above $20 million per location is the high value tier | | High value commercial property | Any Division I policy with more than $20 million at one location | Ends three years after it began. Assembly committee: sunset in 2028 | | Businessowners policy, Division II | $20 million combined property. Business liability up to $1 million per occurrence and $3 million aggregate | Allowed by the Plan of Operation. The public policies page lists only dwelling, commercial and earthquake | Two details in the Plan of Operation matter a lot for associations and multi-building owners. **What counts as one location.** A location is every building at one address or assessor's parcel, or at contiguous parcels with the same owner. For condominiums, it also includes every unit on the recorded final map, parcel map or condominium plan. A 30-building condo project on one map shares one $100 million cap, not 30 of them. **What the sunset means.** The plan has to stop offering high value policies three years after they were rolled out. No new or renewal high value policy can start after that date, but a policy issued on or before it stays in force for its term. After that, commercial policies issue at no more than $20 million per location. High value policies can also carry a temporary supplemental fee, held in a separate account and refunded pro rata after the program closes. If your building needs more than $20 million, plan now for the renewal after the sunset. Our guide to [commercial property insurance](https://www.menloinsurance.com/library/guides/commercial-property-insurance-explained) explains how a full-form policy compares. ## What does the FAIR Plan commercial policy not cover? [#what-does-the-fair-plan-commercial-policy-not-cover] The biggest gaps are liability, lost income, theft, water damage and earthquake. Don't expect the plan to add liability soon. In December 2025 the Court of Appeal held that the plan is not required to offer expanded liability coverage, after years of litigation with the Department of Insurance. The Plan of Operation does allow a Division II businessowners policy with business liability up to $1 million per occurrence, but the plan's policies page doesn't offer it. So plan on buying liability somewhere else. The missing income coverage surprises apartment owners the most. The commercial property form has no business income or rental income section. After a fire, the FAIR Plan pays to rebuild but not for the rent you lose while tenants are out. For a mixed-use building or a business that has to close, that can be the larger loss. Our guide to [business income insurance](https://www.menloinsurance.com/library/guides/business-income-insurance-explained) explains how that coverage is normally written. Vacancy is the other trap. Under the July 2025 endorsement, a building owned by the policyholder counts as vacant or unoccupied when 70 percent or more of its total floor area is. After 60 straight days in that state the policy pays nothing for any loss, or after 30 days for vandalism, unless a vacancy permit endorsement is attached. Buildings under construction or renovation don't count as vacant. If you're between tenants or halfway through a lease-up, tell your broker before the 60 days run out. ## What coverage should I buy alongside it? [#what-coverage-should-i-buy-alongside-it] Buy general liability, then fill the property gaps that matter to your building. The FAIR Plan's own DIC page says difference in conditions policies supply the water damage, theft and liability the plan doesn't. It also says the plan doesn't sell them. That page and the Department of Insurance's list of DIC insurers describe residential policies, built to make a FAIR Plan home policy look like a homeowners policy. There is no equivalent state list for commercial buildings. The companion policies for a commercial risk are placed by your broker, one at a time. ### Steps ### General liability Every owner, association and business needs it, and the FAIR Plan property policy doesn't provide it. For an apartment building or HOA, the liability policy covers injuries in common areas. Our guide to [general liability](https://www.menloinsurance.com/library/guides/what-does-general-liability-insurance-cover) covers what it pays for. An [umbrella](https://www.menloinsurance.com/library/guides/umbrella-vs-excess-liability) goes above it for large buildings. ### The perils the FAIR form leaves out Ask for a policy written to sit over FAIR Plan fire coverage and pick up theft, water damage and the other non-fire perils, with limits, deductibles and dates matched to the FAIR Plan policy. For a condo or HOA master policy, confirm what the association's governing documents require it to insure. ### Business income or rental income If losing rents or revenue for a year would hurt more than the repair bill, price this separately. The FAIR Plan form has no income section. ### Earthquake and flood Both are excluded on the FAIR Plan commercial form. Menlo quotes [commercial earthquake](https://www.menloinsurance.com/commercial-earthquake-insurance) and [commercial flood](https://www.menloinsurance.com/commercial-flood-insurance) as separate policies. Check each companion quote against the FAIR Plan declarations. Gaps show up where one policy ends and the next begins, and claims are where you find them. ## How do I get a FAIR Plan commercial policy? [#how-do-i-get-a-fair-plan-commercial-policy] You apply through a licensed broker. The plan's commercial page tells applicants to "please contact a licensed broker," and plan staff can't advise on coverages or limits. The broker sets the limits with you, submits the application, and is paid a commission set by the plan's governing committee. A broker may not charge you a separate fee for placing coverage only with the FAIR Plan. Menlo Insurance Services is a licensed California broker (license 6020106) and a registered California FAIR Plan broker. We shop the regular and surplus lines markets for the building first. If they decline, we place the FAIR Plan commercial policy and quote the companion coverage around it. [Start a commercial property quote](https://www.menloinsurance.com/commercial-property-insurance) with the building's address, construction, occupancy and current limits. ## Can I lower the premium or move off the plan? [#can-i-lower-the-premium-or-move-off-the-plan] Yes, through hardening discounts, the commercial clearinghouse and shopping at each renewal. For commercial policies effective on or after November 15, 2025, the plan offers up to 12 wildfire hardening discounts on the wildfire portion of the premium: five for the immediate surroundings, five for the structure, a completion discount, and a community discount. A commercial policyholder who earns all 12 may see up to 13.8 percent off the wildfire portion. State law also required a commercial clearinghouse by July 1, 2024. Through it, admitted insurers can review FAIR Plan commercial policies and make offers, which reach you only through your broker of record. No one can force you to move. Carrier appetite for habitational and wildfire-exposed buildings changes from year to year, so have the market checked 60 to 90 days before every renewal. ## Frequently Asked Questions ### Does the California FAIR Plan offer liability insurance for businesses? The commercial property policy the plan publishes has no liability coverage. The Plan of Operation allows a Division II businessowners policy with business liability up to $1 million per occurrence and $3 million aggregate, but the plan's public policies page lists only dwelling, commercial and earthquake coverage. Buy general liability from another insurer. ### Can an HOA or condo association get FAIR Plan coverage? Yes. Homeowners and condominium associations are written on the commercial program. For a condominium, one location includes every unit on the recorded map, so the whole project shares one $100 million cap at $20 million per structure. ### When does the FAIR Plan commercial high value program end? The Plan of Operation requires the plan to stop offering high value policies three years after it rolled them out in July 2025. The Assembly Insurance Committee puts the sunset in 2028. Policies issued on or before the sunset date run to the end of their term, and later policies issue at no more than $20 million per location. ### Does the FAIR Plan cover a building under construction? Yes. Residential and commercial buildings under construction from the ground up are on the commercial eligibility list, and the vacancy condition does not treat a building under construction or renovation as vacant. ### Does the FAIR Plan cover crops or livestock on a farm? No. The plan insures farm and winery buildings, but the Plan of Operation excludes commercial agricultural commodities, livestock, and equipment used to grow or transport them. *This guide is for educational purposes. It summarizes the California FAIR Plan's published commercial policy, endorsement and Plan of Operation, and public California Department of Insurance guidance, as of September 2026. Your policy's terms, conditions and endorsements control. Menlo Insurance Services is a licensed California broker and earns a commission on policies it places.* ## References . [California FAIR Plan. Commercial (accessed 2026-09-24)]() . [California FAIR Plan. Policies (accessed 2026-09-24)]() . [California FAIR Plan Association. Plan of Operation, Ed. 9/3/25: Sections III.M-N (location, high value), IV.A (ineligible property), maximum policy limits and high value sunset, XII (commission) (accessed 2026-09-24)]() . [California Department of Insurance. Commissioner Lara approves major FAIR Plan expansion to help HOAs, builders, farmers, and businesses access insurance coverage (March 28, 2025; accessed 2026-09-24)]() . [Insurance Journal. California FAIR Plan Rolls Out Commercial High Value Policy (July 25, 2025; accessed 2026-09-24)]() . [Assembly Insurance Committee. Oversight Hearing: The California FAIR Plan, background paper (January 28, 2026; accessed 2026-09-24)]() . [California FAIR Plan. Sample Commercial Property Policy, CP 00 99 (01 05) (accessed 2026-09-24)]() . [California FAIR Plan. Commercial Amendatory Endorsement, CFP 300 0725, Vacancy condition (accessed 2026-09-24)]() . [California FAIR Plan. Difference in Conditions (DIC) (accessed 2026-09-24)]() . [California FAIR Plan. How to Apply (accessed 2026-09-24)]() . [California Department of Insurance. Residential Insurance: Homeowners and Renters Guide, broker fees (accessed 2026-09-24)]() . [California FAIR Plan. Wildfire Hardening Discounts for Dwelling Fire and Commercial Policies (applicable as of November 15, 2025; accessed 2026-09-24)]() . [California Legislative Information. Insurance Code section 10095 (accessed 2026-09-24)]() # California FAIR Plan Quote: How the Broker Application Works, Step by Step (https://www.menloinsurance.com/library/guides/california-fair-plan-quote) How to get a California FAIR Plan quote in 2026. Only a broker registered with the plan can submit the application, no broker fee is allowed, the plan answers within three business days of an inspection report, and eleven kinds of property are ineligible. Markdown version: https://www.menloinsurance.com/library/guides/california-fair-plan-quote.md You can't get a California FAIR Plan quote online. The plan takes applications from licensed brokers who have registered with it, [like Menlo](https://www.menloinsurance.com/california-fair-plan-insurance), and it expects the broker to search the regular market first. If you can't find a broker, the Department of Insurance says you can call the FAIR Plan at 800-339-4099. The broker may not charge you a fee for a FAIR Plan-only placement. Once an inspection report reaches the plan, it has three business days to tell you whether the home is eligible, eligible with a surcharge, or declined. It delivers the policy after you pay. Those deadlines come from the plan's Plan of Operation, the rulebook the Insurance Commissioner last approved on March 27, 2026. Below is the order things happen in, what a broker will ask you for, and the few things that get a home turned down. If you want to know what the policy covers once you have it, our [main California FAIR Plan guide](https://www.menloinsurance.com/library/guides/california-fair-plan) has that. ## Key takeaways * **Broker only, no fee.** Applications go through a licensed broker registered with the FAIR Plan. A broker can't charge a fee for placing FAIR Plan coverage alone; the plan pays the broker a commission instead. * **Regular market first.** The plan wants business only after a diligent search of the normal market, so a good broker quotes admitted and surplus lines carriers before the FAIR Plan. * **Three business days.** After the plan gets an inspection report, it must issue an action report within three business days: eligible, eligible if you make listed repairs, or not eligible. * **Where you live can't be the reason.** Neighborhood, location or any hazard outside your control can't be used to decline or surcharge a home. Condition and use can. * **It's half a policy.** Set up a difference in conditions (DIC) wrap with the same broker, on the same dates, before the FAIR Plan policy starts. ### Registered FAIR Plan broker A California-licensed property and casualty agent or broker who has submitted the plan's New Broker Information Form and a copy of an active license, and who has been added to the plan's broker database. Only a registered broker can use the plan's broker portal to submit and service applications. ## Who can get me a California FAIR Plan quote? [#who-can-get-me-a-california-fair-plan-quote] A licensed broker who is registered with the FAIR Plan. Not every broker is. The plan's own site says so, and it points you to the broker finder on its home page. To register, a broker sends the plan a New Broker Information Form with a copy of a valid California property and casualty license. The plan takes up to three business days to verify it, then gives the broker access to the portal used to submit new business. Menlo Insurance Services registered with the California FAIR Plan in September 2026, so we can now submit FAIR Plan applications ourselves. We hold California license #6020106. The Department of Insurance also lists the plan's own number, 800-339-4099, as a way to apply. In practice you'll still want a broker. FAIR Plan staff can't advise you on coverages or limits, and the plan doesn't estimate what your home would cost to rebuild. Someone has to set the dwelling limit with you, and that person should be on your side. ## Does a broker charge a fee for a FAIR Plan policy? [#does-a-broker-charge-a-fee-for-a-fair-plan-policy] No. The Department of Insurance's residential guide says it is "illegal or improper for an insurance broker to charge you a fee for placing coverage solely with the California Automobile Assigned Risk Plan or the California FAIR Plan." The plan says the same thing more plainly: there's no additional cost for having a broker. The broker is paid a commission by the plan, set by the plan's Governing Committee and paid to the producer you designate on the application. A fee can come into play only for other policies the broker places, such as the DIC wrap. If a broker asks for a fee, ask what it's for in writing. ## What happens after I ask for a quote? [#what-happens-after-i-ask-for-a-quote] The timings below are the plan's written rules, not our guesses. ### Steps ### The broker checks the regular market The plan tells brokers that, under the Insurance Code, a risk should be submitted to it only "after a diligent search of the normal insurance market has been made." One of the plan's statutory purposes is to keep as much business as possible with admitted insurers and surplus lines brokers. So the first thing a broker should do is quote you elsewhere. Start with a [FAIR Plan quote request](https://www.menloinsurance.com/california-fair-plan-insurance) so admitted and surplus lines carriers see the home first. ### The broker submits the application through the portal Registered brokers submit and service FAIR Plan business through the plan's online broker portal. The application is the basis for accepting or rejecting coverage, and making sure it's accurate is your responsibility, not the broker's or the plan's. ### The property may be inspected Anyone with an insurable interest in a California property can ask the plan for an inspection, at no cost, to find out whether the property is eligible or would be surcharged. The inspection report covers the structure, occupancy and general condition, may include photographs, and reaches the plan within five days after it's completed. You or your broker can ask for a copy. ### The plan issues an action report within three business days Within three business days after it receives the inspection report, the plan must tell you one of three things: the risk is eligible (and, if it's surcharged, what would remove the surcharge); it will be eligible once you make the repairs listed and a reinspection confirms them; or it isn't eligible, with the reasons. ### You pay and the policy is delivered If the plan accepts the risk, it delivers the policy once the premium is paid. Dwelling and commercial premiums can be paid in full or in monthly installments, by check, cashier's check, money order, credit card or electronic funds transfer. The plan's published payment options add a three-payment and an eleven-payment plan with a $4.50 fee per installment, no fee for ACH, and a 3.5 percent card fee. Policies run for one year. Here's the same process as a checklist, with the rule behind each step: | Stage | Who acts | What the rule says | Source | | ----------------- | ------------------------ | ------------------------------------------------------------------------------------- | -------------------------------------------------------------- | | Market search | Your broker | Submit to the FAIR Plan only after a diligent search of the normal market | Plan broker page | | Application | Registered broker | Submitted through the broker portal; accuracy is the applicant's responsibility | Plan broker page, application form | | Inspection | Plan's inspection bureau | Free on request; report reaches the plan within 5 days of completion; copy on request | Plan of Operation § V | | Decision | FAIR Plan | Action report within 3 business days of receiving the inspection report | Plan of Operation § VI.A | | Surcharge removal | You, then the plan | Make the listed improvements; plan reinspects or removes the surcharge | Plan of Operation § VI.D | | Issue | FAIR Plan | Policy delivered on payment of premium; one-year term | Plan of Operation §§ VI.B, VIII | | Denial | You | Appeal to the Governing Committee, then to the Commissioner within 30 days | Plan of Operation § XI | ## What will the broker need from me? [#what-will-the-broker-need-from-me] The basics of the home, and honest answers about its condition. The plan's paper dwelling application (ACORD 854 CA, June 2020 edition) asks for the applicant and title holder, the property location, units, construction, occupancy, coverage limits and deductible, other structures with a value for each, and prior property damage. Brokers now submit through the portal, but the substance hasn't changed much. Have these ready: * **Who owns it.** If you aren't the legal title holder, the application asks you to explain why. * **How it's built and used.** Construction type, number of units, and whether you live there, rent it out, or use it seasonally. The dwelling program covers one-to-four-unit homes you live in, rentals, seasonal homes, renters' contents and condo units. * **What it would cost to rebuild.** The plan doesn't estimate it, and it's up to you to decide the value. The 2020 checklist required current exterior photos and a rebuild estimate from a licensed contractor or appraiser when combined limits exceeded $1.5 million, with the dwelling limit at least equal to the estimate. Ask your broker whether that still applies to your limit. * **Any existing damage.** The 2020 checklist asked for a signed repair contract from a licensed contractor if the home had unrepaired damage. * **Mortgage details.** The lender usually needs to be listed and may set a minimum dwelling limit. Tell your broker about wildfire hardening work at the same time. The plan offers up to 12 discounts on the wildfire portion of the premium for policies effective on or after November 15, 2025, and it sends policyholders to their broker to claim them. ## Why would the FAIR Plan decline a home? [#why-would-the-fair-plan-decline-a-home] For what the property is, or how it's kept, not where it is. The Plan of Operation says neighborhood, location, or any hazard beyond the owner's control can't be used to decline or surcharge a risk. A home in the highest fire hazard zone is still eligible. What the plan can do is refuse these eleven kinds of property outright: | Ineligible property | What it means in practice | | --------------------------------------------------- | -------------------------------------------------- | | Motor vehicles | Cars and road vehicles subject to registration | | Farm property | Crops, livestock and the equipment used for them | | Movable residences not on a foundation | A mobile home that isn't affixed | | Vacant or unoccupied more than one year | Unless the vacancy is due to ongoing construction | | Condemned or uninhabitable buildings | As declared by a civil authority | | Illegal storage of flammable or explosive materials | Storage that violates the law | | Property used in a felony that raises the risk | Including arson and insurance fraud | | Owner with an insurance-related felony | Arson or fraud conviction within the last 10 years | | Property intended to be demolished | Scheduled teardowns | | Lender-owned property | Bank-owned homes after foreclosure | | Residential property used only for storage | A house used as a warehouse | Everything else can be written. A house with problems may just cost more. The plan names two kinds: physical problems that raise the risk of a covered loss, such as bad wiring, heating or construction, signs of past fires or general deterioration; and use or housekeeping problems, such as stored rubbish or flammable materials. Fix what the action report lists and the plan will reinspect or drop the surcharge. Say the inspector flags an old fuse box. You get it replaced, send the electrician's invoice through your broker, and the surcharge can come off once the plan is told the work is done. If you're declined, the denial has to tell you that you can appeal. You appeal first to the plan's Governing Committee, then to the Insurance Commissioner within 30 days of the committee's decision. ## What should I set up at the same time? [#what-should-i-set-up-at-the-same-time] A DIC policy. The FAIR Plan dwelling policy covers fire, lightning, internal explosion and smoke, with vandalism available for extra premium. It doesn't cover liability, theft or water damage, and the plan doesn't sell the policy that does. Quote the [DIC wrap](https://www.menloinsurance.com/f/dic) with the same broker so the limits, deductibles and start dates line up. Our [DIC insurance guide](https://www.menloinsurance.com/library/guides/difference-in-conditions-insurance) explains where the two policies can leave gaps, and our [California DIC page](https://www.menloinsurance.com/dic-insurance-california) shows who writes it. Plan the exit too. Under Insurance Code section 10095, admitted insurers can review FAIR Plan policies through a clearinghouse and make offers, which reach you only through your broker of record. That's one more reason to pick the broker carefully: the broker on the policy is the one who hears about those offers. Our guide to the [broker of record letter](https://www.menloinsurance.com/library/guides/broker-of-record-letter) explains how to change brokers if you need to. ### Buying in escrow? The plan's written deadline starts when it receives the inspection report, not when you apply. If you're closing on a home in a high fire area, get the regular market search and the FAIR Plan application started as soon as you're in contract, and ask the lender what dwelling limit it needs. ## How much will the quote be? [#how-much-will-the-quote-be] We can't tell you until the plan prices the application, and there's no public calculator. The price depends mostly on the wildfire rating of the location, the dwelling limit, and which hardening discounts you earn. Rates are going up: the Department of Insurance approved a 29.1 percent average dwelling fire rate change in April 2026, and the plan has said it applies from October 15, 2026. Our guide to the [2026 FAIR Plan rate increase](https://www.menloinsurance.com/library/guides/california-fair-plan-rate-increase-2026) explains what moves the premium. When you compare quotes, add the DIC premium to the FAIR Plan premium and compare that total with any single policy you're offered. ## Frequently Asked Questions ### Can I apply for the California FAIR Plan without a broker? The Department of Insurance lists the plan's phone number, 800-339-4099, as a way to apply. The plan itself directs applicants to a registered broker, and its staff can't advise on coverages or limits. Since a broker can't charge you a fee for a FAIR Plan-only placement, there's little reason to go without one. ### Does the FAIR Plan inspect my house? It can. Anyone with an insurable interest can ask for a free inspection to learn whether the property is eligible or would be surcharged, and the report may include photos of the property. You can ask for a copy through your broker. ### Can the FAIR Plan turn me down because I live in a high fire risk area? No. The Plan of Operation says neighborhood, location, or a hazard beyond your control can't be grounds to decline or surcharge a risk. Wildfire location does affect the price through the rate, but not your eligibility. ### Can I insure a vacant house with the FAIR Plan? Only if it hasn't been vacant or unoccupied for more than a year, unless the vacancy is due to ongoing construction. Vacancy also limits coverage under the policy, so ask your broker about the plan's vacancy terms before you buy. ### How do I know my broker is registered with the FAIR Plan? Use the broker finder on the plan's website, or ask the broker to confirm they can submit through the plan's broker portal. *This guide is for educational purposes and summarizes the California FAIR Plan's Plan of Operation (edition approved March 27, 2026), the plan's published pages, and California Department of Insurance guidance as of September 2026. Your policy's terms control. Menlo Insurance Services is a licensed California broker and may earn a commission on policies it places.* ## References . [California FAIR Plan. How to Apply]() . [California FAIR Plan. Prospective Brokers]() . [California Department of Insurance. California FAIR Plan]() . [California Department of Insurance. Residential Insurance: Homeowners and Renters Guide]() . [California Department of Insurance. Stipulation and Order No. 2026-2, with the California FAIR Plan Association Plan of Operation (Ed. 4/3/26), executed March 27, 2026]() . [California FAIR Plan. Dwelling policies]() . [California Legislative Information. Insurance Code section 10090]() . [California FAIR Plan. Dwelling Application Checklist and Application for Dwelling Insurance, ACORD 854 CA (2020/06)]() . [California FAIR Plan. Payment Plan Options]() . [California FAIR Plan. Wildfire Hardening Discounts for Dwelling Fire and Commercial Policies (effective November 15, 2025)]() . [California FAIR Plan. Difference in Conditions (DIC)]() . [California Legislative Information. Insurance Code section 10095]() . [California Department of Insurance. Rate Filing Approval and Closed List, year to date August 31, 2026 (file 25-2174, California FAIR Plan, Dwelling Fire)]() . [Orange County Register (via Consumer Watchdog). FAIR Plan rates going up 29.1% in late 2026 (May 20, 2026)]() # California FAIR Plan Rate Increase 2026: What Was Approved, What Drives Your Cost, and What You Can Do (https://www.menloinsurance.com/library/guides/california-fair-plan-rate-increase-2026) The California Department of Insurance approved a 29.1 percent FAIR Plan dwelling fire rate change in April 2026, effective October 15. What it means for your premium, why cost varies by ZIP code, and the moves that can lower the bill or get you off the plan. Markdown version: https://www.menloinsurance.com/library/guides/california-fair-plan-rate-increase-2026.md The California Department of Insurance approved a 29.1 percent rate change for the California FAIR Plan's dwelling fire program in 2026, against the 35.6 percent the plan requested. The Department's list of approved filings shows the filing closed as approved on April 6, 2026. The FAIR Plan has said the new rate applies from October 15, 2026, that not every policyholder will see the full amount, and that some will see a decrease. Keep in mind that 29.1 percent is a statewide average for the whole dwelling fire book. Your own change depends on where the house is, how much it's insured for, and what you've done to harden it. Below we cover what was approved, why FAIR Plan prices keep going up, why two homes in different ZIP codes can get very different increases, and what you can do about yours. There's no public FAIR Plan premium calculator. The plan says it doesn't estimate rebuilding cost and its staff can't advise on limits. Your renewal notice is the closest thing you'll get to a calculator, and we explain when it has to arrive and what has to be on it. ## Key takeaways * **Approved, not proposed.** 29.1 percent approved on a 35.6 percent request for the dwelling fire program, closed April 6, 2026; the plan says it applies from October 15, 2026. * **It is an average.** The wildfire portion of the premium drives most of the change, so high-risk brush territories tend to see more than the average and some lower-risk homes see less or a decrease. * **Your renewal offer is your number.** Insurers, including the FAIR Plan, must deliver a renewal offer at least 45 days before expiration stating the premium. * **You have levers.** Up to 12 hardening discounts worth up to 16.4 percent off the wildfire portion, a fresh market search under the Sustainable Insurance Strategy, a surplus lines quote, and the clearinghouse can each change the bill. * **Count the whole stack.** A FAIR Plan policy usually needs a DIC wrap with its own premium; compare the combined total, not the FAIR Plan line alone, against any other quote. ### Rate change (approved) A percentage change to an insurer's overall rate level for a line of business, approved by the Insurance Commissioner after review. It is an average across all policies in the program; the change on any single policy can be higher or lower depending on its rating factors. ## What exactly was approved in 2026? [#what-exactly-was-approved-in-2026] The Department of Insurance publishes a running list of rate filings it has approved or closed. The 2026 list, current to August 31, 2026, contains two California FAIR Plan personal lines entries. File 25-2174, for the Dwelling Fire program, is a rate filing with a requested change of 35.6 percent and an approved change of 29.1 percent, status approved, closed April 6, 2026 (SERFF filing MOCC-134657692). A second file, 25-2455, for Dwelling Fire and Allied Lines, was approved with a 0 percent rate change on the same date. A few things are clear from that record. First, the approval is for the dwelling fire program, the residential policy most homeowners have. It doesn't cover commercial. Second, the plan asked for more than it got. Third, the Department's list doesn't show an effective date. The October 15, 2026 date comes from the FAIR Plan's own statement to the Orange County Register, which also said that "not every FAIR Plan customer will see their premium rise by this amount" and that some will see a decrease. Rate changes kick in when a policy renews, not in the middle of the term. So you'll see the increase at your first renewal on or after that date. That's also the time to have the regular market checked again. Send a [FAIR Plan quote request](https://www.menloinsurance.com/california-fair-plan-insurance) 60 to 90 days before renewal and a broker has time to shop admitted and surplus lines carriers before the FAIR Plan bill comes due. - 29.1% — Approved dwelling fire rate change, 2026 — [California Department of Insurance approved filings list]() - 35.6% — Rate change the FAIR Plan requested — [California Department of Insurance approved filings list]() - Oct 15, 2026 — Date the FAIR Plan says the new rate applies — [Orange County Register]() ## Why do FAIR Plan rates keep rising? [#why-do-fair-plan-rates-keep-rising] The FAIR Plan isn't allowed to lose money on purpose. Insurance Code section 10100.2 requires its rates to be actuarially sound, so that premiums are adequate to cover expected losses, expenses and taxes, while not being excessive or unfairly discriminatory. So when the plan grows in the riskiest parts of the state and the losses come in, rates have to go up. And the plan has grown fast. As of June 2026 the plan had 696,562 policies in force and $768 billion of exposure, up 157 percent and 250 percent since September 2022, with written premium of $2.04 billion. Most of those policies sit where the regular market pulled out, and that's the part of the state most exposed to wildfire. The plan's own summary of the January 2025 Los Angeles fires puts its share at roughly 5,400 Eaton and Palisades claims and nearly $3.5 billion paid. To pay them it turned to a $1 billion assessment on member insurers, approved by the Commissioner in February 2025, and it has since secured a line of credit and a reinsurance program that includes a $750 million catastrophe bond. Under the 2024 modernization rules, insurers bear the first half of such an assessment; the second half can be recovered from policyholders only through a temporary supplemental fee that itself requires Prop 103 approval. That fee is separate from the 29.1 percent rate change, and it is charged by regular insurers on their own policies; our guide to the [FAIR Plan temporary supplemental fee](https://www.menloinsurance.com/library/guides/fair-plan-temporary-supplemental-fee) lists the insurers approved to charge it. The upshot: the plan now carries more homes, in riskier places, than its old rates were set for. The 2026 approval closes part of that gap, not all of it. That's why the Department approved less than the plan asked for. ## Why does FAIR Plan cost vary so much by ZIP code? [#why-does-fair-plan-cost-vary-so-much-by-zip-code] Property insurance is priced by territory. For the FAIR Plan, the part of territory that matters most is wildfire. The plan applies its hardening discounts to "the wildfire portion of the policy premium," which tells you the premium has a wildfire component that is rated separately from the basic fire and smoke component. If your ZIP code backs onto brush, that piece is big. On a suburban street grid it's small. When wildfire losses drive most of a rate change, homes with a big wildfire piece go up the most. Homes with little wildfire exposure can go up less, or even come down. That's how the plan can say some policyholders will get a decrease. Everything else that moves the price is what you'd expect on any dwelling policy: | Cost driver | Why it moves the premium | | --------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------- | | Wildfire territory of the ZIP code and parcel | Sets the wildfire portion of the premium, where most of the 2026 change lands | | Dwelling limit (Coverage A) | Premium scales with the amount insured; the FAIR Plan does not estimate rebuild cost, so the limit is set with your broker | | Contents and other structures limits | Add to the insured amount | | Hardening of the structure and the immediate surroundings | Earns up to 12 discounts on the wildfire portion | | Community status (Firewise USA site or Fire Risk Reduction Community) | Earns the community discount | | Optional coverages such as vandalism | Added at additional cost | | Payment plan | Installments carry a $4.50 fee each on dwelling fire policies; full pay and ACH have none | One thing you won't find on that list is a broker fee. There is no additional cost for using a broker on a FAIR Plan policy, and the Department of Insurance guide says a broker may not charge a fee for placing FAIR Plan coverage alone. ## Is there a California FAIR Plan premium calculator? [#is-there-a-california-fair-plan-premium-calculator] No, there isn't a public one. The plan's site won't quote a premium until a registered broker sends in an application. You have two substitutes. The first is your renewal offer. Insurance Code section 678 requires the insurer to deliver or mail an offer of renewal at least 45 days before the policy expires, contingent on payment of the premium stated in the offer, and to identify any limits being reduced or coverage being eliminated. If you renew on or after October 15, 2026, that offer is where you'll first see your own number. The second is a rough ceiling. A former Insurance Commissioner, asked how policyholders should budget, suggested adding about 30 percent to the current premium and treating that as an estimate that could run higher for the riskiest homes. That's a way to budget, not a quote. If your home has a small wildfire piece, or you already get hardening discounts, your real number may come in lower. ### Where the wildfire portion shows up The FAIR Plan applies hardening discounts to the wildfire portion of the premium. If your declarations page doesn't show that split, ask your broker to get it from the plan. It tells you how much of your bill the 2026 change, and the discounts, can actually touch. ## What can FAIR Plan policyholders do about the increase? [#what-can-fair-plan-policyholders-do-about-the-increase] ### Steps ### Have the admitted market shopped again The Department of Insurance's Sustainable Insurance Strategy requires insurers that use catastrophe models and reinsurance costs in their rates to write in distressed areas at no less than 85 percent of their statewide market share, and it gives homes that meet Safer from Wildfires priority in moving back to the admitted market. Mercury, Allstate and CSAA were the first insurers to file rate plans using the new models in 2025. Carriers change what they'll write every year, so a home that got turned down in 2024 may get a quote now. Start with a [quote for a high fire risk home](https://www.menloinsurance.com/home-insurance-high-fire-risk-california). ### Earn every hardening discount For policies effective on or after November 15, 2025, the plan offers five immediate-surroundings discounts, five structure discounts, a completion discount for meeting all ten, and a community discount. A dwelling fire policyholder who earns all twelve may see up to 16.4 percent off the wildfire portion of the premium. The state's Safer from Wildfires regulation makes every insurer give discounts for the same work. So whatever you do still counts after you leave the plan. ### Price the whole stack against one policy A FAIR Plan policy covers fire, lightning, internal explosion and smoke; the DIC wrap that adds liability, theft and water damage is a second premium from a different insurer. A surplus lines homeowners policy can sometimes cover the whole home for a combined premium comparable to the FAIR Plan plus DIC. Our guides to [surplus lines insurance](https://www.menloinsurance.com/library/guides/surplus-lines-insurance) and [Delos Insurance](https://www.menloinsurance.com/library/guides/delos-insurance-california) explain the trade-offs, including the absence of guaranty fund protection. ### Watch the clearinghouse Insurance Code section 10095 requires a clearinghouse through which regular insurers can review FAIR Plan policies and make offers, delivered through your broker of record; admitted insurers get the first option before nonadmitted insurers. Nobody can force you to switch, and an offer can come in at any time. ### Cut the payment friction, not the coverage Pay in full or by ACH to avoid installment and card fees, and use the autopay system the plan must operate under AB 290, which also bars cancellation for declining autopay and gives installment payers a grace window. Don't cut the dwelling limit below what it would cost to rebuild just to save premium. If you have a loss, that shortfall comes out of your pocket. If you believe the change on your policy was applied incorrectly, the Department of Insurance's consumer hotline takes complaints about rating as well as claims. ## Should I leave the FAIR Plan because of the increase? [#should-i-leave-the-fair-plan-because-of-the-increase] Leave if a regular insurer or a well-rated surplus lines carrier will write the home for a combined premium that is close to the FAIR Plan plus DIC total. Both the plan and the Department treat the FAIR Plan as a temporary last option, not a destination. Stay for now if you can't get anything else, or if the alternatives cost so much more that the better coverage isn't worth it. Then spend the year hardening the home so the next market search goes better. Our guide to high-risk homeowners insurance in California lays out every alternative after a nonrenewal, and the [main FAIR Plan guide](https://www.menloinsurance.com/library/guides/california-fair-plan) covers what the policy pays for. Menlo Insurance Services is a licensed California broker and, since September 2026, a registered California FAIR Plan broker. We can't change the FAIR Plan's rates. What we can do is shop the admitted and surplus lines market for your home, place or renew the FAIR Plan policy when nothing else is available, and quote the [DIC wrap](https://www.menloinsurance.com/dic-insurance-california) or a [dwelling fire policy](https://www.menloinsurance.com/dwelling-fire-insurance) alongside it. ## Frequently Asked Questions ### Does the 29.1 percent apply to commercial FAIR Plan policies? The approved 2026 filing on the Department of Insurance list is for the plan's Dwelling Fire program, a personal lines filing. Commercial rates are filed separately, and no commercial FAIR Plan rate approval appears on the 2026 list through August 31. Our guide to the [FAIR Plan commercial policy](https://www.menloinsurance.com/library/guides/california-fair-plan-commercial) covers that program's limits and gaps. ### When will I see the increase on my bill? At your first renewal on or after October 15, 2026, according to the plan's statement. Your renewal offer must reach you at least 45 days before the policy expires and must state the premium. ### Will my premium go up by exactly 29.1 percent? No. The figure is a statewide average across the dwelling fire program. The plan has said that not every customer will see that amount and some will see a decrease; the wildfire portion of your premium decides where you land. ### Can I get a FAIR Plan quote online? Not from the plan. Applications go through a broker registered with the FAIR Plan, the plan does not estimate rebuild cost, and its staff cannot advise on coverages or limits. Our guide to [getting a California FAIR Plan quote](https://www.menloinsurance.com/library/guides/california-fair-plan-quote) walks through the application step by step. *This guide is for educational purposes and summarizes public California Department of Insurance filings and California FAIR Plan statements as of September 2026. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## The Bottom Line [#the-bottom-line] The Department of Insurance approved a 29.1 percent FAIR Plan dwelling fire rate change on a 35.6 percent request in April 2026, and the plan applies it from October 15, 2026. That's an average. The wildfire part of your premium decides what happens to yours. Treat your renewal offer as your calculator and go after the hardening discounts. Compare the FAIR Plan plus DIC total with a single admitted or surplus lines policy. And have the market shopped every year until you're off the plan. ## References . [California Department of Insurance. Rate Filing Approval and Closed List, year to date August 31, 2026 (files 25-2174 and 25-2455, California FAIR Plan)]() . [Orange County Register (via Consumer Watchdog). FAIR Plan rates going up 29.1% in late 2026 (May 20, 2026)]() . [California FAIR Plan. How to Apply]() . [California Legislative Information. Insurance Code section 678]() . [California Legislative Information. Insurance Code section 10100.2]() . [California FAIR Plan. Key Statistics & Data]() . [California FAIR Plan. One Year Later: California FAIR Plan Response to the Eaton and Palisades Wildfires (January 2026)]() . [California Department of Insurance. Commissioner Lara approves FAIR Plan request for $1 billion assessment (February 11, 2025)]() . [California FAIR Plan. Wildfire Hardening Discounts for Dwelling Fire and Commercial Policies (effective November 15, 2025)]() . [California FAIR Plan. Dwelling policies]() . [California FAIR Plan. Payment Plan Options]() . [California Department of Insurance. Residential Insurance: Homeowners and Renters Guide]() . [KPBS / CapRadio. California's FAIR Plan will hike its rates this fall. How will that impact policyholders? (June 22, 2026)]() . [California Department of Insurance. Sustainable Insurance Strategy]() . [California Department of Insurance. Commissioner Lara finalizes reinsurance regulation with 85 percent writing commitment (December 30, 2024)]() . [California Department of Insurance. Department completes review of wildfire catastrophe models; first insurers file (August 1, 2025)]() . [California Department of Insurance. Safer from Wildfires]() . [California FAIR Plan. Difference in Conditions (DIC)]() . [California Legislative Information. Insurance Code section 10095]() . [California Legislative Information. Assembly Bill 290 (2025), Chapter 475]() . [California Department of Insurance. Top 10 Tips for Finding Residential Insurance]() . [California FAIR Plan. About the FAIR Plan]() # California FAIR Plan for Rental Property and Condos: Fair Rental Value, Occupancy and What to Add (https://www.menloinsurance.com/library/guides/california-fair-plan-rental-property) How the California FAIR Plan dwelling policy (CFP 00 01) works for landlords of 1 to 4 unit rentals, short-term and seasonal rentals, condo unit owners and tenants. Fair Rental Value pays 1/12 of its limit a month, total losses settle at actual cash value unless you add replacement cost, and liability has to come from another policy. Markdown version: https://www.menloinsurance.com/library/guides/california-fair-plan-rental-property.md The California FAIR Plan insures rental property and condos on the same dwelling policy it sells to homeowners, form CFP 00 01. What changes is the occupancy you declare and the coverages you check. The plan writes one to four unit rentals leased for at least a year, seasonal rentals rented for less than a year, tenants' belongings, and condominium unit owners' belongings and improvements. For a landlord, the coverage that matters most is Fair Rental Value, which replaces lost rent after a covered fire. The policy pays it at no more than 1/12 of its limit a month. The policy does not include liability. Total losses are settled at actual cash value unless you add replacement cost, and the limit is $3 million at one location. This guide is for the owner of a rental house, a duplex to fourplex, a vacation rental or a condo who has been [sent to the FAIR Plan](https://www.menloinsurance.com/california-fair-plan-insurance). For what the plan is, how it's priced and how to leave it, read the main [California FAIR Plan guide](https://www.menloinsurance.com/library/guides/california-fair-plan). If you haven't had the regular market checked yet, a [dwelling fire quote](https://www.menloinsurance.com/dwelling-fire-insurance) for the rental comes first. ## Key takeaways * **Occupancy sets the policy.** Rented a year or more is "tenant." Rented for less than a year is "seasonal." Condo owners and renters buy contents coverage, not the building. * **Fair Rental Value has a monthly ceiling.** 10 percent of the dwelling limit is built in and reduces that limit. You can buy a separate limit on top, but each month pays at most 1/12 of it. * **Check the valuation box.** The base form pays a total loss at fair market value. Dwelling Replacement Cost changes that if the dwelling limit is at least 80 percent of the cost to rebuild. * **Vacancy and tenant alterations.** Vandalism is not covered after 30 days vacant, or for alterations a tenant makes without your permission. * **No liability.** A tenant's guest who falls on your stairs is not a FAIR Plan claim. You need liability from another policy. ### Fair Rental Value (FAIR Plan Coverage D) The rent you lose when a covered loss makes the part of the property you rent out, hold for rental or live in unfit for normal use, less expenses that stop while it's unfit. The FAIR Plan pays it for the shortest time needed to repair or replace that part of the property. ## Which FAIR Plan policy does a rental or condo need? [#which-fair-plan-policy-does-a-rental-or-condo-need] It depends on who lives there and for how long. The plan's dwelling page lists five occupancies: * **Owner-occupied:** a one to four unit dwelling where the owner lives in one or more units * **Seasonal rental:** a dwelling rented in whole or in part for less than one year * **Rental:** a one to four unit dwelling rented to a tenant for at least one year * **Renters:** personal property of a tenant in an apartment or house * **Condominium unit owners:** personal property and improvements of a condo unit owner Short-term and vacation rentals fall under "seasonal," the occupancy for anything rented for less than a year. The application asks directly whether any part of the dwelling is rented for less than a year. Five or more units, or a building owned by a business, goes on the commercial program instead. Our guide to the [FAIR Plan commercial policy](https://www.menloinsurance.com/library/guides/california-fair-plan-commercial) covers apartment buildings and HOA master policies. The table below turns the policy form into a checklist for each type of owner. The FAIR Plan column comes from form CFP 00 01 (05/2026) and the plan's application checklist. The last column lists what the FAIR Plan never provides. | Your situation | FAIR Plan occupancy | Coverages to ask for on the FAIR Plan policy | Needed from another policy | | -------------------------------------------------------- | ----------------------------- | ---------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------- | | House or duplex leased for 12 months | Rental (tenant) | Dwelling, Fair Rental Value limit, Extended Coverages and Vandalism, Dwelling Replacement Cost | Landlord liability, theft, water damage | | You live in one unit of a two to four unit building | Owner-occupied | Dwelling, your Personal Property, Fair Rental Value (it pays for rented units and your own) | Liability, theft, water damage, living expenses beyond Fair Rental Value | | Vacation or short-term rental | Seasonal | Dwelling, Personal Property if furnished, Fair Rental Value | Liability, theft. Ask how furnishings used for the rental business are treated | | Condo unit you own and live in or rent out | Condominium unit owner | Personal Property, Improvements, Alterations and Additions limit, Fair Rental Value | Liability, loss assessment, water damage. The building is on the HOA master policy | | Tenant in a house or apartment | Renters | Personal Property | Liability, theft | | Guest house rented to someone other than the main tenant | Separate dwelling application | Its own Dwelling limit | Same as a rental | Sources for the table: occupancies, coverages and exclusions, separate guest house application. ## How does Fair Rental Value work on a FAIR Plan policy? [#how-does-fair-rental-value-work-on-a-fair-plan-policy] It pays the rent you lose while a covered loss keeps the rented part of the property unfit for use. It pays at most 1/12 of the Fair Rental Value limit for each month, based on a 30-day month, and never more than that part's monthly rental value. From that it deducts expenses that stop while the unit is out of use. It covers only the shortest time needed to repair, and it continues after the policy expires if the repair is still underway. There are two layers of limit: 1. **Built in.** You may use up to 10 percent of the Coverage A dwelling limit for lost rent. Whatever you use comes out of the dwelling limit for the same loss. 2. **Purchased.** If Fair Rental Value is checked on your declarations, the policy pays up to the scheduled limit, in addition to the built-in 10 percent. The plan's application checklist (revised January 2021) says the purchased limit can be up to 50 percent of the dwelling limit, or 50 percent of the improvements limit for a condo unit owner. The 1/12 rule decides how much a long rebuild will pay. Say a house rents for $4,000 a month and you buy a $24,000 Fair Rental Value limit. That pays no more than $2,000 a month, so half the rent is lost for every month of a rebuild. To get the full $4,000 each month for a whole year, the limit would need to be $48,000. The same arithmetic works for any rent: multiply the monthly rent by 12, and set the limit there if you want a full year covered. A few other rules apply. If you have personal property coverage, Fair Rental Value is based on a furnished equivalent. Without it, the basis is unfurnished. If a civil authority blocks access because of a covered loss next door, the policy pays up to two weeks. Lost rent from a cancelled lease is not covered. Fair Rental Value is the only [loss of use](https://www.menloinsurance.com/library/glossary/loss-of-use) coverage on the form. There is no separate additional living expense coverage, which is why the [difference in conditions guide](https://www.menloinsurance.com/library/guides/difference-in-conditions-insurance) warns about how the DIC's own loss of use is triggered. ## What does the FAIR Plan dwelling policy cover for landlords and condo owners? [#what-does-the-fair-plan-dwelling-policy-cover-for-landlords-and-condo-owners] The base perils are fire or lightning, internal explosion, and smoke. The policy defines smoke to include windborne soot, ash and char from outside fires. It excludes smoke from fireplaces, fire pits, barbecues and other flames used on purpose. Windstorm or hail, explosion, riot, aircraft, vehicles and volcanic eruption apply only if Extended Coverages is checked. Vandalism applies only if Vandalism or Malicious Mischief is checked. The checklist says vandalism is available only with Extended Coverage. For a landlord, the property parts work like this: * **Coverage A, Dwelling:** the building, attached structures, and building and outdoor equipment used to service it. * **Coverage B, Other Structures:** detached garages, sheds and fences. The policy excludes other structures rented to anyone who isn't a tenant of the dwelling, unless the structure is used only as a private garage, and structures used for business or farming. A rented guest house needs its own application. * **Coverage C, Personal Property:** property usual to a dwelling, owned or used by you or family members living with you, while it's at the insured address. Business personal property, meaning inventory and equipment used in your business, is excluded. If you furnish a short-term rental, ask your broker how the plan treats those furnishings before you rely on Coverage C. * **Improvements, Alterations and Additions:** a condo unit owner or tenant may use up to 10 percent of Coverage C for improvements made at their own expense to the part of the property only they use. A separate, higher limit can be scheduled. ## How are FAIR Plan rental losses settled? [#how-are-fair-plan-rental-losses-settled] Unless you add replacement cost, the base form pays [actual cash value](https://www.menloinsurance.com/library/glossary/actual-cash-value). On a total loss, that is the building's value before the loss measured by fair market value, up to the limit. On a partial loss, it is the repair cost less depreciation. For an older rental, the gap between fair market value and the cost to rebuild can be large. The fixes are endorsements, and each needs a checkmark on the declarations: * **Dwelling Replacement Cost.** Pays the cost to rebuild without depreciation, if the dwelling limit is at least 80 percent of the full cost to rebuild at the time of loss. The checklist says it's automatically included for dwellings 25 years old or less unless declined. Older dwellings need a roof updated within the past 25 years, and mobile or manufactured homes are not eligible. * **Extended Dwelling Coverage.** Adds 25 percent above the dwelling limit, priced as if the limit were 25 percent higher. * **Inflation Guard.** Raises the dwelling and ordinance or law limits at renewal using construction cost factors. The policy still says it's your job to pick an adequate limit. * **Ordinance or Law.** Code upgrades are excluded unless you buy this coverage. The checklist caps it at 10 percent of the dwelling limit. Our [ordinance or law guide](https://www.menloinsurance.com/library/guides/ordinance-or-law-coverage) explains why older rentals need it. If the combined limits exceed $1.5 million, the application needs current exterior photos and a rebuild estimate from a licensed contractor or appraiser. The dwelling limit must be at least that estimate. The most one policy can carry is $3 million at one location. The Plan of Operation counts adjacent houses on separate parcels as separate locations, even if one landlord owns them all. ## What does the FAIR Plan dwelling policy leave out for rentals? [#what-does-the-fair-plan-dwelling-policy-leave-out-for-rentals] Liability, theft, water damage and long vacancies are the big gaps. **Liability.** The dwelling form insures property only. The Department of Insurance describes the FAIR Plan as a fire policy without liability or burglary coverage. A landlord can be sued over injuries on the property, so this is the gap to close first. **Theft and tenant damage.** Even when vandalism is added, it excludes theft and burglary (except burglars' damage to the building) and alterations to rental property made without the owner's permission. **Water, flood and earthquake.** Flood, surface water, sewer backup and groundwater are excluded, as is earthquake. The plan points owners to difference in conditions, flood or earthquake policies to supplement it. **Vacancy.** Vandalism is not covered if the dwelling was vacant or unoccupied for more than 30 straight days before the loss. The policy calls a dwelling unoccupied when no one is lawfully living in it. A building vacant or unoccupied for more than a year, unless because of construction, isn't eligible at all. If a rental sits empty between tenants, tell your broker, and look at [vacant property insurance](https://www.menloinsurance.com/vacant-property-insurance) if the gap will be long. ## What should landlords and condo owners buy with it? [#what-should-landlords-and-condo-owners-buy-with-it] A companion policy that adds liability, theft and water damage, with limits and dates matched to the FAIR Plan policy. The FAIR Plan's DIC page says difference in conditions policies supply water damage, theft and liability, and that the plan doesn't sell them. The Department of Insurance keeps a list of insurers that do. DIC programs differ in the occupancies they accept, so tell the broker whether the property is owner-occupied, leased, seasonal or a condo unit. Menlo quotes the [DIC wrap](https://www.menloinsurance.com/dic-insurance-california) for homes and condo units with fire coverage in force. For a rental, compare the FAIR Plan plus DIC total against a single [landlord policy](https://www.menloinsurance.com/landlord-insurance) or a [dwelling fire policy](https://www.menloinsurance.com/dwelling-fire-insurance) from a non-standard market. A DP3 form with premises liability can sometimes cover the rental on one policy. Condo owners should also have their [condo unit policy](https://www.menloinsurance.com/condominium-insurance) or DIC checked for loss assessment, since the HOA's master policy may itself be a FAIR Plan commercial policy with the gaps described in our commercial guide. ## How do I get a FAIR Plan policy for a rental? [#how-do-i-get-a-fair-plan-policy-for-a-rental] Through a licensed broker registered with the FAIR Plan. Plan staff can't advise on coverages or limits, and the plan doesn't estimate rebuilding cost. Each dwelling needs its own application. A broker may not charge a fee for placing coverage only with the FAIR Plan. Menlo Insurance Services is a licensed California broker (license 6020106) and a registered California FAIR Plan broker. We check the regular and surplus lines markets for the rental first, place the FAIR Plan dwelling policy if they decline, and quote the companion coverage at the same time so the dates line up. Start with a [dwelling fire quote](https://www.menloinsurance.com/dwelling-fire-insurance) and include the occupancy, the monthly rent and the year the roof was replaced. The same hardening discounts apply to rentals as to homes. A dwelling fire policyholder who earns all 12 may see up to 16.4 percent off the wildfire portion of the premium. ## Frequently Asked Questions ### Does the California FAIR Plan cover Airbnb or short-term rentals? The plan writes dwellings rented in whole or in part for less than one year as seasonal rentals, and its application asks whether any part of the dwelling is rented for less than a year. Declare the short-term use. The policy has no liability coverage for guests, and business personal property is excluded, so ask how furnishings used for the rental are treated. ### How much Fair Rental Value does the FAIR Plan pay? Up to 10 percent of the dwelling limit is built in and reduces that limit. You can also buy a separate limit. Either way, each month pays no more than 1/12 of the Fair Rental Value coverage and no more than the actual monthly rental value, less expenses that stop. ### Does the FAIR Plan cover my tenant's belongings? No. A landlord's policy covers personal property owned or used by the named insured and resident family. A tenant can buy their own FAIR Plan renters policy for personal property, or a regular [renters policy](https://www.menloinsurance.com/renters-insurance), which usually includes liability. ### What is extended dwelling coverage on the California FAIR Plan? An optional coverage that raises the dwelling limit by 25 percent for a premium equal to what a 25 percent higher limit would cost, according to the plan's application checklist. It helps when rebuilding costs more than you expected. ### Can one FAIR Plan policy cover several rental houses? No. Each dwelling needs a separate application, and adjacent houses on separate parcels are separate locations, each with its own $3 million maximum. *This guide is for educational purposes. It summarizes the California FAIR Plan dwelling policy CFP 00 01 (05/2026), the plan's application checklist and Plan of Operation, and public California Department of Insurance guidance, as of September 2026. Your policy's terms, conditions and endorsements control. Menlo Insurance Services is a licensed California broker and earns a commission on policies it places.* ## References . [California FAIR Plan. Dwelling (accessed 2026-09-24)]() . [California FAIR Plan. Dwelling Property Policy, CFP 00 01 (05/2026): Coverages A to D, Other Coverages, Perils Insured Against, General Exclusions, Conditions 3 and 6 (accessed 2026-09-24)]() . [California FAIR Plan Association. Plan of Operation, Ed. 9/3/25: definition of Location, ineligible property, maximum policy limits (accessed 2026-09-24)]() . [California FAIR Plan. Dwelling Application Checklist and application (rev. 01-2021) (accessed 2026-09-24)]() . [California Department of Insurance. Residential Insurance: Homeowners and Renters Guide (accessed 2026-09-24)]() . [California FAIR Plan. Difference in Conditions (DIC) (accessed 2026-09-24)]() . [California Department of Insurance. List of Insurers that Sell Difference in Conditions (DIC) Policies (accessed 2026-09-24)]() . [California FAIR Plan. How to Apply (accessed 2026-09-24)]() . [California FAIR Plan. Wildfire Hardening Discounts for Dwelling Fire and Commercial Policies (applicable as of November 15, 2025; accessed 2026-09-24)]() # California FAIR Plan: What It Covers, What It Costs, and How to Leave It (https://www.menloinsurance.com/library/guides/california-fair-plan) What the California FAIR Plan covers and excludes, its dwelling and commercial limits, how you apply through a broker, what drives the premium, the approved 2026 rate change, and the routes back to a regular insurer. Markdown version: https://www.menloinsurance.com/library/guides/california-fair-plan.md The California FAIR Plan is the state's property insurer of last resort. It is an association of every insurer licensed to write property insurance in California, and it sells basic fire insurance to owners who cannot find coverage in the regular market. A FAIR Plan dwelling policy covers fire, lightning, internal explosion, and smoke. It is not a full homeowners policy, so most buyers pair it with a difference in conditions (DIC) policy to add back liability, theft, and water damage. If a wildfire nonrenewal just pushed you toward it, you are in a large group, and there are defined routes back out. The plan has grown from a backstop into a mainstream insurer within a few years. As of June 2026 it had 696,562 policies in force and $768 billion of insured exposure, up 157 percent and 250 percent since September 2022. This guide explains what the policy pays for, what it leaves out, how you get one, what drives the premium, and how to get back to a regular insurer. If you have not yet been placed on the plan, start by [requesting a FAIR Plan quote](https://www.menloinsurance.com/california-fair-plan-insurance) so the regular market is checked first. ## Key takeaways * **Named perils only.** The dwelling policy pays for fire, lightning, internal explosion, and smoke. It does not include liability, theft, or water damage. * **You need a companion policy.** A DIC policy wraps around the FAIR Plan and brings the package close to a standard homeowners policy. The FAIR Plan does not sell DIC itself. * **Limits:** $3 million at one location for residential property; $20 million per structure up to $100 million per location for commercial property, with the expanded commercial limits set to sunset in 2028. * **The price is rising.** The Department of Insurance approved a 29.1 percent dwelling fire rate change in April 2026 against a 35.6 percent request; the plan says it applies from October 15, 2026, and the wildfire portion of the premium drives most of it. * **It is designed to be temporary.** Hardening discounts, the clearinghouse, and the Sustainable Insurance Strategy all exist to move you back to a regular carrier. ### California FAIR Plan The California FAIR Plan Association (Fair Access to Insurance Requirements) is a pool of all insurers licensed to write property insurance in California. It was established by statute in August 1968 and sells basic property insurance when no other option is reasonably available. Member insurers share its results in proportion to their market share. ## What is the California FAIR Plan? [#what-is-the-california-fair-plan] The FAIR Plan is not a government program and not an ordinary private insurer. It is an association created by the Legislature after the riots and brush fires of the 1960s left many properties uninsurable. Every insurer licensed to write property insurance in California must be a member, and each member shares the plan's profits and losses in proportion to its share of the state market. The plan is not a state agency, is not funded by taxpayers, and is not rated by A.M. Best. The statute gives the plan four purposes: to stabilize the property insurance market, to make basic property insurance available, to keep as much business as possible in the normal market of admitted insurers and surplus line brokers, and to spread the cost of hard-to-place property fairly among insurers. The plan itself describes its goal as attrition, meaning it wants policyholders to leave for the regular market as soon as they can. By statute, "basic property insurance" means the perils insured under the standard fire policy and extended coverage endorsement, plus vandalism and malicious mischief, plus anything the Commissioner approves. Manufactured homes and mobilehomes are covered on the same terms as other homes, a change made by SB 525 in 2025. ## What does the California FAIR Plan cover? [#what-does-the-california-fair-plan-cover] The FAIR Plan dwelling fire policy is a named [peril](https://www.menloinsurance.com/library/glossary/peril) policy. It pays only for damage caused by the specific causes of loss listed in the policy: fire and lightning, internal explosion, and smoke. Vandalism and malicious mischief can be added for an extra premium. The policy is available for owner-occupied one-to-four-unit homes, seasonal rentals, one-to-four-unit rentals leased for at least a year, renters' personal property, and condominium unit owners' personal property and improvements. Landlords and condo owners should read our guide to the [FAIR Plan for rental property and condos](https://www.menloinsurance.com/library/guides/california-fair-plan-rental-property), which walks through Fair Rental Value and the options a rental needs. The policy is narrower than a standard homeowners policy by statute, and the Assembly Insurance Committee's own background paper notes that it still satisfies mortgage lenders, which is often the immediate reason people buy it. The Department of Insurance describes it as a standard fire policy on the structure and contents that does not include liability or burglary coverage. Coverage limits have climbed as the plan absorbed more of the market: | Program | Current maximum limit | How it got here | | ----------- | -------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | | Residential | **$3 million** at one location | Raised by order of the Insurance Commissioner | | Commercial | **$20 million per structure, up to $100 million per location** | $8.4 million per location in 2021, $20 million per location in 2023, then per structure with the $100 million cap finalized in July 2025; expanded limits sunset in 2028 | The commercial expansion was aimed at homeowners associations, condominium developments, and larger businesses that could not find full limits anywhere else. Our guide to the [FAIR Plan commercial policy](https://www.menloinsurance.com/library/guides/california-fair-plan-commercial) covers who qualifies, the high value tier and what the commercial form leaves out, and our guide to [commercial property insurance](https://www.menloinsurance.com/library/guides/commercial-property-insurance-explained) shows how a standard policy compares. ## What does the FAIR Plan not cover? [#what-does-the-fair-plan-not-cover] The gap between a FAIR Plan policy and a homeowners policy is wide. The FAIR Plan does not cover personal liability, theft, or water damage, and the plan's own DIC page lists exactly those three as the coverages a DIC policy supplies. A burst pipe, a guest injured on your steps, or a break-in are not paid by the FAIR Plan alone. In December 2025 the California Court of Appeal ruled that the FAIR Plan is not required to offer expanded liability coverage, so closing the gap remains the policyholder's job. The standard fix is a difference in conditions policy, known in the trade as the wrap. It is a second policy from a private insurer that adds back liability, theft, and water damage, and often [loss of use](https://www.menloinsurance.com/library/glossary/loss-of-use). The FAIR Plan does not sell DIC policies; the Department of Insurance keeps a list of insurers that do. Limits, deductibles, and effective dates on the two policies have to line up, so read our full guide to [DIC insurance](https://www.menloinsurance.com/library/guides/difference-in-conditions-insurance) before you bind, and get a [DIC quote](https://www.menloinsurance.com/dic-insurance-california) at the same time as the FAIR Plan application, not after. ## Who needs the FAIR Plan? [#who-needs-the-fair-plan] You do not shop for the FAIR Plan. You land there after a search of the regular market comes up empty. The plan's own application page says that if coverage is available in the traditional marketplace, the FAIR Plan is not right for you, and the Department of Insurance's first recommendation is to shop the market. The plan is meant as a temporary solution while a traditional carrier is unavailable. In practice the people who need it fall into a few groups: owners nonrenewed after a wildfire risk review, buyers in escrow in a high-fire ZIP code who cannot get a standard quote before closing, owners of older or unusual homes that admitted carriers decline, condominium associations that cannot find full limits, and landlords with rentals in brush areas. The Department of Insurance calls it the last option and suggests surplus lines only if nothing else is available. ## How do I apply for the California FAIR Plan? [#how-do-i-apply-for-the-california-fair-plan] You apply through a licensed insurance broker, not directly. The Department of Insurance says applications go through an agent or broker registered to sell FAIR Plan coverage, or through the plan's broker referral line. The plan's site adds that not every broker is registered with it, and that a broker may be able to offer other options that are more complete than the FAIR Plan. ### Steps ### Your broker shops the regular market first The broker performs a diligent search among admitted carriers. The FAIR Plan exists only for property the traditional market will not write. ### The broker submits the FAIR Plan application FAIR Plan staff cannot advise you on coverages or limits, and the plan does not estimate rebuilding cost, so your broker sets the dwelling limit with you. ### Add the DIC policy Because the FAIR Plan does not sell DIC, the wrap comes from one of the insurers on the Department of Insurance's DIC list, arranged by the same broker so limits and dates match. ### Pay and set up autopay Full payment has no fee. Installment plans exist, and the plan now accepts automatic payments. Our step-by-step guide to [getting a California FAIR Plan quote](https://www.menloinsurance.com/library/guides/california-fair-plan-quote) covers what the broker needs, the inspection and three-business-day decision, and what makes a property ineligible. There is no extra cost for using a broker on a FAIR Plan policy. The Department of Insurance guide states that a broker may not charge a broker fee for placing FAIR Plan coverage on its own. Menlo Insurance Services is a licensed California broker and, since September 2026, a registered California FAIR Plan broker. We shop the admitted and surplus lines market for your home first, place the FAIR Plan policy if nothing else is available, and quote the [DIC wrap](https://www.menloinsurance.com/dic-insurance-california) or a [dwelling fire policy](https://www.menloinsurance.com/dwelling-fire-insurance) at the same time. ## How much does the California FAIR Plan cost? [#how-much-does-the-california-fair-plan-cost] FAIR Plan rates are regulated. Insurance Code section 10100.2 says they may not be excessive, inadequate, or unfairly discriminatory, and must be actuarially sound so that premiums cover expected losses, expenses, and taxes. Because the plan inherited the homes the regular market nonrenewed, its book is concentrated in the areas with the highest wildfire risk, and the wildfire portion of the premium is the largest cost driver. Your [premium](https://www.menloinsurance.com/library/glossary/insurance-premium) reflects the ZIP code's wildfire territory, the dwelling limit, construction, and what has been done to harden the home. The trend is up. The Department of Insurance's 2026 list of approved rate filings shows the FAIR Plan's dwelling fire rate filing closed as approved on April 6, 2026, at 29.1 percent against a 35.6 percent request. The plan told reporters the new rate takes effect October 15, 2026, that not every customer will see that amount, and that some will see a decrease. Our separate guide covers the [2026 FAIR Plan rate increase](https://www.menloinsurance.com/library/guides/california-fair-plan-rate-increase-2026), what drives cost by ZIP code, and what you can do about it. Two other cost facts matter. First, the FAIR Plan price is only part of your total, because the DIC policy carries its own premium; compare the combined figure against any standard quote you can still get. Second, member insurers, not policyholders, absorbed the first half of the $1 billion assessment approved in February 2025 after the Los Angeles fires; the other half can be recovered through a temporary supplemental fee on policies only with a Prop 103 rate approval. Our guide to the [FAIR Plan temporary supplemental fee](https://www.menloinsurance.com/library/guides/fair-plan-temporary-supplemental-fee) lists which insurers were approved to charge it. ## What discounts does the FAIR Plan offer? [#what-discounts-does-the-fair-plan-offer] The plan applies up to 12 wildfire hardening discounts to the wildfire portion of the premium for policies effective on or after November 15, 2025. Five cover the immediate surroundings (cleared decks, a five-foot noncombustible zone including fences and gates, sheds more than 30 feet away, defensible space compliance), five cover the structure (Class-A roof, enclosed eaves, ember-resistant vents, multi-paned windows or shutters, six inches of noncombustible material at the base of exterior walls), one is a completion bonus for meeting all ten, and one is a community discount for a Firewise USA site or a Fire Risk Reduction Community. A dwelling fire policyholder who earns all 12 may see up to 16.4 percent off the wildfire portion; a commercial policyholder up to 13.8 percent. These are the same actions the Department of Insurance's Safer from Wildfires framework lists, and the state's regulation requires every insurer, not just the FAIR Plan, to give discounts for them. Keep receipts and photos. The same evidence that earns a FAIR Plan discount is what a regular carrier will ask for when you try to leave. ## How do I pay, and what if I miss a payment? [#how-do-i-pay-and-what-if-i-miss-a-payment] Paying in full has no installment fee. The plan also offers a three-payment plan (40, 30, and 30 percent) and an eleven-payment plan, each with a $4.50 fee per installment on dwelling fire and commercial policies. ACH payments are free; card payments carry a 3.5 percent fee; a returned payment costs $25. AB 290, signed in October 2025, requires the plan to run an automatic payment system by April 1, 2026, bars it from cancelling or nonrenewing you for declining autopay, and gives installment payers the standard grace window before cancellation. ## How do I get off the California FAIR Plan? [#how-do-i-get-off-the-california-fair-plan] The exits are written into statute and regulation. **The clearinghouse.** Insurance Code section 10095 requires a residential clearinghouse through which regular insurers can review FAIR Plan policies and make offers, and a commercial clearinghouse that began July 1, 2024. Offers reach you only through your broker of record, and nonadmitted insurers may participate only after admitted insurers have had the first option. The Assembly committee's background paper describes that first window as 30 days. No transfer is forced. **The Sustainable Insurance Strategy.** Under the Department of Insurance's strategy announced in September 2023, insurers that use catastrophe models and net reinsurance costs in their rates must commit to writing in distressed areas at no less than 85 percent of their statewide market share, and homes that comply with Safer from Wildfires get priority in moving back to the admitted market. The Department calls the FAIR Plan the last option, and Insurance Code section 678 requires every residential nonrenewal notice to describe the FAIR Plan as the insurer of last resort and to explain DIC policies. **Shop at every renewal.** Carrier appetite in high-fire ZIP codes changes year to year, so do not let a FAIR Plan policy auto-renew without a market check. If the admitted market says no again, a surplus lines carrier may write the whole home on one policy. Our guides to [surplus lines insurance](https://www.menloinsurance.com/library/guides/surplus-lines-insurance), [admitted vs non-admitted carriers](https://www.menloinsurance.com/library/guides/admitted-vs-non-admitted-carriers) and [Delos Insurance](https://www.menloinsurance.com/library/guides/delos-insurance-california) explain what that means, and our guide to high-risk homeowners insurance in California walks through every option after a nonrenewal. Start with a [quote for a high fire risk home](https://www.menloinsurance.com/home-insurance-high-fire-risk-california). ## Frequently Asked Questions ### Is the California FAIR Plan a government program? No. It is an association of every insurer licensed to write property insurance in California, created by the Legislature in 1968. It is funded by member insurers and policyholder premiums, not taxpayers. The Insurance Commissioner regulates it and approves its rates and any assessment on members, but the state does not pay its claims. ### What is a difference in conditions (DIC) policy? A DIC policy is a companion policy sold by private insurers to wrap around a FAIR Plan policy. It supplies the coverages the FAIR Plan excludes, in particular liability, theft, and water damage, so the combination approximates a standard homeowners policy. The FAIR Plan does not sell it; the Department of Insurance publishes a list of insurers that do. ### Does the FAIR Plan satisfy my mortgage lender? A FAIR Plan policy meets lenders' fire insurance requirements, which is why it keeps home sales and refinances moving in areas the regular market has left. Your lender may require a specific dwelling limit, so confirm the limit matches the loan documents. ### Can Menlo place my FAIR Plan policy? Yes. Menlo Insurance Services is a licensed California broker and a registered California FAIR Plan broker. We shop the admitted and surplus lines market for your home first, place the FAIR Plan policy if nothing else is available, and quote the DIC wrap or a dwelling fire policy alongside it. *This guide is for educational purposes and summarizes California FAIR Plan provisions and public California Department of Insurance guidance. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## The Bottom Line [#the-bottom-line] The California FAIR Plan sells basic fire coverage when no regular carrier will write your property. It is not full homeowners insurance, so pair it with a difference in conditions policy to add back liability, theft, and water damage. Treat the placement as temporary: harden the home and keep the receipts, watch the clearinghouse for offers through your broker, and have the market shopped at every renewal instead of letting the policy auto-renew. ## References . [California FAIR Plan. Key Statistics & Data]() . [California FAIR Plan. About the FAIR Plan]() . [California Legislative Information. Insurance Code section 10090]() . [California Legislative Information. Insurance Code section 10091]() . [California FAIR Plan. Dwelling policies]() . [Assembly Insurance Committee. Oversight Hearing: The California FAIR Plan (background paper, January 28, 2026)]() . [California Department of Insurance. Residential Insurance: Homeowners and Renters Guide]() . [California FAIR Plan. Difference in Conditions (DIC)]() . [California FAIR Plan. How to Apply]() . [California Department of Insurance. California FAIR Plan]() . [California Department of Insurance. Top 10 Tips for Finding Residential Insurance]() . [California FAIR Plan. Payment Plan Options]() . [California Legislative Information. Insurance Code section 10100.2]() . [California Department of Insurance. Rate Filing Approval and Closed List, year to date August 31, 2026 (file 25-2174, California FAIR Plan, Dwelling Fire)]() . [Orange County Register (via Consumer Watchdog). FAIR Plan rates going up 29.1% in late 2026 (May 20, 2026)]() . [California Department of Insurance. Commissioner Lara approves FAIR Plan request for $1 billion assessment (February 11, 2025)]() . [California FAIR Plan. Wildfire Hardening Discounts for Dwelling Fire and Commercial Policies (effective November 15, 2025)]() . [California Department of Insurance. Safer from Wildfires]() . [California Legislative Information. Assembly Bill 290 (2025), Chapter 475]() . [California Legislative Information. Insurance Code section 10095]() . [California Department of Insurance. Sustainable Insurance Strategy]() . [California Legislative Information. Insurance Code section 678]() . [California FAIR Plan Association. Plan of Operation, Ed. 9/3/25: maximum policy limits (accessed 2026-09-24)]() # California Workers' Comp Class Codes: How WCIRB Classifications Work (2026) (https://www.menloinsurance.com/library/guides/california-workers-comp-class-codes) How California assigns workers' comp class codes through the WCIRB instead of NCCI, the 8810 and 8742 standard exceptions, a table of construction codes with the September 1, 2026 dual wage thresholds, and how to check and appeal your classification. Markdown version: https://www.menloinsurance.com/library/guides/california-workers-comp-class-codes.md A California workers' comp class code is a four-digit number from the Workers' Compensation Insurance Rating Bureau of California (WCIRB). It describes the kind of work your business does, and your insurer uses it to price every $100 of payroll on your [workers' comp policy](https://www.menloinsurance.com/workers-compensation-insurance). The codes come from the WCIRB's own system, not from the National Council on Compensation Insurance (NCCI). The WCIRB's classifications live in the California Uniform Statistical Reporting Plan (USRP), which the Insurance Commissioner adopts as a regulation. So don't assume a code number or wage rule from another state works here. Below we go through how California codes are built and assigned, and which exceptions let you rate office and sales staff separately. There's a table of common construction codes with the hourly wage thresholds that started September 1, 2026, and a section on what to do if your code is wrong. For how the premium itself is built, see our [workers' compensation insurance guide](https://www.menloinsurance.com/library/guides/workers-compensation-insurance-guide), or [request a workers' comp quote](https://www.menloinsurance.com/f/workers-compensation) with your current codes in hand. ## Key takeaways * **One system, set by regulation.** The WCIRB develops the classification system. The USRP is adopted by the Insurance Commissioner as a regulation and updated through yearly filings. * **The business is classified, with exceptions.** Your operation gets a governing class. Standard exception classes such as 8810 Clerical Office Employees and 8742 Salespersons – Outside let qualifying staff be reported separately. * **Construction codes split by wage.** Many trades have a low-wage and a high-wage code. For example, Carpentry is 5403 below $46.00 an hour and 5432 at or above it, from September 1, 2026. * **Rates are advisory.** The Commissioner adopted an average advisory pure premium rate of $1.65 per $100 of payroll for September 1, 2026. Insurers file and charge their own rates. * **You can challenge a code.** Ask the insurer or the WCIRB to reconsider, then appeal to the Insurance Commissioner if the answer is no. ### Workers' comp class code (California) A California workers' compensation class code is a numbered classification in the WCIRB's Standard Classification System, part of the California Workers' Compensation Uniform Statistical Reporting Plan. Each code describes a type of business operation. Insurers report payroll and losses by code and use it to set the rate per $100 of payroll. ## What is a workers' comp class code in California? [#what-is-a-workers-comp-class-code-in-california] It's the WCIRB classification that best fits what your business does. California law requires the Insurance Commissioner to designate a rating organization "to develop a classification system," and requires every workers' comp insurer to report its experience under the approved uniform statistical plan. That organization is the WCIRB. The plan, the California Workers' Compensation Uniform Statistical Reporting Plan—1995, is adopted by regulation at Title 10, section 2318.6 of the California Code of Regulations. The text is not printed in the code itself; the WCIRB publishes it. The plan changes every year. The WCIRB's September 1, 2026 regulatory filing amended the USRP's Standard Classification System, including "the wage and payroll limitations and dual wage thresholds." The Insurance Commissioner approved the changes on May 15, 2026, effective for policies starting on or after September 1, 2026. On paper, an insurer can file its own classification system, as long as it shows its data can still be reported under the WCIRB's plan. In real life, the WCIRB code is what you'll see on your policy, your audit and your experience rating. ## How is your class code assigned? [#how-is-your-class-code-assigned] Your insurer picks it at underwriting, based on what you tell it about your work. After the policy year, the auditor checks it. California looks at the employer's operation first. Each job or location is assigned to its governing classification. For example, when a contractor puts up or takes down its own scaffolding on its own jobs, that work goes to "the employer's governing classification at a particular job or location," not to a separate scaffolding code. The WCIRB builds each classification from California payroll and loss data. The 2026 filing's review sheets list, for each code, the payroll, claim counts and losses behind its rate relativity. Most of the time, three questions settle it: 1. **What does the business do for its customers?** A plumbing contractor is generally classified by its plumbing work, not by its trucks or its office. 2. **Does any employee qualify for a standard exception?** Clerical office staff and outside salespeople may be split out if they meet the exception rules. 3. **For construction, what is each worker's regular hourly wage?** That decides whether the low-wage or high-wage code applies in a dual wage pair. ## What are the standard exception classifications? [#what-are-the-standard-exception-classifications] They're a short list of classes you can report separately from your governing class, under Section III, Rule 4 of the USRP. The ones most employers run into are 8810 Clerical Office Employees, 8871 Clerical Telecommuter Employees and 8742 Salespersons – Outside. Why bother? Office and sales payroll is expected to produce a small fraction of the claim costs that field payroll does. The WCIRB's experience rating table for September 1, 2026 sets expected losses per $100 of payroll at 0.093 for 8810 and 0.132 for 8742. For comparison, it sets 4.051 for 5403 low-wage carpentry and 6.087 for 5552 low-wage roofing. Those are expected loss rates for figuring experience mods, not premium rates. Still, they show you how far apart the classes are. The exceptions are narrow. For construction employers, the 2026 filing spells out when a construction-side employee may be reported as 8742. The employee's non-clerical duties must be confined to visiting job sites for pre-construction estimating or meeting clients. The employee must also have no supervisory duties over construction operations, and must not walk job sites to assess progress, check quality or check safety compliance. So if your estimator also checks on crews, they don't qualify. Staff who edit digital files or create computer animation for a film company can be assigned to 8810 or 8871, "subject to the Standard Exceptions rule." Read the full exception definitions in the USRP before you split anyone's payroll. Audits often turn up someone reported as clerical who also works in the field. Before you call a person clerical, hold their actual duties up against the exception's conditions. Our [workers' comp audit guide](https://www.menloinsurance.com/library/guides/workers-comp-audit-guide) shows how auditors test that split. ## Which class codes do California contractors use? [#which-class-codes-do-california-contractors-use] Most construction trades in California have a dual wage pair: one code for employees below an hourly wage threshold and one for employees at or above it. You only get the high-wage code if the auditor can verify the employee's wage at final audit. For Carpentry, the payroll of an employee "whose regular hourly wage is not shown to equal or exceed" the threshold goes to the low-wage code, 5403. Here are common trades and the thresholds approved for policies starting on or after September 1, 2026. | Trade (WCIRB title) | Low-wage code | High-wage code | Hourly wage threshold from Sep 1, 2026 | Previous threshold | | ------------------------------------------------------------------------ | ------------- | -------------- | -------------------------------------- | ------------------ | | Carpentry (N.O.C.) | 5403 | 5432 | $46.00 | $41.00 | | Steel Framing | 5632 | 5633 | $46.00 | $41.00 | | Wallboard Installation | 5446 | 5447 | $45.00 | $41.00 | | Electrical Wiring – within buildings | 5190 | 5140 | $40.00 | $36.00 | | Plumbing | 5183(1) | 5187(1) | $35.00 | $32.00 | | Heating or Air Conditioning Equipment | 5183(3) | 5187(3) | $35.00 | $32.00 | | Heating or Air Conditioning Ductwork | 5538(2) | 5542(2) | $37.00 | $33.00 | | Sheet Metal Work | 5538(1) | 5542(1) | $37.00 | $33.00 | | Automatic Sprinkler Installation | 5185 | 5186 | $36.00 | $33.00 | | Roofing – all kinds | 5552 | 5553 | $33.00 | $31.00 | | Painting or Wallpaper Installation | 5474(1) | 5482(1) | $36.00 | $32.00 | | Waterproofing | 5474(2) | 5482(2) | $36.00 | $32.00 | | Plastering or Stucco Work | 5484 | 5485 | $42.00 | $38.00 | | Masonry | 5027 | 5028 | $37.00 | $35.00 | | Glaziers – away from shop | 5467 | 5470 | $43.00 | $39.00 | | Concrete or Cement Work – sidewalks, driveways, patios, curbs or gutters | 5201(1) | 5205(1) | $36.00 | $33.00 | | Concrete or Cement Work – floor slabs and slab-type foundations | 5201(2) | 5205(2) | $36.00 | $33.00 | | Excavation | 6218(1) | 6220(1) | $45.00 | $40.00 | | Grading Land | 6218(2) | 6220(2) | $45.00 | $40.00 | Source: WCIRB September 1, 2026 Regulatory Filing, Section A, as approved by the Insurance Commissioner. Titles are shortened; the USRP wording controls. The table shows no rates. The WCIRB publishes class-level advisory pure premium rates separately, and insurers file their own rates. A few related codes appear on many construction policies: * **5606 Contractors – construction or erection – executive level supervisors** applies only when at least two levels of supervision sit between the supervisor and the workers doing construction, or when all construction is subcontracted to licensed contractors. One employee's payroll cannot be divided between 5606 and another class. It does not apply to employees whose job site duties are limited to estimating, outside sales or public relations. * **5610 Contractors – construction or erection – all construction subcontracted** applies on jobs where all construction is subcontracted to licensed subcontractors, including job site cleaning and warranty repairs. * **9015(1) Building Operation – N.O.C.** now applies to minor repairs for others only when the work needs no building permit and stays under the Business and Professions Code's minor-work license exemption limit. That rule changed on September 1, 2026. * **5146(1) Cabinet, Fixture or Trim Installation** and **5107 Door, Door Frame or Pre-Glazed Window Installation** apply only if the employer does no rough carpentry at the same job or location. ## How does your class code affect your premium? [#how-does-your-class-code-affect-your-premium] The code sets the rate, and the rate gets multiplied by your payroll. The Department of Insurance says an employer's premium can "fluctuate greatly" with the classification of the business, the mix of employees and operations, and actual claims experience. For September 1, 2026, the Insurance Commissioner adopted an average advisory pure premium rate of $1.65 per $100 of payroll, a 6.6% increase from the 2025 rate. The rate is advisory: "insurance companies are not bound by it and are free to set their own rates." The advisory rate only covers expected claims and the cost of handling them. Insurer expenses and profit aren't in it. The Department's actuaries reported an industry average filed manual rate of $2.48 per $100 of payroll as of January 1, 2026. They put the 2025 average charged rate, after schedule credits and other rating plan adjustments, at $1.56. A clerical code and a roofing code land very far apart around those averages. That's why one wrong code can move your bill more than any discount will. Codes also feed your experience mod. From September 1, 2026, a California employer qualifies for experience rating when its expected losses, calculated from payroll by class, reach $11,700, up from $10,800. Our [experience mod guide](https://www.menloinsurance.com/library/guides/experience-mod-guide) explains how the [experience modification rate](https://www.menloinsurance.com/library/glossary/experience-modification-rate) is built from those class-by-class expected losses. ## What happens if you are misclassified? [#what-happens-if-you-are-misclassified] Usually the audit catches it, and your final bill gets recalculated with the auditor's code. A dual wage split is the most common example. If your payroll records do not prove a carpenter's regular hourly wage met the threshold, the auditor moves that payroll to the low-wage code, 5403. Clerical or outside sales payroll that does not meet the exception rules moves to the governing class. It can go the other way too. If you've been put in a higher-rated code than your work calls for, you may be able to fix that going forward. When an insurer changes your classification in a way that raises your premium, it must notify you in writing of the change and the reasons, within 30 days after adopting it. The notice must also tell you your right to request reconsideration and appeal. ## How do you find or appeal your class code? [#how-do-you-find-or-appeal-your-class-code] **Find it.** Your code is on your policy's information page and on each audit statement. Licensed contractors must also list up to the top three classification codes on their policy, by highest estimated payroll, with the Contractors State License Board. The board notes that it does not verify those codes and that a shared policy may show codes that do not match a particular license. The WCIRB posts the USRP and its regulatory filings on its website, wcirb.com. **Challenge it.** Use the two-step process in the Insurance Code: ### Steps ### Ask for reconsideration Write to the insurer, or to the WCIRB if the WCIRB made the classification decision. Explain the operations and attach evidence: job descriptions, payroll by employee, contracts and photos. Anyone aggrieved by a rating organization's decision may request reconsideration. Insurers and rating organizations must also offer a way to review how their rating system was applied to you. ### Appeal to the Insurance Commissioner If the WCIRB rejects the request, or does not act on it within 30 days, you may appeal to the Commissioner by filing a written complaint and request for a hearing. For an appeal of an insurer's or rating organization's action on a review request, the deadline is 30 days after written notice of that action. If you can, fix the code before the next audit. Getting the right code on a new policy is much easier than chasing a refund after a year on the wrong one. ## Frequently Asked Questions ### Does California use NCCI class codes? No. California uses the WCIRB's Standard Classification System in the California Uniform Statistical Reporting Plan. Some California code numbers look like codes used in other states, but do not assume the definitions or rules match. California's dual wage splits, for example, are set in the California plan. Check every code against it. ### What are the workers comp class code rates in California? The WCIRB proposes an advisory pure premium rate for each class, and the Insurance Commissioner adopts them. The adopted average for September 1, 2026 is $1.65 per $100 of payroll. Insurers are free to set their own rates, and each insurer's filed rate includes expenses and profit on top of the pure premium. Your rate depends on the code, the insurer, your experience mod and any schedule credits. ### What is the class code for office employees in California? 8810, Clerical Office Employees, and 8871, Clerical Telecommuter Employees, for qualifying clerical staff who telecommute. Both are standard exception classes, so an employee counts only if they meet the exception rules in the USRP. Office staff who also do field or shop work may not qualify, so read the rule before reporting them as clerical. ### Can one employee's payroll be split between two class codes? Sometimes, but only under the USRP's rules and with payroll records that support the split. The dual wage construction codes already split payroll by each employee's regular hourly wage, verified at audit. Splitting one person's hours across two unrelated trades needs records that the auditor accepts. *This guide is for educational purposes. It summarizes the WCIRB's September 1, 2026 regulatory filing as approved by the Insurance Commissioner, California statutes and Department of Insurance publications. The USRP and your policy control your classification. Menlo Insurance Services is a licensed California insurance broker (license 6020106) and may earn a commission on policies it places. Talk to a licensed broker about your actual exposures.* ## The Bottom Line [#the-bottom-line] In California, workers' comp class codes come from the WCIRB, not NCCI. Your code follows the work your business actually does. Job titles don't decide it. Office and outside sales staff can be split out only under strict exception rules. Most construction trades have a low-wage and a high-wage code, and the thresholds went up on September 1, 2026. Look at your codes before renewal. Keep payroll records that prove your wage splits. If a code is wrong, ask for reconsideration, and appeal if you have to. To have the codes and wage splits reviewed before your next policy, [request a California workers' comp quote](https://www.menloinsurance.com/f/workers-compensation). ## References . [California Legislative Information. Insurance Code section 11734]() (accessed 2026-09-23) . [Legal Information Institute (Cornell). Cal. Code Regs. Tit. 10, § 2318.6 – California Workers' Compensation Uniform Statistical Reporting Plan – 1995]() (accessed 2026-09-23) . [WCIRB (filed with the California Department of Insurance). California Workers' Compensation Insurance Regulatory Filing Effective September 1, 2026, CDI File REG-2026-00001 (February 26, 2026)]() (accessed 2026-09-23) . [California Department of Insurance. September 1, 2026 Workers' Compensation Insurance Classification and Rating Rules: Proposed Decision and Decision and Order, REG-2026-00001 (May 15, 2026)]() (accessed 2026-09-23) . [California Department of Insurance. Proposed Decision: September 1, 2026 Workers' Compensation Claims Cost Benchmark and Advisory Pure Premium Rates, REG-2026-00002]() (accessed 2026-09-23) . [California Department of Insurance. Commissioner Lara takes action to maintain stable workers' compensation market amid rising costs (July 10, 2026)]() (accessed 2026-09-23) . [California Legislative Information. Insurance Code section 11753.1]() (accessed 2026-09-23) . [Contractors State License Board. Workers' Compensation Requirements]() (accessed 2026-09-23) . [California Legislative Information. Insurance Code section 11737]() (accessed 2026-09-23) # Cannabis Insurance in California by License Type: What Growers, Makers, Distributors, Retailers and Labs Need (https://www.menloinsurance.com/library/guides/cannabis-insurance-by-license-type-california) California's cannabis rules set one insurance minimum, $1M per loss and $2M aggregate general liability for distributors, on top of the $5,000 DCC bond every annual license needs. What each license type (cultivation, manufacturing Types 6, 7, N, P and S, distribution, retail, microbusiness, testing) should insure, and what the programs cost, from $500 monoline GL (Blitz) to a $1,200 minimum (Carma). Markdown version: https://www.menloinsurance.com/library/guides/cannabis-insurance-by-license-type-california.md California requires one kind of cannabis insurance by license type: distributors (and microbusinesses that distribute) must carry commercial general liability of at least $1,000,000 per loss and $2,000,000 in the aggregate at all times. Every annual license, except the event organizer license, also needs a $5,000 surety bond per licensed premises, which protects the State, not you. Everything else is up to you, your landlord and your city, and it should follow what your license lets you do: a grower insures crops, a manufacturer insures products liability, a distributor insures goods in transit and vehicles, and every business with employees must carry workers' compensation. This guide goes license type by license type through the risks each one carries and the coverage to ask for, with the program limits and minimum premiums the cannabis markets publish. The $5,000 bond has its own guide: [the DCC bond and the insurance you need](https://www.menloinsurance.com/library/guides/california-cannabis-license-bond-insurance). When you're ready, the [cannabis business insurance application](https://www.menloinsurance.com/cannabis-business-insurance) takes each location on its own and sends it to several cannabis insurers. ## Key takeaways * **One state insurance minimum.** Distributors carry $1M per loss / $2M aggregate general liability at all times. No other DCC license type has an insurance minimum in the regulations. * **Workers' comp is not optional.** California Labor Code section 3700 requires every employer to secure workers' compensation, cannabis or not. * **Products liability follows the product.** Manufacturers, growers and sellers can be sued over what they make or sell. Blitz writes general liability with or without products liability. Carma writes general and products liability. * **Published program floors.** Blitz's cannabis monoline GL starts at $500 plus taxes and fees, with business personal property from $250 per location. Carma's minimum premium is $1,200. * **Program limits.** Blitz writes up to $1M/$2M liability and $5M of insured value per location for operations up to $15M in sales and 35,000 square feet. Carma writes up to $10M of insured value per location. ## What insurance does California require for a cannabis license? [#what-insurance-does-california-require-for-a-cannabis-license] The bond for almost every license, and liability insurance only for distributors. DCC's regulations require distributors to hold commercial general liability of at least $1,000,000 for each loss and $2,000,000 aggregate, at all times, and to show proof of insurance for their transport vehicles when asked. A testing laboratory must show proof of insurance on each vehicle that carries samples. Our [bond guide](https://www.menloinsurance.com/library/guides/california-cannabis-license-bond-insurance) has the full license-by-license table of state bond and insurance rules. Beyond the state, two other parties usually set insurance terms. Your lease may require a liability limit, the landlord as additional insured and property coverage on your improvements. Your city or county permit can add its own requirements. Read both before you shop. ## What insurance does each cannabis license type need? [#what-insurance-does-each-cannabis-license-type-need] The table follows DCC's license categories. "Coverage to ask about" is the insurance that answers the risks that license type creates. It is not a state rule unless the last column says so. | DCC license | What it allows | Main risks | Coverage to ask about | State insurance rule | | -------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------- | | Cultivation: specialty cottage to large, nursery, processor | Growing (outdoor, indoor, mixed-light), propagating, or trimming, drying, curing and packaging | Crop loss, fire and equipment in grow rooms, products claims | Property and business personal property, crop and harvested stock, equipment breakdown, general and products liability | None | | Manufacturing Type 7 (volatile solvent), Type 6 (non-volatile or mechanical), Type N (infusion), Type P (packaging and labeling), Type S (shared-use facility) | Extraction, infusion, packaging and labeling | Fire and explosion (especially extraction), product contamination and injury claims | Products liability, property, stock, equipment breakdown | None | | Distributor Type 11 and transport-only Type 13 | Moving cannabis between licensees, storage, and (Type 11) quality assurance | Goods in transit, vehicles, warehouse stock, liability to others | General liability, cargo or stock throughput, commercial auto | CGL of $1M per loss / $2M aggregate. Vehicle insurance proof on request | | Retailer Type 10 (storefront) and Type 9 (non-storefront delivery) | Selling to customers in a store or by delivery | Customer injuries, theft, inventory, delivery vehicles | General and products liability, property and stock, crime, commercial or hired and non-owned auto | None | | Microbusiness Type 12 | Several activities under one license | The risks of each activity it performs | Coverage for each activity | Distributor CGL applies if it distributes | | Testing laboratory Type 8 | Testing samples | Errors in results, samples in transit | Professional liability (errors and omissions), general liability, auto | Vehicle insurance proof for sample transport, on request | Any license type with employees adds workers' compensation. ## Which insurers write cannabis businesses in California? [#which-insurers-write-cannabis-businesses-in-california] Two cannabis programs are available to Menlo in California, with different sizes and floors. | | Blitz Cannabis Operators | Carma | | --------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------- | | Classes | Retailers, dispensaries, non-storefront delivery, distributors, transporters, manufacturers (non-extraction, non-combustible extraction and combustible extraction), indoor and outdoor cultivators, growers and processors | Cultivation including indoor crops and hemp, manufacturing and packaging, wholesale, dispensaries, laboratory and testing | | Liability | Up to $1M/$2M premises and products. Occurrence or claims-made. Retro date up to 5 years | General and products liability, occurrence or claims-made | | Property | Seed-through-sale property, up to $5M insured value per location | Up to $10M insured value per location, with a schedule of locations | | Other coverages | Employee benefits liability | Stock throughput, inland marine and cargo, excess liability, workers' comp, D\&O, E\&O, EPLI and crime, cyber, commercial auto | | Size limits | Sales up to $15M, 35,000 sq ft per location | New ventures to large multistate operators | | Minimum premium | Monoline GL from $500 plus taxes and fees. BPP from $250 per location | $1,200 | Blitz places its cannabis business with non-admitted insurers through its California surplus lines license. Carma describes its carrier as AM Best A-rated. Each quote names the insurer. ## How much does cannabis insurance cost? [#how-much-does-cannabis-insurance-cost] The published floors are the clearest numbers: $500 plus taxes and fees for Blitz monoline general liability, $250 per location for Blitz business personal property, and a $1,200 minimum premium at Carma. Above the floor, the price follows sales, square footage, the activities at each location, building construction and fire protection, stock and crop values, vehicles and claims history. On a non-admitted policy, California adds 3% surplus lines tax and a 0.18% stamping fee. We don't publish a typical cannabis premium, because we don't yet have enough of our own completed cannabis quotes to give a representative figure. ## What should I have ready for a cannabis insurance quote? [#what-should-i-have-ready-for-a-cannabis-insurance-quote] ### Steps ### Licenses and activities Your DCC license types and numbers, and exactly what happens at each location: cultivation method, extraction type, delivery, distribution or testing. ### Each location Address, square footage, construction, year built, sprinklers, alarm and security, and the values of the building (if you own it), equipment, stock and crop. ### Sales, payroll and vehicles Annual sales, employee payroll and any vehicles used for delivery or transport. ### Contracts Your lease and local permit insurance requirements, so the quote matches them. ### History Prior insurance and five years of claims, if you have them. Then [apply for cannabis business insurance](https://www.menloinsurance.com/cannabis-business-insurance). In California the application also asks whether you need the $5,000 DCC licensee bond, so both can be requested together. ## Frequently Asked Questions ### Is insurance required for a California cannabis license? Only for distributors, who must carry general liability of at least $1 million per loss and $2 million aggregate. Every annual license except the event organizer license also needs the $5,000 bond, and every employer needs workers' compensation. ### What insurance does a dispensary need in California? The state doesn't set one. A storefront retailer should ask about general and products liability, property and stock coverage, and crime coverage, and it needs workers' comp for employees and auto coverage if it delivers. The lease often requires a liability limit and additional insured status. ### What is the minimum premium for cannabis insurance? Blitz's cannabis monoline general liability starts at $500 plus taxes and fees, and Carma's minimum premium is $1,200. ### Does cannabis insurance cover crops? It can. Blitz covers property "from seed through sale," and Carma lists crop and inventory coverage. Ask for the crop limit and the valuation method in writing. ### Is the $5,000 DCC bond insurance? No. It guarantees your obligations to the State, and the surety expects to be repaid if it pays. Our [bond guide](https://www.menloinsurance.com/library/guides/california-cannabis-license-bond-insurance) explains the difference. *This guide is for educational purposes and summarizes DCC's regulations (July 2026), DCC's license-type pages, California law and carrier program sheets dated 2025–2026. Rules, programs and prices change, and your policy's terms control. Menlo Insurance Services (CA license 6020106) is a licensed broker that may earn a commission on a placement and does not guarantee that any coverage or price will be available. Non-admitted insurers are not backed by the California Insurance Guarantee Association.* ## The Bottom Line [#the-bottom-line] The state sets one cannabis insurance minimum, $1M/$2M general liability for distributors, plus the $5,000 bond on nearly every annual license and workers' comp for every employer. The rest follows your license: crops for growers, products liability for manufacturers, transit and vehicles for distributors, stock and crime for retailers, errors and omissions for labs. Blitz writes cannabis liability from $500 and Carma from a $1,200 minimum, and our application describes each location on its own. ## References . [Department of Cannabis Control. Medicinal and Adult Use Cannabis Regulations (July 2026), § 15308 Insurance Requirements]() (accessed 2026-09-27) . [Department of Cannabis Control. Medicinal and Adult Use Cannabis Regulations (July 2026), § 15002(c)(22) and (d)]() (accessed 2026-09-27) . [California Legislative Information. Labor Code section 3700]() (accessed 2026-09-27) . [Menlo Insurance Services. California Cannabis License: The $5,000 DCC Bond and the Insurance You Need (license-type table from DCC's July 2026 regulations)]() (accessed 2026-09-27) . [Blitz Insurance. Cannabis Operators]() (2025) . [CARMA. CARMA Program Overview (Spring 2026)]() (2026) . [CARMA. CARMA program flyer]() (2026) . [Department of Cannabis Control. Medicinal and Adult Use Cannabis Regulations (July 2026), § 15312 Required Transport Vehicle Information]() (accessed 2026-09-27) . [Department of Cannabis Control. Medicinal and Adult Use Cannabis Regulations (July 2026), § 15708(b)(3)]() (accessed 2026-09-27) . [Department of Cannabis Control. License types]() (accessed 2026-09-27) . [Department of Cannabis Control. Cultivation: License types]() (accessed 2026-09-27) . [Department of Cannabis Control. Manufacturing: License types]() (accessed 2026-09-27) . [Department of Cannabis Control. Medicinal and Adult Use Cannabis Regulations (July 2026), § 15500(f) Microbusiness]() (accessed 2026-09-27) . [Surplus Line Association of California. Broker Taxes and Fees]() (accessed 2026-09-27) # Certificate Holder vs. Additional Insured (https://www.menloinsurance.com/library/guides/certificate-holder-vs-additional-insured) A certificate holder gets a document; an additional insured gets coverage. What each status grants, what it costs, and the contract mistakes to avoid. Markdown version: https://www.menloinsurance.com/library/guides/certificate-holder-vs-additional-insured.md A certificate holder receives a certificate of insurance and nothing more: the status is informational and gives no rights under the policy. An additional insured is added to the policy itself by endorsement and gets real coverage, including a defense and access to the named insured's limits for claims arising from that insured's work. If a relationship is risky enough for you to demand proof of insurance, you usually need additional insured status too. The two terms appear together in almost every commercial lease and construction contract, which is why buyers confuse them. Many assume a certificate that names them as additional insured proves they are covered. It does not. A certificate only reports what the policy says, so if no endorsement adds you, the certificate describes coverage that does not exist. For how certificates are issued, start with our [certificate of insurance guide](https://www.menloinsurance.com/library/guides/certificate-of-insurance-guide). ## Key takeaways * **Certificate holder**: you receive a copy of the ACORD 25 certificate, which gives you information but no coverage and no rights against the insurer. * **Additional insured**: you need an endorsement to the policy, such as CG 20 10, which gives you defense and indemnity under another party's policy. * **Cost and paperwork differ**: naming a certificate holder costs nothing, while adding an additional insured changes the policy and may carry a premium charge. * **The certificate never creates the status**: a COI that lists you as additional insured is accurate only if a matching additional insured endorsement is on the actual policy. ### Certificate Holder A certificate holder is the person or company named in the lower-left box of a certificate of insurance as the recipient of that document. The status is informational only and gives the holder no coverage, defense or rights under the policy. ## What is a certificate holder? [#what-is-a-certificate-holder] A [certificate holder](https://www.menloinsurance.com/library/glossary/certificate-holder) is the person or organization that receives a certificate of insurance, and the status gives them a document, nothing more. When a landlord or general contractor asks for proof of coverage, the named insured's broker issues an [ACORD 25 certificate](https://www.menloinsurance.com/library/forms/acord-25) listing the carriers, policy numbers, coverage types, limits and effective dates, with the holder's name and address in the certificate holder box. It confirms that coverage existed on the day the certificate was issued, which is useful when vetting tenants, subcontractors and vendors. That is where it stops. The ACORD 25 says plainly that it is issued as a matter of information only and gives the holder no rights. The holder cannot file a claim, demand a defense or enforce the policy's terms. If the policy is canceled the day after the certificate is issued, the certificate does not change that. Some states write these limits into law. New York Insurance Law Section 502 says a certificate cannot "amend, extend, or alter" coverage and creates no rights beyond what the underlying policy provides. New York's Department of Financial Services goes further by limiting which certificate forms a party may even demand, so a landlord who insists on certificate wording the policy does not contain is making a request that is prohibited there. ## What is an additional insured? [#what-is-an-additional-insured] An [additional insured](https://www.menloinsurance.com/library/glossary/additional-insured) is a person or organization with real rights under someone else's policy, because the policy itself was amended to include them. On a commercial general liability policy this happens through an additional insured endorsement, most often [CG 20 10](https://www.menloinsurance.com/library/forms/cg-20-10) for ongoing operations, either naming the party or granting blanket status to anyone a contract requires. The status gives benefits no certificate can: * **A defense paid by the other party's insurer**: defense costs are supplementary payments outside the limits of the standard CGL policy, so a covered lawsuit is defended without using up your own coverage. * **Access to the named insured's limits**: their policy responds before yours, especially when primary and noncontributory wording is added. * **Protection from subrogation**: carriers generally do not pursue recovery against their own insureds. * **A backup when contractual indemnity fails**: if a state anti-indemnity statute voids the hold harmless clause, additional insured status can still respond. The coverage has limits. Endorsements such as CG 20 10 apply only to liability arising from the named insured's work for you, and "ongoing operations" wording ends when the project is finished. Where a contract needs protection for claims after completion, it should also require [CG 20 37](https://www.menloinsurance.com/library/forms/cg-20-37). Our guide to [additional insured endorsements](https://www.menloinsurance.com/library/guides/additional-insured-endorsements-explained) covers all the forms. ## How do certificate holders and additional insureds compare? [#how-do-certificate-holders-and-additional-insureds-compare] The main difference is the rights you get under the policy; cost and paperwork follow from that: The two are not mutually exclusive. A party that requires additional insured status is still listed as certificate holder, so it also receives the certificate showing the endorsement and holds both roles at once. ## What contract mistakes should you avoid? [#what-contract-mistakes-should-you-avoid] The most common mistake is asking only for a certificate when you needed the endorsement. A contract that says "provide a certificate of insurance" gets a certificate and nothing else. Instead, say "name us as additional insured on the CGL by endorsement", and require completed operations coverage where the exposure outlasts the job. Adding you is a policy change, so it goes through the named insured and their broker, and a blanket endorsement usually needs a written contract signed before the work begins. The paperwork must be real. Some certificates say you were added as additional insured without the endorsement behind them. That certificate protects no one and creates errors and omissions exposure for the agency that issued it. According to the Independent Insurance Agents and Brokers of America, about 1 in 25 E\&O claims against agencies involves a certificate, and failing to add an additional insured correctly, or naming one incorrectly, causes 36 percent of those. Always get the endorsement itself, read the schedule, and check that your legal entity name matches it exactly: adding Smith Properties LLC does not necessarily insure Smith Properties Management Inc. Two more traps. At each renewal, confirm the policy is still in force, because a mid-term cancellation or nonrenewal can leave you without coverage under the agreement. And do not confuse additional insured status with [named insured](https://www.menloinsurance.com/library/guides/named-insured-vs-additional-insured) status. An additional insured has liability coverage tied to the named insured's work, but none for its own independent activities; your own policy covers those. ## Frequently Asked Questions ### Does being a certificate holder give me any insurance coverage? No. A certificate holder receives only the certificate as evidence that coverage was in force when it was issued, and the ACORD 25 says the holder has no rights under the policy. To get a defense or indemnity under the policy you must be an insured, which for a third party means being added by an additional insured endorsement to the policy. ### How much does it cost to add an additional insured? It depends on the policy. Many contractors' CGL policies already include blanket additional insured wording that applies automatically when a written contract requires it, with no charge per request. Endorsements that name a specific entity often carry a flat fee, so have the named insured ask their broker about the charge before either party signs. Either way, the cost falls on the named insured whose policy is being endorsed. ### Can I be both a certificate holder and an additional insured? Yes, and you usually are. The endorsement makes you an additional insured, and the certificate listing you as holder documents that status for your files. Think of the certificate as the receipt and the endorsement as the purchase. ### What is the difference between an additional insured and an additional interest? An additional interest, also called an interested party, is listed on a policy only to be notified of cancellation, lapse or changes, for example a landlord on a renters policy or a lienholder on an auto policy. Like a certificate holder, it has nothing to claim under. An additional insured is added to the policy by endorsement and can file a claim when it is involved in a covered loss. *This guide is for educational purposes and summarizes standard ISO policy language. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## Getting real coverage, not just a certificate [#getting-real-coverage-not-just-a-certificate] A certificate holder gets a document; an additional insured gets coverage. The certificate is the receipt and the endorsement is the purchase, and only the endorsement lets you tender a claim to the other party's insurer. For risky relationships, require the certificate as proof and put additional insured language in the written contract. When the endorsement arrives, read the schedule and confirm it shows your exact legal entity name. ## References . [New York State Senate. Insurance Law Section 502: Prohibitions]() . [New York Department of Financial Services. Certificates of Insurance]() . [Independent Insurance Agents and Brokers of America. Certificates of Insurance: Issues and Answers]() # Certificate of Insurance (COI): What It Proves (https://www.menloinsurance.com/library/guides/certificate-of-insurance-guide) What a certificate of insurance proves, when landlords and contractors ask for one, and why a COI alone never makes anyone an additional insured. Markdown version: https://www.menloinsurance.com/library/guides/certificate-of-insurance-guide.md A certificate of insurance (COI) is a one-page summary of your insurance that lists the carriers, policy numbers, coverage types, limits and effective dates, as proof that coverage was in place on the day it was issued. Landlords, general contractors and clients usually ask for one before they start doing business with you. It is information only: a certificate does not change your policy or create coverage, and on its own it does not make the certificate holder an additional insured. Most people who ask for a COI assume the paper in their file means they are protected. Often it does not. The gap between a [certificate holder and an additional insured](https://www.menloinsurance.com/library/guides/certificate-holder-vs-additional-insured) drives a steady stream of errors and omissions claims against issuing agencies, and holders usually discover the problem at claim time. ## Key takeaways * **A COI reports, it does not protect**: to protect another party the policy itself must be endorsed, and the certificate then reflects what the endorsement did. * **On construction work, one endorsement is not enough**: contracts usually require additional insured coverage for both ongoing and completed operations, and a certificate citing only one of the two fails the contract. * **The request is a bundle**: The designation of an Additional Insured, Waiver of Subrogation, primary and noncontributory wording, and Notice of Cancellation all require action on the policy. * **Collect certificates from your subs**: an uninsured sub's injured worker can leave you the statutory employer holding the claim. ### Certificate of Insurance (COI) A one-page document summarizing a business's insurance policies, issued as evidence that coverage existed on the date it was produced. Most liability certificates use the ACORD 25, a standardized industry form. ## What is a certificate of insurance (COI)? [#what-is-a-certificate-of-insurance-coi] A certificate of insurance is a standardized summary that your [insurance agent or broker](https://www.menloinsurance.com/library/guides/insurance-agent-vs-broker) issues to a third party, called the certificate holder, who wants proof you carry insurance. For liability coverage, nearly every certificate is issued on the [ACORD 25 form](https://www.menloinsurance.com/library/forms/acord-25), which lists each insurer, the policy numbers and dates, the limits, a description of operations, and the holder's name and address. A sample certificate of insurance reads top to bottom in fixed blocks: the producer (your agency), the insured business, the insurers lettered A through F with their NAIC numbers, the coverage grid with each policy's limits and dates, the description of operations, and the certificate holder box. The insurer blocks show each carrier's legal name rather than its brand, which is why a certificate stays accurate through a carrier rebrand like [Next Insurance becoming ERGO NEXT](https://www.menloinsurance.com/library/guides/next-insurance-ergo-next). The box a compliance desk reads hardest is the description of operations, which carries the project name, contract number, and any additional insured or waiver notations. Cite the endorsement form number behind each notation there, and attach that endorsement to the certificate. The NAIC numbers do more than identify the insurer. Enter one in the National Association of Insurance Commissioners (NAIC) Consumer Insurance Search to see the insurer's complaint index, which compares its share of complaints with its share of premium. An index of 1.0 means an average number of complaints for an insurer of its size; a number well above that is worth a question before you rely on the certificate. ## When do you need a certificate of insurance? [#when-do-you-need-a-certificate-of-insurance] You need a certificate of insurance whenever someone you are about to do business with asks for proof that you carry active insurance, usually before work or a lease starts. The most common requests: | Who asks | Why they ask | What they usually require | | ------------------ | --------------------------------------------------- | --------------------------------------------------------------------------------- | | Landlord | Tenant negligence at the leased premises | GL certificate, often with additional insured status | | General contractor | Claims arising from a subcontractor's work | GL and workers comp certificates, additional insured, waiver of subrogation | | Project owner | Vicarious liability for the contractor's operations | Certificates plus additional insured endorsements down the chain | | Enterprise client | Contract compliance before onboarding | Certificates showing the minimum limits named in the contract | | Equipment lessor | Damage its equipment causes in your hands | A certificate showing the lessor as additional insured on the lessee's CGL policy | A typical construction contract asks for $1,000,000 per occurrence and $2,000,000 general aggregate, the default limits on most ISO CGL declarations, so the requirement rarely means buying more coverage. A certificate of insurance for contractors flows both directions: collect one from every sub and vendor, because an uninsured sub's injured employee can make you the statutory employer under [workers compensation law](https://www.menloinsurance.com/library/guides/workers-compensation-insurance-guide), leaving your own policy to pay. ### Example A general contractor hires a subcontractor without collecting a certificate of insurance. The sub turns out to be uninsured, and one of its employees is hurt on the job. Under workers compensation law, the hiring contractor can become the statutory employer responsible for that worker's benefits, a claim its own policy pays and its premiums will reflect. ## Does a certificate of insurance make someone an additional insured? [#does-a-certificate-of-insurance-make-someone-an-additional-insured] No, and this is where real money is lost. Under the standard ISO CGL policy, only an endorsement can grant additional insured status, and the certificate merely reports what the policy says. For a landlord or general contractor to actually get that status, three things must line up: the contract requires it, the policy is endorsed with a scheduled or blanket [additional insured endorsement](https://www.menloinsurance.com/library/guides/additional-insured-endorsements-explained), and the certificate then reflects it. On construction work the endorsement question splits in two. [CG 20 10](https://www.menloinsurance.com/library/forms/cg-20-10) covers the additional insured for ongoing operations, and [CG 20 37](https://www.menloinsurance.com/library/forms/cg-20-37) covers the products-completed operations hazard after the work is done. Most sophisticated construction contracts require both, and a certificate referencing only one does not satisfy them. Owners often require the CG 20 37 to stay in force for two or three years after completion, since defect claims surface late. When your contract entitles you to that status, ask for the endorsement itself, not just the certificate. ## What else do contracts ask for alongside a COI? [#what-else-do-contracts-ask-for-alongside-a-coi] Contracts that ask for a COI usually also ask for additional insured status, a waiver of subrogation, primary and noncontributory wording and notice of cancellation, and each one needs a policy change, not a line on the certificate: * **Additional insured status**: as above, requires an endorsement. * **Waiver of subrogation**: the insured's carrier agrees not to recover a paid loss from the other party. The workers comp policy needs the [WC 00 03 13](https://www.menloinsurance.com/library/forms/wc-00-03-13) endorsement, and some states prohibit it. * **Primary and noncontributory**: the named insured's policy pays first, without asking the additional insured's own insurance to contribute. It requires the [CG 20 01](https://www.menloinsurance.com/library/forms/cg-20-01) endorsement on the ISO CGL policy. * **Notice of cancellation**: contracts demand "30 days notice to the certificate holder," which the certificate cannot deliver. The current ACORD 25 (2016/03 edition) states only that notice will be given per the policy provisions. Holder notice exists only if a cancellation endorsement grants it. Each item is a policy matter your agent cannot create by typing it on a certificate, and many states now bar certificates that try to amend the policy at all. Texas Insurance Code Chapter 1811, for example, prohibits issuing a certificate that alters, amends, or extends the referenced policy, with civil penalties of up to $1,000 per infraction. When reviewing a sub's COI, confirm the policy period covers your project dates and, for [claims-made lines](https://www.menloinsurance.com/library/guides/occurrence-vs-claims-made-policies), that you understand the trigger. ## Frequently Asked Questions ### What does COI mean in insurance? COI stands for certificate of insurance, a one-page summary of a company's policies and proof of coverage on the date it was issued. For liability the industry standard is the ACORD 25, listing each carrier with policy numbers, limits, and dates. ### Is a certificate of insurance the same as an insurance policy? No. The policy is a contract, often 50 pages or more with its endorsements, while the certificate is a one-page summary someone wrote from it. Several states have put the difference into law: Texas Insurance Code Chapter 1811, for example, says a certificate is not a policy and gives the holder no contract rights. When the two documents disagree, the policy controls. ### Does being listed as a certificate holder give me any coverage? No. A certificate holder only receives the certificate. To have rights under the policy, such as a defense and payment of claims, you must be an insured. For a third party that takes an additional insured endorsement attached to the policy itself, typically CG 20 10. ### How long is a certificate of insurance valid? A certificate is evidence of coverage as of its issue date, for the policy periods it lists. It does not guarantee the policies stay in force, and coverage can be canceled mid-term. The current ACORD 25 promises no cancellation notice beyond what the policy requires, which is why holders demand a fresh certificate at each renewal. *This guide is for educational purposes and summarizes standard ISO policy language. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## Before you rely on a certificate [#before-you-rely-on-a-certificate] A certificate of insurance is a one-page snapshot that proves your policies existed on the day it was issued, and little more. It does not add coverage, grant additional insured status, or force your carrier to warn a holder before canceling. Only an endorsement does that. Before you rely on anyone's COI, ask for the endorsement behind it and read it against your contract. ## References . [ACORD. ACORD Forms]() . [Texas Legislature. Insurance Code Chapter 1811: Certificates of Property and Casualty Insurance]() . [NAIC. How to File a Complaint and Research Complaints Against Insurance Carriers]() # CG 00 01 Explained: How the CGL Coverage Form Works (https://www.menloinsurance.com/library/guides/cgl-policy-coverages-explained) How the ISO CG 00 01 general liability form works: Coverages A, B and C, defense costs paid outside the limits, and the two aggregate limits. Markdown version: https://www.menloinsurance.com/library/guides/cgl-policy-coverages-explained.md The ISO [commercial general liability](https://www.menloinsurance.com/general-liability-insurance) (CGL) coverage form, CG 00 01, has three insuring agreements: Coverage A for bodily injury and property damage, Coverage B for personal and advertising injury, and Coverage C for medical payments. The insurer pays covered damages up to each coverage's limit, and all payments are capped by one of two annual aggregate limits. Defense costs are paid on top of the limits, not out of them. If you are deciding whether general liability fits your business, start with our buyer's guide to [what general liability insurance covers](https://www.menloinsurance.com/library/guides/what-does-general-liability-insurance-cover). This article explains how the standard [CG 00 01](https://www.menloinsurance.com/library/forms/cg-00-01) form is built. Each coverage makes a broad promise in its first paragraph, but most coverage disputes are decided later in the form, in the definitions. ## Key takeaways * **Five sections**: Coverages, Who Is An Insured, Limits, Conditions and Definitions. A claim has to clear all five to be paid. * **Three coverages**: A responds to bodily injury or property damage from an occurrence, B to seven named offenses, and C pays small medical bills regardless of fault. * **Defense outside the limits**: defense costs are Supplementary Payments, so a long fight does not reduce the money available for judgments or settlements. * **Two aggregates**: every damages payment reduces the each-occurrence limit and one aggregate, and once that aggregate is used up the duty to defend under it ends. ### CG 00 01 (Commercial General Liability Coverage Form) CG 00 01 is the standardized ISO coverage form at the core of a commercial general liability policy. It contains three insuring agreements, the rules for who qualifies as an insured, the limits of insurance, the policy conditions, and the definitions that give quoted terms their precise meaning. ## How is the CG 00 01 coverage form organized? [#how-is-the-cg-00-01-coverage-form-organized] CG 00 01 follows the declarations and has five sections, and a claim must work under all of them. Section I sets out the coverages and their exclusions. Section II says who is an insured. Section III sets the limits. Section IV lists the conditions. Section V defines every word that appears in quotation marks in the policy. The sections depend on each other. A claim can meet the Coverage A insuring agreement and still fail because the person sued is not an "insured" under Section II, or because a Section V definition leaves out the harm involved. A word in quotation marks has a defined meaning, and the everyday meaning does not control. ## How do Coverage A and its occurrence trigger work? [#how-do-coverage-a-and-its-occurrence-trigger-work] Coverage A makes two promises: the insurer pays the sums the insured becomes legally obligated to pay for bodily injury or property damage, and it defends the insured against suits seeking those damages. "Legally obligated" means a judgment, verdict or settlement, not just an allegation. The duty to defend is broader than the duty to pay. In most states, an insurer must defend the whole suit if even one allegation could be covered. Courts decide this with the "four corners" rule, called the "eight corners" rule in some states: they compare the plaintiff's complaint with the policy and look at nothing else. In Monroe Guaranty Ins. Co. v. BITCO Gen. Ins. Corp. (2022), the Texas Supreme Court allowed limited outside evidence for the first time, but only evidence that goes solely to coverage. When some counts look covered and others do not, the insurer usually defends under a reservation of rights letter. The promise to pay applies when the injury is caused by an "occurrence", defined as an accident, including continuous or repeated exposure to substantially the same harmful conditions, and the injury happens during the policy period. When the claim is made does not matter. That is why an [occurrence policy](https://www.menloinsurance.com/library/guides/occurrence-vs-claims-made-policies) from years ago can still respond to a claim filed today. ## What do Coverage B and Coverage C add? [#what-do-coverage-b-and-coverage-c-add] Coverage B covers seven named offenses committed during the policy period, so it is triggered by the offense, not by when an injury happens. The seven offenses are: (1) false arrest, detention or imprisonment; (2) malicious prosecution; (3) wrongful eviction or invasion of the right of private occupancy; (4) libel or slander; (5) publication that violates a person's right of privacy; (6) use of another's advertising idea in your advertisement; and (7) infringing another's copyright, trade dress or slogan in your advertisement. Harm outside this list is not covered under Coverage B. A store manager who detains an innocent shopper as a suspected shoplifter has committed false arrest, the first offense on the list. Coverage C works differently. It pays medical expenses for people injured in an accident on or next to the named insured's premises, or caused by its operations, regardless of fault. The limit is typically $5,000 per person, and the expenses must be incurred and reported within one year of the accident. Coverage C never covers the named insured's own employees. It is goodwill coverage rather than true liability coverage, so there is no duty to defend under it. ## Why do defense costs sit outside the limits? [#why-do-defense-costs-sit-outside-the-limits] Defense costs sit outside the limits because the form pays them as Supplementary Payments, which apply to Coverages A and B. When the insurer investigates, settles or defends a claim, its costs for lawyers, expert witnesses and court fees are paid in addition to the limits. A defense can go on for years without reducing the money available to pay a judgment. The same section also pays smaller items, such as up to $250 for bail bonds after a covered vehicle accident, up to $250 a day for the insured's lost earnings while helping with the defense, and interest before and after judgment. There is one hard stop. The duty to defend ends once the applicable limit has been used up paying judgments, settlements or medical expenses. When an aggregate is exhausted, the insurer stops defending the pending suit and every later suit under that aggregate. A business can end up paying its own lawyers mid-lawsuit because earlier settlements used up the aggregate. Every settlement also shows up on the [loss runs](https://www.menloinsurance.com/library/guides/how-to-read-loss-runs) underwriters review at renewal. ## What is an aggregate limit and how does the CG 00 01 limits structure work? [#what-is-an-aggregate-limit-and-how-does-the-cg-00-01-limits-structure-work] An aggregate limit is the most the insurer will pay in total during the policy period, no matter how many claims are made. CG 00 01 has two: the General Aggregate and the Products-Completed Operations Aggregate. Both sit above the per-occurrence and per-person limits. The limits are not a menu to choose from; each payment counts against several of them at once. A typical declarations page looks like this: | Limit | Typical amount | What it caps | | --------------------------------------- | -------------- | ------------------------------------------------------------------------------------------------------------- | | Each Occurrence | $1,000,000 | The most paid for any one occurrence under Coverage A, including Coverage C payments from the same occurrence | | General Aggregate | $2,000,000 | The most paid in the policy term for everything except products-completed operations losses | | Products-Completed Operations Aggregate | $2,000,000 | The most paid in the policy term for products and completed work losses | | Personal and Advertising Injury | $1,000,000 | The most paid to any one person or organization under Coverage B | | Damage to Premises Rented to You | $100,000 | A sublimit within the each-occurrence limit for damage to rented premises | | Medical Expense | $5,000 | The most paid per person under Coverage C | Every damages payment counts against the each-occurrence limit and, at the same time, against the General Aggregate. Products-completed operations losses are the exception: they count against their own aggregate instead. The two aggregates never share dollars, so when one is used up the other stays whole. Sublimits do not add capacity; they only divide it. ### Example A policy has a $1,000,000 each-occurrence limit and a $2,000,000 general aggregate. A bodily injury claim from ongoing operations in March settles for $1,200,000. The insurer pays $1,000,000, capped by the each-occurrence limit, which leaves $1,000,000 of general aggregate. A premises claim in June settles for $700,000 and is paid from what is left, leaving $300,000. A $100,000 products claim in July is paid in full anyway, because it draws on the separate $2,000,000 products-completed operations aggregate, which is still untouched. Endorsements tailor this base form to each policyholder and decide how far the coverage really goes. Section II names only the people who are insureds automatically. A landlord, project owner or general contractor becomes an insured only through an [additional insured endorsement](https://www.menloinsurance.com/library/guides/additional-insured-endorsements-explained), usually required by contract. [CG 20 10](https://www.menloinsurance.com/library/forms/cg-20-10) covers an additional insured for ongoing operations. The CG 25 endorsements (CG 25 03 for designated construction projects, CG 25 04 for designated locations) give each project or location its own aggregate, so a large loss at one job site does not shrink the limits at every other site. CG 21 35 removes Coverage C. CG 21 44 limits coverage to scheduled premises, projects or operations. Two policies on the same base form can cover very different things. ## Frequently Asked Questions ### What is the difference between the each-occurrence limit and the general aggregate? The each-occurrence limit is the most the insurer pays for any one occurrence. The general aggregate is the most it pays in total for all claims during the policy period, except products and completed operations losses. Once the aggregate has been paid out, the insurer pays nothing more, no matter how many incidents occur. Every payment reduces both at once, so coverage can run out even if no single claim reached the per-occurrence limit. ### Do defense costs reduce my CGL limits? No. Under the standard form, defense costs are Supplementary Payments paid outside the policy limits. Investigation costs, attorneys' fees and court costs do not reduce the money available for judgments and settlements. The insurer's duty to defend ends when the limit has been used up paying judgments, settlements or medical expenses. ### Why does the CGL have two separate aggregate limits? Products and completed operations claims often surface long after the work is done, so they have their own aggregate. A bad year of premises and operations claims cannot drain the limit set aside for products and completed work, and the reverse is also true. The two aggregates cannot be combined or moved from one to the other. ### Is Coverage C really no-fault coverage? Yes. Coverage C pays medical expenses for people hurt on or next to your premises, or by your operations, without any finding that you were legally responsible. It exists to settle small injuries quickly and keep goodwill, with a modest per-person limit, a one-year window to incur and report the expenses, and no coverage for your own employees. *This guide is for educational purposes and summarizes standard ISO policy language. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## Reading your own CG 00 01 policy [#reading-your-own-cg-00-01-policy] CG 00 01 sets what a general liability claim is worth through three insuring agreements, two aggregates and the definitions that decide most disputes. Defense costs are paid outside the limits, but the duty to defend ends once an aggregate is used up. Before you assume you are covered at every location, project or contract, pull the endorsement schedule from your declarations and check it against those contracts. ## References . [Supreme Court of Texas. Monroe Guaranty Insurance Company v. BITCO General Insurance Corporation, No. 21-0232]() # Commercial Auto Insurance in California: Limits and Rules (https://www.menloinsurance.com/library/guides/commercial-auto-insurance-california) California's auto minimum is 30/60/15 since 2025, but trucks over 10,000 lbs hauling property need a $750,000 filing. Which business vehicles need what. Markdown version: https://www.menloinsurance.com/library/guides/commercial-auto-insurance-california.md Every business vehicle in California is required to carry at least the state's minimum liability, which rose to $30,000 per person, $60,000 per accident and $15,000 for property damage for policies issued or renewed on or after January 1, 2025. A truck with two or more axles over 10,000 pounds gross vehicle weight rating, or any vehicle that carries property for pay, makes your business a motor carrier of property. That requires a DMV motor carrier permit and an insurance certificate filed with the DMV showing a combined single limit of at least $750,000, or $300,000 if you only operate vehicles under 10,000 pounds. This guide is for a California business owner with work vehicles: a contractor's pickups, a caterer's van, a landscaper's truck and trailer, or a small delivery fleet. It explains which rules apply to which vehicles, what a business auto policy adds over a personal one, what limits your clients may ask for and which small-business insurers write it. When you're ready, [request a commercial auto quote](https://www.menloinsurance.com/commercial-auto-insurance). ## Key takeaways * **The minimum rose in 2025.** 30/60/15 for policies issued or renewed on or after January 1, 2025, up from 15/30/5. * **Heavy trucks and for-hire hauling need a permit.** A motor carrier of property needs a DMV motor carrier permit before operating. * **The permit needs a filed certificate.** At least $750,000 combined single limit, or $300,000 for carriers running only vehicles under 10,000 pounds GVWR. * **A lapse suspends the permit.** The DMV suspends a carrier's permit on the date its insurance lapses. * **Business policies are built vehicle by vehicle.** Each auto is scheduled with its own coverages, usually at a $500,000 or $1,000,000 combined single limit. ## What are California's minimum limits for business vehicles? [#what-are-californias-minimum-limits-for-business-vehicles] The same floor as for personal autos. For policies issued or renewed on or after January 1, 2025, Vehicle Code section 16056 requires a minimum of $30,000 for injury to one person, $60,000 for injury to two or more people and $15,000 for property damage in any one accident. Before 2025 the minimum limits were 15/30/5. That minimum is rarely enough to protect a business. An accident in a work truck can easily exceed $60,000, and your business is responsible for whatever the policy doesn't pay. The Department of Insurance notes that business auto policies are usually written with a combined single limit, with "$500,000 or $1,000,000" common. Most contracts that mention auto liability ask for $1,000,000. ## When does my business need a motor carrier permit? [#when-does-my-business-need-a-motor-carrier-permit] When you operate a "commercial motor vehicle" under the Vehicle Code. That includes any motortruck with two or more axles over 10,000 pounds gross vehicle weight rating, and "any other motor vehicle used to transport property for compensation." Certain vehicles are excluded from this definition, such as certain pickups and two-axle rental trucks under 26,001 pounds used noncommercially. A motor carrier of property cannot operate on a California highway without a valid motor carrier permit issued by the DMV. The permit is issued only after proof of insurance is filed, and the certificate cannot be cancelled on less than 30 days' written notice to the department. The required limits: | Motor carrier of property | Minimum liability (Vehicle Code 34631.5) | | ----------------------------------------------------------------------------- | --------------------------------------------------- | | General freight and most carriers | $750,000 combined single limit | | Operates only vehicles under 10,000 lbs GVWR, no petroleum or hazardous loads | $300,000 | | Petroleum products in bulk and hazardous materials | Higher limits set in the same section | The rule reaches the people who hire you. A business may not contract with a motor carrier of property that lacks a valid permit, and a carrier that subcontracts its hauling must obtain a certification of compliance from the carrier it hires. Interstate carriers also have federal filing rules. Our guide to the [MCS-90 endorsement](https://www.menloinsurance.com/library/guides/mcs-90-endorsement-explained) explains the federal endorsement, and our [motor truck cargo guide](https://www.menloinsurance.com/library/guides/motor-truck-cargo-insurance) covers the freight itself. ## What does a business auto policy cover that a personal policy doesn't? [#what-does-a-business-auto-policy-cover-that-a-personal-policy-doesnt] It is written around how a business uses its vehicles. In the Department of Insurance's words, a business auto policy "has the flexibility to provide coverage for business, personal, non-owned, or hired autos," and each auto can be "separately scheduled along with corresponding coverages." A vehicle is classified by weight (light, medium, heavy, extra heavy) and by use (private passenger, service, commercial), and those classifications drive the rate. The coverage for each vehicle is set by numbered covered-auto symbols. Symbol 1 covers any auto for liability, and narrower symbols cover only owned, scheduled, hired or non-owned autos. Our guide to [commercial auto symbols](https://www.menloinsurance.com/library/guides/commercial-auto-insurance-symbols) explains each one. Two gaps catch small businesses: * **Employees driving their own cars on errands.** Their personal policy responds first, but a lawsuit names your business too. [Hired and non-owned auto](https://www.menloinsurance.com/library/guides/hired-and-non-owned-auto-insurance) coverage protects the business. * **A vehicle titled to the owner but used for the business.** Tell the insurer how it's used, because use and ownership decide which policy applies. ## Which insurers write small business auto in California? [#which-insurers-write-small-business-auto-in-california] Commercial auto splits by what you drive and haul. THREE, Berkshire Hathaway's small-business policy, provides commercial auto for businesses in its target segments such as auto services, contractors and landscaping, but lists transportation among the industries it doesn't write. For-hire trucking and delivery fleets are submitted to transportation specialists, which we do by hand. What insurers ask for any business auto quote: 1. Each vehicle's year, make, model, VIN, GVWR and garaging ZIP code. 2. What each vehicle does: service calls, hauling your own tools and materials, deliveries, or hauling for others. 3. The radius of operation. 4. Each driver's license number and driving record. 5. Prior insurance and five years of claims. 6. The limits and certificate wording your contracts require. ## How can a small business lower its commercial auto cost? [#how-can-a-small-business-lower-its-commercial-auto-cost] Start with the drivers. Driving records are one of the strongest rating factors, so check each driver's record before adding them. Then: * Schedule only the vehicles the business actually uses, with accurate use and radius. * Choose physical damage deductibles you can afford, and drop collision on old vehicles worth little. * Keep a written policy on who may drive and on personal use. * Report and document every accident promptly. ## Frequently Asked Questions ### What is the minimum commercial auto insurance in California? At least $30,000 per person, $60,000 per accident and $15,000 property damage for policies issued or renewed on or after January 1, 2025. Motor carriers of property need at least $750,000, or $300,000 if they run only vehicles under 10,000 pounds GVWR. ### Do I need a motor carrier permit for my pickup truck? Usually not, if the pickup is rated at 10,000 pounds GVWR or less and carries only your own tools and materials, not property for pay. The permit applies to commercial motor vehicles, which include motortrucks of two or more axles over 10,000 pounds GVWR and any vehicle used to carry property for compensation. ### Does my personal auto policy cover a vehicle I use for work? It may not fully cover business use. Tell your insurer how the vehicle is used. A business auto policy can schedule the vehicle with coverages matched to that use. ### What limit should my business carry? Business auto policies commonly carry $500,000 or $1,000,000 combined single limits, and most contracts ask for $1,000,000. *This guide is general information based on the California Vehicle Code and Department of Insurance material current in 2026. Your policy's terms and your contracts control. Menlo Insurance Services (CA license 6020106) is a licensed broker that may earn a commission on a placement.* ## References . [California Legislative Information. Vehicle Code section 16056]() (accessed 2026-09-27) . [California Legislative Information. Vehicle Code section 34601]() (accessed 2026-09-27) . [California Legislative Information. Vehicle Code section 34620]() (accessed 2026-09-27) . [California Legislative Information. Vehicle Code section 34631.5]() (accessed 2026-09-27) . [California Legislative Information. Vehicle Code section 34630]() (accessed 2026-09-27) . [California Department of Insurance. Commercial Insurance Guide (Form 700, revised June 14, 2024)]() (accessed 2026-09-27) . [THREE by Berkshire Hathaway. Target Industries]() (accessed 2026-09-27) . [THREE by Berkshire Hathaway. Common Declines (last updated May 1, 2026)]() (accessed 2026-09-27) # Commercial Auto Symbols: What Symbols 1, 2, 7, 8, and 9 Mean (https://www.menloinsurance.com/library/guides/commercial-auto-insurance-symbols) How covered auto symbols 1, 2, 7, 8 and 9 decide which vehicles a business auto policy insures, and the symbol 7 trap for newly bought vehicles. Markdown version: https://www.menloinsurance.com/library/guides/commercial-auto-insurance-symbols.md [Commercial auto](https://www.menloinsurance.com/commercial-auto-insurance) symbols are the number codes in Item Two of the business auto declarations that decide which vehicles each coverage applies to. Symbol 1 covers any auto for liability only, symbol 2 covers owned autos, symbol 7 covers only the autos listed on the schedule, symbol 8 covers hired and borrowed autos, and symbol 9 covers non-owned autos used in your business. If the right symbol is not next to a coverage on the declarations page, that coverage does not apply to that vehicle. The symbols are where expensive gaps hide. A symbol 7 fleet that misses the 30-day notice on a new vehicle has effectively self-insured it, so the same insurer can pay a loss on last year's box truck and refuse the identical claim on the van you bought last month. Here is how the symbols work under the ISO Business Auto Coverage Form [CA 00 01](https://www.menloinsurance.com/library/forms/ca-00-01). ## Key takeaways * A vehicle becomes a "covered auto" only through the symbol listed next to each coverage in Item Two of the declarations, and more than one symbol can appear per coverage. * **Symbol 1** is the broadest, but it applies to liability only. Physical damage and other coverages always need other symbols. * **Symbol 7** (specifically described autos) is the narrowest: newly acquired vehicles must be reported within 30 days or they have no coverage. * **Symbols 8 and 9**: hired and non-owned autos, cover the exposure created when your business uses vehicles it does not own, including employees driving their own cars on company business. ### Covered Auto Symbols Covered auto symbols are the numbers in the declarations of a business auto policy that define which autos are insured for each coverage. If a vehicle's symbol is missing next to a coverage on the declarations page, that coverage does not apply to the vehicle. ## How do covered auto symbols work? [#how-do-covered-auto-symbols-work] Each covered auto symbol turns on one coverage for one group of vehicles, and does nothing else. Every coverage on the business auto declarations (liability, medical payments, [uninsured motorist](https://www.menloinsurance.com/library/guides/uninsured-motorist-coverage), comprehensive, collision and towing) has a "covered autos" box next to it. The numbers in that box, often "1" for liability and "7" for physical damage, tell the policy which autos that coverage applies to. Section I of CA 00 01 defines each symbol. Before any claim is paid, the adjuster asks one question first: is this vehicle a covered auto for this coverage? If the answer is no, the analysis ends there, regardless of fault or limits. ## What does each covered auto symbol mean? [#what-does-each-covered-auto-symbol-mean] Here is what each covered auto symbol covers, and which coverages it can support: | Symbol | Covered Automobiles | Applicable coverages | | ------ | ------------------------------------------------------------------------------------------------------------ | --------------------------------------------------------------------- | | 1 | Any auto, owned, hired, or non-owned | Liability only | | 2 | Owned autos only (including autos acquired later) | Liability, physical damage, medical payments, PIP, uninsured motorist | | 3 | Owned private passenger autos only | Same as 2, plus towing | | 4 | Owned autos other than private passenger | Same as 2 | | 5 | Owned autos subject to no-fault | PIP where state no-fault law is compulsory | | 6 | Owned autos subject to a compulsory uninsured motorist law | Uninsured motorist where it cannot be rejected | | 7 | Specifically described (scheduled) autos only | Liability, physical damage, medical payments, PIP, uninsured motorist | | 8 | Hired autos, leased, hired, rented, or borrowed (not from employees, partners, members, or their households) | Liability, physical damage | | 9 | Non-owned autos, including employees' and partners' own vehicles used in the business | Liability only | | 19 | Mobile equipment subject to a compulsory or financial responsibility law | Liability only | A few details in that table decide most real claims: 1. Symbol 1 (any auto) is the broadest designation, but it can carry only liability coverage. 2. Symbol 2 automatically covers owned autos acquired mid-term, with the premium recalculated by audit at the end of the term. 3. Symbol 7 covers only scheduled autos, so newly acquired vehicles must be reported within 30 days or they have no coverage. 4. Symbol 8 (hired autos) excludes vehicles borrowed from employees, partners, LLC members or their households. 5. Symbol 9 (non-owned autos) is liability only and protects the business, not the driver. 6. A temporary substitute for an owned auto that is out of service gets liability coverage automatically, without symbol 8. Symbols 3 and 4 split the owned-auto group that symbol 2 covers into private passenger autos and everything else, so coverages can be set by vehicle type. ## What does symbol 1 mean? [#what-does-symbol-1-mean] Symbol 1, "any auto", is the broadest designation the form defines, and it applies only to liability coverage. Ownership does not matter: liability covers the vehicle, listed or not, whether you own it, hired, leased or rented it, borrowed it, or it belongs to someone else entirely. Because symbol 1 can support only liability, the standard setup is symbol 1 for liability plus symbol 2 or 7 for physical damage and the other coverages. For-hire fleets have another reason to care where liability reaches. Federal rules set minimum public liability insurance for interstate motor carriers in 49 CFR 387.9, starting at $750,000 for general freight and rising to $5,000,000 for bulk hazardous materials. A truck the liability symbol misses is a truck running below that federal minimum. ## What does symbol 7 mean, and where is the trap? [#what-does-symbol-7-mean-and-where-is-the-trap] Symbol 7 covers only the specific autos scheduled in the declarations, coverage by coverage. Check Item Three vehicle by vehicle: the sedan may carry comprehensive and collision while the delivery van carries liability only. The trap is newly acquired autos. With symbols 1 through 6 (and 19), owned vehicles acquired mid-term are covered automatically for the rest of the policy period. Symbol 7 is different. A newly acquired auto is covered only if both conditions are met: 1. The insurer already covers all autos you own for that coverage, or the new auto replaces a vehicle that had that coverage, and 2. You notify the insurer within 30 days of acquiring the vehicle. Miss the 30-day notice and the new vehicle has no coverage for that coverage. A replacement vehicle gets only the coverages the replaced vehicle had, so if you replace a liability-only van, the new van has liability only. ### Symbol 7: track the 30-day window If your fleet changes often, symbol 7's lower premium can cost far more than it saves. Symbol 2 (or symbols 2, 8, and 9 together) removes the reporting risk for owned autos. ## What is hired and non-owned auto coverage? (Symbols 8 and 9) [#what-is-hired-and-non-owned-auto-coverage-symbols-8-and-9] Symbols 8 and 9 cover vehicles your business uses but does not own. Symbol 8 covers autos you lease, hire, rent or borrow. It is often entered on the comprehensive and collision lines to buy hired auto physical damage, which insures damage to a rental truck. Symbol 8 excludes vehicles borrowed from your employees, partners, LLC members or members of their households. Symbol 9 covers everyone else's vehicles used in your business, mainly employees' own cars on company errands. For businesses without owned vehicles, our guide to [hired and non-owned auto insurance](https://www.menloinsurance.com/library/guides/hired-and-non-owned-auto-insurance) covers the details. Two points decide most symbol 9 claims: * **It protects the business, not the driver.** If an employee causes an accident while driving their own car on agency business, symbol 9 insures the agency, not the employee. The employee's personal auto policy pays first and the agency's policy sits excess. The Employees As Insureds endorsement (CA 99 33) closes that gap for the driver. * **It is liability only.** There is no physical damage coverage for a vehicle your business does not own. ## Which symbols should your business carry? [#which-symbols-should-your-business-carry] Carry the symbols that match every way a vehicle enters your operations, and ask for the broadest ones the insurer will give: ### Steps ### List every way vehicles enter your business Owned fleet, leased units, employee cars on business errands, rentals during travel, borrowed trucks and road-going mobile equipment each map to a symbol. Equipment used at the jobsite rather than on the road is a [contractors equipment](https://www.menloinsurance.com/library/guides/contractors-equipment-insurance) question, not an auto one. ### Ask for the broadest symbols the insurer will give The common strong combination is symbol 1 for liability plus symbols 2, 8 and 9 on the other coverages. Many carriers refuse symbol 1 or reserve it for fleets they know well. If it is refused, symbols 2, 8 and 9 together cover nearly the same ground. ### Read Item Two line by line at renewal A policy can show symbol 1 on liability and still leave a rented box truck's physical damage uninsured because symbol 8 is missing from the comprehensive and collision lines. ### Coordinate the auto policy with your general liability policy Autos on the road belong to the auto policy, and mobile equipment in use at a site belongs to the [general liability policy](https://www.menloinsurance.com/library/guides/what-does-general-liability-insurance-cover). Placing both with one insurer avoids disputes over borderline claims. You are not locked in until renewal. A mid-term endorsement can move a fleet from symbol 7 to symbol 2, effective the day you ask for it. ## Frequently Asked Questions ### What is the difference between symbol 1 and symbol 7? Symbol 1 covers any auto (owned or not, listed or not), but only for liability. Symbol 7 covers only the vehicles listed in the declarations, coverage by coverage, and you must tell the insurer about a newly acquired vehicle within 30 days or it is not covered. Symbol 1 is the broadest designation and symbol 7 is the narrowest. ### Do I need hired and non-owned auto coverage if my business owns no vehicles? Usually, yes. Your business can be sued when an employee drives their own car on company business, and it has the same exposure when it rents or borrows a vehicle. Symbols 8 and 9 provide this coverage, or a hired and non-owned auto endorsement on another policy can. General liability policies exclude it. ### Does symbol 9 cover my employee when they drive their own car for work? No. Symbol 9 protects only the named insured business. When an employee drives their own car for your company, their personal auto policy pays first, and your business auto policy sits excess for the business. An Employees As Insureds endorsement (CA 99 33) can make the employee an insured under your business policy. ### Are newly purchased vehicles automatically covered? It depends on the symbol. Under symbols 1 through 6 or 19, an owned auto of the described type acquired mid-term is covered automatically for the rest of the policy term. Under symbol 7, a newly acquired vehicle is covered only if the insurer covers all of your owned autos for that coverage (or the new vehicle replaces one that had it), and you tell the insurer about it within 30 days. *This guide is for educational purposes and summarizes standard ISO policy language. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## Checking the symbols on your declarations [#checking-the-symbols-on-your-declarations] Covered auto symbols decide which vehicles each coverage in your business auto policy insures. Symbol 1 is the broadest but liability only, and symbol 7 covers only scheduled autos, so a new vehicle must be reported within 30 days to be covered. Before your next renewal, pull your declarations pages and read Item Two line by line to confirm the right symbol sits next to each coverage. ## References . [Cornell Law School Legal Information Institute. 49 CFR 387.9: Financial Responsibility, Minimum Levels]() # Commercial Crime Insurance and Fidelity Bonds (https://www.menloinsurance.com/library/guides/commercial-crime-insurance) What commercial crime insurance covers, how fidelity bonds and employee theft coverage work, and the ERISA bond (10% of plan funds) your plan must carry. Markdown version: https://www.menloinsurance.com/library/guides/commercial-crime-insurance.md Commercial [crime insurance](https://www.menloinsurance.com/commercial-crime-insurance) pays for money, securities, and other property stolen from your business, whether the thief is your own bookkeeper or an outside fraudster. The standard ISO policy offers eight insuring agreements, and the first of them, called Fidelity, is the modern form of the fidelity bond: it covers employee theft, ERISA plan official dishonesty, and employee theft of clients' property. You pick only the agreements you want, and each one gets its own limit and deductible on the declarations page. Theft by insiders is the loss most businesses never see coming, and it is exactly the loss that general liability and property policies exclude. ## Key takeaways * **Eight insuring agreements, a la carte**: you are covered only under agreements with a limit shown on the declarations. A blank or "Not Covered" entry means that agreement is not part of the policy. * **A fidelity bond is employee dishonesty insurance**: today it is usually written as the Fidelity insuring agreement of a crime policy, not as a true surety bond. * **ERISA requires bonding**: everyone who handles benefit plan funds must be bonded for at least 10% of the money they handle, and in most cases the required amount is capped at $500,000 per plan. * **Coverage ends on discovery**: coverage for an employee ends as soon as a designated person learns of any dishonest act by that employee, even one committed before they were hired. ### Commercial Crime Insurance Commercial crime insurance covers loss of money, securities, and other tangible property from theft, fraud, forgery, and related criminal acts committed by employees or outsiders. Businesses select individual insuring agreements, each with its own limit, rather than buying one blanket coverage. ## What does commercial crime insurance cover? [#what-does-commercial-crime-insurance-cover] Commercial crime insurance covers eight kinds of loss under the current ISO program, written on the Commercial Crime Coverage Form in a Discovery version (CR 00 20 06 22) or a Loss Sustained version (CR 00 21 06 22). Carriers issue the loss sustained version by default on standard placements; the discovery version is the exception you have to ask for. You choose which agreements to buy, and the declarations show a per-occurrence limit and deductible for each one. Fidelity is really three agreements in one: Employee Theft, ERISA Plan Official Dishonesty and Employee Theft of Clients' Property. The rest cover theft by outsiders, on and off your premises. Fraudulent Impersonation, the social engineering coverage, is not one of the eight base agreements: it is added by endorsement, usually with a sublimit. The eight base agreements sort cleanly by who steals and what each one pays: | Insuring Agreement | Who steals | What it pays | | ---------------------------------------------------------------------------------------------- | ---------- | ----------------------------------------------------------------------------------------------------------- | | Fidelity (Employee Theft, ERISA Plan Official Dishonesty, Employee Theft of Clients' Property) | Insiders | Theft of money, securities, and other property by employees or ERISA plan officials | | Forgery or Alteration | Outsiders | Forged or altered checks, drafts, and promissory notes, plus forged payment card instructions as a sublimit | | Inside the Premises: Theft of Money and Securities | Outsiders | Theft, disappearance, or destruction of money and securities inside your premises or a bank | | Inside the Premises: Robbery or Safe Burglary of Other Property | Outsiders | Robbery of a custodian or safe burglary of property other than money and securities | | Outside the Premises | Outsiders | Money, securities, and property in the care of a messenger or armored car off premises | | Computer Fraud | Outsiders | Hacking that fraudulently transfers your money, securities, or property out of your systems | | Funds Transfer Fraud | Outsiders | Fraudulent instructions sent to your bank, purportedly from you, directing a transfer of funds | | Money Orders and Counterfeit Money | Outsiders | Money orders that are never paid and counterfeit currency accepted in good faith | Fidelity agreements bundle every act by one employee, or one scheme by several in collusion, into a single [occurrence](https://www.menloinsurance.com/library/glossary/occurrence) subject to one limit. Two clerks who conspire to steal $50,000 from a policy with a $25,000 Employee Theft limit recover $25,000, not $50,000. And if the only evidence of theft is an inventory or profit and loss computation, there is no coverage. That inventory-shortage rule drives more claim disputes than any other condition in the form. ## What is a fidelity bond? [#what-is-a-fidelity-bond] A fidelity bond is coverage that reimburses an employer for theft or dishonesty committed by its own employees. The name survives from an era when this protection was written as a bond guaranteeing an individual's honesty, but today it is almost always issued as insurance, either as the Fidelity insuring agreement of a commercial crime policy or as a standalone employee dishonesty policy. Unlike a surety bond, which involves three parties and lets the surety recover from the principal, a fidelity bond is a two-party contract between insurer and employer, and the employee whose theft triggers the claim has no rights under it. If someone quotes you employee dishonesty insurance, a fidelity bond, or Employee Theft coverage, they are describing the same protection under three names. Employee Theft of Clients' Property extends the coverage to property your employees steal from customers, though the claim must be presented by your business as the [named insured](https://www.menloinsurance.com/library/glossary/named-insured), never by the client directly. One design choice deserves a hard position. The unendorsed form pays even when you cannot identify which employee stole, which matters because embezzlers hide well. The Employee Theft Name or Position Schedule endorsement (CR 04 08 06 22) trades that away, covering only named individuals or scheduled positions. For nearly every buyer, blanket coverage is worth the extra premium and the schedule endorsement is a false economy. ## What is an ERISA bond and how much coverage is required? [#what-is-an-erisa-bond-and-how-much-coverage-is-required] ERISA requires anyone who handles the money in an employee benefit plan, such as a 401(k) or pension, to carry a bond equal to at least 10% of the funds that person handled the year before, with a $1,000 floor. The most any plan must carry is $500,000, which rises to $1,000,000 for plans holding employer securities. Those figures come from Section 412 of ERISA as read by the U.S. Department of Labor in Field Assistance Bulletin 2008-04, still the governing guidance. This bond protects the plan, not the company. The employer cannot collect a dime under it, and carrying it is not optional. Plans report the bond amount on the Form 5500, and a missing or inadequate bond is one of the most common audit flags the Department of Labor pursues. DOL guidance prohibits any deductible on the required ERISA portion of the bond, which is why the deductible section of the ISO crime program's crime declarations clearly states N/A for ERISA Plan Official Dishonesty. DOL rules also require that the bond be issued by an insurer (surety) named on the Treasury Department's Listing of Approved Sureties, Circular 570. This coverage is provided under the ERISA Plan Official Dishonesty agreement which provides coverage to all plan officials, regardless of whether they are specifically identified, for fraudulent or dishonest acts, including those committed by a sole proprietor insured who steals from their own company's plan. ## What is the difference between the loss sustained and discovery forms? [#what-is-the-difference-between-the-loss-sustained-and-discovery-forms] The loss sustained form and the discovery form provide the same coverages with different triggers. Under the Loss Sustained Form (CR 00 21 06 22), the theft must take place during the policy period and be discovered during the policy period or the extended discovery period, which runs 60 days after cancellation, or one year for an ERISA plan. Under the Discovery Form (CR 00 20 06 22), the theft can take place at any time, including years before the policy existed, so long as it is discovered during the policy period. Discovery means more than suspicion: a designated person must learn facts that would cause a reasonable person to believe a covered loss occurred. The trigger difference is everything for embezzlement, which often runs for years before surfacing. The ACFE's 2024 Report to the Nations puts the median occupational fraud at 12 months from start to detection, and the longest-running schemes are the costliest ones. That median should also size your Employee Theft limit. Think about the largest checks your controller can sign and the wires your office manager can release, then multiply by a year of nobody looking. That is the floor. ## Is crime insurance the same as cyber insurance? [#is-crime-insurance-the-same-as-cyber-insurance] No. Crime and cyber insurance overlap in one narrow area, and most businesses need both. The crime policy's Computer Fraud and Funds Transfer Fraud agreements cover a hacker who moves money out of your systems or sends your bank fraudulent wire instructions in your name. Fraudulent Impersonation, added by a separate endorsement, covers social engineering: an employee tricked into sending money by someone posing as a vendor or executive. Carriers routinely sublimit this coverage well below your crime limits, so check your declarations before assuming the full limit applies. What the crime policy never pays are breach costs. Forensics, customer notification, credit monitoring, ransomware response, and lost income while systems are down all live in a [cyber insurance policy](https://www.menloinsurance.com/library/guides/cyber-insurance-small-business). The crime forms replace the stolen funds themselves, and everything spent responding to the incident is a cyber claim. Fraudulent Impersonation also carries a verification condition: you must confirm any change-of-account request or transfer instruction through a method other than email, a callback or text to the apparent sender, and document that verification before the money moves. An accounts payable clerk who wires $80,000 on a convincing email alone has likely failed the condition. ## Frequently Asked Questions ### Is a fidelity bond the same as a surety bond? No. A surety bond is a three-party agreement in which a surety guarantees your performance to someone else, and the surety can recover its payout from you. A fidelity bond is two-party insurance that pays your business for theft committed by your own employees, and the insurer's recovery target is the dishonest employee. Fidelity bonds today are usually issued as the Employee Theft coverage of a commercial crime policy. ### Does commercial crime insurance cover theft by the business owner? No. The policy excludes theft and dishonesty by the named insured, its partners (in a partnership) or its LLC members, acting alone or together, whatever coverage you buy. The one exception is ERISA Plan Official Dishonesty, which covers a sole proprietor who steals from the company's benefit plan, because that agreement exists to make the plan whole and the owner has no claim on its proceeds. ### Do I have to identify which employee stole to collect under Employee Theft? Not under the standard unendorsed form, which pays as long as you can prove an employee theft happened, even if you never learn who did it. Proving it is your job, though. The base form's indirect loss exclusion bars the costs you incur to establish that a loss happened or how much it was, so the forensic accountant who rebuilds the books is your expense unless the policy has the Include Expenses Incurred To Establish Amount Of Covered Loss endorsement (CR 25 40 06 22), which pays those fees within the limit. A policy with the Employee Theft Name or Position Schedule endorsement (CR 04 08 06 22) covers only listed names or positions, so it does require identifying the thief. Either way, the proof cannot rest only on inventory or profit and loss computations. ### How much fidelity bond coverage does ERISA require for a 401k plan? Each person who handles plan funds must be bonded for at least 10% of the funds they handled in the prior year, with a $1,000 minimum and a $500,000 maximum required amount. If the plan holds employer stock, the required amount can reach $1,000,000. Department of Labor rules also say the bond can have no deductible and must be written by a surety on the U.S. Treasury's approved list. *This guide is for educational purposes and summarizes standard ISO policy language. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## Sizing your crime coverage [#sizing-your-crime-coverage] Commercial crime insurance replaces money and property stolen by your own employees or by outsiders, a loss your general liability and property policies exclude. Buy the insuring agreements you actually need, size the Employee Theft limit to a full year of what one trusted person can move, and confirm whether you hold a discovery or loss sustained form. Pull your declarations and check the deductible, sublimits, and form date against those exposures. ## References . [U.S. Department of Labor. Field Assistance Bulletin No. 2008-04]() . [U.S. Department of Labor. Protect Your Employee Benefit Plan With an ERISA Fidelity Bond]() . [Bureau of the Fiscal Service. Surety Bonds: Certified Companies (Circular 570)]() . [ACFE. Occupational Fraud 2024: A Report to the Nations]() # Commercial Property Insurance: Coverage and Forms (https://www.menloinsurance.com/library/guides/commercial-property-insurance-explained) How commercial property insurance works: the CP 00 10 coverage form, Basic, Broad and Special causes of loss, coinsurance, valuation and vacancy. Markdown version: https://www.menloinsurance.com/library/guides/commercial-property-insurance-explained.md [Commercial property insurance](https://www.menloinsurance.com/commercial-property-insurance) pays for direct physical loss or damage to covered property at your described premises caused by a covered cause of loss. A coverage form, usually the Building and Personal Property Coverage Form, defines the "covered property", and a separate causes of loss form (Basic, Broad or Special) defines the "covered causes of loss". Those two forms, plus your valuation and coinsurance choices, decide how much of a claim you recover. This guide shows where the surprises happen. ## Key takeaways * The policy pays only when four conditions line up: direct physical loss, to covered property, at the described premises, from a covered cause of loss. * The Special Form (CP 10 30) is open perils, so anything not excluded or limited is covered and the insurer carries the burden of proof. Basic and Broad are named perils forms. * **Coinsurance** penalizes underinsurance at partial losses, cutting your recovery when you carry less than the required percentage of value. * Losses settle at actual cash value unless the Replacement Cost option is marked on the Declarations. ### Commercial Property Insurance Commercial property insurance pays for direct physical loss of or damage to covered property at a described premises, caused by a covered cause of loss. The coverage form, causes of loss form, and valuation choice decide what a claim pays. ## What does commercial property insurance cover? [#what-does-commercial-property-insurance-cover] Commercial property insurance covers three kinds of property, each with its own limit: your building, your business personal property, and other people's property in your care. The coverage form, usually the Building and Personal Property Coverage Form ([CP 00 10](https://www.menloinsurance.com/library/forms/cp-00-10)), sets what property is insured, while a separate causes of loss form sets which perils are covered: * **Building**: the described structure, its fixtures and permanently installed equipment, and property used to maintain or service it. * **Your Business Personal Property**: furniture, machinery, stock, your interest in tenant improvements, and leased property you are required to insure. * **Personal Property of Others**: other people's property in your care at the premises, covered when a limit for it is shown in your policy. The 100-foot rule catches many insureds. Business personal property is covered in the described building and in the open or in a vehicle within 100 feet, but not inside another building that is not described, such as a shed, even if it is within 100 feet. Schedule every building that holds your property. Property under construction belongs on a [builders risk policy](https://www.menloinsurance.com/library/guides/builders-risk-insurance-guide). ## What are the Basic, Broad, and Special causes of loss forms? [#what-are-the-basic-broad-and-special-causes-of-loss-forms] Every commercial property policy includes a causes of loss form, and the choice decides who has to prove what. Under Basic and Broad, the insured must show that one of the listed named perils caused the loss. Under Special, anything not excluded or limited is covered, and the burden shifts to the insurer to prove an exclusion applies. | Feature | Basic (CP 10 10) | Broad (CP 10 20) | Special (CP 10 30) | | --------------- | -------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------- | | Coverage basis | Named perils | Named perils | **Open perils** | | Core perils | Fire, lightning, explosion, windstorm or hail, smoke, aircraft or vehicles, riot, vandalism, sprinkler leakage, sinkhole collapse, volcanic action | Basic perils plus falling objects, weight of snow, ice, or sleet, and water damage | Everything in Broad plus theft and any direct physical loss not excluded or limited | | Burden of proof | Insured proves a named peril | Insured proves a named peril | **Insurer** proves an exclusion | The Special Form ([CP 10 30](https://www.menloinsurance.com/library/forms/cp-10-30)) is defined by what it excludes. Windstorm, vandalism, sprinkler leakage and theft can each be removed by endorsement. Flood and earth movement are excluded on all three forms. According to the National Flood Insurance Program, just one inch of water in an average-size building can cause about $25,000 of damage. - $25,000 — Estimated damage from one inch of floodwater in an average size building — [National Flood Insurance Program]() ## How does coinsurance work, and how does the penalty bite? [#how-does-coinsurance-work-and-how-does-the-penalty-bite] Coinsurance cuts your claim payment when you carry less than the required percentage of the property's value, usually 80 percent, at the time of the loss. Owners assume the limit they bought is what a claim pays. Instead, the payment is reduced by a formula known as "did over should": the amount you carried, divided by the amount you should have carried, times the loss. ### Example A building valued at $100,000 with an 80 percent coinsurance clause needs an $80,000 limit. The insured carried only $40,000, half the requirement. On a $10,000 loss, the insurer pays 50 percent ($5,000) minus the $1,000 deductible, a $4,000 settlement. Had the insured carried $80,000, the same loss would have paid $9,000. Underinsurance is common. Marshall & Swift/Boeckh, now part of CoreLogic, has estimated that 75 percent of US businesses are underinsured by 40 percent or more. Because the test applies at the time of loss, rising construction costs can push you into a penalty mid-term, so review values every year or suspend coinsurance with the Agreed Value option. ## Actual cash value vs. replacement cost: which valuation applies? [#actual-cash-value-vs-replacement-cost-which-valuation-applies] Actual cash value applies unless Replacement Cost is marked on the declarations. [Actual cash value](https://www.menloinsurance.com/library/guides/actual-cash-value-vs-replacement-cost) (ACV) is replacement cost minus depreciation, so depreciation comes off every payment. When Replacement Cost is chosen, the policy pays the least of the limit, the cost to replace with comparable property, or the amount you actually spend. Code upgrades still need [ordinance or law coverage](https://www.menloinsurance.com/library/guides/ordinance-or-law-coverage). ## What does commercial property insurance not cover? [#what-does-commercial-property-insurance-not-cover] The base policy excludes flood, earth movement and code-driven upgrades, and it sharply limits coverage for vacant buildings. The vacancy condition is the one most well-built programs miss. If a building has been vacant for more than 60 consecutive days before a loss, there is no coverage for six perils, including theft, vandalism and water damage, and every other covered loss is reduced by 15 percent. The rule reflects the fire risk: the U.S. Fire Administration reported about 23,800 fires a year in vacant residential buildings from 2013 to 2015, and 34 percent of them were intentionally set. The Vacancy Permit endorsement (CP 04 50) waives the condition between tenants. Two exposures need their own coverage: lost income belongs to [business income insurance](https://www.menloinsurance.com/library/guides/business-income-insurance-explained), and liability to others to your [general liability policy](https://www.menloinsurance.com/library/guides/what-does-general-liability-insurance-cover). If no standard carrier will write your California building, the fallback is the California FAIR Plan's commercial program, a narrower named-peril form with its own vacancy rule. Our guide to the [FAIR Plan commercial policy](https://www.menloinsurance.com/library/guides/california-fair-plan-commercial) compares it with the forms above. ## Frequently Asked Questions ### What is the difference between named perils and open perils coverage? A named perils form (Basic or Broad) covers only the causes of loss it lists, and the insured must show that one of them caused the damage. The open perils Special Form covers all direct physical loss unless it is excluded or limited, which shifts the burden of proof to the insurer. ### What coinsurance percentage should I choose? The percentage on your declarations, commonly 80, 90 or 100 percent, is the share of the property's value at the time of loss you must carry to avoid the penalty. A higher percentage earns a better rate but requires an accurate valuation. Many insureds are safer with an adequate limit plus Agreed Value, which suspends coinsurance while it is in effect. ### Does commercial property insurance cover theft? Only under the Causes of Loss Special Form. Basic and Broad are named perils forms and neither lists theft, and even the Special Form limits theft and lets it be excluded by endorsement. ### Is my business personal property covered at other locations? Not under the base form. Coverage applies at the described premises and in the open or in a vehicle within 100 feet. Property in transit gets only a small extension under the Special Form (specified causes of loss, $5,000 maximum). Off-premises and transit exposures need scheduled locations, inland marine coverage or endorsements. *This guide is for educational purposes and summarizes standard ISO policy language. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## Checking your property program [#checking-your-property-program] Commercial property insurance pays for direct physical loss to covered property at your premises from a covered cause of loss. How much a claim pays depends on the coverage form, the causes of loss form, and your valuation and coinsurance choices. Vacancy and underinsurance are where good programs quietly fail, so pull your declarations, confirm the values reflect today's rebuilding cost, and ask your broker whether Agreed Value and Replacement Cost are in place. ## References . [National Flood Insurance Program. Understanding the Fundamentals: The Real Cost of Flooding]() . [Insurance Journal. How to Help Small Businesses Avoid Underinsurance and Anticipate the Unexpected]() . [U.S. Fire Administration. Vacant Residential Building Fires (2013-2015)]() # Contractor General Liability After a Non-Renewal or Decline in California: Where to Go Next (https://www.menloinsurance.com/library/guides/contractor-general-liability-after-nonrenewal-california) A California contractor who was non-renewed or declined still has markets. Admitted programs (RLI Contrac Pac, CNA Best Choice) and surplus lines programs (Brivado through BTIS, Blitz, from $500 minimum premium) write $1M/$2M contractor GL, some for new ventures with 2 years of experience. Your rights on a non-renewal notice, which trades are placed by hand, and what to prepare. Markdown version: https://www.menloinsurance.com/library/guides/contractor-general-liability-after-nonrenewal-california.md Yes, a California contractor who was non-renewed or declined can usually still buy general liability, but often from a different kind of market. Admitted contractor programs such as RLI Contrac Pac and CNA's Best Choice write small and mid-sized trade contractors, and surplus lines programs such as Brivado (through BTIS) and Blitz take trades, sizes and histories the admitted programs don't, with $1 million per occurrence and $2 million aggregate limits and minimum premiums from $500. Start as soon as the notice arrives. For the commercial policies Insurance Code section 678.1 covers, the insurer must send a non-renewal at least 60 days before the policy ends, with the reasons. This guide is for a California contractor holding a non-renewal notice, a cancellation or a string of declines. It covers what the notice must tell you, how the reason points to the right market, which programs write hard-to-place contractors, which trades we place by hand, and what to send so a new insurer can quote quickly. When you're ready, start the [contractor general liability application](https://www.menloinsurance.com/contractors-general-liability-insurance) and pick your trade. ## Key takeaways * **You get notice and a reason.** For the commercial policies it covers, Insurance Code section 678.1 requires written non-renewal notice 60 to 120 days before the end of the term, stating the reasons, to you and your broker. * **Declines open the surplus lines market.** A broker can place you with a non-admitted insurer after a diligent search of admitted insurers. Three admitted declinations are evidence of that search. * **Some programs take a lapse or no prior insurance.** BTIS's contractor marketplace asks about lapses of 1–59 or 60+ days and no prior insurance, and it accepts new ventures. * **Hard trades have a home.** Brivado writes excavation, grading, tree service, welding and pool work, with receipts up to $15 million. Roofing, tree service, excavation and welding go to specialty programs we submit by hand. * **Minimums are published.** Blitz's contractor GL starts at $500 plus taxes and fees ($750 for a package), and Brivado's minimum starts at $500 and varies by class, with 25% earned at the start. ## What does a non-renewal notice have to tell me in California? [#what-does-a-non-renewal-notice-have-to-tell-me-in-california] For the commercial policies it covers, California Insurance Code section 678.1 requires the insurer to deliver or mail a written notice of non-renewal "and the reasons for the nonrenewal" to the named insured and the producer of record at least 60 days, and no more than 120 days, before the policy period ends. There are exceptions, for example when the insurer offers to renew on changed terms, when you have already replaced the coverage, or for policies of 60 days or less. The reason is the most useful thing in the notice. Keep it and send it to your broker, because it tells a new insurer what to look at, and hiding it only causes a problem later. ## Why do contractors get non-renewed or declined? [#why-do-contractors-get-non-renewed-or-declined] Usually for one of a handful of reasons, and each points to a different market: | Reason | What it means to a new insurer | Where to look | | ---------------------------- | --------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------- | | Your trade | The insurer stopped writing your class, or never wrote it | A program that lists your trade, such as Brivado for excavation, tree service or welding | | Your size | Receipts or payroll outgrew the program | RLI's limit is $4M receipts for a GC and $3M for a trade contractor. Brivado and Blitz go to $15M | | New residential construction | Too many new homes, condos or townhomes | RLI excludes condo and townhome projects. Brivado and Blitz cap new homes at 25 a year outside construction-defect states | | Working as a paper GC | Subcontracting everything without supervising | RLI declines true paper contractors. Brivado and Blitz accept them | | Uninsured subcontractors | Their work is rated as your payroll | Collect certificates. RLI rates uninsured subs as employees | | Claims | Frequency or a large loss | Surplus lines programs price claims history. Have loss runs ready | | A lapse | Days or months without coverage | BTIS's marketplace takes lapse and no-prior-insurance answers | ## Which insurers write contractors other carriers declined? [#which-insurers-write-contractors-other-carriers-declined] These are the contractor programs available to Menlo in California. Admitted programs come first when you qualify, because a surplus lines placement needs a diligent search of the admitted market. | Program | Admitted? | Who it takes | Limits | Minimum premium | | ------------------------------ | ---------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------- | | RLI Contrac Pac | Admitted, AM Best A+ | GCs on site daily up to $4M receipts. Trades up to $3M. New ventures with 3 years' experience (not plumbers) | GL with blanket AI, primary and non-contributory and waiver of subrogation available | Not published | | CNA Best Choice (through BTIS) | Admitted, A rated | Small artisan contractors and new ventures, up to $1.5M receipts, subs up to $100,000 or 25% of receipts | $1M/$2M/$2M. Blanket AI, waiver and primary/non-contributory included | Not published | | Brivado (through BTIS) | Non-admitted, A XV | Hard-to-place and high-revenue trades up to $15M receipts, payroll up to $3M, paper GCs, new ventures with 2 years' trade experience | $1M/$2M/$2M, $1,000 deductible. Blanket AI (CG 20 38) and waiver included | From $500, varies by class. 25% minimum earned | | Blitz Contractors | Non-admitted | GCs including paper GCs, artisans. Payroll up to $3M, sales up to $15M | Up to $1M/$2M. Blanket AI, primary/non-contributory and waiver at no charge | Monoline GL from $500. Package from $750, plus taxes and fees | BTIS's contractor marketplace sends one application to several of its programs, admitted and non-admitted, with limits up to $2M/$4M/$4M and optional tool coverage and faulty workmanship coverage. Its application's experience question starts at two years in the trade. ## What if my trade is roofing, tree work, excavation or welding? [#what-if-my-trade-is-roofing-tree-work-excavation-or-welding] Those go by hand. Our online contractor application covers the common trades, and roofing, tree service, excavation and welding are submitted to specialty programs directly. Brivado, for example, lists excavation, grading, tree service and welding among its eligible classes with no gross receipts threshold. Choose "Another trade" on the application or contact us with a short description of the work, and include the notice or decline letter. ## Do I need general liability to keep my California contractor license? [#do-i-need-general-liability-to-keep-my-california-contractor-license] It depends on how the license is held. A contractor licensed as a limited liability company must carry liability insurance of at least $1 million in the aggregate for five or fewer people on the personnel of record, plus $100,000 for each additional person, up to $5 million. So for an LLC licensee, a non-renewal is a licensing problem as well as a contract problem. Replace the coverage before the old policy ends. ## What should I send to get a new quote fast? [#what-should-i-send-to-get-a-new-quote-fast] ### Steps ### The notice and the reason The non-renewal or cancellation notice, or the decline emails, with the reason each insurer gave. ### Loss runs Five years of loss runs from every insurer, even with no claims. Our guide on [how to read loss runs](https://www.menloinsurance.com/library/guides/how-to-read-loss-runs) explains what the new insurer will look at. ### Your numbers Gross receipts, employee payroll and subcontractor costs for the last year and the next, plus years in the trade and in business. ### Your work The share of residential, commercial and new construction work, number of new homes a year, and any work over three stories. ### What your contracts require The limits, additional insured forms, waiver of subrogation and primary wording your customers ask for. Our guide to [additional insured endorsements](https://www.menloinsurance.com/library/guides/additional-insured-endorsements-explained) explains the forms. Then open the [contractor general liability application](https://www.menloinsurance.com/contractors-general-liability-insurance). General liability doesn't cover your own workers or tools. See our guides to [contractors equipment insurance](https://www.menloinsurance.com/library/guides/contractors-equipment-insurance) and [workers' comp exemptions in California](https://www.menloinsurance.com/library/guides/workers-comp-exemption-california). ## Frequently Asked Questions ### How much notice does an insurer have to give before non-renewing my contractor GL? At least 60 days and no more than 120 days before the policy ends, in writing and with the reasons, for the commercial policies covered by Insurance Code section 678.1. ### Can I get general liability after a lapse in coverage? Often, yes. BTIS's contractor marketplace takes lapses of 1–59 days, 60 or more days, and no prior insurance as answers, and new ventures are accepted. ### Is surplus lines insurance good enough for my contracts? It can meet the limits and endorsements most contracts ask for, and several surplus lines programs include blanket additional insured and waiver of subrogation. Non-admitted insurers are not backed by the California Insurance Guarantee Association, so check whether your contract requires an admitted insurer. ### What is the cheapest general liability for a hard-to-place contractor? The published floors are $500 for Blitz monoline GL and from $500 for Brivado, varying by class, plus taxes and fees. Your price depends on trade, receipts, payroll, subcontracting and claims. *This guide is for educational purposes and summarizes California law and carrier program sheets dated 2024–2026. Programs, eligibility and prices change, and your policy's terms control. Menlo Insurance Services (CA license 6020106) is a licensed broker that may earn a commission on a placement and does not guarantee that any coverage or price will be available. Non-admitted insurers are not backed by the California Insurance Guarantee Association.* ## The Bottom Line [#the-bottom-line] A non-renewal or a decline narrows the market, but it doesn't close it. Read the reason on the notice, which California law requires for covered commercial policies, and send it with your loss runs and numbers. Admitted programs like RLI Contrac Pac and CNA Best Choice come first when you fit them. After admitted declines, surplus lines programs like Brivado and Blitz write hard trades, larger contractors, paper GCs and new ventures, from about $500 minimum premium. Roofing, tree service, excavation and welding are placed by hand, so contact us early. ## References . [BTIS (Builders & Tradesmen's Insurance Services). Brivado Contractor General Liability, Ver. 10.24.25]() (2025) . [RLI. Contrac Pac Program Features (CP-MK500)]() (2024) . [Blitz Insurance. Contractors]() (2025) . [California Legislative Information. Insurance Code section 678.1]() (accessed 2026-09-27) . [California Legislative Information. Insurance Code section 1763 (diligent search)]() (accessed 2026-09-27) . [BTIS. Contractor General Liability marketplace application (years of experience, prior insurance history), as walked by Menlo in September 2026]() (accessed 2026-09-26) . [BTIS. Contractor General Liability Overview]() (2024) . [Menlo Insurance Services. Contractor General Liability Insurance in California]() (accessed 2026-09-27) . [RLI. What You Need to Know About General Contractors and Subcontractors (CPC-MK528)]() (2024) . [BTIS. Best Choice Contractor General Liability (CNA), program details]() (2025) . [California Legislative Information. Business and Professions Code section 7071.19]() (accessed 2026-09-27) # Contractor General Liability Cost in California (2026) (https://www.menloinsurance.com/library/guides/contractor-general-liability-insurance-cost-california) California contractor general liability starts at published minimums of $350 to $500 a year for $1M/$2M. What sets your price and what taxes add. Markdown version: https://www.menloinsurance.com/library/guides/contractor-general-liability-insurance-cost-california.md In California, contractor general liability has published minimums, or floors, instead of one price. For $1 million per occurrence and $2 million aggregate, Hiscox's general liability starts as low as $350 a year, Blitz's contractor program at $500 plus taxes and fees, and BTIS's Brivado program at $500 depending on the class. Above those minimums, your premium depends on your trade, your payroll and subcontractor costs, your claims history and the endorsements your contracts require. This guide is for a California contractor budgeting for a first policy, a renewal or a bid on a bigger contract. It covers the published minimums, what insurers actually rate, why two contractors who bill the same amount pay different premiums, what is added on top of the base premium, and how the audit changes your total annual cost. When you're ready, start the [contractor general liability application](https://www.menloinsurance.com/contractors-general-liability-insurance) and we'll price it with several contractor programs. ## Key takeaways * **Published minimums run $350 to $500 a year.** Hiscox from $350, Blitz from $500 ($750 for a package), Brivado from $500 by class code. * **Payroll and subcontract costs drive the premium.** RLI rates its contractor program on payroll and subcontractor costs, not gross sales. * **Uninsured subs cost you.** Subcontractors without insurance, or without a certificate, are rated as your employees. * **Surplus lines adds tax.** Non-admitted programs carry California's 3% surplus lines tax and a 0.18% stamping fee. * **Some premium is kept if you cancel.** Brivado keeps 25% as a minimum earned premium. ## What is the minimum cost of contractor general liability in California? [#what-is-the-minimum-cost-of-contractor-general-liability-in-california] The lowest published starting points in Menlo's carrier files are these, all for California contractors: | Program | Paper | Published minimum | Limits | Notes | | ------------------------ | ------------------ | -------------------------------------------- | -------------------------------- | --------------------------------------------------------------------------------------------------------- | | Hiscox general liability | Admitted | From $350 a year | Up to $2M online, $5M on request | Contractor classes carry a minimum earned premium | | Blitz contractors | Non-admitted | $500 plus taxes and fees, $750 for a package | Up to $1M/$2M | Blanket additional insured, primary/non-contributory and waiver of subrogation at no charge | | Brivado (BTIS) | Non-admitted, A-XV | From $500, varies by class code | $1M/$2M/$2M, $1,000 deductible | 25% minimum earned premium. Blanket AI and waiver included | | Best Choice (CNA, BTIS) | Admitted | Not published | $1M/$2M/$2M | Blanket AI with waiver and primary/non-contributory included | | VETA (BTIS) | Non-admitted, A- | Not published | $1M/$2M/$2M, $0 deductible | Tools package $100 or $200 | A minimum is the least the program will charge for any policy. A one-person contractor in a low-risk trade often pays close to it, while a bigger or riskier contractor pays a rate on its exposures that lands well above it. We don't publish an average contractor premium. Menlo's own quotes span too many trades and business sizes to average honestly, and the carriers' filed rates vary by class. ## What do insurers rate a contractor's general liability on? [#what-do-insurers-rate-a-contractors-general-liability-on] They rate exposures, not the contract price you charge. RLI's contractor program states it plainly: gross sales are not a rating exposure there, and the premium basis is payroll and subcontractor costs. Other programs use gross receipts for some classes. Either way, the application asks for: | What they ask | Why it moves the price | | ---------------------------- | ------------------------------------------------------------------------------------------------------------------------------------- | | Your trade (class code) | Roofing and excavation carry more injury and damage risk than interior painting. Each class has its own rate | | Payroll, owners included | Owner and employee payroll, excluding clerical, is a rating base in many programs | | Subcontractor costs | Insured subs are rated at a low rate. Uninsured subs are rated as employees | | Gross receipts | Sets eligibility. Best Choice takes contractors up to $1.5 million in receipts, Brivado up to $15 million | | New residential construction | Tract and subdivision work raises the price or ends eligibility. Brivado caps new homes at 25 a year in California | | Years in business | New ventures are accepted with 2 years of trade experience on Brivado and 3 on RLI | | Claims history | Recent claims raise the rate or move you to a surplus lines program | ## Why do two contractors with the same revenue pay different premiums? [#why-do-two-contractors-with-the-same-revenue-pay-different-premiums] Because revenue isn't what's rated. Take two contractors who each bill $600,000 a year. One is a remodeler who pays $250,000 to insured subcontractors and has one employee. The other does all of the work with an in-house crew and $300,000 of payroll. The second has more payroll exposure, and if any of the first contractor's subs were uninsured, their cost would be rated as payroll too. Trade affects rating just as much. A carpentry contractor and a roofer with identical payroll land in different class rates, and some small-business programs exclude roofing completely. A contractor who was declined for its trade can read our guide to [contractor general liability after a non-renewal](https://www.menloinsurance.com/library/guides/contractor-general-liability-after-nonrenewal-california). ## What is added on top of the premium? [#what-is-added-on-top-of-the-premium] Three things can raise the total above the premium line: 1. **Surplus lines tax and fees.** A non-admitted policy carries California's 3% surplus lines tax and a 0.18% stamping fee, collected by the broker. Our [surplus lines tax table](https://www.menloinsurance.com/library/guides/surplus-lines-tax-by-state) shows how it's figured. 2. **Policy and program fees.** Blitz quotes its minimums "plus taxes & fees." 3. **Endorsements.** Programs that include blanket additional insured, waiver of subrogation and primary/non-contributory wording cost nothing extra for those forms. Others charge for each one, so compare quotes with the same wording. ## How does the audit change what I pay? [#how-does-the-audit-change-what-i-pay] The first premium is a deposit based on an estimate of payroll, subcontractor costs or receipts. At the end of the policy period, the insurer audits your actual figures and either bills you for the difference or refunds it. Underestimating payroll leads to a bill later, and uninsured subcontractors found at audit are charged as employees. Keep a certificate from every sub on file. Cancelling before the policy expires doesn't always return the unused premium. Brivado retains 25% as a minimum earned premium. ## How much general liability does a California contractor need? [#how-much-general-liability-does-a-california-contractor-need] At least what your contracts and the law require. An LLC licensee with five or fewer people on the personnel of record must carry liability insurance with an aggregate limit of at least $1,000,000, increasing by $100,000 for each additional person up to a maximum of $5,000,000. Every home improvement contract must also tell the owner whether you carry commercial general liability and with which insurer. Most contracts ask for $1 million per occurrence and $2 million aggregate, which is the standard limit on every program above. Umbrella or excess policies usually provide higher limits above the general liability. ## Frequently Asked Questions ### How much does $1 million general liability cost for a contractor? The published starting points for $1 million per occurrence are $350 a year on Hiscox and $500 on Blitz and Brivado, before taxes and fees. Your trade, payroll, subcontract costs and claims set the actual price. ### Is general liability cheaper for a contractor with no employees? Usually, because payroll is a main rating base. The owner's own payroll is still counted in many programs, and uninsured subcontractors are rated as employees. ### Do surplus lines policies cost more? They add California's 3% surplus lines tax and a 0.18% stamping fee. The premium itself can be higher or lower than an admitted quote, and surplus lines programs often take trades admitted insurers decline. ### Can I lower my contractor GL premium? Report payroll and subcontract costs accurately, collect certificates from every sub, keep your class descriptions precise, and compare programs with the same endorsements. A higher deductible also lowers the price where a program offers one. *This guide is general information based on California law and carrier program sheets dated 2023–2026. Rates and minimums change, and your policy's terms control. Menlo Insurance Services (CA license 6020106) is a licensed broker that may earn a commission on a placement. Non-admitted insurers are not backed by the California Insurance Guarantee Association.* ## References . [Hiscox. Hiscox NOW Product Info]() (2026) . [Blitz Insurance. Contractors]() (2025) . [BTIS. Brivado Contractor General Liability, Ver. 10.24.25]() (2025) . [RLI. What You Need to Know About General Contractors and Subcontractors (CPC-MK528)]() (2024) . [Surplus Line Association of California. Broker Taxes and Fees]() (accessed 2026-09-27) . [BTIS. Best Choice Contractor General Liability (CNA)]() (2025) . [BTIS. VETA Contractor General Liability]() (2023) . [RLI. Contrac Pac Program Features (CP-MK500)]() (2024) . [MGT Insurance. Navigation Guide: Artisan Contractors]() (2026) . [California Legislative Information. Business and Professions Code section 7071.19]() (accessed 2026-09-27) . [California Legislative Information. Business and Professions Code section 7159]() (accessed 2026-09-27) # Contractors Equipment Insurance: Tools and Machinery (https://www.menloinsurance.com/library/guides/contractors-equipment-insurance) Tool insurance for contractors: how an equipment floater covers machinery at the jobsite, in transit and in storage, plus cranes and key exclusions. Markdown version: https://www.menloinsurance.com/library/guides/contractors-equipment-insurance.md Contractors equipment insurance, also called a contractors equipment floater or tool insurance, covers the machinery, equipment and tools a business uses for its work wherever they are: on your premises, at a jobsite, in transit or in storage. It is an [inland marine policy](https://www.menloinsurance.com/library/guides/what-is-inland-marine-insurance), so it is not tied to one listed address the way a commercial property policy is. That matters because a standard property policy leaves equipment badly exposed as soon as it leaves your yard. Stolen equipment is rarely recovered. Of 11,574 equipment thefts reported in 2016, only 2,442 machines were recovered, a 21 percent recovery rate, according to the National Equipment Register and National Insurance Crime Bureau annual theft report. For most owners, insurance is the only way to replace a stolen machine. This guide follows the AAIS Contractors' Equipment Coverage form (IM 7000 04 04), the most widely used base form for this coverage. ## Key takeaways * **Open perils, anywhere**: the floater covers mobile machinery, equipment and tools (cranes, backhoes, bulldozers, generators, forklifts) on an open perils basis, and unlike many forms it does not exclude flood or earth movement. * **Property falls short**: a commercial property policy gives only $10,000 off premises and $5,000 in transit, and its off-premises coverage for builders' equipment does not include theft. * **Scheduled or blanket**: write a limit for each piece of equipment, or one catastrophe limit with periodic reporting for large fleets, plus blanket small tools coverage for mixed gear. * **Built-in extras**: supplemental coverages add employee tools, leased and rented equipment, newly purchased equipment, pollutant cleanup, rental reimbursement and spare parts, each with its own automatic limit. ### Contractors Equipment Floater A contractors equipment floater is an [inland marine policy](https://www.menloinsurance.com/inland-marine-insurance) that covers the equipment, machinery and tools of your trade anywhere you work: on site, between job sites, in storage, or during maintenance at your own premises. ## What is contractors equipment insurance? [#what-is-contractors-equipment-insurance] Contractors equipment insurance is an inland marine policy for equipment "of a mobile nature" used in your contracting, installation, repair or moving operations. It is called a floater because the coverage follows the equipment instead of staying tied to one address. Despite the name, it is not only for contractors: farms insure tractors this way, warehouses insure forklifts, and golf courses insure greens equipment. Watch the use requirement, though. The form covers only equipment used in those operations, so a golf course's greens mower fits the definition, while the cart its security staff drive around the property may not. ## Why doesn't my commercial property policy cover this? [#why-doesnt-my-commercial-property-policy-cover-this] Your commercial property policy is built around a location, so it covers equipment away from that location only in small amounts. The Building and Personal Property Coverage Form ([CP 00 10](https://www.menloinsurance.com/library/forms/cp-00-10)) limits it this way: * It excludes vehicles and self-propelled machines that are licensed for road use or operated mainly away from the described premises. * Property away from your premises gets a $10,000 coverage extension. * Property in transit gets only $5,000, for limited perils, and only in or on your own vehicle. * Under the [Causes of Loss Special Form](https://www.menloinsurance.com/library/forms/cp-10-30), builders' machinery, tools and equipment away from your premises are covered only for "specified causes of loss", and theft is not on that list. Compare those sublimits with what actually gets stolen: - 21% — Recovery rate for stolen equipment — [NER / NICB, 2016]() - $29,258 — Average value of a stolen machine — [NER / NICB, 2016]() - $400M — Estimated annual U.S. equipment theft losses — [NER / NICB, 2016]() The average stolen machine is worth nearly three times the property form's entire off-premises extension. ### Example A contractor leaves a generator and tools at a jobsite over the weekend and finds them gone on Monday. The commercial property policy's off-premises coverage applies only to specified causes of loss, which do not include theft, so it pays nothing. A contractors equipment floater written on an open perils basis covers the theft. Theft still has to be proven at claim time. The floater excludes missing property: equipment that is simply gone, with no physical evidence of what happened, is not a covered theft. The adjuster will want a police report plus something concrete, such as a cut chain or a pried-open lockbox. Photograph your equipment in place each week and keep a log of serial numbers. ## How is the coverage structured, scheduled or blanket? [#how-is-the-coverage-structured-scheduled-or-blanket] Most policies are written on a scheduled basis: each item is listed with its own limit, and a catastrophe limit caps what is paid for any one event. The catastrophe limit can equal the total value of all items, or be set lower for a better rate when the equipment is spread across job sites and one event is unlikely to reach all of it. For large fleets or frequent buying and selling, blanket coverage (AAIS form IM 7002) works differently. One catastrophe limit covers the whole fleet, capped by a per-item maximum, and you send the insurer an updated equipment list on a set schedule. On a reporting form, both your premium and your claim payment depend on what you last reported, so a late or understated list caps your recovery at that old figure. Even scheduled policies usually add a blanket limit for small tools through a Small Tools Endorsement. ## What equipment is not covered? [#what-equipment-is-not-covered] The form starts broad and then narrows through its Property Not Covered section: | Not covered | Why, and what to do about it | | ------------------------------------------ | ---------------------------------------------------------------------------------------------------- | | Aircraft or watercraft | Separate policies, though drones and barges can sometimes be added by endorsement | | Property you lease or rent to others | Restore with the Equipment Leased Or Rented To Others endorsement (IM 7013) | | Property you loan to others | Restore with scheduled or jobsite loaned-property endorsements (IM 7022 / IM 7023) | | Equipment underground in mining operations | Some forms exclude all below-ground equipment, but excavator buckets used for trenching stay covered | | Highway vehicles hauling people or cargo | That's a business auto exposure, but unlicensed off-road units stay covered | | Waterborne property | Add back with a Waterborne Endorsement (IM 7019) if you barge equipment to jobsites | Contractors often lend or rent machines to each other, and the moment you do, the base form stops covering that item. If sharing equipment is part of how you work, put the leased or rented to others and loaned property endorsements in place before anything leaves your yard. Also look for the weight-of-load exclusion common in this market (IM 7017 06 04), which removes coverage for a loss caused by a load heavier than the machine's rated lifting capacity. Treat it as negotiable and ask the underwriter to remove it. ## Does contractors equipment insurance cover cranes? [#does-contractors-equipment-insurance-cover-cranes] Yes. Cranes are covered as mobile equipment under the base contractors equipment form, and for most owners the floater is their main crane insurance for physical damage. The catch is the boom. Boom collapse is the loss insurers worry about most, because it often totals the whole crane. Many carriers respond with a boom restriction: the AAIS Boom Restriction Endorsement (IM 7016 04 04) removes coverage for crane booms over 25 feet long unless the loss comes from a specified peril while the equipment is in transit. Crane wording varies between carriers more than almost any other part of this coverage, so if you own or operate cranes, read the boom wording before you bind, not at claim time. ## How much coverage do I need, and what's built in? [#how-much-coverage-do-i-need-and-whats-built-in] Set your limits at real market values, not the purchase price or depreciated book value. Unlike buildings, contractors equipment is often insured at [actual cash value rather than replacement cost](https://www.menloinsurance.com/library/guides/actual-cash-value-vs-replacement-cost), and many insurers offer replacement cost only for items five years old or newer. Most policies have a coinsurance condition of 80, 90 or 100 percent, so if you insure too little, the claim payment is reduced. An Agreed Amount endorsement (IM 7026) fixes a value at the start of the policy for hard-to-value equipment and turns off coinsurance for those items. IM 7000 04 04 also includes six supplemental coverages automatically, each adjustable on the schedule: | Supplemental coverage | Automatic limit | | ----------------------------------------------------------- | ------------------------------------------------------ | | Employee tools (at your premises or a jobsite) | $5,000 per occurrence | | Equipment leased or rented from others (unscheduled) | $25,000 per occurrence | | Newly purchased equipment | 30 percent of the catastrophe limit, for up to 60 days | | Pollutant cleanup and removal | $25,000 annual aggregate | | Rental reimbursement (a substitute while yours is repaired) | $5,000, after a 72-hour waiting period | | Spare parts and fuel | $5,000 per occurrence | To set limits that hold up at claim time, work through these steps: ### Steps ### Decide how each item will be valued Replacement cost, actual cash value or agreed amount: the choice appears on the coverage schedule and drives everything else. ### Establish real market values Equipment dealers and used-equipment sites are reliable sources of value. The original purchase price, the loan balance and depreciated book value are common answers, and all of them are wrong. ### Set the catastrophe limit and deductible Choose a flat or percentage deductible, and confirm that the deductible applies per event, not per item. ### Keep the schedule current Newly purchased equipment is covered automatically for only 60 days. Report new purchases promptly, and confirm how your [general liability](https://www.menloinsurance.com/library/guides/what-does-general-liability-insurance-cover) and [business auto](https://www.menloinsurance.com/library/guides/commercial-auto-insurance-symbols) forms treat new units, because their "mobile equipment" definitions don't always match the inland marine form. ## Frequently Asked Questions ### Does contractors equipment insurance cover theft from a jobsite? Generally, yes. Theft is covered under this open perils coverage, which matters because equipment is often left at job sites overnight and on weekends. Coverage does not apply when property is gone with no physical evidence of how it was taken. That is treated as "mysterious disappearance", not theft. ### Are my employees' own tools covered? Yes, up to $5,000 per occurrence under the built-in Employee Tools supplemental coverage, but only while they are at your premises or a jobsite. Tools stolen from a truck in a diner parking lot would not qualify. ### Is rented equipment covered? Equipment you lease or rent from others is covered automatically up to $25,000 per occurrence, and a reporting form endorsement can add coverage for higher-value rentals. Equipment you borrow needs a separate endorsement. Equipment you lend or rent to others is not covered unless you add an endorsement for it. ### What's the difference between a contractors equipment floater and builders risk? The floater covers the tools and equipment you build with, while [builders risk](https://www.menloinsurance.com/library/guides/builders-risk-insurance-guide) covers the structure being built and the materials that become part of it. Most contractors need both. Builders risk picks up lumber, pipe and fixtures once they reach the site, while your tools stay on the floater from the first day of the job to the last. *This guide is for educational purposes and summarizes standard ISO and AAIS policy language. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## Checking your equipment schedule [#checking-your-equipment-schedule] Contractors equipment insurance is an inland marine floater that follows your tools and machinery on site, in transit and in storage, and it covers the theft your commercial property policy does not. It can be written scheduled (item by item) or blanket (one limit for the fleet), and each machine should be insured at real market value, not book value. If you own cranes, read the boom endorsement before you bind. Ask your broker for the coverage schedule and check it against the equipment actually in your yard. ## References . [National Equipment Register and National Insurance Crime Bureau. 2016 Equipment Theft Report]() # Cyber Insurance for Small Business: Coverage and Cost (https://www.menloinsurance.com/library/guides/cyber-insurance-small-business) What cyber insurance covers for a small business, what it costs (about $129 a month), first vs third party coverage, and the controls carriers require. Markdown version: https://www.menloinsurance.com/library/guides/cyber-insurance-small-business.md [Cyber insurance](https://www.menloinsurance.com/cyber-liability-insurance) for a small business pays the costs of a hack or data breach: forensic investigation, notifying customers, credit monitoring, negotiating and paying a ransom, lost income while systems are down, and lawsuits or regulatory actions that follow. Small businesses buy it separately because general liability, property and businessowners policies exclude cyber losses or barely touch them. A typical small business policy has a $1,000,000 limit and costs around $1,500 a year, based on Insureon's customer data. Most owners assume hackers only go after big companies. The data says otherwise. Verizon's 2025 Data Breach Investigations Report found ransomware in 88 percent of breaches at small organizations, compared with 39 percent at large ones. Attackers also use a small vendor's network as a back door into a larger customer's systems. ## Key takeaways * **Two sides of coverage**: first party agreements pay your own breach costs, and third party agreements pay claims others bring against you. Most incidents trigger both. * **Traditional policies don't fill the gap**: the CGL treats electronic data as intangible property and carries a mandatory cyber limitation, so a stand-alone cyber policy is usually necessary. * **Cost is modest for the exposure**: small businesses average about $1,500 a year, while NetDiligence puts the average SME cyber claim at $246,000. * **The application is part of the policy**: claiming security controls such as MFA that you do not actually have can void coverage after a loss. ### Cyber Insurance Cyber insurance covers financial losses from hacking, data breaches, ransomware and other cyber events. It combines two kinds of coverage: first party coverage for your own response costs (forensics, notifying affected people) and lost income, and liability coverage for claims by affected customers, regulators and card networks. ## What is cyber liability insurance? [#what-is-cyber-liability-insurance] Cyber liability insurance, also called data breach insurance, protects a business against hacking, data breaches and ransomware, and against the lawsuits that follow. It exists because traditional policies were never designed for this risk. Your [general liability policy](https://www.menloinsurance.com/library/guides/what-does-general-liability-insurance-cover) says electronic data is not tangible property. A [businessowners policy](https://www.menloinsurance.com/library/guides/bop-business-owners-policy-guide) has only small electronic data sublimits, and [commercial crime insurance](https://www.menloinsurance.com/library/guides/commercial-crime-insurance) picks up some computer fraud but nothing close to a full breach response. ## What does cyber insurance cover? [#what-does-cyber-insurance-cover] Cyber insurance covers two kinds of loss. First party coverage pays your own costs after an attack: forensic analysis to find out whether data was breached, legally required customer notices, credit monitoring, data restoration and ransom payments, plus the income you lose while getting back online. Third party coverage pays damages and defense when others make claims after an attack: customers who sue because their personal information was exposed, regulators enforcing privacy laws such as HIPAA or the CCPA, and card networks imposing assessments under the Payment Card Industry Data Security Standard. A single incident often triggers several of these at once. The ISO benchmark form organizes this into eight insuring agreements, and most proprietary forms follow the same outline under different names: | Insuring agreement | Side | What it pays | | ----------------------- | ----------- | --------------------------------------------------------------- | | Breach response expense | First party | Forensics, notification, call centers, credit monitoring, PR | | Cyber extortion | First party | Ransom payments, negotiators, interest on a loan to pay quickly | | Data restoration | First party | Cost to restore data and programs, including re-entry | | Business income | First party | Lost net income and continuing expenses during downtime | | Breach liability | Third party | Damages and defense for people whose data was compromised | | Regulatory proceeding | Third party | Regulatory defense, consumer redress, insurable fines | | Payment card liability | Third party | PCI assessments, card reissuance, fraud recoveries | | Media liability | Third party | Defamation, privacy, and copyright claims from your content | ## What does cyber insurance not cover? [#what-does-cyber-insurance-not-cover] Cyber insurance does not cover war, and many newer forms also exclude widespread events and outages at infrastructure you depend on but do not control. State-sponsored attacks raised the question of whether foreign government hacking counts as "war" under a policy's war exclusion. In Merck & Co., Inc. v. ACE American Insurance Company (2023), a New Jersey appellate court held that a traditional war exclusion did not bar Merck's recovery for its $1.4 billion NotPetya loss. Carriers rewrote their war wording in response, and many policies now exclude nation-state and widespread events outright. The base form also excludes outages at your own power or internet provider, so a cloud failure that takes your systems down needs contingent business interruption coverage, added by endorsement and usually sublimited. ## How much does cyber insurance cost for a small business? [#how-much-does-cyber-insurance-cost-for-a-small-business] Small businesses pay an average of $129 a month, or about $1,552 a year, for cyber insurance, according to Insureon's analysis of its customers' policies, and 41 percent pay less than $100 a month. That usually buys a $1,000,000 limit with a [retention](https://www.menloinsurance.com/library/glossary/self-insured-retention) of $1,000 to $2,500. By comparison, NetDiligence puts the average cyber claim for a small or mid-sized enterprise (SME) at $246,000 over a five-year period, more than most small businesses could absorb. Premiums rise with revenue, industry, the amount of personal and card data you hold, prior incidents, and fall with the security controls you can confirm. - $129/mo — Average small business cyber premium — [Insureon, 2026]() - $246K — Average SME cyber claim, five-year — [NetDiligence, 2025]() - 88% — Small-org breaches involving ransomware — [Verizon DBIR, 2025]() Two terms decide how much a policy actually pays after a loss: * **Eroding limits**: on most cyber forms, defense costs reduce the limit as they are spent. A $1,000,000 policy that spends $400,000 on lawyers has $600,000 left for the judgment. * **Sublimits**: extortion, social engineering and regulatory fines are common sublimit targets. A $1,000,000 policy with a $100,000 ransomware sublimit is not a $1,000,000 ransomware policy. ## What do cyber insurers require before they quote? [#what-do-cyber-insurers-require-before-they-quote] Cyber underwriters require a set of baseline security controls before they quote, and your answers on the application become part of the policy. Nearly every carrier requires multifactor authentication on email, remote access and administrator accounts. Most also expect tested offline backups, endpoint detection and response (EDR) software, and phishing training. Many carriers scan your public internet footprint before quoting, and the most common problem they find is Remote Desktop Protocol (RDP) open to the internet on port 3389. Coalition's 2024 Cyber Claims Report found that policyholders with internet-exposed RDP were 2.5 times more likely to have a claim. Answer precisely: the insurer relies on your application answers, and a misstatement found after a loss can void coverage. ## Frequently Asked Questions ### Does a BOP or general liability policy cover cyber attacks? Not in any meaningful way. The CGL treats electronic data as intangible property and includes a mandatory endorsement limiting cyber exposure. BOP and commercial property forms give only small electronic data sublimits for a narrow set of perils. Either policy can add a cyber endorsement, but those carry sublimits far below real breach costs. A stand-alone cyber policy is the reliable route. ### Does cyber insurance cover ransomware payments? Yes, under cyber extortion coverage. The ISO form pays the ransom (including in cryptocurrency) and the cost of a negotiator or reward. There are conditions: you generally must confirm the threat is real, try to restore from backups, and notify the insurer and get its approval before paying. The approval includes a sanctions check on the attacker, because the Treasury Department's Office of Foreign Assets Control (OFAC) warns that paying a sanctioned attacker can itself violate federal law. ### Is cyber insurance required by law? No state requires businesses to buy cyber insurance. Every state has breach notification laws that apply whether or not you are insured, and privacy rules such as HIPAA and the CCPA add further obligations and penalties. In practice, most businesses meet a cyber insurance requirement through contracts: many customer, lender and government agreements require proof of cyber coverage. *This guide is for educational purposes and summarizes standard ISO policy language. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## Buying cyber coverage that pays [#buying-cyber-coverage-that-pays] Cyber insurance pays your own breach costs and the claims others bring after a breach, a gap your general liability and property policies leave wide open. At around $1,500 a year against an average claim of about $246,000, the math favors buying it. Answer the application's security questions accurately, because a control you said you had but never deployed can void the policy after a loss. And ask your broker how the policy handles wire transfer fraud limits and ransomware sublimits. ## References . [Insureon. Cyber Liability Insurance Cost]() . [Verizon. 2025 Data Breach Investigations Report: Small- and Medium-Sized Business Snapshot]() . [Superior Court of New Jersey, Appellate Division. Merck and Co., Inc. v. ACE American Insurance Company]() . [NetDiligence. Cyber Claims Study 2025 Report]() . [Coalition. 2024 Cyber Claims Report]() . [U.S. Department of the Treasury, OFAC. Updated Advisory on Potential Sanctions Risks for Facilitating Ransomware Payments]() # Delos Insurance in California: Who It Writes and What the 2026 Expansion Changed (https://www.menloinsurance.com/library/guides/delos-insurance-california) What Delos Insurance is, who qualifies for its California homeowners policies, and what the March 2026 expansion changed for homes stuck on the FAIR Plan. Markdown version: https://www.menloinsurance.com/library/guides/delos-insurance-california.md Delos Insurance Solutions is a managing general agent, an MGA, based in San Francisco, and it writes homeowners insurance for [California homes with wildfire exposure](https://www.menloinsurance.com/home-insurance-high-fire-risk-california). It runs its own wildfire model and uses it to accept properties other insurers turn down. Delos is not itself an insurance carrier. The policies it sells are issued by Homesite Insurance Company and Lloyd's of London, and in March 2026 the company announced it had opened eligibility to more than 1 million additional homes in twelve months, which brought its statewide total to roughly 12 million. If a wildfire nonrenewal pushed you toward the FAIR Plan, Delos is one of the few names your broker can shop against it. The chain is short: the Delos model scores your specific parcel, the score decides whether you are eligible, Delos underwrites the policy as an MGA, one of its carriers issues it, and that carrier is who pays your claim. Everything worth asking about Delos comes back to one of those links. ## Key takeaways * **Model-gated eligibility**: Delos accepts homes parcel by parcel, so one address can qualify while the house next door does not, and eligibility can change as the model updates. * **The paper matters**: depending on the program, your policy sits with an admitted carrier or a non-admitted Lloyd's syndicate, and that decides whether California's guaranty fund stands behind it. * **Company claims are company claims**: the "no fire losses" record from the January 2025 LA fires comes from a Delos press release, not an audited or independently verified result. * **The real comparison**: by Delos's own analysis more than half of FAIR Plan homes are Delos-eligible, so the decision is usually a FAIR Plan plus DIC stack against a single HO-3. ### Delos Insurance Solutions A managing general agent that underwrites California homeowners insurance in wildfire-exposed areas using a proprietary wildfire risk model, on behalf of the rated carriers whose paper backs each policy. ## What Is Delos Insurance? [#what-is-delos-insurance] Delos is an MGA, which means it does the underwriting, quoting, and policy service, while a separate carrier holds the risk and pays claims. Its two named capacity providers are Homesite Insurance Company and Lloyd's of London, and Delos says all of its capacity runs through companies rated A by [AM Best](https://www.menloinsurance.com/library/guides/am-best-insurance-ratings-explained) or A by Demotech. The split between agent and carrier is worth a minute of your attention. Homesite is a licensed, admitted carrier, while Lloyd's writes California home business as a [non-admitted carrier](https://www.menloinsurance.com/library/guides/admitted-vs-non-admitted-carriers) placed through the [surplus lines](https://www.menloinsurance.com/library/guides/surplus-lines-insurance) market. An admitted policy is backed by the California Insurance Guarantee Association if the carrier fails. A surplus lines policy is not, and it carries surplus lines taxes and fees as separate line items on the quote. Before you bind, ask your broker one question: whose paper is this policy on? ## What Does Delos Homeowners Insurance Cover? [#what-does-delos-homeowners-insurance-cover] Delos writes HO-3 policies for primary, secondary, and seasonal homes, plus a separate vacant home policy, and it distributes through roughly 14,000 California brokers and agents rather than selling direct. An HO-3 is the standard full homeowners form: it covers the dwelling against all causes of loss except those the policy excludes, covers personal property on a named perils basis, and includes personal liability and additional living expense if a covered loss forces you out. The point of the product is that scope. A FAIR Plan dwelling policy covers fire, lightning, internal explosion, and smoke, and nothing else without add-ons. Moving to an HO-3 gets back the coverages the FAIR Plan never had. The vacant home policy fills a real gap too. Most standard forms restrict or suspend key coverages once a home sits empty past a stated period, often 60 days, so owners between tenants, mid-renovation, or settling an estate usually cannot buy a standard HO-3 at all. ## How Is the Delos Wildfire Model Different? [#how-is-the-delos-wildfire-model-different] Legacy catastrophe models score wildfire risk broadly, often by territory or brush zone, which is why entire ZIP codes get nonrenewed at once. Delos models the individual parcel. The company says its model draws on hundreds of parameters, including NASA earth observation imagery, high-resolution wind data, fire suppression efficacy datasets, and metrics for urban conflagration, the house-to-house spread that drove the Eaton and Palisades losses. Delos research puts a number on the disagreement: 65% of homes other insurers class as high risk should, by its model, be considered medium to low risk. Two more of the company's claims call for care. Delos states its model correctly predicted the major California wildfires of the past six years, and CEO Kevin Stein said in the March 2026 release that Delos took no fire losses from the January 2025 LA fires. Both are company statements in company press materials. ### Company claims are not audited results The zero-loss record from the January 2025 fires and the model-accuracy claims come from Delos press releases, not from a regulator, a rating agency, or an independent study. They may well be true. Treat them as the company's account of itself, and weigh the carrier ratings behind the policy, which are independently assigned, more heavily than the marketing. ## What Did the March 2026 Expansion Change? [#what-did-the-march-2026-expansion-change] The expansion changed who can get a quote. Over the twelve months ending March 2026, Delos opened eligibility to more than 1 million additional California homes, including about 270,000 in the five counties surrounding the Eaton and Palisades fire footprints, bringing its eligible universe to roughly 12 million homes statewide. An October 2025 round accounted for 265,000 of those, spread across Los Angeles, Orange, Riverside, San Bernardino, and San Diego counties. The timing matters because the fires pushed the residual market the other way. FAIR Plan enrollment jumped 43% to 668,609 policies between September 2024 and December 2025, the figure Delos cited in its release, and the plan's own data shows 696,562 policies in force by June 2026, backed by $768 billion of exposure. Against that backdrop Delos makes its sharpest claim: by its analysis, more than half the homes currently on the FAIR Plan are eligible for a single comprehensive Delos policy. If your address was declined in 2024, that answer may have changed. ## Delos or the FAIR Plan: Which Path Fits? [#delos-or-the-fair-plan-which-path-fits] The practical choice is rarely Delos against a standard carrier, because if a standard carrier would take the home you would already be there. The choice is a [California FAIR Plan](https://www.menloinsurance.com/library/guides/california-fair-plan) policy wrapped with a [difference in conditions policy](https://www.menloinsurance.com/library/guides/difference-in-conditions-insurance) against a single HO-3 from a program like Delos. Put them side by side: | Question | FAIR Plan + DIC | Delos HO-3 | | ----------------- | ------------------------------------------------------------------------ | ------------------------------------------------------------ | | Who qualifies | Every insurable California home, by design | Only parcels the Delos model accepts, about 12 million homes | | Policies involved | **Two policies, two carriers** | **One policy, one carrier** | | Perils covered | Fire policy plus a DIC wrap for liability, theft, water, living expenses | Full HO-3 scope in a single form | | Claim handling | Each carrier adjusts only its own perils, gaps possible at the seams | One adjuster, one deductible, one form | | Backing | FAIR Plan is guaranteed by its member insurers | Homesite (admitted) or Lloyd's (surplus lines), by program | The two-policy stack works, and hundreds of thousands of households run on it. Its weakness shows at claim time, when a loss touches both policies and mismatched limits, deductibles, or effective dates leave a seam nobody covers. A single HO-3 has no seams. What it has instead is a gate: the model has to accept your parcel, and an acceptance this year is not a promise for next year's renewal. If the model turns your address down, our guide to [getting a California FAIR Plan quote](https://www.menloinsurance.com/library/guides/california-fair-plan-quote) walks through the other path, from the broker application to the DIC wrap. ## Frequently Asked Questions ### Is Delos Insurance a real insurance company? Delos Insurance Solutions is a real, California-licensed business, but it is a managing general agent rather than an insurance carrier. It underwrites and services policies that are issued by Homesite Insurance Company or through Lloyd's of London. The carrier named on your declarations page, not Delos, is the company legally obligated to pay your claims. ### Is Delos admitted in California? The answer depends on the program behind your specific quote. Homesite is an admitted California carrier, so policies on its paper carry guaranty fund protection. Lloyd's of London writes as a non-admitted, surplus lines insurer, so those policies carry no guaranty fund backing and add surplus lines taxes and fees. Ask your broker which carrier is issuing before you bind. ### Can Delos get me off the California FAIR Plan? Possibly. Delos's March 2026 analysis found that more than half of homes currently on the FAIR Plan are eligible for one of its policies, and its eligible universe now covers roughly 12 million California homes. Eligibility is decided parcel by parcel through its wildfire model, so the only way to know is to have a broker submit your address. ### What happens to my Delos policy if there is a huge fire year? The carriers issuing the policies, not Delos, absorb the losses, which is why their AM Best and Demotech ratings matter more than the MGA's marketing. Delos reported no fire losses from the January 2025 LA fires, though that is the company's own statement. As with any wildfire program, appetite can tighten after a bad season, so renewal terms are never guaranteed. *This guide is for educational purposes and summarizes public company statements and California market data. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## The Bottom Line [#the-bottom-line] Delos Insurance Solutions is a wildfire-focused MGA. Its HO-3 and vacant home policies are issued by A rated carriers, and its model accepts many homes the rest of the market declines. The March 2026 expansion made roughly 12 million California homes eligible, including, by the company's count, over half of those on the FAIR Plan. If you are carrying a FAIR Plan and DIC stack, have your broker test your address against it at renewal. ## References . [PR Newswire. Delos Expands Insurance Eligibility by More Than 1 Million Homes in Wildfire-Stressed Areas]() . [Delos Insurance Solutions. About Delos]() . [Insurance Journal. Delos Says It Has Expanded Eligibility by 1M California Homes in Wildfire-Stressed Areas]() . [Reinsurance News. Delos Expands Wildfire Coverage to 265,000 Additional California Homes]() . [California FAIR Plan. Key Statistics & Data]() # DIC Insurance: How a Difference in Conditions Policy Completes Your FAIR Plan (https://www.menloinsurance.com/library/guides/difference-in-conditions-insurance) How a difference in conditions (DIC) policy wraps around the California FAIR Plan, what it covers, who sells one, how to match limits, and what it cannot do. Markdown version: https://www.menloinsurance.com/library/guides/difference-in-conditions-insurance.md A [difference in conditions](https://www.menloinsurance.com/dic-insurance-california) (DIC) policy is a second home insurance policy that covers what a [California FAIR Plan](https://www.menloinsurance.com/library/guides/california-fair-plan) policy leaves out, chiefly personal liability, theft, water damage, and fuller [loss of use](https://www.menloinsurance.com/library/glossary/loss-of-use) than the FAIR Plan's capped Fair Rental Value. Private insurers sell it as a companion to the FAIR Plan's bare fire policy, and the two contracts together come close to standard homeowners coverage. The FAIR Plan does not sell a DIC itself. Its own website says DIC policies exist to fill its coverage gaps and sends you to a broker or insurer for one. The Department of Insurance lists 18 admitted insurers that sell a DIC built for FAIR Plan households, and Menlo quotes two DIC programs, Aegis and Green Shield, alongside the FAIR Plan itself. To get both quoted together, start on our [FAIR Plan and DIC page](https://www.menloinsurance.com/dic-insurance-california). Keep one picture in mind: the FAIR Plan insures a short list of named perils, the DIC insures around that list, and each carrier pays only for its own perils. The wrap protects you fully only where the seams line up. ## Key takeaways * **Two contracts, two adjusters**: the FAIR Plan handles fire and smoke claims, the DIC carrier handles liability, theft, and water claims, and neither pays the other's perils. * **The seams are the risk**: mismatched limits, deductibles, or effective dates between the two policies create gaps that neither carrier insures. * **Peril gaps, not limit gaps**: a DIC will not raise the FAIR Plan's $3 million residential cap. A home worth more needs separate excess coverage. * **Loss of use has a trigger**: some DIC forms pay additional living expenses only for perils the DIC itself insures, which can leave a fire evacuation unreimbursed. ### Difference in Conditions (DIC) Policy A difference in conditions policy is a separate home insurance policy that covers the perils a basic fire policy excludes. Paired with a California FAIR Plan policy, a DIC typically adds back personal liability, theft, water damage, and additional living expenses. ## DIC insurance: the short answers [#dic-insurance-the-short-answers] These are the facts people ask about most. The sections below explain them. * **What does a DIC cover?** What the FAIR Plan leaves out, chiefly liability, theft, water damage and fuller loss of use. * **Does the FAIR Plan sell one?** No. It tells policyholders to get a DIC elsewhere. * **Who sells DIC in California?** The Department of Insurance lists 18 admitted insurers, including Mercury's California Automobile Insurance Company, CSAA, Farmers, Nationwide, Foremost, Pacific Specialty, Zurich American and DB Insurance. * **Which ones can Menlo quote?** Aegis, whose stand-alone DIC takes dwelling values up to $3 million, and Green Shield. We compare them with the admitted list in our guide to [the best ways to add coverage to the FAIR Plan](https://www.menloinsurance.com/library/guides/best-dic-insurance-california-fair-plan). * **Does a DIC raise the FAIR Plan's $3 million limit?** No. It fills peril gaps, not limit gaps. * **Does a DIC cover earthquake or flood?** Generally no. Those are separate policies. ## What is a difference in conditions policy? [#what-is-a-difference-in-conditions-policy] A difference in conditions policy is what the private market sells around a policy that insures too little. The FAIR Plan writes named peril coverage, meaning it pays only for damage from the causes of loss listed on the policy: fire, lightning, internal explosion, and smoke, with options such as vandalism available for extra premium. Everything else a homeowners policy would normally absorb, from a burst pipe to a dog bite lawsuit, stays with you. The DIC picks up that remainder. The name comes from commercial property insurance, where DIC policies have long filled gaps in standard forms. In California, though, the term now means one thing to most buyers: the FAIR Plan wrap. Owners often assume the DIC upgrades the FAIR Plan itself, as though buying it converted the fire policy into a full homeowners contract. It does not. The DIC is a separate contract with its own carrier, its own deductible, its own policy number, and its own claims department. Nothing about your FAIR Plan policy changes when you add one. The difference is that the losses the FAIR Plan would have declined now have somewhere to go. ## What does a DIC policy cover? [#what-does-a-dic-policy-cover] A typical California DIC restores four protections: liability if someone is injured on your property, theft of your belongings, sudden water damage, and the cost of living elsewhere while your home is repaired. Side by side, the two policies split a house like this: | Coverage | FAIR Plan dwelling policy | Typical DIC policy | | ------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------- | | Fire, lightning, smoke, internal explosion | **Covered** as named perils | Not covered | | Personal liability | Not covered | **Covered** | | Theft of personal property | Not covered | **Covered** | | Sudden and accidental water damage | Not covered | **Covered** | | Loss of use and additional living expenses | Limited: Fair Rental Value up to 10% of the dwelling limit, paid out of that limit, unless a separate Fair Rental Value limit is bought | **Covered**, trigger varies by form | | Vandalism and malicious mischief | Optional for extra premium | Varies by carrier | | Flood and earthquake | Not covered | Not covered on most forms | Water damage on a DIC means a failed supply line or an overflowing appliance, not rising water from outside. Flood belongs to a flood policy and earthquake to an earthquake policy, exactly as with a standard homeowners program. Notice how often that table says typical and varies. DIC forms are not standardized the way homeowners forms are, so two carriers' wraps can differ on vandalism, on mold, and most of all on how loss of use is triggered. ## Who sells DIC insurance in California? [#who-sells-dic-insurance-in-california] Eighteen admitted insurers, according to the Department of Insurance's list of insurers that sell DIC policies to pair with the FAIR Plan (checked September 27, 2026). The list includes Mercury's California Automobile Insurance Company, CSAA Insurance Exchange, Farmers Insurance Exchange, Nationwide Mutual, Foremost, Pacific Specialty, Standard Fire, Zurich American, DB Insurance and Seaview (Aegis Group). Menlo quotes Aegis and Green Shield. Our [comparison of FAIR Plan add-ons and DIC options](https://www.menloinsurance.com/library/guides/best-dic-insurance-california-fair-plan) sets them side by side. The department scopes the list carefully: these are DIC products built to complement a FAIR Plan policy, not endorsements that broaden a regular homeowners policy you already have. Every company on it is licensed in California, which means most FAIR Plan households can build the whole wrap in the admitted market, where the state guarantee fund stands behind claims if a carrier fails. Our comparison of [admitted vs non-admitted carriers](https://www.menloinsurance.com/library/guides/admitted-vs-non-admitted-carriers) explains what that backstop is worth. Some homes cannot stay in that market. When replacement cost passes the FAIR Plan's residential cap, or heavy brush exposure scares off every listed carrier, brokers turn to [surplus lines insurance](https://www.menloinsurance.com/library/guides/surplus-lines-insurance), where non-admitted insurers write DIC and excess fire coverage with more freedom on price and terms. A surplus lines placement requires a documented diligent search of the admitted market first, and the policy carries surplus lines taxes and no guarantee fund. Ask which kind of carrier is quoting your DIC before you buy. ## How do you match a DIC to your FAIR Plan policy? [#how-do-you-match-a-dic-to-your-fair-plan-policy] Treat the two policies as one program, because a claim will. These are the points your broker should line up before either policy is issued: * **Dwelling and contents limits**: the DIC should carry the same dwelling and personal property limits as the FAIR Plan policy, so a water loss is not settled against a smaller number than a fire loss would be. * **Deductibles**: each policy applies its own deductible to its own claims. Matching them keeps what you pay out of pocket predictable when one event touches both policies. * **Effective dates**: same inception date, same renewal date. A DIC bound two weeks after the FAIR Plan policy leaves fourteen days with no liability or theft coverage at all. * **Named insureds**: the names and property address must be identical on both policies, including a trust if the home sits in one. A mismatch is a claim delay waiting to happen. * **The loss of use trigger**: get a written answer on whether additional living expenses are paid when a FAIR Plan peril, above all fire, forces you out. ## What happens when you file a claim on two policies? [#what-happens-when-you-file-a-claim-on-two-policies] Each carrier adjusts only the perils its own policy insures, and nobody adjusts the whole loss. A burst pipe is a DIC claim from first call to final payment, and the FAIR Plan never hears about it. A kitchen fire runs the other way: the FAIR Plan adjusts the structure and smoke damage while the DIC carrier decides, under its own wording, whether your hotel bills are covered. When one event touches both policies, expect two claim numbers, two adjusters, and two deductibles. Give each carrier notice promptly instead of waiting to see which one responds. Late notice to the carrier you guessed wrong about is a denial you handed them. ### The loss of use trap Some DIC forms pay additional living expenses only when a peril the DIC itself insures caused the loss. Under that wording, a wildfire that puts your family in a rental for six months is a FAIR Plan claim for the house, and the only money for the rent is the FAIR Plan's Fair Rental Value, capped at 10% of the dwelling limit and paid out of it unless you bought a separate Fair Rental Value limit. Have your broker confirm in writing that the DIC's loss of use coverage responds to FAIR Plan perils too. Our guide to the [FAIR Plan for rental property and condos](https://www.menloinsurance.com/library/guides/california-fair-plan-rental-property) shows how the purchased limit and its 1/12-a-month rule work. ## What does a DIC policy not do? [#what-does-a-dic-policy-not-do] A DIC fills peril gaps, not limit gaps. The FAIR Plan caps residential coverage at $3 million at one location, and no DIC raises that number. If your home would cost $5 million to rebuild, the wrap still leaves you $2 million short on the fire side. Closing that gap takes excess property coverage stacked above the FAIR Plan, usually from a surplus lines carrier. The DIC also merges nothing. You pay two premiums, receive two renewals, and carry two policies that can each nonrenew independently. If the DIC carrier exits, the FAIR Plan policy stands while your liability and theft coverage quietly ends, so treat a DIC nonrenewal notice with the same urgency as losing the FAIR Plan itself. ## Frequently Asked Questions ### Is a DIC policy required with a California FAIR Plan policy? No law requires one. Mortgage lenders require dwelling fire coverage, which the FAIR Plan satisfies on its own, and most do not insist on a DIC. Skipping it means carrying the liability, theft, water damage, and loss of use exposure yourself, which is a larger uninsured bet than most homeowners would knowingly accept. ### Can I buy a DIC policy from the FAIR Plan? No. The FAIR Plan states on its own website that it does not offer DIC policies, and it directs policyholders to their broker or to the California Department of Insurance list of carriers that sell them. The FAIR Plan writes only its fire policy. The wrap always comes from a separate private insurer. ### Does a DIC policy cover flood or earthquake? Generally no. Most DIC forms exclude flood and earthquake just as standard homeowners policies do. Flood coverage comes from the National Flood Insurance Program or a private flood insurer, and earthquake from the California Earthquake Authority or a private quake policy, stacked as third and fourth policies if you need them. ### Will the FAIR Plan ever offer these coverages itself? Possibly. The California Department of Insurance says a comprehensive residential policy option is in progress at the FAIR Plan, which would let policyholders buy water damage, liability, theft, and additional living expense coverage without a separate DIC. No completion date has been announced, so for now the two policy stack is the only route. *This guide is for educational purposes and summarizes California FAIR Plan provisions, public California Department of Insurance guidance, and common DIC policy practices. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## The Bottom Line [#the-bottom-line] A difference in conditions policy is the half of your house insurance the FAIR Plan cannot sell you: liability, theft, water damage, and fuller loss of use, written by a private carrier around a bare fire policy. Start it the same day as the FAIR Plan policy, match the limits and deductibles, and get the loss of use trigger confirmed in writing. Have one broker place both policies, because the seams between them are where claims go wrong. ## References . [California FAIR Plan. Difference in Conditions (DIC)]() . [California FAIR Plan. Dwelling Policy]() . [California Department of Insurance. List of Insurers that Sell Difference in Conditions (DIC) Policies]() . [Assembly Insurance Committee. Oversight Hearing: The California FAIR Plan]() . [California Department of Insurance. California FAIR Plan]() . [California FAIR Plan. Dwelling Fire Policy, CFP 00 01 (05/2026), Coverage D: Fair Rental Value]() . [California FAIR Plan Association. Plan of Operation, Ed. 9/3/25: maximum policy limits (accessed 2026-09-24)]() . [Aegis General Insurance Agency. Aegis General Product Overview (CA)]() (2026) # DP1 vs DP3 Insurance: Dwelling Fire Policies Compared (https://www.menloinsurance.com/library/guides/dp1-vs-dp3-insurance) DP-1 covers named perils at actual cash value; DP-3 covers open perils at replacement cost. How DP-1, DP-2 and DP-3 differ, and where the FAIR Plan fits. Markdown version: https://www.menloinsurance.com/library/guides/dp1-vs-dp3-insurance.md A DP-1 is the basic dwelling fire policy: it covers the home against a limited number of named perils and pays actual cash value (ACV), which subtracts depreciation. A DP-3 is the special form: it covers the house against all causes of loss except those specifically excluded, and pays replacement cost when the house is insured to at least 80% of its replacement cost. Neither includes liability, so a landlord adds it by endorsement or buys a separate liability policy. Rental homes, vacant properties, seasonal homes and other non-standard residences usually go on dwelling fire policies. This guide compares the three ISO forms, shows how the California FAIR Plan fits in, and helps you choose. For a quote on your California rental, vacant or seasonal house, see our [dwelling fire insurance page](https://www.menloinsurance.com/dwelling-fire-insurance). ## Key takeaways * **DP-1:** fire, lightning and internal explosion, with windstorm, hail, smoke, vandalism and other perils available as options. Losses are usually settled at actual cash value. * **DP-2:** broad named perils on the building and contents, usually with replacement cost on the building. * **DP-3:** open perils on the building and other structures, named perils on contents, replacement cost if insured to at least 80%. * **Loss of rent is different by form.** DP-1 pays fair rental value up to 20% of the dwelling limit, one-twelfth a month. DP-2 and DP-3 add additional living expense within the same 20%. * **No liability on any of them.** The forms don't insure liability or medical payments. ## What is the difference between DP-1, DP-2 and DP-3? [#what-is-the-difference-between-dp-1-dp-2-and-dp-3] The difference is which causes of loss are covered and how each loss is valued. The ISO dwelling program offers three property forms: DP 00 01 (basic), DP 00 02 (broad) and DP 00 03 (special). Each form includes dwelling coverage, other structures, personal property, fair rental value and additional coverages, but they cover different perils. | | DP-1 (DP 00 01, basic) | DP-2 (DP 00 02, broad) | DP-3 (DP 00 03, special) | | ------------------------ | ------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------- | | Perils on the building | Fire, lightning, internal explosion; extended coverage and vandalism optional | Broad named perils, such as windstorm, burglary damage, falling objects, weight of ice and snow, water discharge and freezing | Open perils: everything not excluded | | Perils on contents | Same named perils | Broad named perils | Broad named perils | | Building loss settlement | Usually actual cash value | Usually replacement cost if insurance-to-value requirements are met | Replacement cost if insured to at least 80% | | Fair rental value | Up to 20% of dwelling limit, 1/12 a month | Included with additional living expense, 20% combined | Included with additional living expense, 20% combined | | Liability | Not included | Not included | Not included | | Typical use | Vacant or older homes, lowest price | Rentals needing named perils plus replacement cost | Rentals and second homes that need homeowners-like protection | The practical difference shows up at claim time. A DP-1 policy with actual cash value pays what a 30-year-old roof or kitchen was worth after depreciation, not what it costs to replace. A DP-3 at replacement cost pays the cost to rebuild, provided the limit meets the 80% requirement. ## What does DP-1 cover? [#what-does-dp-1-cover] DP-1 includes only fire, lightning and internal explosion unless you add others. Extended coverage perils (windstorm, hail, explosion, riot, aircraft, vehicles, smoke and volcanic eruption) and vandalism or malicious mischief can be added for an additional premium if they appear on the declarations page. Losses are usually settled at actual cash value, though some insurers offer replacement cost for an additional premium. DP-1 fits a vacant house, an older house that an insurer won't write on a broader form, or an owner who wants to keep the premium low and could absorb depreciation. For example, Aegis has a California dwelling program that writes DP-1 on an actual cash value basis for dwellings up to $750,000. ## What does DP-3 cover? [#what-does-dp-3-cover] DP-3 covers the dwelling and other structures against all direct physical loss except what the policy excludes, and covers personal property against named perils. Common exclusions still apply, such as earthquake, flood, wear and tear and neglect, so a DP-3 is broad but not all-inclusive. To get replacement cost, the dwelling must be insured to at least 80% of its replacement cost. If you insure it for less, your claim will be reduced. In California, Aegis writes DP-3 with limited replacement cost for dwellings up to $900,000, and Green Shield writes DP-1 and DP-3 with building limits up to $1.25 million in California and up to $1 million of liability. ## Is DP-3 the same as HO-3? [#is-dp-3-the-same-as-ho-3] No. They both cover the home on an open perils basis, but a DP-3 is designed for a dwelling that isn't a standard owner-occupied home and has no built-in liability or medical payments coverage. An HO-3 homeowners policy includes personal liability and was designed for the owner who lives there. Once you rent the house out or leave it empty, an HO-3 may no longer fit, and that is when a DP-3 or a landlord endorsement comes in. For example, Delos offers landlord coverage by endorsement to its HO-3 for long-term rentals only, and excludes home-sharing such as Airbnb and VRBO. ## Where does the California FAIR Plan fit? [#where-does-the-california-fair-plan-fit] The FAIR Plan dwelling policy works like a DP-1: named perils only. Its base policy covers fire and lightning, internal explosion and smoke, with vandalism and malicious mischief and other options available at extra cost. It writes owner-occupied homes, 1–4 unit rentals, seasonal homes, renters and condo units. Replacement cost is an option, not the default. For a dwelling more than 25 years old, the FAIR Plan offers dwelling replacement cost only if the roof was updated within the last 25 years; the home must be insured to at least 80% of its replacement cost; and mobile homes aren't eligible. Since the FAIR Plan has no liability, a landlord on the FAIR Plan will need to add it through a DIC policy or a separate premises liability policy. Our guide to [the FAIR Plan for rental property](https://www.menloinsurance.com/library/guides/california-fair-plan-rental-property) walks through that setup. Texas works differently, with its own FAIR Plan dwelling form (TDP-1) and TWIA for coastal wind: see our [Texas landlord insurance guide](https://www.menloinsurance.com/library/guides/landlord-insurance-texas). ## Which should I choose, DP-1 or DP-3? [#which-should-i-choose-dp-1-or-dp-3] Choose DP-3 if you could not pay for a partial loss out of your own pocket, if the house is worth rebuilding, and if an insurer will write it. Choose DP-1 when the house is vacant, very old or in an area where a broader form isn't available, or when you are willing to accept depreciated value in order to lower the premium. Whichever you choose, add liability for a rental: Green Shield offers up to $1 million on its dwelling program, and Aegis offers premises liability options on its DP-1. See our guide to [actual cash value vs. replacement cost](https://www.menloinsurance.com/library/guides/actual-cash-value-vs-replacement-cost) for how much depreciation can take out of a claim. ## Frequently Asked Questions ### Is DP1 or DP3 better? DP-3 covers more: open perils on the building and replacement cost if insured to at least 80%. DP-1 names a few perils and usually pays actual cash value, but it costs less and is available on homes a DP-3 won't take. ### What is covered by DP2 and DP3 but not DP1? Additional living expense is built into DP-2 and DP-3 within a 20% limit, while DP-1 includes fair rental value and needs an endorsement for additional living expense. DP-2 and DP-3 also cover broader perils. ### Does a DP3 policy include liability? No. A DP-3 has no personal liability or medical payments coverage. Add it by endorsement or buy a separate policy. ### Is the California FAIR Plan a DP1? It works like one: named perils (fire and lightning, internal explosion and smoke) with options, and replacement cost only as an option with conditions. *This guide is for educational purposes and summarizes the ISO dwelling property forms as described by FC\&S, IRMI and InsuranceXDate, the California FAIR Plan's public documents, and carrier program guides. Insurers file their own versions of these forms, and your policy's terms control. Menlo Insurance Services (CA license 6020106) is a licensed broker and a registered FAIR Plan broker. It may earn a commission on a placement and does not guarantee that any coverage or price will be available. Some dwelling programs are written by non-admitted insurers, which are not backed by the California Insurance Guarantee Association. Each quote names its insurer and whether it is admitted.* ## The Bottom Line [#the-bottom-line] DP-1 names a few perils and usually pays depreciated value, DP-2 names more and usually adds replacement cost, and DP-3 covers the building against everything not excluded. None includes liability. In California, the FAIR Plan behaves like a DP-1, so a rental or second home that qualifies for a DP-3 elsewhere usually gets better protection there. ## References . [IRMI. Dwelling Property Coverage Forms]() (accessed 2026-09-27) . [InsuranceXDate. Dwelling Property 1, Basic Form, DP 00 01]() (accessed 2026-09-27) . [InsuranceXDate. Dwelling Property 3, Special Form, DP 00 03]() (accessed 2026-09-27) . [InsuranceXDate. Dwelling Property 2, Broad Form, DP 00 02]() (accessed 2026-09-27) . [PropertyCasualty360 (FC&S Legal). Dwelling Property Forms: Coverages]() (2024) . [Aegis General Insurance Agency. Aegis General Product Overview (CA)]() (2026) . [Green Shield Risk Solutions. Dwelling Fire: Specialty Lines program sheet]() (2026) . [Delos Insurance Solutions. Homesite Policy Comparison: Homeowners vs Landlord]() (2023) . [California FAIR Plan Association. Dwelling policies]() (accessed 2026-09-27) . [California FAIR Plan Association. Optional Dwelling Replacement Cost Addendum for Properties More Than 25 Years Old (CFP-RCAD-2)]() (2016) # Earthquake Insurance Cost in California (2026 Data) (https://www.menloinsurance.com/library/guides/earthquake-insurance-cost-california) California homeowners paid $1,440 a year on average for earthquake coverage in 2025. What sets the price, the deductible in dollars, and whether it's worth it. Markdown version: https://www.menloinsurance.com/library/guides/earthquake-insurance-cost-california.md California homeowners who bought earthquake coverage paid an average of $1,440.11 a year for it in 2025, according to the Department of Insurance's annual data call, which covers 922,090 homeowners policies with earthquake coverage. Condo owners averaged $538.03 a year and renters $87.27. Your premium depends on where the house sits, how old it is, how it is built and the deductible you select, so the same coverage can cost a few hundred dollars a year in one ZIP code and several thousand in another. This guide will help explain what drives the price, what a 5% to 25% deductible means in dollars, how California Earthquake Authority (CEA) policies compare with private earthquake insurance, and how to decide whether the cost is worth it. When you're ready for numbers on your own home, our [earthquake insurance page](https://www.menloinsurance.com/earthquake-insurance) starts a quote. ## Key takeaways * **State averages, 2025:** $1,440.11 per homeowners policy, $538.03 per condo policy, $339.68 per mobilehome policy and $87.27 per renters policy. * **Most California homes have none.** Only 15.24% of homeowners policies and 12.48% of all residential policies carried earthquake coverage in 2025. * **The deductible is the big number.** CEA deductibles run 5% to 25% of the dwelling limit, so a $600,000 limit at 15% means $90,000 before the dwelling coverage pays. * **Retrofits pay twice.** CEA gives up to 25% off for a properly retrofitted older house, and the Earthquake Brace + Bolt program offers grants of up to $3,000 for the retrofit itself. * **Private policies price differently.** Programs such as Neptune can waive the deductible entirely after very strong shaking, which changes the math for high-value homes. ## How much does earthquake insurance cost in California? [#how-much-does-earthquake-insurance-cost-in-california] The statewide average for a homeowners earthquake policy was $1,440.11 a year in 2025. It comes from the Department of Insurance's Earthquake Premium and Policy Count Data Call, which every licensed insurer answers each year. It averages all homes, all deductibles and all regions, so use it as a benchmark and not as a quote. | Policy type (2025) | Average earthquake premium per policy | Average rate per $1,000 of coverage | Share of policies with earthquake coverage | | --------------------------------------------- | ------------------------------------- | ----------------------------------- | ------------------------------------------ | | Homeowners | $1,440.11 | $1.62 | 15.24% | | Condominium | $538.03 | $12.68 | 14.13% | | Mobilehome | $339.68 | $1.99 | 18.95% | | Dwelling fire (rentals, FAIR Plan and others) | $953.05 | $1.46 | 2.91% | | Renters | $87.27 | $2.86 | 13.30% | | All residential | $956.43 | $1.70 | 12.48% | Source: California Department of Insurance, 2025 experience year. The CEA wrote 968,479 of the 1,591,648 residential earthquake policies in the data, with an average premium of $964.52 across all of its policy types. Earthquake policies from other insurers averaged $943.85. The condo rate per $1,000 looks high because a condo policy insures only a relatively small amount of property, such as contents and loss assessment, not the entire building. ## What makes earthquake insurance more or less expensive? [#what-makes-earthquake-insurance-more-or-less-expensive] Location and the house itself set most of the price. According to the CEA, its rate depends on "your home's age, foundation type, construction type, roof type, and earthquake-risk location data such as proximity to a fault and soil type." After that, your selections move it: a higher deductible lowers the premium, and higher limits for contents, loss of use or building code upgrades raise it. * **Location:** distance to a fault and soil type. Two houses a few miles apart can price very differently. * **Age and foundation:** older wood-frame houses on raised foundations cost more, and a pre-1980 raised-foundation house without a verified retrofit can't choose the 5% or 10% deductible on a CEA policy. * **Dwelling limit:** homes with more than $1 million of dwelling coverage are also limited to 15%, 20% or 25% deductibles on CEA. * **Retrofit:** a qualifying retrofit can take up to 25% off the CEA premium. * **Options:** CEA loss-of-use limits run from $1,500 to $100,000, and building code upgrade coverage of $10,000 can be raised to $20,000 or $30,000. The CEA's public premium calculator lets you enter your own address and try these combinations before you ask for a quote. ## What does the deductible mean in dollars? [#what-does-the-deductible-mean-in-dollars] A CEA deductible is a percentage of the dwelling limit, not a flat amount. You can select 5%, 10%, 15%, 20% or 25%, and on the standard homeowners policy one deductible applies to both dwelling and personal property. Here is what that means on common dwelling limits: | Dwelling limit | 5% | 10% | 15% | 25% | | -------------- | ------- | ------- | -------- | -------- | | $400,000 | $20,000 | $40,000 | $60,000 | $100,000 | | $600,000 | $30,000 | $60,000 | $90,000 | $150,000 | | $900,000 | $45,000 | $90,000 | $135,000 | $225,000 | The CEA's Homeowners Choice policy lets you choose a separate deductible for personal property, which is waived if the dwelling deductible is met. Emergency repairs have no deductible on the first $1,500. When you compare quotes, compare the premium and the deductible in dollars side by side. A cheap policy with a 25% deductible may pay nothing after a moderate quake. ## Is earthquake insurance worth it in California? [#is-earthquake-insurance-worth-it-in-california] It is worth it if you could not afford to repair or rebuild your home after a major quake without it, and if the deductible is an amount you can realistically pay. Most Californians have chosen otherwise: only 12.48% of residential policies included earthquake coverage in 2025. Homeowners policies don't cover earthquake damage, though state law does require them to cover fire that follows an earthquake. Three questions usually settle it: 1. **How much equity is in the house?** If a quake destroyed it, would you still owe a mortgage on a house you couldn't live in? 2. **What would you pay out of pocket?** Put the deductible in dollars next to your savings. If a 15% deductible is more than you could raise, look at lower deductibles, private programs or a deductible buy-back. 3. **What kind of house is it?** An older raised-foundation house that hasn't been retrofitted is more likely to be badly damaged. It is also where a retrofit grant and discount help most. ## CEA or private earthquake insurance: which is cheaper? [#cea-or-private-earthquake-insurance-which-is-cheaper] It depends on the house, so price both. The CEA sells through participating home insurers and does not sell directly to consumers. Private earthquake policies are sold through brokers and don't require your home insurer to be a CEA participant. | | CEA policy | Private earthquake policy (for example Neptune) | | -------------------- | ---------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------ | | Where you buy it | Through your home insurer if it participates in CEA | Through a broker, alongside any home policy | | Deductibles | 5%, 10%, 15%, 20% or 25% | Set per policy; Neptune waives it to $0 when shaking at the property reaches a peak ground velocity of 40 cm/sec | | Dwelling limit | Chosen on the policy, with restrictions above $1 million | Neptune up to $4 million | | Discounts | Up to 25% for a verified retrofit | Carrier-specific | | Average 2025 premium | $964.52 across CEA policy types | $943.85 across non-CEA earthquake policies | Menlo quotes private residential earthquake coverage through Neptune and Aegis, and an earthquake deductible buy-back through Adaptive that sits on top of an existing earthquake policy to lower what you pay out of pocket. If you are on the California FAIR Plan, read our guide to [earthquake insurance with the FAIR Plan](https://www.menloinsurance.com/library/guides/earthquake-insurance-with-california-fair-plan), because the CEA route there works differently. ## How can I lower my earthquake insurance cost? [#how-can-i-lower-my-earthquake-insurance-cost] Retrofit an older house, choose the highest deductible you could realistically pay, and eliminate options you don't need. For a pre-1980 wood-frame house on a raised foundation, the Earthquake Brace + Bolt program offers grants of up to $3,000 in participating ZIP codes, and supplemental grants can cover up to 100% of the cost for households with income of $94,480 or less. A completed retrofit can then earn up to 25% off a CEA premium and opens the lower 5% and 10% deductibles. After that, shop around between the CEA and private programs every year or two. Rates, eligibility and new-business availability change, especially after a large quake. ## Frequently Asked Questions ### How much is earthquake insurance in California per month? The 2025 state average for a homeowners earthquake policy was $1,440.11 a year, or about $120 a month. Condo owners averaged $538.03 a year and renters $87.27. Your own quote can be far higher or lower. ### What percentage of California homeowners have earthquake insurance? 15.24% of homeowners policies included earthquake coverage in 2025, and 12.48% of all residential policies. ### Is earthquake insurance a rip-off? Not by design, but a high deductible can mean it pays little after a moderate quake. Judge it by the deductible in dollars and the damage you could not absorb, not by the premium alone. ### Does homeowners insurance cover earthquakes in California? No. Earthquake damage needs a separate policy, but California homeowners and renters policies must cover fire that follows an earthquake. ### What is the cheapest earthquake insurance in California? There is no single cheapest insurer, because price follows the house and location. Compare a CEA quote with private quotes at the same deductible in dollars. *This guide is for educational purposes and summarizes Department of Insurance data and consumer pages, California Earthquake Authority pages, the Earthquake Brace + Bolt program and carrier program documents. Averages describe the whole market and are not a quote. Coverage, eligibility and prices change, and your policy's terms control. Menlo Insurance Services (CA license 6020106) is a licensed broker that may earn a commission on a placement and does not guarantee that any coverage or price will be available. Some private earthquake insurers are non-admitted, and non-admitted insurers are not backed by the California Insurance Guarantee Association. Each quote names its insurer and whether it is admitted.* ## The Bottom Line [#the-bottom-line] The average California homeowner with earthquake coverage paid $1,440.11 for it in 2025, but your price follows your location, house and deductible. Work out the deductible in dollars before you compare premiums, check whether a retrofit grant and discount apply, and price a CEA policy against private programs. ## References . [California Department of Insurance. Earthquake Premium and Policy Count Data Call: Summary of 2025 Residential Totals (edition 7/03/2026)]() (2026) . [California Earthquake Authority. Homeowners Coverage Options and Deductibles]() (accessed 2026-09-27) . [California Earthquake Authority. Homeowners Earthquake Insurance]() (accessed 2026-09-27) . [California Residential Mitigation Program. Earthquake Brace + Bolt retrofit]() (accessed 2026-09-27) . [Neptune Flood. Earthquake Insurance (program sheet), 06/26]() (2026) . [California Earthquake Authority. Earthquake Insurance Premium Calculator]() (accessed 2026-09-27) . [California Department of Insurance. Earthquake Insurance]() (accessed 2026-09-27) . [Menlo Insurance Services. Earthquake insurance (markets quoted: Neptune, Aegis residential earthquake, Adaptive earthquake deductible buy-back)]() (accessed 2026-09-27) # Earthquake Insurance When You Have the California FAIR Plan: CEA, DIC or a Private Quake Policy (https://www.menloinsurance.com/library/guides/earthquake-insurance-with-california-fair-plan) The California FAIR Plan excludes earthquake damage but covers fire that follows one. FAIR Plan policyholders can add a California Earthquake Authority policy (5% to 25% deductibles, up to 25% retrofit discount), but not a stand-alone one. How that compares with a DIC policy and private earthquake programs such as Neptune ($0 deductible in a major quake) and GeoVera. Markdown version: https://www.menloinsurance.com/library/guides/earthquake-insurance-with-california-fair-plan.md No, the California FAIR Plan does not cover earthquake damage, but it does pay for fire that follows an earthquake. Its dwelling policy excludes earth movement, including earthquake, "unless direct loss by" fire or explosion results. For the shaking itself you need a separate earthquake policy. As a FAIR Plan policyholder you can add a California Earthquake Authority (CEA) policy through the FAIR Plan, which is a CEA participating insurer, but only alongside an in-force FAIR Plan policy. The other route is a private stand-alone earthquake policy. This guide is for a California homeowner who has, or is about to get, a FAIR Plan policy and wants to know how to cover earthquake. It compares the CEA policy, a difference in conditions (DIC) policy and private earthquake programs, and explains what to ask for. If you are still putting your FAIR Plan coverage together, start with our [FAIR Plan page](https://www.menloinsurance.com/california-fair-plan-insurance) and our [FAIR Plan plus DIC page](https://www.menloinsurance.com/dic-insurance-california). For a quake quote, use our [earthquake insurance page](https://www.menloinsurance.com/earthquake-insurance). ## Key takeaways * **FAIR Plan: fire after a quake, not the quake.** Earth movement is excluded, except direct loss by fire or explosion that follows. * **CEA is available, only as a companion.** The FAIR Plan offers CEA earthquake coverage for 1–4 unit dwellings, condos, renters and mobile homes, and says "a stand-alone earthquake policy written by the California FAIR Plan is not available." * **CEA deductibles run 5% to 25%.** Homes with more than $1 million of dwelling coverage, or built before 1980 on a raised foundation without a verified retrofit, are limited to 15%, 20% or 25%. * **DIC usually doesn't add earthquake.** Most DIC forms exclude flood and earthquake, just as homeowners policies do. * **Private programs work differently.** Neptune's earthquake policy waives the deductible to $0 when shaking at the property reaches 40 cm/sec, and GeoVera (Homesite) offers deductibles from 2.5% to 25%. GeoVera has paused new California earthquake business. ## Does the California FAIR Plan cover earthquakes? [#does-the-california-fair-plan-cover-earthquakes] No. The FAIR Plan dwelling policy lists earth movement as an exclusion: earthquake, landslide, mine subsidence, mudflow, and earth sinking, rising or shifting. The exclusion does not apply to "direct loss by" fire or explosion that results. So if an earthquake cracks your foundation, the FAIR Plan doesn't pay. If the earthquake breaks a gas line and the house burns, the fire is covered up to your FAIR Plan limits. The Department of Insurance notes that state law requires homeowners and renters policies to cover fire caused by or following an earthquake whether or not you buy earthquake coverage. ## Can I get a CEA earthquake policy with the FAIR Plan? [#can-i-get-a-cea-earthquake-policy-with-the-fair-plan] Yes. The FAIR Plan is a participating CEA insurer and sells CEA coverage to customers with a FAIR Plan policy. It offers CEA policies for 1–4 unit dwellings, condominium units, renters and mobile or manufactured homes. The catch is the word "companion": "You must have an in-force California FAIR Plan policy to qualify for CEA coverage." In the FAIR Plan's broker system, a CEA application needs the companion FAIR Plan policy number. What a CEA homeowners policy offers: * **Deductibles** of 5%, 10%, 15%, 20% or 25% of the dwelling limit. Dwellings insured for more than $1 million, and pre-1980 homes on raised foundations without a verified retrofit, choose from 15%, 20% or 25%. * **Building code upgrade** of $10,000 included, with higher limits available. * **Emergency repairs** with no deductible on the first $1,500. * **Retrofit discounts** of up to 25% for older houses that have been properly retrofitted. The Department of Insurance adds that CEA policies cover personal property starting at $5,000 and additional living expenses while the home is repaired, and exclude pools, fences, landscaping and separate structures. ## Does a DIC policy cover earthquake? [#does-a-dic-policy-cover-earthquake] Usually not. A DIC policy exists to fill what the FAIR Plan leaves out: theft, water damage, liability and broader perils. Most DIC forms exclude flood and earthquake just as homeowners policies do, so earthquake stays a separate policy. Aegis, for example, describes its DIC as covering "water damage, collapse, theft & liability" alongside a FAIR Plan policy. Read the DIC form you are offered and ask the broker directly whether earthquake is excluded. So a complete FAIR Plan setup is often three policies: the FAIR Plan for fire, a DIC for most of the rest, and an earthquake policy. Our [DIC guide](https://www.menloinsurance.com/library/guides/difference-in-conditions-insurance) explains how the first two fit together. ## What private earthquake insurance can I buy instead of CEA? [#what-private-earthquake-insurance-can-i-buy-instead-of-cea] Private stand-alone earthquake programs also write California homes, and some accept a FAIR Plan policy as the underlying coverage. They differ from CEA mostly on deductibles, limits and eligibility. | | CEA (through the FAIR Plan) | Neptune earthquake | GeoVera earthquake (Homesite) | | ------------------------- | ------------------------------------------------------- | --------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------- | | Needs a FAIR Plan policy? | Yes, in force | Not stated on the program sheet | Needs a homeowners or standard dwelling fire policy | | Deductible | 5%–25% of dwelling limit | Waived to $0 when shaking reaches a peak ground velocity of 40 cm/sec. Otherwise per policy | 2.5%, 5%, 7.5%, 10%, 12%, 15%, 20% or 25% | | Dwelling limit | Chosen on the CEA policy | Up to $4 million | $100,000 to $3,500,000 | | Personal property | From $5,000 | Up to $500,000 | Available | | Loss of use | Additional living expenses during repairs | Up to $200,000 residential | Available | | Eligible homes | Dwellings, condos, renters, mobile homes | 1–4 unit wood-frame homes, 3 stories or less, built after 1906 | 1–4 unit wood-frame homes, 1–3 stories, built 1940 or later | | Status in September 2026 | Available | Available in all of California | New California business paused | Neptune's approach stands out for FAIR Plan owners with expensive homes. Its sheet shows a $4 million home with $2 million of damage: a conventional policy with a 15% deductible would pay $1.4 million, while Neptune pays $2 million once the deductible waiver triggers. Each quote names the insurer and whether it is admitted in California. GeoVera's program is written by Homesite Insurance Company of California. Before its pause, Menlo's walks of GeoVera's quoting system included a condo whose underlying coverage was a FAIR Plan plus DIC combination, so FAIR Plan policyholders were in scope. GeoVera's underwriting manual also sets a moratorium on new business for at least 60 days after a magnitude 5.0 or greater earthquake in an affected area. ## How much does earthquake insurance cost with the FAIR Plan? [#how-much-does-earthquake-insurance-cost-with-the-fair-plan] It depends on the home's value, construction, age, foundation, soil and location, and on the deductible you pick. CEA's retrofit discount can take up to 25% off for a qualifying older house. GeoVera's manual shows how its rate is built: a territory base rate adjusted for construction, number of levels, deductible and options, plus a $40 policy fee. We don't publish a typical earthquake price, because we don't yet have enough of our own earthquake quotes to give a representative figure. ## What should I ask before I choose? [#what-should-i-ask-before-i-choose] ### Steps ### Check your FAIR Plan policy number and limits A CEA policy needs the companion FAIR Plan policy number, and GeoVera starts its earthquake dwelling limit at the underlying policy's dwelling limit. ### Pick a deductible you could pay A 15% deductible on a $1 million dwelling limit is $150,000 before the policy pays for the dwelling. Compare that with your savings, and with a program that waives the deductible in a major quake. ### Know your house Year built, foundation type (slab or raised), stories, construction and any seismic retrofit. These set eligibility and price on every program. ### Confirm what the DIC excludes If your DIC excludes earthquake, as most do, nothing covers shaking damage until you add a quake policy. ## Frequently Asked Questions ### Does the California FAIR Plan cover earthquake damage? No. It excludes earthquake and other earth movement, but it pays for direct loss by fire or explosion that follows. ### Can I buy a CEA earthquake policy if I'm on the FAIR Plan? Yes, as long as you have an in-force FAIR Plan policy. The FAIR Plan sells CEA policies for dwellings, condos, renters and mobile homes. It does not write stand-alone earthquake policies. ### Does DIC insurance cover earthquakes? Generally no. Most DIC forms exclude flood and earthquake. Check the exclusions on the DIC you are offered. ### What is the lowest CEA deductible? 5% of the dwelling limit. Homes insured for more than $1 million, or older raised-foundation homes without a verified retrofit, start at 15%. ### Is private earthquake insurance better than CEA? It can be for some homes. Private programs may offer higher limits, lower deductibles or a deductible waiver in a major quake, but eligibility is narrower and availability can pause after large quakes. Compare the deductible in dollars, not only the premium. *This guide is for educational purposes and summarizes the FAIR Plan's dwelling policy and public pages, the California Earthquake Authority and Department of Insurance consumer pages, and carrier program documents dated 2020–2026. Coverage, eligibility and availability change, and your policy's terms control. Menlo Insurance Services (CA license 6020106) is a licensed broker and a registered FAIR Plan broker. It may earn a commission on some placements and does not guarantee that any coverage or price will be available. Non-admitted insurers are not backed by the California Insurance Guarantee Association.* ## The Bottom Line [#the-bottom-line] The FAIR Plan pays for fire after an earthquake but not the shaking. To cover the quake itself, add a CEA policy through the FAIR Plan, which needs an in-force FAIR Plan policy and offers 5% to 25% deductibles, or buy a private stand-alone policy such as Neptune's, which waives its deductible in a major quake. A DIC policy usually won't fill this gap. Pick the deductible in dollars you could actually pay. ## References . [California FAIR Plan Association. Dwelling Fire Policy (sample), effective 3/17/2026, General Exclusions: Earth Movement]() (2026) . [California FAIR Plan Association. Earthquake]() (accessed 2026-09-27) . [California Earthquake Authority. Homeowners Earthquake Insurance]() (accessed 2026-09-27) . [Menlo Insurance Services. DIC Insurance: How a Difference in Conditions Policy Completes Your FAIR Plan]() (accessed 2026-09-27) . [Neptune Flood. Earthquake Insurance (program sheet), 06/26]() (2026) . [GeoVera. California Earthquake Quick Reference Guide]() (2021) . [GeoVera. GeoSource quoting notice: quoting and binding unavailable for earthquake products in California, Oregon and Washington, as seen by Menlo in September 2026]() (accessed 2026-09-26) . [California Department of Insurance. Earthquake Insurance]() (accessed 2026-09-27) . [California FAIR Plan Association. Broker policy system, CEA application (companion policy number), reviewed by Menlo]() (accessed 2026-09-25) . [Aegis General Insurance Agency. DIC sell sheet (CA only)]() (2020) . [Homesite Insurance Company of California / GeoVera. Residential Earthquake Program Underwriting Rules]() (2020) # Employers Liability Insurance: Part Two of Workers Comp (https://www.menloinsurance.com/library/guides/employers-liability-insurance) Employers liability is Part Two of the workers comp policy. What it covers, the $100,000/$500,000/$100,000 standard limits, exclusions and stop gap. Markdown version: https://www.menloinsurance.com/library/guides/employers-liability-insurance.md Employers liability insurance is Part Two of the standard [workers compensation policy](https://www.menloinsurance.com/workers-compensation-insurance) (form WC 00 00 00 C). It defends the employer and pays damages in lawsuits over workplace injuries that fall outside workers compensation benefits. Part One pays statutory, no-fault benefits with no dollar limit; Part Two responds to lawsuits for damages, most often third-party action over, loss of consortium, consequential bodily injury and dual capacity claims. Standard limits are $100,000 each accident, $500,000 disease policy limit and $100,000 disease each employee. Most employers never read past Part One. That is a mistake, because the claims Part Two exists for are rare but expensive, and they land squarely on the employer rather than the benefits system. ## Key takeaways * **Two coverages, one policy**: workers compensation and employers liability are distinct insurance coverages combined in the same NCCI policy, with Part One paying statutory benefits and Part Two paying lawsuit damages. * **Four claim types drive Part Two**: third-party action over, care and loss of services, consequential bodily injury, and dual capacity, all of which the CGL and business auto policies typically exclude. * **Standard limits are low**: $100,000 each accident, $500,000 disease policy limit and $100,000 disease each employee. Raising them to $1,000,000 costs about 1 percent of premium. * **Monopolistic states**: state funds in North Dakota, Ohio, Washington, and Wyoming provide none of this, so employers with payroll there need stop gap coverage endorsed to the CGL. ### Employers Liability Insurance Employers liability insurance protects an employer against lawsuits for work-related injuries and occupational diseases that are not covered under a state's workers compensation law. It is written as Part Two of the workers compensation policy, subject to the limits shown in Item 3.B of the Information Page. ## What is employers liability insurance? [#what-is-employers-liability-insurance] Employers liability insurance is the part of the [workers compensation policy](https://www.menloinsurance.com/library/guides/workers-compensation-insurance-guide) that covers an employer sued over a work-related injury, beyond the statutory benefits workers compensation pays. The workers compensation system rests on the exclusive remedy bargain: the employee gets prompt, no-fault benefits and gives up the right to sue the employer in tort. That protection is real but not complete. Some states have exceptions that let an injured worker sue despite the workers compensation law. And people outside the bargain, such as the injured employee's spouse or children or a third party pulled into the loss, were never bound by it. Employers liability insurance fills those gaps. Part One responds to claims for workers compensation benefits; Part Two defends lawsuits for damages. That one-word difference, benefits versus damages, is the whole point, and the duty to defend matters as much as the duty to pay. ## What does employers liability insurance cover? [#what-does-employers-liability-insurance-cover] Employers liability insurance pays what the employer becomes legally obligated to pay for employee bodily injury outside the workers compensation statute, plus the cost of defending those lawsuits. The form covers four kinds of claims, which are really four different people who might sue you over an injury at your workplace. The CGL and business auto policies typically exclude all four, so Part Two is the only place they are covered: | Claim type | Who sues the employer | Typical scenario | | --------------------------- | --------------------------------------- | ------------------------------------------------------------------------------------------------------------------ | | Third-party action over | A third party the injured employee sued | Employee hurt on a machine sues the manufacturer, and the manufacturer sues the employer back for poor maintenance | | Care and loss of services | The employee's spouse or children | Spouse sues for lost household services and companionship after a serious injury, the loss of consortium claim | | Consequential bodily injury | A family member with their own injury | Spouse suffers a nervous breakdown from the stress of weeks at the hospital | | Dual capacity | The injured employee | Employee hurt by a saw their employer manufactured sues the company as manufacturer, not as employer | Third-party action over is the claim brokers see most, and it raises a contract question. When the third party's claim against the employer comes through a [hold harmless agreement](https://www.menloinsurance.com/library/glossary/hold-harmless-agreement), the [general liability policy](https://www.menloinsurance.com/library/guides/what-does-general-liability-insurance-cover) responds instead, under its insured contract coverage. The rule of thumb is simple: if there is an insured contract, look to the CGL; if there is no contract, look to Part Two. ## Employers liability vs workers comp: what is the difference? [#employers-liability-vs-workers-comp-what-is-the-difference] Workers compensation and employers liability are two separate coverages sold together in one policy. Part One pays benefits on a no-fault basis, carries no limit of liability, and has no exclusions, because the workers compensation law itself defines what is and is not paid. Part Two pays tort damages only when the employer is legally liable, is capped by the Item 3.B limits, and carries exclusions. The employers liability limits do not erode by anything paid under Part One, so a $2,000,000 medical and indemnity claim under Part One leaves the full Part Two limit intact for the consortium suit that follows it. ## What are the standard employers liability limits? [#what-are-the-standard-employers-liability-limits] The standard employers liability limits, shown in Item 3.B of the Information Page, are: * $100,000 bodily injury by accident, each accident * $500,000 bodily injury by disease, policy limit * $100,000 bodily injury by disease, each employee The cost is built into the workers compensation premium rather than billed separately, so buyers rarely notice how low these limits are. The disease limits work together. If several employees develop respiratory illnesses from exposure to the same chemical, no single employee collects more than $100,000, and the insurer pays no more than $500,000 across all of them for the policy term. Those amounts have not changed in decades and are far too low for any employer with a real payroll. The fix is inexpensive. The North Carolina Rate Bureau's increased limits table prices $1,000,000/$1,000,000/$1,000,000 limits at about 1.2 percent of premium, with a $120 minimum charge. Ask your broker for the factor that was filed in your state. The umbrella is the other reason to raise them. Its schedule of underlying insurance lists the exact employers liability limits the [umbrella or excess policy](https://www.menloinsurance.com/library/guides/excess-liability-insurance) expects beneath it, and $1,000,000 across all three is the customary entry. Construction contracts built on AIA documents leave those limits blank for the parties to fill in for each accident, each employee, and the policy limit, which is why contractors raise them as a matter of course. Quote increased limits on every workers comp account. ### Check Item 3.B against the umbrella every renewal An umbrella that requires $1,000,000 underlying employers liability limits over a policy still carrying $100,000/$500,000/$100,000 leaves the insured personally holding the layer between them. Verify Item 3.B matches the umbrella's schedule of underlying insurance at every renewal, including on stop gap endorsements for monopolistic states. ## What does employers liability insurance exclude? [#what-does-employers-liability-insurance-exclude] Part Two has 12 exclusions, and most exist because another policy or statute is meant to respond. Contractual liability belongs on the CGL or business auto policy. Punitive damages are excluded, which is worth noting because the unendorsed CGL does not exclude them. Employment-related claims (demotion, harassment, discrimination, termination and the like) need a separate EPLI policy. A federal group of exclusions removes work under the Longshore and Harbor Workers' Compensation Act, the Federal Employers' Liability Act, the Defense Base Act and others, along with injuries to masters and crew members of vessels. Most of these can be added back by endorsement if you have the exposure. ## When do you need coverage outside the standard policy? [#when-do-you-need-coverage-outside-the-standard-policy] Two situations leave an employer without Part Two even when workers compensation benefits are fully in place. The first is payroll in a monopolistic state. Four states (Ohio, Washington, Wyoming and North Dakota) sell workers compensation only through state-run funds, which provide statutory benefits only, so those states never appear in Item 3.A of a standard policy. The fix is stop gap coverage, an endorsement to the CGL that adds employers liability back for the listed states. Our guide to the [monopolistic states](https://www.menloinsurance.com/library/guides/monopolistic-states-workers-comp) walks through the placement mechanics. The second is workers exempted by statute. States exempt some kinds of employment, such as domestic workers, some farm laborers and employers below a minimum number of employees. In North Carolina, for example, an employer must carry coverage only when it regularly employs three or more people, under N.C. Gen. Stat. 97-2. Exempt employees keep their right to sue, so the exclusive remedy does not protect the employer. The Voluntary Compensation And Employers Liability Coverage endorsement (WC 00 03 11 A) brings these employees into the system and protects both sides. ## Frequently Asked Questions ### Is employers liability insurance included in workers comp? Yes. The standard NCCI policy is the Workers Compensation And Employers Liability Insurance Policy, and employers liability is Part Two of that single form. You do not buy it separately unless you operate in a monopolistic state, where the state fund provides no employers liability and you add stop gap coverage to your general liability policy instead. ### Does employers liability insurance cover discrimination or wrongful termination lawsuits? No. Part Two excludes employment practices such as coercion, demotion, harassment, discrimination, defamation and termination. Those claims need a separate employment practices liability insurance (EPLI) policy. Employers liability covers bodily injury claims outside the workers compensation law; personnel decisions belong on the EPLI form. ### Can an employee sue their employer if workers comp paid the claim? Usually not directly. Workers compensation law is the "exclusive remedy": in exchange for guaranteed benefits, it bars most lawsuits by employees against their employer. State laws create exceptions, some states allow dual capacity suits, and family members and third parties were never part of the bargain. Those are exactly the suits employers liability insurance defends. *This guide is for educational purposes and summarizes standard NCCI policy language. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## Checking your employers liability limits [#checking-your-employers-liability-limits] Employers liability insurance is Part Two of the workers compensation policy, and it defends you when an employee injury becomes a lawsuit instead of a benefits claim. The standard $100,000/$500,000/$100,000 limits have been in place for decades and are too low for any real payroll, and raising them to $1,000,000 costs about 1 percent of premium. Pull your Information Page, read Item 3.B and match it to what your umbrella requires underneath. ## References . [North Carolina Rate Bureau. Basic Manual Appendix C: Increased Limits Tables]() . [AIA Contract Documents. How to Manage Risk Using Construction Insurance and Bonds Part 8: Workers Compensation and Employers Liability]() . [North Carolina General Assembly. N.C. Gen. Stat. 97-2: Definitions]() # Essentia Insurance Company: The Name on Your Hagerty Policy (https://www.menloinsurance.com/library/guides/essentia-insurance-company) Essentia Insurance Company (NAIC 37915) issues US Hagerty policies. Here is what changed on January 1, 2026, when Hagerty Re took 100% of the risk from Markel. Markdown version: https://www.menloinsurance.com/library/guides/essentia-insurance-company.md Essentia Insurance Company is the licensed insurer that issues Hagerty collector vehicle policies in the United States. Hagerty is the brand and the selling agency. Essentia, NAIC company code 37915, is the carrier legally bound on the policy. And since January 1, 2026, the risk behind those policies has been 100 percent reinsured by Hagerty's own reinsurer, Hagerty Re, which leaves Markel-owned Essentia as a fronting carrier. If that name caught you off guard on a declarations page or in a state insurance database, nothing is wrong with your policy. There are four links in the chain. Hagerty sells the policy, Essentia issues it, Hagerty Re carries the risk, and Markel collects a small fee for the use of its licensed carrier. The rest of this guide just walks down that chain. ## Key takeaways * **Agency, not insurer**: Hagerty Insurance Agency holds producer licenses in all 50 states and Washington DC, but the policy contract itself belongs to Essentia. * **The 80/20 era ended**: through 2025, Hagerty Re took 80 percent of the risk and Markel kept 20. Now Markel fronts the program for a fee that starts near 2 percent of premium. * **Date of loss controls**: losses on or after January 1, 2026 fall to Hagerty Re even on policies issued earlier, which means in-force policies shifted too. * **Essentia still owes you**: a fronting carrier stays legally responsible on every policy it issues, whatever its reinsurance says. ### Essentia Insurance Company Essentia Insurance Company is the insurance carrier behind the Hagerty brand in the United States. Markel bought the company in 2013 to underwrite Hagerty's program, and Hagerty's producer disclosures list its AM Best financial strength rating as A (Excellent) or better. ## What is Essentia Insurance Company? [#what-is-essentia-insurance-company] Essentia Insurance Company is the underwriting company behind the Hagerty brand. Most owners assume Hagerty is their insurance company. It is not. Hagerty Insurance Agency, LLC is a licensed producer, the business that quotes, sells, and services the policy, and an agency never pays claims from its own balance sheet. The policy comes from Essentia, a carrier Markel acquired in 2013 to write the program. Hagerty's own auto disclosure keeps the wording careful: your policy "may be underwritten by" Essentia Insurance Company, NAIC 37915, rated A (Excellent) or better by AM Best. That split is the norm in specialty insurance, not a Hagerty quirk. The brand you buy from and the company that pays your claim are usually different entities, which is why our guide to [who underwrites classic car insurance](https://www.menloinsurance.com/library/guides/who-underwrites-classic-car-insurance) reads the fine print across the whole collector market. What made Essentia unusual is how invisible it stayed: for years, searching the name returned little beyond raw state licensing records. ## What changed on January 1, 2026? [#what-changed-on-january-1-2026] Hagerty Re now assumes 100 percent of the premium and the risk on Essentia policies, ending a decade in which Markel shared it. Before that, Hagerty Re took 80 percent of the risk and Markel retained 20. Hagerty announced the restructuring as a letter of intent on July 24, 2025, and the definitive agreements closed on December 31, 2025, once state regulators had approved them. The new quota share reinsurance agreement reaches further than the issue date suggests. It covers policies issued on or after January 1, 2026, and it also picks up older unexpired policies for any loss dated January 1, 2026 or later. Side by side, the roles look like this: | Role | Through December 31, 2025 | From January 1, 2026 | | --------------------- | ---------------------------------------- | --------------------------- | | Issues the policy | Essentia Insurance Company | Essentia Insurance Company | | Sells and services it | Hagerty Insurance Agency | Hagerty Insurance Agency | | Bears the risk | Hagerty Re 80 percent, Markel 20 percent | Hagerty Re 100 percent | | Markel's role | Risk-sharing owner of Essentia | Fronting carrier paid a fee | ## What is a fronting carrier? [#what-is-a-fronting-carrier] A fronting carrier is a licensed insurer that issues policies in its own name while passing essentially all of the risk to another company through reinsurance. The policyholder still gets a contract with a fully licensed, regulated carrier. What the reinsurer gets is the economics, without the years it takes to assemble state licenses and rate filings across the country. Hagerty Re is a reinsurance company, and reinsurers do not hold the licenses needed to sell policies directly to consumers. So it needs licensed paper standing in front of it. That paper is what Markel now provides, for a fronting fee starting at about 2 percent of premium, with the rate stepping down as annual policy volume grows. The agreements also preserve an option for Hagerty to buy Essentia outright, exercisable between January 1, 2026 and January 1, 2028. Exercising it would end the rental and put the brand, the paper, and the risk under one roof. ## What does the change mean for your Hagerty policy? [#what-does-the-change-mean-for-your-hagerty-policy] For the document itself, nothing visible changed. The carrier name on the declarations page, the policy terms, the claims process, and the agents you deal with all carried over. Hagerty told policyholders to expect no disruption, and that is worth reading for what it is: the company's own characterization of its deal, not an independent finding. What did change, substantively, is the balance sheet behind the promise. Through 2025, Markel's capital stood behind a fifth of every Hagerty claim. From 2026, the results of Hagerty's underwriting land on Hagerty Re alone. ### Fronting does not change who owes you Essentia remains legally obligated on every policy it issues, no matter how the risk is reinsured behind it. Your claim is a claim against Essentia, and regulators approved this structure precisely because that obligation stays put. Whether that concentration of risk should matter to you is really a question about capital, and capital questions are what financial strength ratings are for. ## Is Hagerty insurance legitimate? [#is-hagerty-insurance-legitimate] Yes. Hagerty insurance reviews on owner forums argue about plenty, but the structure itself is conventional and regulated: a producer licensed in all 50 states and Washington DC, selling for an [admitted carrier](https://www.menloinsurance.com/library/guides/admitted-vs-non-admitted-carriers) rated A (Excellent) or better, under a reinsurance deal that closed only after state approval. The forum lore deserves more caution than the structure does. One thread insists Hagerty requires a fully enclosed garage, while the next reports a carport passing underwriting without comment. Both posters may be right. Mileage expectations, daily-driver restrictions, and garaging standards vary by vehicle and by state, because an admitted carrier's underwriting rules are filed and applied state by state rather than set once nationally. What an owner in Ohio was told about a 1972 pickup says little about your 1995 coupe in California. Confirm your own situation with Hagerty's underwriting, in writing, before you rely on it. ## How do you check who stands behind a specialty policy? [#how-do-you-check-who-stands-behind-a-specialty-policy] The Hagerty arrangement is unusual mainly in being documented in SEC filings anyone can read. Most specialty programs, whether for classic cars, jewelry, or short-term rentals, put a brand in front and a different carrier behind it, and the quality of the promise lives with the carrier. Three checks will tell you who that carrier is and what it is worth: ### Steps ### Read the declarations page The first page of your policy names the issuing carrier, usually under wording like "underwritten by" or "policy issued by". That name, not the brand on the app or the marketing, is the company legally bound to pay. ### Look up the carrier by name or NAIC number The NAIC's free Consumer Insurance Search returns the carrier's licensing states, its NAIC code, and closed complaint data. Your own state insurance department's company lookup shows whether it is admitted where you live. ### Check the financial strength rating A letter grade from AM Best or a similar rating agency estimates the carrier's ability to pay claims. For a policy you plan to keep for years, A minus or better is the common comfort line. Our guide to [AM Best insurance ratings](https://www.menloinsurance.com/library/guides/am-best-insurance-ratings-explained) explains what the grades measure and where they fall short. Run all three checks on any policy where the brand and the paper might differ, which in specialty lines is most of them. ## Frequently Asked Questions ### Is Essentia Insurance Company the same as Hagerty? No. Hagerty Insurance Agency is the licensed producer that sells and services the policy. Essentia Insurance Company, a Markel-owned carrier, is the one that issues it. Since January 1, 2026, Hagerty's reinsurer, Hagerty Re, has assumed 100 percent of the risk on Essentia policies, but the two remain separate legal entities. ### Who pays my claim on a Hagerty policy? You file the claim through Hagerty, and Essentia Insurance Company is the carrier legally obligated to pay it. Behind the scenes, Hagerty Re reimburses Essentia for 100 percent of losses dated January 1, 2026 or later. That reinsurance layer never involves you. Your contract, and your right to payment, run against Essentia. ### Why does my state insurance database show Essentia instead of Hagerty? State insurance departments license and track carriers, and Essentia is the carrier on Hagerty's US auto program. Hagerty itself appears in producer records for agents and agencies instead. Finding Essentia in a carrier database confirms the program is properly licensed, it is not a sign something is off. ### Did my Hagerty policy change on January 1, 2026? The terms did not. Coverage wording, claims handling, and your agent relationship carried over, and Hagerty's own characterization was that the transition involved no disruption for policyholders. What changed is who bears the risk. Losses dated on or after January 1, 2026 now fall 100 percent to Hagerty Re instead of being shared 80/20 with Markel. *This guide is for educational purposes and summarizes publicly filed agreements and company disclosures. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## The Bottom Line [#the-bottom-line] Essentia Insurance Company is the licensed carrier on US Hagerty policies. Hagerty is the agency and the brand in front of it. Since January 1, 2026, Hagerty Re has carried 100 percent of the risk, with Markel paid a small fronting fee for the use of Essentia's licenses. Your coverage, claims process, and agent did not change. When any policy shows a name you do not recognize, look the carrier up before assuming something is wrong. ## References . [Hagerty. Hagerty Announces LOI for New Fronting Arrangement with Markel, Hagerty Re to Assume 100% of the Premium]() . [Hagerty. US Auto Disclosures]() . [Insurance Business America. Hagerty Unveils Plan to Take Full Control of Underwriting under New Markel Deal]() . [U.S. Securities and Exchange Commission. Hagerty, Inc. Form 8-K: Entry into a Material Definitive Agreement, December 31, 2025]() . [NAIC. Consumer Insurance Search]() # Excess Liability Insurance: When Your Business Needs It (https://www.menloinsurance.com/library/guides/excess-liability-insurance) Excess liability insurance adds limits above your general liability, auto and employers liability policies. When you need it, how limits stack, and cost. Markdown version: https://www.menloinsurance.com/library/guides/excess-liability-insurance.md Excess liability insurance adds limits above your primary, or "underlying", liability policies, most often commercial general liability (CGL), business auto liability and employers liability. It pays the part of a covered loss above the underlying limit, and it drops down when paid claims use up an underlying aggregate. Businesses buy it because construction contracts, leases and lawsuits routinely go beyond the $1,000,000 per occurrence limit on a primary CGL policy. How a quote works matters more than what it is called. Two $5,000,000 "excess" policies can look identical on a certificate, yet one pays defense costs out of its limit while the other pays them on top of it. ## Key takeaways * **Extra limits are the core job**: these policies sit above a schedule of underlying insurance and pay after those limits run out. * **Three types exist**: follow form, stand alone, and commercial umbrella, and only the umbrella can be broader than the policies beneath it. * **Contracts drive most purchases**: owners, general contractors and landlords often require $5,000,000 or more in combined limits. * **The first excess million costs the most**: higher layers pay less often, so they cost much less per million of limit. ### Excess Liability Insurance Excess liability insurance provides additional limits above one or more liability policies listed on its schedule of underlying insurance. Once the limits of the underlying policy are exhausted by a covered loss, the excess policy responds. ## What is excess liability insurance? [#what-is-excess-liability-insurance] Excess liability insurance is a second layer of coverage that pays when a covered loss is larger than your primary policy's limit. The underlying policies it sits above, usually your [CGL policy](https://www.menloinsurance.com/library/guides/cgl-policy-coverages-explained), business auto liability and [employers liability coverage](https://www.menloinsurance.com/library/guides/employers-liability-insurance), are listed on the excess policy's schedule of underlying insurance. When an auto claim settles for $1,800,000 against a $1,000,000 business auto limit, the excess policy pays the $800,000 the business would otherwise owe. It also does a job buyers often overlook. Your [aggregate limit](https://www.menloinsurance.com/library/glossary/aggregate-limit) caps what an underlying policy pays for all claims in a policy year, and once claims use it up, the excess policy drops down and responds in its place. Defense costs are where the difference between policies shows up. The ISO [umbrella](https://www.menloinsurance.com/commercial-umbrella-insurance) form CU 00 01 pays defense on top of the limit, while many surplus lines excess forms pay only your "ultimate net loss", which includes defense. On those forms, a $1,200,000 legal bill cuts a $5,000,000 layer down to $3,800,000. ## Is excess liability the same as umbrella insurance? [#is-excess-liability-the-same-as-umbrella-insurance] Not quite. An umbrella is the broadest kind of excess coverage and the only kind that can drop down and act as primary insurance, over a self-insured retention, for some claims the underlying policies exclude. The other two kinds, follow form and stand-alone excess, only add limits above the coverage below. A warning about follow form: true follow form is rare, so check that each layer's terms match the layer beneath it. For which structure fits which buyer, see our [umbrella vs excess liability](https://www.menloinsurance.com/library/guides/umbrella-vs-excess-liability) guide. ## When does a business need excess liability coverage? [#when-does-a-business-need-excess-liability-coverage] Most businesses buy excess coverage for one of three reasons: a contract requires it, a landlord or large customer wrote the requirement into a lease or agreement, or the worst realistic loss is larger than $1,000,000. Contracts are the most common trigger. General contractors set minimum total limits, often $5,000,000 or $10,000,000, and want the certificate before you start work. The third reason needs no contract. US juries returned 1,288 verdicts of $10,000,000 or more between 2013 and 2022, according to the US Chamber Institute for Legal Reform, and the median product liability verdict among them reached $36,000,000. - $36M — Median US product liability jury verdict, 2013 to 2022 — [US Chamber Institute for Legal Reform]() Severe losses concentrate in a few places: * **Auto fleets**: vehicles on the road are the most common source of verdicts above $1,000,000. * **Work at height or below grade**: roofing, scaffold, and excavation work produces catastrophic injury claims. * **Public footfall and products**: restaurants, retail, apartments, and anything you make or distribute expose large numbers of strangers. ## How do excess liability limits stack? [#how-do-excess-liability-limits-stack] Excess limits stack in layers, and each layer starts where the one below it ends. A simple small-business tower is a $1,000,000 CGL with a $5,000,000 excess layer above it, for $6,000,000 in total. Large commercial towers often have many layers from several insurers. The excess carrier requires each underlying policy to carry minimum limits, and a typical schedule looks like this: | Underlying line | Required limit | Basis | | ---------------------------- | -------------- | ---------------------------------------------- | | Commercial general liability | $1,000,000 | Each occurrence | | Commercial general liability | $2,000,000 | General aggregate | | Commercial general liability | $2,000,000 | Products-completed operations aggregate | | Business auto liability | $1,000,000 | Each accident | | Employers liability | $500,000 | Each accident, each employee, and policy limit | Keeping those limits is a policy condition. If you cancel or reduce an underlying policy mid-term, the excess policy still pays only as if the required limits were in place, and the gap is yours. Sublimits are the quietest trap: a $250,000 assault and battery sublimit inside a $1,000,000 CGL is picked up by the excess only if it is listed separately on the schedule. At each renewal, have your broker walk through the schedule with you. ## How much does excess liability insurance cost? [#how-much-does-excess-liability-insurance-cost] Excess liability pricing follows the same factors as your primary policies, plus one structural factor: where the layer sits. The first excess million costs the most because it is the layer most likely to pay, and each layer above it costs less per million. Industry class moves the price more than anything else: a roofing contractor or a long-haul trucker pays several times what a consulting firm pays for the same limit. Prices are also rising across the market. Social inflation, claim severity growing faster than economic inflation, added 57 percent to US liability claims over the past decade and ran at 7 percent in 2023, according to the Swiss Re Institute. Excess layers absorb the top of every large verdict, so they feel the trend first. Our [cost calculator](https://www.menloinsurance.com/library/cost-calculator) shows how your class translates into premium. ## Frequently Asked Questions ### What is the difference between excess liability and umbrella insurance? An umbrella is the broadest form of excess coverage. Regular excess only adds limits above other policies. An umbrella can also drop down and pay as primary, over a self-insured retention, for some claims the underlying policies do not cover. ### How much excess liability coverage does my business need? Start with your contracts and leases, because their limits are not negotiable and usually range from $2,000,000 to $10,000,000. Then weigh your worst realistic loss based on fleet size, work at height, foot traffic and products. Higher layers cost less per million, so quoting one limit above your first instinct is cheap. ### Does excess liability insurance cover professional liability or workers compensation? Generally, no. Excess liability reaches workers compensation only through the employers liability part of the policy, which is usually scheduled as underlying insurance. Professional liability is usually not covered unless the excess carrier agrees to schedule it, which is worth asking for when that exposure is significant. *This guide is educational in nature and a summary of standard ISO policy language only. The actual terms, conditions and endorsements contained in your policy will control. Consult with a licensed broker about your actual exposures.* ## Before you bind an excess layer [#before-you-bind-an-excess-layer] Excess liability insurance adds limits above your general liability, auto and employers liability policies and pays once the underlying limits are used up. Most buyers need it because a contract or lease requires $5,000,000 or more, though severe verdicts justify the layer on their own. Before you bind, ask for the schedule of underlying insurance and confirm whether defense costs sit inside or outside the limit. ## References . [US Chamber Institute for Legal Reform. Nuclear Verdicts: An Update on Trends, Causes, and Solutions]() . [Swiss Re Institute. Litigation Costs Drive US Liability Claims by 57% Over Past Decade]() # Experience Modification Rate (EMR): What It Costs (https://www.menloinsurance.com/library/guides/experience-mod-guide) Your experience mod multiplies your workers comp premium. What a 1.25 mod costs, why small claims move it most, and how to get errors fixed. Markdown version: https://www.menloinsurance.com/library/guides/experience-mod-guide.md Your experience modification rate (EMR), also called an e-mod or X-mod, is a multiplier that raises or lowers your [workers comp](https://www.menloinsurance.com/workers-compensation-insurance) premium based on your own injury record. At 1.00 you pay what businesses of your size and industry are expected to pay. At 1.25 you pay 25 percent more than a business with the same payroll and a clean record, so a $100,000 premium becomes $125,000. Most owners who cross 1.00 assume one serious injury did it. Usually it did not. The formula counts the first few thousand dollars of every claim far more heavily than the rest, so three $9,000 strains can cost more than one $60,000 shoulder surgery. And the injuries behind today's mod are already a year or more old. ## Key takeaways * **Claim count beats claim size**: the first slice of every injury counts at nearly full weight and the rest is discounted and capped, so a run of small claims moves your rate further than one severe accident. * **This year's injury is priced into three renewals**: the calculation uses three completed policy years and skips the one that just ended, so a claim reported now follows you until it ages out. * **Open reserves count as losses**: a claim still open enters at whatever the adjuster set aside for it, even if it later settles for a fraction of that figure. * **Worksheets carry errors**: wrong payroll, claims that belong to another employer and recoveries never credited back all show up, and a corrected rate comes back to you as return premium. ### Experience Modification Rate An experience modification rate is a factor from a workers compensation rating plan, most often the National Council on Compensation Insurance (NCCI) plan. It raises your premium if your losses were higher than expected for your payroll and type of work, and lowers it if they were lower. ## What is an experience modification rate (EMR)? [#what-is-an-experience-modification-rate-emr] An experience modification rate is a single number, centered on 1.00, that a rating bureau calculates for your business each year. The bureau (NCCI in most states) takes the payroll and claims your insurer reported and compares your actual losses over three years with the losses expected for businesses of your size and type of work. Match the expectation and you get 1.00; do better and you get a credit; do worse and you get a debit. The mod appears on your policy's Information Page, in Item 4. It multiplies your manual premium, which is your payroll run through the published rates for your kind of work, before discounts, expense constants and surcharges. See how your [experience modification](https://www.menloinsurance.com/library/glossary/experience-modification-rate) changes the result: Not every employer qualifies for experience rating. You qualify only if your premium exceeds a minimum set by the state, measured either over the most recent 24 months or as an average over the whole rating period. NCCI's "ABCs of Experience Rating" uses an example state that requires $14,000 over the most recent two years or a $7,000 average. Below that line, you pay the standard published rates and your claims never become a multiplier. Payroll and class codes build the premium your mod multiplies; see our [workers compensation guide](https://www.menloinsurance.com/library/guides/workers-compensation-insurance-guide). California runs its own system through the WCIRB rather than NCCI; our guide to [California workers comp class codes](https://www.menloinsurance.com/library/guides/california-workers-comp-class-codes) explains how it classifies payroll. ## How is the experience modification rate calculated? [#how-is-the-experience-modification-rate-calculated] At its core, the formula is one ratio: your actual losses divided by the losses expected for your size and class codes. Three adjustments keep that ratio from swinging wildly. The first is the split point, a dollar line drawn through every claim. The part of a claim below the line is primary loss and counts at nearly full value. The part above it is excess loss, which the formula discounts and caps, so one catastrophic claim cannot wreck your rating on its own. The split point is no longer one national number. NCCI retired the old uniform $18,500 split point in its Experience Rating Plan methodology update, and now files a state-specific split point with each state's annual loss cost filing. Oregon's is $10,000 for ratings effective January 1, 2026, according to the Oregon Workers' Compensation Division's Bulletin 209, while NCCI's own illustration puts a higher-severity state at $25,000. Two more values finish the calculation. The weighting value decides how much of your excess loss counts at all, and it grows with size, because a larger employer has more claims and a more reliable record. The ballast value is a fixed amount added to both sides of the ratio, which pulls every mod toward 1.00. That is why a small employer's mod barely moves after a bad year, while a large employer's responds quickly. Both values are printed on your experience rating worksheet. ## Why do small claims hurt your mod more than one big injury? [#why-do-small-claims-hurt-your-mod-more-than-one-big-injury] Small claims hurt more because the split point sits low, so the part of your record counted at full weight is close to a count of claims. Ten $12,000 claims produce about $120,000 of primary loss at nearly full weight. One $120,000 injury produces a single primary loss capped at the split point, plus a heavily discounted excess portion, so it moves your mod far less. This is deliberate. Ten sprains and cuts over three years point to a supervision problem that will keep producing claims, while one severe accident may just be bad luck. Medical-only claims, injuries that need a doctor but cause no lost work days, get extra relief in most states. Where the rating bureau has approved the Experience Rating Adjustment (ERA), only 30% of such a claim counts, a 70% reduction to both its primary and excess portions. A few states, Colorado among them, never adopted the ERA, so medical-only losses count in full there. That reduction also answers the owner tempted to pay a $600 medical bill out of pocket to keep a claim off the record. Part Four of your policy, which sets out your duties after an injury, forbids voluntary payments, and the claim would have counted for only a few dollars anyway. Closing claims quickly matters for the same reason. An open claim counts at whatever the adjuster has reserved for it, and reserves are estimates. A claim carried at $40,000 that finally settles for $9,000 inflated your premium the entire time it was open, which is why the [loss runs](https://www.menloinsurance.com/library/guides/how-to-read-loss-runs) your carrier sends are worth reading line by line. ## When does a claim start counting, and when does it drop off? [#when-does-a-claim-start-counting-and-when-does-it-drop-off] A claim starts counting once your insurer reports it to the bureau, about 18 months after the policy starts, and it stays in three consecutive mods. Your insurer, not you, sends the bureau a unit statistical report with the policy's audited payroll by class code and the amounts paid and reserved on each claim. The first report is valued 18 months after the policy's effective date, with yearly updates at 30, 42 and 54 months for claims that remain open. The mod is then issued about 90 days before its effective date using the three most recent complete years, skipping the latest policy year because its claims are too new to value reliably. The valuation date controls, and it produces a lag that surprises owners. A claim that settles for $8,000 two weeks after the valuation date still enters your mod at its $45,000 reserve. Brokers who schedule a claim review with the adjuster around month 16, two months before valuation, give the adjuster time to close claims or reduce reserves while it still counts. If nobody has scheduled that review, ask for it. ## How do you check your mod and fix an error? [#how-do-you-check-your-mod-and-fix-an-error] Check your mod every year against your experience rating worksheet, because a mod above 1.00 costs contractors bids as well as premium. Prequalification platforms such as ISNetworld and Avetta collect your annual EMR letter and build it into the grade project owners see, and many owners screen out any contractor above 1.00. Get your experience rating worksheet from NCCI or your state bureau each year; you or your designated broker are entitled to it. Check three things against your own records: that payroll by class code matches your [final audit](https://www.menloinsurance.com/library/guides/workers-comp-audit-guide) for each of the three years, that every claim listed is yours and shows the right value as of the valuation date, and that the ownership section is correct, because buying or selling a business can wrongly merge or split loss history under NCCI's ownership rules. The same errors come up again and again: claims reported under the wrong policy, subrogation recoveries never credited back, claims reduced by the adjuster without a revised report, and estimated payroll that the audit never replaced. A corrected mod applies retroactively and produces return premium, but it moves only as fast as the paperwork. The insurer must file a revised unit statistical report before the bureau recalculates, and nobody will make that a priority but you. If a correction stalls, escalate in writing to the insurer, then through the bureau's appeal process, and finally to your state insurance department. ## Frequently Asked Questions ### What is a good EMR rating? Anything below 1.00 is better than average for your class and size. For bidding construction work, aim for 0.90 or lower, since many owners screen at 1.00. The floor is not zero: even with no losses, the weighting and ballast values leave a loss-free minimum that depends on your size, and the smaller the company, the closer that floor sits to 1.00. ### How long does a claim stay in my mod? A claim affects three consecutive mods, because each one uses a three-year experience period that skips the most recent completed year. A 2024 claim first appears in the 2026 mod and ages out after the 2028 mod, though its reported value can change at each valuation while the file stays open. ### Can I avoid a bad mod by switching carriers or starting a new company? No. The mod follows the employer, and NCCI's ownership rule combines loss experience for entities under common majority ownership. A company that forms a new corporation to escape a debit mod passes its loss history to the new corporation. Misstating ownership on the ERM-14, the form used to report ownership changes, is treated as fraud in most states. ### Do all states use NCCI experience rating? No. Most states use NCCI, but some run their own rating bureaus, California among them, with different split points, eligibility thresholds and formulas. A business with employees in several states can have an NCCI interstate mod plus separate mods from independent bureau states, so check which bureau produced each factor before assuming one fix covers them all. *This guide is intended for informational use only, and outlines general information regarding typical provisions found in NCCI’s Standard Rating Plans and Policy Language. Your actual policy wording and/or endorsements govern. Contact a licensed agent/broker to discuss your exposures.* ## Reviewing your mod before renewal [#reviewing-your-mod-before-renewal] Your experience modification rate turns your own claim history into a premium multiplier. Above 1.00, you pay more premium and lose bid invitations at the same time. How often you have claims matters more than how severe they are, and a claim reported this year is priced into three renewals. Pull your worksheet, compare the payroll and claim values with your own records, and dispute anything that does not match. ## References . [NCCI. ABCs of Experience Rating]() . [NCCI. Experience Rating Plan Methodology Update FAQs]() . [Oregon Workers Compensation Division. Bulletin 209]() . [ISNetworld. Agent/Broker Agreement]() . [Avetta. Avetta Supply Chain Risk Management]() # FAIR Plan Temporary Supplemental Fee: Why It's on Your Home Insurance Bill (https://www.menloinsurance.com/library/guides/fair-plan-temporary-supplemental-fee) The "Temporary Supplemental Fee" on California home insurance bills recovers half of the $1 billion FAIR Plan assessment approved after the January 2025 Los Angeles fires. The Department of Insurance approved 176 insurer filings through August 2026; the median homeowner fee is $28 a year for up to two years. Markdown version: https://www.menloinsurance.com/library/guides/fair-plan-temporary-supplemental-fee.md The "Temporary Supplemental Fee" on a California home insurance bill is a charge your own insurer adds to recover part of what it paid toward the [California FAIR Plan](https://www.menloinsurance.com/california-fair-plan-insurance)'s $1 billion assessment after the January 2025 Los Angeles fires. It isn't a FAIR Plan bill. The Insurance Commissioner approved the assessment on February 11, 2025. Insurers carry half of it themselves, and each one needs the Commissioner's approval to recover the other half from its policyholders. When it's approved, the fee is a percentage of your premium, collected over no more than two years and shown as its own line. The Department of Insurance put the median homeowner fee at $28 a year. Plenty of people have one. From July 25, 2025 through August 25, 2026, the Department approved 176 fee filings from 101 insurance companies, covering homeowners, dwelling fire, renters, landlord and commercial package policies. If your home is insured with a large admitted insurer, check your last renewal bill for it. ## Key takeaways * **It's your insurer's fee, not the FAIR Plan's.** Admitted insurers are members of the FAIR Plan, paid the assessment, and recover half of it from their own policyholders with approval. * **It's capped in size and time.** Insurers can recover 50 percent of a $1 billion assessment, only for amounts reinsurance didn't cover, over no more than two years. * **It must be labeled.** The fee appears as a separate "Temporary Supplemental Fee" line with a required explanation, and it isn't premium. * **It can't be baked into rates.** Recovered amounts don't count as losses in any later rate filing. * **The rules held up in court.** A Los Angeles Superior Court judge rejected a challenge to the Commissioner's recoupment rules; the Department announced the ruling on July 1, 2026. ### Temporary supplemental fee A charge, approved by the Insurance Commissioner under Proposition 103, that a FAIR Plan member insurer adds to its own policies to recover part of a FAIR Plan assessment it paid. It is a percentage of premium, is stated separately on the bill or declarations, is not counted as premium, and is collected for a limited period. ## Why is there a FAIR Plan fee on my homeowners bill? [#why-is-there-a-fair-plan-fee-on-my-homeowners-bill] Because every admitted property insurer in California is a member of the FAIR Plan and shares its losses. The plan is an association of all admitted insurers licensed to write basic property insurance in the state. When its own money runs short, it can ask the Commissioner to assess those members. That happened in 2025. By February 11, 2025, the FAIR Plan had received 4,794 claims from the Palisades and Eaton fires, paid $914 million, and estimated its total loss from the two fires at about $4 billion. The Commissioner approved Order 2025-1 that day, letting the plan levy a $1 billion assessment on member insurers, the first in more than 30 years. Members had 30 days from their notice to pay. The last assessments followed the 1993 fires in Altadena and Malibu and the 1994 Northridge earthquake, totaling $260 million. Each insurer's share of an assessment follows its market share. The Plan of Operation assesses members in proportion to their premiums written two calendar years earlier, and it keeps residential and commercial losses separate, so a dwelling loss is charged to residential lines only. ## How much can my insurer charge? [#how-much-can-my-insurer-charge] Only what the Commissioner approves, within limits the Department set in two bulletins. Bulletin 2024-8, issued in September 2024, set the approach before any fire; Bulletin 2025-4, issued with the assessment on February 11, 2025, updated it. The main rules from Bulletin 2025-4: | Rule | What it means for you | | -------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------- | | Insurers may recover 50% of an assessment of up to $1 billion per line in a year | Your insurer absorbs the other half; for 2025 that's half of each insurer's share of $1 billion | | Above $1 billion in a year, 100% of the excess may be recovered | A larger future assessment would cost policyholders more | | Only the part not covered by reinsurance or reimbursed another way | Insurers must attest to this under penalty of perjury | | The fee is a percentage of each policyholder's premium | A bigger premium means a bigger fee | | Recovery is planned over two years from the effective date | The fee is temporary, and the Department called it no more than two years | | Filing had to be made within six months of the insurer's assessment notice | Late or defective filings forfeit the right to recover | | The filing must be revenue neutral and can't change rates or rules | The fee can't be used to sneak in a rate change | | Recovered amounts aren't premium and aren't losses in future rate filings | You don't pay for the same assessment twice through rates | | The Department will check that insurers didn't over-collect | Collections are reported back to the regulator | The Department's press release on the court ruling put the median fee for homeowners at $28 a year. At that median, two years of the fee comes to about $56 in total. Yours can be higher or lower: it depends on your insurer's share of the assessment, how the insurer spread that across its policies, and the size of your premium. Because the fee is a percentage, a big premium on a house backing onto brush carries a bigger fee than a small premium on a condo, even with the same insurer. ## Which insurers were approved to charge it? [#which-insurers-were-approved-to-charge-it] Most of the big names in California homeowners insurance. Bulletin 2025-4 requires each fee filing to carry "FPA-2025" in its program name, which makes them easy to find on the Department's public lists of approved and closed filings. The 2025 year-end list shows 144 approved FPA-2025 filings, closed between July 25 and December 23, 2025. The 2026 list, current to August 31, adds 32 more through August 25, 2026. Together that's 176 filings from 101 companies: 108 in personal lines, from 70 companies, and 68 in commercial lines. A sample of the personal lines approvals: | Insurer (as listed by the Department) | Program | Approved | CDI file | | ---------------------------------------------- | ---------- | ------------------ | --------- | | Pacific Specialty Insurance Company | Homeowners | July 25, 2025 | 25-692 | | CSAA Insurance Exchange | Homeowners | August 5, 2025 | 25-641 | | State Farm General Insurance Company | Homeowners | August 19, 2025 | 25-958 | | Allstate Insurance Company | Homeowners | August 29, 2025 | 25-1189 | | Interinsurance Exchange of the Automobile Club | Homeowners | August 29, 2025 | 25-1321 | | California Automobile Insurance Company | Homeowners | September 2, 2025 | 25-502 | | Farmers Insurance Exchange | Homeowners | September 26, 2025 | 25-1582 | | USAA Casualty Insurance Company | Homeowners | November 7, 2025 | 25-1497-A | | Nationwide Mutual Insurance Company | Homeowners | December 1, 2025 | 25-1131 | | Federal Insurance Company | Homeowners | January 30, 2026 | 25-892 | Sources: CDI Rate Filing Approval and Closed Lists, YTD 12/31/25 and YTD 8/31/26. The list shows the approval, not the fee amount or the date collection starts, which the insurer sets in its filing. An approval doesn't mean every policy from that company carries the fee. Each filing names the policy types it applies to, such as homeowners, dwelling, renters, condominium or manufactured homes, and an insurer whose assessment was fully covered by reinsurance has nothing to recover. ## Do FAIR Plan or surplus lines policies carry this fee? [#do-fair-plan-or-surplus-lines-policies-carry-this-fee] Not this one. The recoupment rules let member insurers charge their own policyholders. A FAIR Plan dwelling policy is issued by the plan, not by a member, and a surplus lines carrier isn't a member at all, because membership is limited to admitted insurers. Surplus lines policies have their own taxes and fees, and no guaranty fund, as our guide to [surplus lines insurance](https://www.menloinsurance.com/library/guides/surplus-lines-insurance) explains. The FAIR Plan has a separate supplemental fee for its high-value commercial policies (limits of $20 million per building, up to $100 million per location). The Plan of Operation pays losses on those policies first from temporary supplemental fees charged on them at inception or renewal. That doesn't apply to homeowners. ## Can I get the fee removed? [#can-i-get-the-fee-removed] Not by asking. An approved fee applies to every policy in the program the filing names, and the Commissioner's rules control how much and for how long. What you can do: ### Steps ### Check the line on your bill An approved fee must be shown separately on a notice, bill or declarations page, with the Department's required explanation of the FAIR Plan and the words "Temporary Supplemental Fee" next to the amount. If the charge has a different name, or no explanation, ask your insurer or broker what it is. ### Confirm your insurer was approved Look for your insurer and policy type on the Department's approval lists, searching for "FPA-2025" in the program name. If you find nothing, ask the insurer for the file number. ### Complain if something looks wrong The Department of Insurance's consumer hotline takes complaints about charges on your policy. The Department has said it will collect data to make sure insurers don't recover more than they were allowed. ### Shop the whole premium, not the fee Switching insurers to avoid a fee with a median of $28 a year rarely makes sense by itself, and another admitted insurer may have its own approved fee. Compare the full cost and coverage at renewal instead. A [homeowners quote request](https://www.menloinsurance.com/f/homeowners) lets a broker do that across admitted and surplus lines carriers. ## Could there be another assessment? [#could-there-be-another-assessment] Yes. The Plan of Operation sets the order: the plan pays losses first from retained earnings, then from reinsurance, any line of credit and catastrophe bonds, and only then, if it faces insolvency, through an assessment on members. By January 2026 the plan said it had handled about 5,400 Eaton and Palisades claims and paid nearly $3.5 billion, and that it had secured a line of credit and a reinsurance program that includes a $750 million catastrophe bond, which makes another assessment less likely. Under Bulletin 2025-4, a future assessment above $1 billion in a year could be passed through in full above that amount, with approval. The recoupment rules were also challenged. Consumer Watchdog asked the Los Angeles Superior Court to overturn them, and the court rejected the petition. The Department announced the ruling on July 1, 2026. For now, the framework in the two bulletins stands. For the other ways the FAIR Plan affects your costs, see our [main California FAIR Plan guide](https://www.menloinsurance.com/library/guides/california-fair-plan) and our guide to the [2026 FAIR Plan rate increase](https://www.menloinsurance.com/library/guides/california-fair-plan-rate-increase-2026). If you're applying to the plan, our step-by-step guide to [getting a California FAIR Plan quote](https://www.menloinsurance.com/library/guides/california-fair-plan-quote) covers the broker process. ## Frequently Asked Questions ### Is the temporary supplemental fee a FAIR Plan charge? No. It's charged by your own admitted insurer to recover part of the FAIR Plan assessment that insurer paid. The FAIR Plan doesn't bill it, and the insurer needs the Commissioner's approval to charge it. ### How long will I pay the fee? Insurers must plan to recover the approved amount over two years from the fee's effective date, and the Department describes the recovery as lasting no more than two years. ### How much is the FAIR Plan supplemental fee? It's a percentage of your premium, set in each insurer's approved filing. The Department reported a median of $28 a year for homeowners. ### Does the fee raise my premium at renewal? It isn't premium, and amounts recovered through it can't be counted as losses in any later rate filing. Your premium can still change for other reasons at renewal. *This guide is for educational purposes and summarizes California Department of Insurance bulletins, orders, press releases and approved rate filing lists, and the FAIR Plan's Plan of Operation, as of September 24, 2026. The filing counts come from the Department's lists current to August 31, 2026. Menlo Insurance Services is a licensed California broker and may earn a commission on policies it places.* ## References . [California Department of Insurance. Commissioner Lara approves FAIR Plan request for $1 billion assessment (February 11, 2025)]() . [California Department of Insurance. Bulletin 2025-4: Updated Guidance regarding Insurer Recoupment Procedures in Response to Assessment by the FAIR Plan (February 11, 2025)]() . [California Department of Insurance. Commissioner Lara defeats attempt to undermine California insurance market (July 1, 2026)]() . [California Department of Insurance. Rate Filing Approval and Closed List, year to date December 31, 2025 (program names containing FPA-2025)]() . [California Department of Insurance. Rate Filing Approval and Closed List, year to date August 31, 2026 (program names containing FPA-2025)]() . [California Department of Insurance. Stipulation and Order No. 2026-2, with the California FAIR Plan Association Plan of Operation (Ed. 4/3/26), executed March 27, 2026]() . [California Department of Insurance. Bulletin 2024-8: Insurer Recoupment Procedures in the Highly Unlikely Event of Assessment by the FAIR Plan (September 2024)]() . [California Department of Insurance. Top 10 Tips for Finding Residential Insurance]() . [California FAIR Plan. One Year Later: California FAIR Plan Response to the Eaton and Palisades Wildfires (January 2026)]() # Flood Insurance in California: NFIP vs Private Flood (https://www.menloinsurance.com/library/guides/flood-insurance-california) California home policies exclude flood. The NFIP caps homes at $250,000 with a 30-day wait; private flood goes higher. Mudflow after wildfire and how to buy. Markdown version: https://www.menloinsurance.com/library/guides/flood-insurance-california.md California homeowners and renters policies do not cover flood, so flood coverage has to be bought as a separate policy, either from the National Flood Insurance Program (NFIP), which FEMA runs, or from a private flood insurer. An NFIP policy covers a home's structure up to $250,000 and its contents up to $100,000, and it normally takes effect 30 days after purchase. Private flood policies can go much higher: Neptune's residential flood policy offers up to $7 million on the building and up to $500,000 on contents, with a 10-day wait. This guide compares the NFIP and private flood insurance for California homes, explains the waiting period and its exceptions, including after a wildfire, and covers what each type of flood insurance costs. For a quote, start from our [flood insurance page](https://www.menloinsurance.com/flood-insurance). ## Key takeaways * **Home policies exclude flood.** That includes the California FAIR Plan. * **NFIP limits:** $250,000 building and $100,000 contents for a home. * **The 30-day wait has exceptions.** No wait when a lender requires the policy at a loan closing, and a 1-day wait when flooding from burned federal land follows a wildfire and you buy within 60 days of containment. * **Private flood can do more.** Higher limits, temporary living expenses, pool repair, replacement cost on contents, and a shorter wait on some programs. * **Low-risk zones still flood.** From 2013 to 2023, one-third of NFIP claims came from areas outside current high-risk flood zones, and the average claim from 2019 to 2023 was $52,000. ## Does homeowners insurance cover flooding in California? [#does-homeowners-insurance-cover-flooding-in-california] No. Standard homeowners insurance does not cover flood damage, according to the Department of Insurance. Water damage from a burst pipe inside the house is usually covered by a homeowners policy, but water that comes from outside, such as a river overflowing its banks, heavy rain collecting on the ground or a mudflow, is flood. The FAIR Plan dwelling policy doesn't cover it either. The NFIP covers direct physical loss from a general condition of flooding, including overflow of inland or tidal waters, unusual and rapid runoff of surface water, and mudflow. It specifically excludes earth movement such as landslides, subsidence or erosion, even when water causes them. ## NFIP or private flood insurance: which is better? [#nfip-or-private-flood-insurance-which-is-better] It depends on what your house is worth and what you need covered. The NFIP is the default, and a lender that requires flood insurance will accept it. Consider a private policy when your home would cost more than $250,000 to rebuild, when you want coverage the NFIP leaves out, or when you need coverage to start sooner. | | NFIP (FEMA) | Private flood (example: Neptune residential) | | ------------------------- | ---------------------------------------------------------------------------------------------- | ----------------------------------------------------------------- | | Building limit | $250,000 | Up to $7,000,000 | | Contents limit | $100,000 | Up to $500,000 | | Temporary living expenses | Not included | 75% of covered costs, up to $50,000 | | Contents paid at | Actual cash value | Actual cash value, or replacement cost as an option | | Pool repair and refill | Excluded | Up to $20,000 | | Loss of rental income | Not included | Up to $20,000 | | Waiting period | 30 days; none at a real estate closing or when rolling over another flood policy | 10 days; none at a real estate closing or rollover | Menlo quotes the NFIP through NFIP Direct, FEMA's own program, and private residential flood through Neptune, Adaptive and Annex Risk, so one application can compare both. If your house is worth more than the NFIP limits, you can also keep an NFIP policy and add excess flood insurance above those limits. ## How much does flood insurance cost in California? [#how-much-does-flood-insurance-cost-in-california] It depends on the building, not only the flood zone. Under FEMA's Risk Rating 2.0 pricing, NFIP premiums reflect how often flooding occurs, several flood types including heavy rainfall, distance to a water source, and property details such as elevation and the cost to rebuild. The limit and deductible you choose also move the price. In its California analysis, FEMA found that, under the new method, 57,541 California policyholders saw decreases, and 135,675 saw increases of $0 to $10 a month. One of the best ways to see a real number is to compare quotes: an NFIP estimate and private flood quotes for the same house. Compare the premium against the average NFIP claim payment, which was $52,000 from 2019 to 2023. To see how flood zones affect premiums, see our guide to [flood zones AE and X](https://www.menloinsurance.com/library/guides/flood-zones-ae-and-x-insurance). ## Can I get flood insurance right after a wildfire? [#can-i-get-flood-insurance-right-after-a-wildfire] Yes, and do it as soon as possible. Burned ground absorbs less water, so the hillsides below a burn scar have a greater chance of flooding and mudflow for years to come. The NFIP usually has a 30-day waiting period, but there is a post-wildfire exception: if a flood is caused or made worse by a wildfire on federal land and you buy the policy within 60 days of the fire's containment date, the waiting period is one day. Mudflow counts as flood under the NFIP, but landslides and other earth movement are not covered. ## Who offers flood insurance in California? [#who-offers-flood-insurance-in-california] Three sources: NFIP policies sold by participating insurance companies and agents, private flood policies sold through brokers, and some excess flood programs that provide coverage above an NFIP policy. The Department of Insurance does not regulate the NFIP; FEMA does. Private flood policies can be admitted or non-admitted, so check which on the quote. ## Frequently Asked Questions ### How much does flood insurance cost in California? It varies by building. NFIP premiums reflect flood frequency, flood types, distance to water, elevation and the cost to rebuild, plus the limits and deductible you choose. Get NFIP and private quotes to compare. ### Is flood insurance required in California? Only by lenders. A lender can require flood insurance on a federally backed mortgage for a home in a high-risk flood zone, and that policy can start without the 30-day wait. ### What is not covered by flood insurance? Earth movement such as landslides, subsidence and erosion, even when caused by water. NFIP policies also exclude swimming pools, and they don't include temporary living expenses. ### Does flood insurance cover mudslides after a wildfire? The NFIP covers mudflow, which it treats as flood, but not landslides. Buying within 60 days of a qualifying fire on federal land shortens the wait to one day. ### Can I buy private flood insurance instead of the NFIP? Yes. Private flood policies are sold through brokers and can have higher limits and extra coverages. Confirm your lender accepts the policy if you have a mortgage. *This guide is for educational purposes and summarizes Department of Insurance and FEMA consumer information and carrier program documents. Coverage, eligibility and prices change, and your policy's terms control. Menlo Insurance Services (CA license 6020106) is a licensed broker that may earn a commission on a placement and does not guarantee that any coverage or price will be available. Some private flood insurers are non-admitted, and non-admitted insurers are not backed by the California Insurance Guarantee Association. Each quote names its insurer and whether it is admitted.* ## The Bottom Line [#the-bottom-line] Flood is not covered by a standard California home policy, so buy it separately. The NFIP insures a home up to $250,000 on the building and $100,000 on contents after a 30-day wait, while private flood can go much higher and start sooner. If you live below a recent burn scar, buy within 60 days of containment to use the post-wildfire exception. ## References . [California Department of Insurance. Flood Facts]() (accessed 2026-09-27) . [FEMA, National Flood Insurance Program. Fast Facts on Floods & Flood Insurance (November 2024)]() (2024) . [Neptune Flood. Residential Flood Insurance: the comparison (Neptune vs NFIP)]() (2026) . [FEMA. 30-Day Waiting Period Exception to Flood Insurance Policies May Be Available Following Wildfires on Federal Lands]() (2021) . [Menlo Insurance Services. Flood insurance (markets quoted: NFIP Direct, Neptune, Adaptive and Annex Risk residential flood)]() (accessed 2026-09-30) . [FEMA. NFIP's Pricing Approach (Risk Rating 2.0)]() (accessed 2026-09-27) . [FEMA. Risk Rating 2.0 vs Old Rating Methodology: NFIP California Rate Analysis Comparison (April 2025)]() (2025) # Flood Zones AE and X Explained: What Each FEMA Zone Means for Flood Insurance in California (https://www.menloinsurance.com/library/guides/flood-zones-ae-and-x-insurance) Flood zone AE is a FEMA high-risk area with a 1 percent annual chance of flooding and a known base flood elevation, so flood insurance is required for federally backed mortgages. Zone X is moderate (shaded) or minimal (unshaded) risk, where it is optional. Every FEMA zone, how to look yours up, NFIP vs private flood, Risk Rating 2.0 and California's post-wildfire and Central Valley risks. Markdown version: https://www.menloinsurance.com/library/guides/flood-zones-ae-and-x-insurance.md Flood zone AE is a high-risk area on FEMA's flood maps. Land in zone AE has at least a 1 percent chance of flooding in any given year, and FEMA has calculated the base flood elevation, the height the water is expected to reach in that flood. If you have a mortgage from a federally backed lender on a building in zone AE, flood insurance is required. Zone X sits at the other end of the scale. Shaded X is moderate risk, between the 1 percent and the 0.2 percent annual chance floodplains, and unshaded X is minimal risk, above the 0.2 percent flood. In zone X, the law doesn't make you buy flood insurance. You should still think about it. FEMA says 1 in 3 flood insurance claims come from low- and moderate-risk zones. Your standard homeowners policy doesn't cover flood, whatever zone you're in. Flood coverage is always a separate policy. To compare NFIP and private flood options for a California home, see our [flood insurance page](https://www.menloinsurance.com/flood-insurance). Below, we sort every FEMA zone by risk, explain when you're required to carry insurance, and point out the California risks the maps don't catch. ## Key takeaways * **Zones starting with A or V are high risk.** Together they form the special flood hazard area (SFHA), the land FEMA expects to flood in a 1 percent annual chance flood. * **Zone AE has a base flood elevation.** That number drives building rules and helps price your policy. * **V and VE are the most hazardous.** They are coastal zones with the added force of storm waves. * **Zone X is not zero risk.** Shaded X is moderate, unshaded X is minimal, and one in three flood claims comes from low- and moderate-risk zones. * **Your zone decides whether insurance is required, not what it costs.** Since Risk Rating 2.0, NFIP prices use the building's own flood risk rather than its zone. ### Special flood hazard area (SFHA) The area that FEMA expects to be flooded by a flood with a 1 percent chance of being equaled or exceeded in any given year. It includes every zone that begins with A or V. ## What are the FEMA flood zones? [#what-are-the-fema-flood-zones] FEMA puts land into zones based on how likely it is to flood and how much FEMA knows about that flooding. The zones fall into three groups: high risk (the SFHA), moderate and minimal risk, and undetermined. | Zone | Risk class | What it means | Is flood insurance required with a federally backed mortgage? | | ------------------------------ | -------------------- | -------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------- | | **A** | High (SFHA) | 1% annual chance of flooding | Yes | | **AE** (older maps: A1 to A30) | High (SFHA) | 1% annual chance; base flood elevations provided | Yes | | **AH** | High (SFHA) | 1% annual chance of shallow flooding, usually ponding, averaging one to three feet deep | Yes | | **AO** | High (SFHA) | 1% or greater annual chance of shallow flooding, usually sheet flow, averaging one to three feet deep | Yes | | **A99** | High (SFHA) | Will be protected by a federal flood control system still under construction | Yes | | **V** | High (SFHA), coastal | High-risk coastal area with an additional hazard from storm waves | Yes | | **VE** (older maps: V1 to V30) | High (SFHA), coastal | 1% annual chance plus storm waves; base flood elevations shown | Yes | | **X shaded** (older maps: B) | Moderate | Between the 1% and 0.2% (500-year) annual chance floodplains | No, but recommended | | **X unshaded** (older maps: C) | Minimal | Outside the SFHA and above the 0.2% annual chance flood | No, but recommended | | **D** | Undetermined | Possible but undetermined flood hazard; no analysis has been done | No, but "undetermined" does not mean "no risk" | FEMA lists A, AO, AH, A1 to A30, AE, A99, AR and its combinations, V, VE and V1 to V30 as the SFHA zones. FEMA's homeowner guidance spells out what that means over time: an area with a 1 percent annual chance of flooding has a 26 percent chance of flooding over the life of a 30-year mortgage. ## Is zone AE a bad flood zone? [#is-zone-ae-a-bad-flood-zone] Zone AE is high risk. But it's also a zone where FEMA has published base flood elevations, so you, your builder and your insurer all know how high the 1 percent flood should reach on your lot. That can help you or hurt you. If your lowest floor sits well above the base flood elevation, you're far better off than the neighbor on the same map who built below it. **Can you build in zone AE?** Yes, where the community participates in the NFIP and you follow its floodplain rules. Federal minimum standards require new homes, and substantial improvements, in zones A1 to A30, AE and AH to have the lowest floor, including a basement, elevated to or above the base flood level. Your city or county can add stricter rules, so FEMA says to call the local floodplain administrator before you change anything on the house. **What if the map is wrong about your lot?** If your structure or lot sits on natural high ground above the base flood, you can ask FEMA for a Letter of Map Amendment (LOMA). If FEMA approves it, you send the letter to your lender and ask that the federal flood insurance requirement for the structure be removed. ## What is the worst flood zone? [#what-is-the-worst-flood-zone] Zones V and VE are the most hazardous on FEMA's maps. They share the 1 percent annual chance of flooding with the A zones, but they are coastal areas with an "additional hazard associated with storm waves." The waves are why the building rules are tougher there. New buildings in V zones must be elevated on pilings or columns so the lowest horizontal structural member sits at or above the base flood level. The foundation must be designed to resist wind and water loads acting at the same time and certified by a registered engineer or architect. ## What is the least risky flood zone? [#what-is-the-least-risky-flood-zone] Zone X unshaded, shown as zone C on older maps, is the lowest-risk zone. It is outside the SFHA and above the 0.2 percent annual chance flood. But lowest doesn't mean none. Flooding can happen anywhere, and FEMA reports that 1 in 3 flood insurance claims come from low- and moderate-risk zones. Shaded X, zone B on older maps, sits between the 1 percent and 0.2 percent floodplains. ## Is flood insurance required in zone AE or zone X? [#is-flood-insurance-required-in-zone-ae-or-zone-x] In zone AE and every other A or V zone, flood insurance is mandatory for federally backed mortgages in communities that participate in the NFIP. The rule comes from federal law. Regulated lenders may not make, increase, extend or renew a loan secured by a building or a mobile home in a special flood hazard area unless it is insured for the term of the loan. The required amount is the outstanding principal balance or the maximum coverage available, whichever is less. In zone X, flood insurance is not required by law, though FEMA strongly recommends it. Your lender can still require it for its own loan. If you're buying, ask early. You don't want to learn about it a week before closing. ## NFIP vs private flood insurance: what is the difference? [#nfip-vs-private-flood-insurance-what-is-the-difference] You can buy flood insurance from the National Flood Insurance Program or from a private flood insurer. | | NFIP policy | Private flood policy | | --------------------------------------------- | ------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------ | | Who backs it | The federal program, sold through insurers and agents | A private insurer, admitted or surplus lines | | Building limit for a 1 to 4 family home | Up to $250,000 | Set by the insurer; can be higher | | Contents limit | Up to $100,000 | Set by the insurer | | Waiting period | Usually 30 days, with exceptions | Set by the insurer | | Satisfies a lender's mandatory purchase rule? | Yes | Yes, if it meets the federal definition of private flood insurance; lenders must accept a policy that does | | How it is priced | Risk Rating 2.0, the building's own risk | The insurer's own model | **The 30-day wait.** An NFIP policy normally takes effect 30 days after the application is complete and the first premium is paid. The main exceptions are coverage bought in connection with making, increasing, extending or renewing a loan, and coverage bought within a year of a flood map revision. A third exception matters in California. The wait is also waived for private property the program finds is affected by flooding on federal land caused or worsened by post-wildfire conditions, if the policy is bought within 60 days after the fire is contained. Don't wait until the first storm is in the forecast. **Above the NFIP limits.** Plenty of California homes cost more than $250,000 to rebuild. A private flood policy, or excess flood on top of an NFIP policy, can cover the difference. Some specialty programs, such as [Annex Risk](https://www.menloinsurance.com/library/guides/annex-risk-insurance), write residential flood through brokers. ## How does Risk Rating 2.0 change flood insurance prices? [#how-does-risk-rating-20-change-flood-insurance-prices] Under Risk Rating 2.0, your zone doesn't set your NFIP price anymore. FEMA's pricing approach "does not use flood zones to determine flood risk." Instead it looks at the individual building: river overflow, storm surge, coastal erosion and heavy rainfall, the distance to a water source, the elevation and the cost to rebuild. It applied to new policies from October 1, 2021, to all renewals from April 1, 2022, and was fully in place by April 1, 2023. Your zone still matters for two things. It decides whether your lender must require flood insurance, and it drives local building rules. Existing statutory limits also mean most NFIP rates cannot rise more than 18 percent a year. There's no set price for a zone. Two AE homes on the same street can pay very different premiums if one sits three feet higher. ## How do you look up your flood zone? [#how-do-you-look-up-your-flood-zone] Use FEMA's Flood Map Service Center at msc.fema.gov. Type in your address, then open the dynamic map to view your FIRMette, a printable piece of the official flood map. You can also call your community's floodplain administrator, who can confirm the zone and any local rules. If you're buying, your lender will order its own flood zone determination. Make sure it matches what you found. ## California flood risks the map may not show [#california-flood-risks-the-map-may-not-show] FEMA's maps show river and coastal flooding, based on history and models. In California, look past the zone letter at these risks too. **After a wildfire.** Burned hillsides don't soak up much water. The U.S. Geological Survey warns that "even modest rainstorms can trigger dangerous flash floods and debris flows in steep burned areas." It notes that these flows are usually triggered by short bursts of intense rain and can occur during the first storm after a fire. A house below a burn scar can be in zone X and still get flooding and mud the next winter. Standard homeowners policies do not cover flood, and our guide on whether homeowners insurance covers wildfire explains how that applies to mudslides after a fire. The post-wildfire waiver of the NFIP waiting period described above exists for this situation. **The Central Valley.** Much of the valley floor relies on levees. The Department of Water Resources says approximately 1.3 million Californians live and work in the valley's floodplains, with approximately $223 billion worth of structures and contents. A levee lowers the odds of a flood but can't eliminate them. If your home is behind one, insure it even if the map doesn't require it. **Mobile and manufactured homes.** The federal purchase rule applies to mobile homes as well as other buildings. In A zones, manufactured homes must be elevated and anchored to resist flotation, collapse and lateral movement. Our guide to mobile home insurance in California covers the rest of that market. ## Frequently Asked Questions ### Is zone AE a bad flood zone? It is a high-risk zone, with a 1 percent annual chance of flooding, and flood insurance is required for federally backed mortgages there. But AE is also the zone where FEMA has published base flood elevations, so a home built above that elevation can be much better protected, and better priced under Risk Rating 2.0, than its zone suggests. ### What is the worst flood zone? Zones V and VE. They share the 1 percent annual chance of flooding with the A zones but add the force of storm waves along the coast, which is why new buildings there must be elevated on pilings or columns. ### What is the least risky flood zone? Zone X unshaded, or zone C on older maps, which lies above the 0.2 percent annual chance flood. It is minimal risk, not no risk: about one in three flood insurance claims come from low- and moderate-risk zones. ### Do I need flood insurance in zone X? Not by federal law. A lender can still require it, and FEMA recommends it. Under Risk Rating 2.0 the price depends on the building's own flood risk, not the zone letter. ### Can I get out of a flood zone? If your structure or lot is on natural high ground above the base flood, you can apply to FEMA for a Letter of Map Amendment. If approved, your lender may drop the flood insurance requirement for that structure. Many owners keep a policy anyway. *This guide is for educational purposes and summarizes FEMA, U.S. Geological Survey and California Department of Water Resources publications and federal law. Your flood zone determination, lender requirements and policy terms control. Menlo Insurance Services (CA license 6020106) is a licensed California broker, may earn a commission on policies it places, and does not guarantee that any coverage or price will be available; talk to a licensed broker about your actual exposures.* ## The Bottom Line [#the-bottom-line] Zone AE is high risk, and FEMA knows how high the water should get. With a federally backed mortgage you have to carry flood insurance, and the building rules are tied to that flood height. Zone X is moderate or minimal risk. Insurance is optional there, but still a good idea, because a third of claims come from outside the high-risk zones. Look up your zone at FEMA's Map Service Center. Just remember that under Risk Rating 2.0, your building sets the NFIP price, not your zone. And in California, a burn scar or a levee can change your real risk long before anyone redraws the map. To compare NFIP and private options for your home, start on our [flood insurance page](https://www.menloinsurance.com/flood-insurance). ## References . [FEMA. Flood Zones (glossary)]() . [FEMA National Flood Insurance Program (FloodSmart). What Is My Flood Zone?]() . [FEMA. Know Your Risk: Homeowners]() . [FEMA. Zone AE and A1-30 (glossary)]() . [FEMA. Zone VE and V1-30 (glossary)]() . [FEMA. Zone D (glossary)]() . [FEMA. NFIP's Pricing Approach (Risk Rating 2.0)]() . [Legal Information Institute, Cornell Law School. 42 U.S. Code 4012a: Flood insurance purchase and compliance requirements]() . [Legal Information Institute, Cornell Law School. 42 U.S. Code 4013: Nature and limitation of insurance coverage]() . [FEMA. Flood Insurance]() . [FEMA. Change Your Flood Zone Designation]() . [Legal Information Institute, Cornell Law School. 44 CFR 60.3: Flood plain management criteria for flood-prone areas]() . [U.S. Geological Survey. Emergency Assessment of Post-Fire Debris-Flow Hazards]() . [California Department of Water Resources. Central Valley Flood Protection Plan]() . [FEMA. Zone AH (glossary)]() . [FEMA. Zone AO (glossary)]() # Foremost Vacant Home Insurance in California: What the Farmers Program Covers and How to Get a Quote (https://www.menloinsurance.com/library/guides/foremost-vacant-home-insurance-california) Foremost, the Farmers specialty-home company, reopened its Dwelling Fire Vacant policy to new California customers on March 15, 2025. What the named-peril base policy covers, which add-ons matter for an empty house, and what you need to apply. Markdown version: https://www.menloinsurance.com/library/guides/foremost-vacant-home-insurance-california.md Yes, Foremost writes vacant homes in California again. Foremost is the specialty-home company of the Farmers Insurance Group, and its Dwelling Fire Vacant policy reopened to new California customers on March 15, 2025, after the company had stopped taking new vacant business in the state in August 2023. The base policy insures the house against a short list of named perils. Vandalism, liability, personal property and broader coverage are optional, so the quote you get depends on what you add. You buy Foremost through an agent appointed with Foremost, not online. Menlo can't quote Foremost today, because our appointment is still pending. For an empty California house we quote the California FAIR Plan, Delos, Green Shield and Aegis instead, through our [vacant property insurance](https://www.menloinsurance.com/vacant-property-insurance) page. This guide covers what the Foremost policy covers, what it leaves out unless you add it, and what the agent will ask you for. For how the vacancy clause works and how to name an estate or trust, see our guide to [insuring a vacant or inherited home](https://www.menloinsurance.com/library/guides/vacant-inherited-home-insurance-california), and for every program side by side, [the best vacant home insurance in California](https://www.menloinsurance.com/library/guides/best-vacant-home-insurance-california). ## Key takeaways * **It is open again in California.** Farmers reopened Foremost Dwelling Fire Vacant and Dwelling Fire Landlord to new customers effective March 15, 2025. * **The base policy is thin.** It covers the dwelling against named perils such as fire, lightning, windstorm, hail and explosion. Vandalism and malicious mischief is an add-on. * **One annual policy that can change with the house.** Foremost writes the vacant policy for a year with a pro-rated refund if you cancel, and in most states lets you endorse it between vacant and rental use instead of rewriting it. * **Foremost pays the claim.** The policy is issued by a Foremost company. Foremost Insurance Company Grand Rapids, Michigan has been authorized in California since 1961. * **Condition decides eligibility.** Foremost's agent guide says missing shingles or siding, or unrepaired claim damage, make a home unacceptable. ### Foremost Dwelling Fire Vacant A dwelling fire policy from the Foremost Insurance Group, part of Farmers, written for a house nobody lives in. The base coverage is the dwelling itself against named perils, with other structures, contents, liability, vandalism and broader "comprehensive" coverage available as options. ## Why does an empty house need its own policy? [#why-does-an-empty-house-need-its-own-policy] Because your homeowners policy stops working. California's standard fire policy, the statutory baseline for property insurance in the state, says the insurer is not liable for a loss while a building "is vacant or unoccupied beyond a period of 60 consecutive days". Many homeowners and landlord forms are tighter than that. Foremost's own consumer guide puts the usual limit at "between 30 to 60 days" of vacancy. Past that point, the losses an empty house is most exposed to may not be covered at all: a break-in, vandalism, a pipe that leaks for weeks before anyone notices. A vacant dwelling policy is written on the assumption that nobody is there. That's why it costs more, and why the coverage starts narrow. ## Is Foremost writing vacant homes in California right now? [#is-foremost-writing-vacant-homes-in-california-right-now] Yes. On August 1, 2023, Foremost stopped accepting new business for several specialty property types in California, vacant homes among them, and called the pause temporary. In December 2024, Farmers announced a phased return. The Farmers release says "Foremost Dwelling Fire Landlord and Dwelling Fire Vacant insurance will reopen for new customers effective March 15, 2025." Farmers then removed its monthly cap on new California homeowners policies in November 2025. Two cautions. Reopening means Foremost accepts applications again. It does not mean every address qualifies. Wildfire exposure, condition and value still decide. And this program closed to new California business in 2023 and came back in 2025, so check availability when you need the policy, not from an old article. ## What does a Foremost vacant home policy cover? [#what-does-a-foremost-vacant-home-policy-cover] The base policy covers the dwelling. Foremost's consumer page describes it as named-peril coverage for "fire, explosion, lightning, windstorm and hail damage". Its agent overview of the Dwelling Fire One form adds riot or civil commotion, aircraft, vehicles, and smoke or smudge. Anything not on that list is not covered. Everything else is a choice you make on the quote: | Coverage | In the base policy? | What it does for an empty house | | ---------------------------------- | ---------------------------- | -------------------------------------------------------------------------------------------------------------------------------- | | Dwelling, named perils | Yes | Pays for fire, wind, hail, lightning, explosion and the other listed perils | | Vandalism and malicious mischief | No, optional | Pays for deliberate damage by someone else. Foremost points out that some insurers won't offer it on an empty home | | Comprehensive dwelling coverage | No, optional where available | Broadens the dwelling to "most direct, abrupt and accidental physical losses" unless excluded; varies by state | | Other structures | No, optional | Detached garage, shed, fence | | Personal property | No, optional | Furniture or appliances left in the house, named perils | | Limited theft on personal property | Optional in many states | Theft of contents, with limits | | Liability | No, optional | Someone is hurt on the property and blames you | | Replacement cost | No, optional | Pays repair cost without depreciation | Loss settlement matters more than people expect. Foremost's base vacant policy pays an agreed amount on a covered total loss and actual cash value on a partial loss, which means depreciation comes off repairs. You can buy replacement cost as an option. Our guide to [actual cash value vs replacement cost](https://www.menloinsurance.com/library/guides/actual-cash-value-vs-replacement-cost) shows how big that gap can get on an older roof. Water is where to read the form closely. The named-peril list doesn't include a slow leak or a burst pipe, and an empty house is where those go unnoticed. Ask the agent whether the comprehensive endorsement is available for your address and what it says about water and freezing. ## Who is the insurer, and who pays a claim? [#who-is-the-insurer-and-who-pays-a-claim] A Foremost company, not a surplus lines market. Foremost Insurance Group is a trade name for several underwriting companies, including Foremost Insurance Company Grand Rapids, Michigan, Foremost Property and Casualty Insurance Company and Foremost Signature Insurance Company, all part of Farmers. The California Department of Insurance lists Foremost Insurance Company Grand Rapids, Michigan as authorized in California since August 28, 1961, with a normal, unlimited license that includes fire. That makes the policy admitted business, which carries the California guaranty fund backing that surplus lines policies don't. If you're comparing a Foremost quote to one from a specialty market, our guide to [admitted vs non-admitted carriers](https://www.menloinsurance.com/library/guides/admitted-vs-non-admitted-carriers) explains what changes. Your declarations page names the exact company. That company pays your claim. ## Will your house qualify? [#will-your-house-qualify] Foremost's published guidance describes a wide window. Its vacant dwelling quick facts say homes for sale, homes for rent and vacant manufactured homes are eligible, with "no restrictions based solely on the age of the home or the amount of time the home has been vacant", values from $5,000 to $1,000,000 in most states, and policies in the name of an LLC or a trust. Condition is the real test. The agent overview says: * The agent must take and keep photos before the policy is issued. * Foremost underwrites your loss history at every property you have owned, including this one. * Homes with existing claim damage aren't accepted until repairs are finished. * Missing roof shingles or missing siding make a home unacceptable. * The house has to stay rated as vacant until someone actually moves in. * Vacant homes valued over $500,000 need to be in above-average condition. Those agent documents carry 2016 and 2017 edition dates, and the California program guide controls. Treat them as a sense of what Foremost looks at, not a checklist that guarantees approval. ## How do you get a Foremost vacant home quote? [#how-do-you-get-a-foremost-vacant-home-quote] Through a licensed agent. Foremost sells through agents rather than online, and its site sends you to a local agent or its phone line. Have this ready: ### Steps ### Why the house is empty and for how long For sale, between tenants, estate, renovation. Say if work is planned, because Foremost asks agents to note renovations. ### The house itself Year built, square footage, construction, roof age and condition, and the value you want to insure. Recent photos of every side help, and the agent will need them anyway. ### Your history Prior claims at any property you've owned, prior carriers, and any nonrenewals. ### The coverages you want Decide on vandalism, liability and theft before you compare prices. A quote without vandalism looks cheaper because it covers less. ### Who owns it An individual, a trust, an LLC or an estate. Foremost can write homes in the name of an LLC or a trust. Menlo can't place Foremost today: our Foremost appointment is pending. If you'd like a comparison from programs Menlo can quote, the FAIR Plan, Delos, Green Shield and Aegis all write vacant California homes. [Start a vacant property request](https://www.menloinsurance.com/vacant-property-insurance) and we'll quote those while you get the Foremost quote from a Foremost agent. ## Frequently Asked Questions ### Does Farmers insure vacant homes in California? Yes, through Foremost, its specialty-home company. Farmers reopened Foremost Dwelling Fire Vacant to new California customers effective March 15, 2025. Eligibility still depends on the address, the home's condition and wildfire exposure. ### Does Foremost vacant home insurance cover vandalism? Only if you add it. The base policy covers named perils such as fire, lightning, windstorm, hail and explosion. Vandalism and malicious mischief is an optional coverage, and Foremost notes that many insurers don't offer it on empty homes at all. ### Can I get a 3-month or 6-month Foremost vacant policy? Foremost's agent materials describe an annual policy with a pro-rated refund if you cancel early, subject to a minimum earned premium. If the house sells in two months, you cancel and get the unearned part back. ### What happens when a tenant moves in? In most states Foremost lets the agent endorse the policy from vacant to rental use without canceling and rewriting it. Tell your agent before the move-in date so the policy matches how the house is used. ### Is a Foremost vacant policy admitted in California? Foremost policies are issued by Foremost companies, and Foremost Insurance Company Grand Rapids, Michigan is authorized by the California Department of Insurance. Your declarations page names the exact issuing company. *This guide is for educational purposes and summarizes Foremost and Farmers public materials, some of them agent documents with older edition dates. Your policy's terms, conditions and endorsements control. Menlo Insurance Services (CA license 6020106) is an independent broker whose Foremost appointment was pending in September 2026, may earn a commission, and does not guarantee that any carrier will quote or bind a given home.* ## The Bottom Line [#the-bottom-line] Foremost writes vacant homes in California again, since March 15, 2025. The base policy is a named-peril dwelling fire policy with agreed-value settlement on a total loss and actual cash value on partial losses. For an empty house, the options do most of the work: vandalism, liability, theft and, where available, comprehensive coverage. The insurer is an admitted Foremost company. Get the quote through a Foremost agent (Menlo's appointment is pending), pick your add-ons before you compare prices, and bind before your current policy's vacancy limit runs out. ## References . [Farmers Insurance Newsroom. Recognizing an Improved Insurance Marketplace in California, Farmers Insurance to Expand Its Coverage Options in the State (Dec. 11, 2024)]() . [ABC10. Another insurance company has changed how it's doing business in California (2023)]() . [Foremost Insurance Group. Vacant Home Insurance]() . [Foremost Insurance Group. Vacant Home Insurance Explained]() . [Foremost Insurance Group. Foremost Quick Facts: Vacant Dwelling (form 9014418, 11/16)]() . [Foremost Insurance Group. About Foremost]() . [California Department of Insurance. Company Profile: Foremost Insurance Company Grand Rapids, Michigan]() . [Foremost Insurance Group. Dwelling Fire and Specialty Homeowners Overview (form 9014436, 05/17)]() . [California Legislative Information. California Insurance Code § 2071 (standard form fire policy)]() . [Farmers Insurance Newsroom. Farmers Insurance to Remove Cap on Writing New Homeowners Insurance Policies in California (Nov. 21, 2025)]() # Green Shield Risk Solutions: Vacant Home Insurance in California and Who Pays the Claim (https://www.menloinsurance.com/library/guides/green-shield-risk-solutions) What Green Shield Risk Solutions is, how its Vacant Property program covers an empty California house through the AUGold platform and Lloyd's capacity, what the application asks about the vacancy, and what to check on the quote before you bind. Markdown version: https://www.menloinsurance.com/library/guides/green-shield-risk-solutions.md Green Shield Risk Solutions is a managing general agency, an MGA, based in Chicago. It builds insurance programs for property that standard carriers turn away, and one of them is a Vacant Property program for "residential and commercial buildings between occupancies, whether held for sale, awaiting renovation, or transitioning between tenants." Green Shield is not the insurer. It sells only through appointed retail brokers, and its programs are backed by what it calls "syndicates at Lloyd's of London and leading domestic markets." So yes, Green Shield can quote an empty house in California, as long as you go through a broker and the house passes its eligibility questions. If your California house is empty because a tenant left, a parent passed away, or it is listed for sale or gutted for a remodel, this guide walks through what Green Shield's vacant program is, whose paper it sits on, what the application asks, and what to check on the quote. Menlo Insurance Services can submit to Green Shield. The fastest way to start is our [vacant home insurance page](https://www.menloinsurance.com/vacant-property-insurance), which opens the dwelling quote form. ## Key takeaways * **An MGA, not the insurer**: Green Shield designs and places the program, and the insurer named on your declarations page is the company that pays a claim. * **Vacant homes go to a separate program**: Green Shield's flagship Guardian Elite Home policy excludes vacant homes; empty houses are quoted under its Vacant Property program. * **Lloyd's platform behind the quote**: Green Shield's broker portal opens AUGold, the quote-and-bind system run by Atrium Underwriters, managing agent of Lloyd's Syndicate 609. Expect a surplus lines policy. * **The vacancy itself is underwritten**: how long the house has been empty, whether it stayed insured, how it is secured and how often someone checks on it all feed eligibility and price. * **Broker only**: policyholders report claims through their agent, and Green Shield hands claims to a third-party administrator. ### Green Shield Risk Solutions A Chicago-based managing general agency that combines wildfire analytics with specialty property insurance programs, including high-value homeowners, dwelling fire, DIC, builders risk, vacant land and vacant property, sold only through appointed retail brokers and backed by Lloyd's syndicates and domestic insurers. ## Why Does an Empty House Need a Different Policy? [#why-does-an-empty-house-need-a-different-policy] Because the standard policy stops fitting after about two months. California's standard fire policy, which Insurance Code section 2071 writes into law, says the insurer "shall not be liable for loss occurring" while a described building "is vacant or unoccupied beyond a period of 60 consecutive days," unless the policy says otherwise in writing. Homeowners and dwelling forms often go further and drop vandalism coverage once the house has been empty that long. An empty house also has a different risk profile. Nobody notices a slow leak for weeks, squatters and copper thieves look for dark windows, and a fire can burn longer before anyone calls it in. A vacant program is priced for that, which is why it asks questions a homeowners application never does. ## Who Is Green Shield Risk Solutions? [#who-is-green-shield-risk-solutions] Green Shield describes itself as an MGA "built for a new era of risk," started to write homes and property in catastrophe-exposed places. Its founder and CEO, Pat Blandford, previously ran Tokio Marine Highland, a specialty property MGU in private flood, builders risk and fine arts. The company is best known for wildfire work: its Property Guardian platform scores parcels for wildfire risk and mitigation, and its flagship homeowners product, Guardian Elite Home, writes high-value homes in California and Colorado on Lloyd's paper. That flagship product is not the one for an empty house. Guardian Elite Home's own occupancy rule reads "Primary or secondary, owner occupied (no rentals, vacant or under construction)." Vacant houses go to Green Shield's wholesale programs instead. Those include Dwelling Fire, a DIC (excluding fire) wrap, Builder's Renovation, Course of Construction, Vacant Land and Vacant Property, all "available only to appointed retail brokers." The broker page First Connect publishes for Green Shield describes the Vacant Property program the same way: coverage for residential and commercial buildings "between occupancies, during transitions, or while awaiting sale, renovation, or new tenants." ## Who Actually Pays a Green Shield Vacant Home Claim? [#who-actually-pays-a-green-shield-vacant-home-claim] The insurer named on the policy pays, not Green Shield. Green Shield's public pages do not name the carrier behind each program. What they do show is where the quote is built. The "Access Green Shield Portal" link on its broker page goes to greenshieldrisk.com/portal, and when we checked on September 24, 2026, that address forwarded to the sign-in page of AUGold. AUGold is Atrium Underwriters' quote, bind and policy issuance platform. Atrium says it is "designed for the exclusive use and benefit of our Coverholder relationships" and lets retail agents "submit risks to MGA's" under Lloyd's binding authorities. Its product list starts with "Vacant Package," followed by Builders Renovation, Course of Construction, a California DIC fire wrap and Dwelling Fire, which is the same lineup Green Shield sells. Atrium manages Lloyd's Syndicate 609 and says the syndicate carries the Lloyd's market ratings: "an A rating from A.M. Best, A+ from Standard & Poor's and AA- from Fitch." Put together, the likely chain for a vacant California house is this: Green Shield places it, the AUGold platform rates it under an Atrium binding authority, and a Lloyd's policy is issued through the [surplus lines](https://www.menloinsurance.com/library/guides/surplus-lines-insurance) market. The quote itself will name the insurer, and you should read that line rather than take this guide's word for it. Surplus lines status changes a few things for you. The policy is not backed by the California Insurance Guarantee Association if the insurer fails. The quote adds surplus lines tax and a stamping fee on top of premium. And the rates and forms are not approved by the Department of Insurance the way an [admitted carrier's](https://www.menloinsurance.com/library/guides/admitted-vs-non-admitted-carriers) are. None of that makes a Lloyd's policy a bad buy, but you should know which kind you are buying. ## What Does the Green Shield Vacant Application Ask? [#what-does-the-green-shield-vacant-application-ask] We walked through the broker-side application for Green Shield's vacant program in September 2026. It opens with eligibility questions, and a yes to most of them ends the quote or sends it to an underwriter. Here is what it asks, in plain terms, so you can have answers ready: | Stage | What the application asks | Why it matters for an empty house | | --------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------- | | Vacancy | How long the property has been vacant, in bands starting at 0 to 6 months and 7 to 24 months | Longer vacancies are harder to place | | Vacancy | Whether the house has been continuously insured, with no lapse, since it became vacant | A gap in coverage is a red flag to any vacant market | | Security | Whether the building is secured against unauthorized entry, and whether there is a monitored central station burglar alarm | Break-ins and squatters drive vacant losses | | Upkeep | How often you or someone for you inspects it (daily, weekly, monthly or other) and which utilities are on | Inspections catch leaks; utilities affect freeze and water risk | | History | Prior refusals, cancellations or nonrenewals in 3 years (other than for vacancy), more than three losses or one over $25,000, open claims | Loss history is the usual deal breaker | | Condition | Existing structural damage, condemnation or scheduled demolition, wood shake roof, brush or landslide exposure, historic listing | Physical risks the program declines outright | | Ownership | Foreclosure, tax liens, more than two mortgages or a private lender, evictions under way, bankruptcy or arson history | Moral hazard questions every vacant market asks | | Plans | Any renovation or construction planned while insured | Remodels change the exposure; heavy work may need builders risk instead | | Coverage | Building value, age, construction, roof replacement year, protection class; optional vandalism cover and premises liability, with limits from $100,000/$200,000 up to $1,000,000/$2,000,000 | These set the limit and the price | | Term | 3, 6 or 9 months, or annual | Short terms fit a quick sale or flip | The residential path also asks whether the house is a manufactured home and whether it is an accessory dwelling unit (ADU) to a primary residence. ### Vandalism is a choice, not a given On the Green Shield vacant application, vandalism cover is its own yes/no question. If you leave it off to save premium, a broken window or a gutted kitchen may not be covered. Ask your broker to show you, line by line, whether the quote includes vandalism and malicious mischief, theft (including theft of building materials if you are remodeling), and water damage. ## What Should You Check on a Vacant Home Quote? [#what-should-you-check-on-a-vacant-home-quote] A vacant policy is narrower than a homeowners policy, so the details decide whether it pays. Before you bind a Green Shield quote, or any vacant quote, get clear answers to these: 1. **Who is the insurer, and is it surplus lines?** The declarations page names it. Look up its rating yourself using our [AM Best ratings guide](https://www.menloinsurance.com/library/guides/am-best-insurance-ratings-explained). 2. **Is the form basic or special?** A basic, named perils form covers only listed causes of loss such as fire, lightning, windstorm and explosion. A special form covers everything not excluded. The difference shows up on water, theft and collapse claims. 3. **Is the building valued at replacement cost or actual cash value?** Many vacant forms pay [actual cash value](https://www.menloinsurance.com/library/guides/actual-cash-value-vs-replacement-cost), which subtracts depreciation. On an older house that gap can be large. 4. **What happens when someone moves in?** If the house sells or you lease it, the vacant policy should be canceled and replaced with a landlord or homeowners policy. Ask about cancellation terms and minimum earned premium before you pick an annual term. 5. **Does your lender or the estate need to be listed?** A mortgagee, a trust or an estate administrator usually has to appear on the policy. Give your broker the exact names up front. ## How Do You Get a Green Shield Quote in California? [#how-do-you-get-a-green-shield-quote-in-california] Through a broker who is appointed with Green Shield. Green Shield says its wholesale programs "are available only to appointed retail brokers," and it does not sell to consumers directly. Menlo Insurance Services is a licensed California broker and can submit a vacant house to Green Shield along with other vacant home markets, so you see more than one answer. To start, [request a vacant home quote](https://www.menloinsurance.com/vacant-property-insurance) and have this ready: the property address, the date it became vacant and why, the insurance it had since then, the building's value, age, construction and roof year, how it is locked and checked, any planned work, and the names of any lender, trust or estate that must be on the policy. If the house is in a wildfire area and the only fire option is the [California FAIR Plan](https://www.menloinsurance.com/library/guides/california-fair-plan), ask about a [difference in conditions policy](https://www.menloinsurance.com/library/guides/difference-in-conditions-insurance) as well, since Green Shield also offers a DIC wrap that excludes fire. If you ever have a claim, Green Shield's instructions are simple: "To report a claim, please contact your agent directly." Green Shield then works with a third-party administrator, which assigns the adjuster. ## Frequently Asked Questions ### Is Green Shield Risk Solutions an insurance company? No. Green Shield is a managing general agency. It designs and places programs, and a separate insurer issues the policy and pays claims. Its public materials describe that capacity as Lloyd's syndicates and domestic insurers. ### Does Green Shield insure vacant homes in California? Yes, through its Vacant Property program for residential and commercial buildings between occupancies. Its Guardian Elite Home homeowners product does not accept vacant homes. ### Is Green Shield the same as Green Shield Canada? No. Searches for Green Shield insurance often turn up Green Shield Canada, which is a separate Canadian company. Green Shield Risk Solutions is a US property insurance MGA with its office in Chicago. ### Is a Green Shield vacant policy admitted or surplus lines? The quote runs on AUGold, Atrium Underwriters' platform for Lloyd's binding authorities, so expect a surplus lines policy with no California guaranty fund backing and surplus lines taxes on the bill. Confirm the insurer named on your quote. ### How do I file a claim on a Green Shield policy? Call your agent. Green Shield asks policyholders to report claims through their agent and handles them with a third-party administrator. *This guide is for educational purposes and summarizes Green Shield Risk Solutions' and Atrium Underwriters' public statements, California law and the broker application as it stood in September 2026. Program eligibility, forms and insurers can change, and your policy's specific terms, conditions and endorsements control. Menlo Insurance Services (CA license 6020106) may earn a commission on a placement and does not guarantee that any coverage or price will be available; talk to a licensed broker about your actual exposures.* ## The Bottom Line [#the-bottom-line] Green Shield Risk Solutions is a Chicago MGA that sells through appointed brokers. It writes empty California houses under its Vacant Property program, not under its Guardian Elite homeowners product. The quote is built on AUGold, Atrium's Lloyd's platform, so expect surplus lines paper, taxes and fees, and read the insurer's name on the declarations page. The application underwrites the vacancy itself: how long, whether coverage lapsed, how the house is secured and checked, and what work is planned. Have those answers ready, and make sure vandalism, theft and water are on the quote, not assumed. ## References . [Green Shield Risk Solutions. About Us]() . [Green Shield Risk Solutions. Wholesale & Carrier Solutions]() . [Green Shield Risk Solutions. Guardian Elite Home]() . [First Connect Insurance Services. Green Shield Quoting: Submission Access & Quoting Services]() (accessed 2026-09-24) . [Atrium Underwriters. AUGold]() . [Atrium Underwriters. Who We Are]() . [Green Shield Risk Solutions. Claims]() . [California Legislative Information. Insurance Code Section 2071 (California Standard Form Fire Insurance Policy)]() # Handyman Insurance in California: The $1,000 Rule and Costs (https://www.menloinsurance.com/library/guides/handyman-insurance-california) Unlicensed California handymen may take only jobs under $1,000 with no permit or employees. What insurance you need and the published minimum premiums. Markdown version: https://www.menloinsurance.com/library/guides/handyman-insurance-california.md A California handyman needs a general liability policy first; whether you also need a contractor's license depends on the work you are doing. Under Business and Professions Code section 7048, work is exempt from the Contractors State License Board (CSLB) license only if the entire job, labor and materials together, is under $1,000, needs no building permit, and you have no employees and don't advertise as a contractor. Several contractor programs Menlo uses write general liability for a handyperson. Published minimum premiums start at $350 a year with Hiscox, while Blitz starts at $500 plus taxes and fees. This guide is for a California handyman who works alone or with a small crew and needs a certificate for a client, a property manager or a homeowner. It outlines the $1,000 rule, what the law requires once you are licensed, which programs accept handyman work, what it costs and which add-ons can make a difference. When you're ready, start the [contractor general liability application](https://www.menloinsurance.com/contractors-general-liability-insurance) and select handyperson as your trade. ## Key takeaways * **The $1,000 rule has four conditions.** The job must total under $1,000 in labor and materials, need no building permit, not be split to stay under the limit, and you can't employ anyone or advertise as a contractor. * **Unlicensed contracting is a misdemeanor.** A first conviction can bring a fine of up to $5,000, up to six months in county jail, or both. * **A license brings more requirements.** A $25,000 contractor's bond, a workers' comp certificate or an exemption, and a general liability notice in every home improvement contract. * **Handyperson is a standard class.** BTIS, CNA's Best Choice, RLI Contrac Pac, Blitz, Thimble, Coterie and THREE all list it. * **Published floors are low.** Hiscox general liability starts at $350 a year and Blitz at $500 plus taxes and fees, $750 for a package. ## Can I work as a handyman in California without a license? [#can-i-work-as-a-handyman-in-california-without-a-license] Yes, but only on small jobs. Section 7048 exempts work that is "casual, minor, or inconsequential," where the total contract price for labor, materials and everything else is less than $1,000 and no building permit is needed. The exemption doesn't apply if the job is part of a larger project or is split into several contracts under $1,000 to avoid the limit. Since January 1, 2026, the exemption also doesn't apply to a person who advertises as a contractor or who "employs another person to perform, or assist in performing, the work." So an unlicensed handyman is a one-person business. If you hire someone to help you with a job, regardless of how long they work for you, that takes your business out of the exemption. Working without a license outside the exemption is a misdemeanor. A first conviction can bring a fine of up to $5,000, up to six months in county jail, or both. ## What insurance does a California handyman need? [#what-insurance-does-a-california-handyman-need] General liability is the policy clients ask for. It covers injury to other people and damage to their property caused by your work, such as a ladder falling on a car or water leaking from a faucet you installed. Most property managers and many homeowners will require a certificate before you start work, often naming them as additional insured. The rest depends on how you work: | Situation | Coverage to add | Why | | -------------------------------------- | --------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------- | | You have a helper or employee | Workers' compensation | California requires it for employees, and a licensed contractor must file a certificate or an exemption with the CSLB | | You carry tools in your truck | Tools and equipment (inland marine) | General liability doesn't cover your own tools. Best Choice sells tool limits of $5,000, $10,000 or $15,000 | | A client says your work was done wrong | Faulty workmanship or contractors professional liability | General liability excludes the cost of redoing your own work. Hiscox's small contractor policy includes $50,000 of faulty workmanship cover | | You drive a truck or van to jobs | Business use on your auto policy, or commercial auto | Tell your auto insurer the vehicle is used for work. General liability excludes vehicle accidents | | You formed an LLC and got licensed | General liability of at least $1,000,000 in the aggregate | Required for LLC licensees with five or fewer people on the personnel of record | ## What does California require once I'm a licensed contractor? [#what-does-california-require-once-im-a-licensed-contractor] A license creates three insurance-related obligations. You must keep a $25,000 contractor's bond on file. You must file a workers' comp certificate, or an exemption if you do not employ anyone. And every home improvement contract must contain a notice headed "Commercial General Liability Insurance (CGL)" that says whether you carry it and with which insurer. The exemption for sole owners is ending. The version of section 7125 that takes effect on January 1, 2028 drops the no-employee exemption for most licensees, so a licensed handyman will need a workers' comp policy then even with no employees. Our [guide to California's workers' comp exemption](https://www.menloinsurance.com/library/guides/workers-comp-exemption-california) covers the dates. ## Which insurers write handyman general liability in California? [#which-insurers-write-handyman-general-liability-in-california] Handyperson is a standard contractor class, so both admitted insurers and surplus lines programs will accept it. These are the ones in Menlo's carrier files that list it: | Program | Paper | What it publishes for handymen | | ------------------------------- | ---------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------- | | BTIS contractor GL | Admitted and non-admitted, A-rated | Handyperson is a top target class. New ventures accepted, limits up to $2M/$4M/$4M, add-on tool coverage | | Best Choice (CNA, through BTIS) | Admitted | Handyperson listed. Receipts up to $1.5 million, $1M/$2M/$2M, blanket additional insured with waiver and primary/non-contributory included | | RLI Contrac Pac Quickwrite | Admitted | Class 95625 Handyperson. Trade contractors up to $3 million receipts, new ventures with three years' experience | | Blitz contractors | Non-admitted | Handyperson among 80+ classes. $500 minimum for monoline GL, $750 for a package, additional insured bundle at no charge | | Thimble | Admitted carriers | Handyman class for general liability, bought annually, monthly or on demand | | Coterie | Admitted | Handymen eligible, but not roofing, foundation work, ground-up construction or room additions | | THREE (Berkshire Hathaway) | Admitted | Handyperson in its contractor segment. Its contractor highlights list blanket additional insured and tools and equipment | Not every small-business insurer writes handyman work. For example, MGT lists general contractors and handyman services as ineligible for its contractor BOP. That is why a broker who can submit one application to several programs saves time. ## How much does handyman insurance cost? [#how-much-does-handyman-insurance-cost] The published floors are the place to begin. Hiscox general liability begins at $350 a year, though contractor classes carry a minimum earned premium. Blitz's contractor general liability begins at $500 plus taxes and fees, or $750 for a liability and property package. Because Blitz is a surplus lines program, its price also carries California's 3% surplus lines tax and a 0.18% stamping fee. Above the floor, the price follows how you run your business. The insurer looks at your class, your receipts or payroll, how much you pay subcontractors, any claims and the limits you select. RLI's rating note is a useful warning: uninsured subcontractors, or subs who don't give you a certificate, are rated as your employees. If you don't collect a certificate from every sub, expect a higher audit. Add-ons are small next to the liability premium. BTIS's VETA program offers a tools package of $5,000 of miscellaneous tools and $10,000 of installation property for $100, or twice those limits for $200. We don't publish an average handyman premium because we haven't placed enough handyman policies to state one honestly. Your quote will depend on the facts above. ## What should I have ready to get a quote? [#what-should-i-have-ready-to-get-a-quote] Five things get a handyman priced fast: 1. The work you do and the share of each type (repairs, painting, carpentry, fixtures, and so on), plus anything you never do, such as roofing or electrical panels. 2. Your expected receipts and payroll for the next 12 months, and what you pay subcontractors. 3. Years in the trade, and your CSLB license number if you have one. 4. Prior insurance and five years of claims, or a statement that you had none. 5. The certificate wording your clients require: additional insured, waiver of subrogation, primary and non-contributory. ## Frequently Asked Questions ### What is the maximum a handyman can charge in California without a license? Less than $1,000 for the whole job, labor and materials included, with no building permit needed. The job can't be split into smaller contracts to stay under the limit. ### Can an unlicensed handyman have employees in California? No. Since January 1, 2026, section 7048's exemption doesn't apply to a person who employs another person to perform or help with the work. ### Does general liability cover my own tools? No. Your tools are your own property, so they need tools and equipment coverage, which several contractor programs add for a small charge. ### Do I need workers' comp as a handyman with no employees? Not today if you have no employees and file the CSLB exemption. From January 1, 2028, most licensed contractors will need a policy even with no employees. *This guide is general information based on California law and carrier program sheets dated 2023–2026. Programs and prices change, and your policy's terms control. Menlo Insurance Services (CA license 6020106) is a licensed broker that may earn a commission on a placement. Non-admitted insurers are not backed by the California Insurance Guarantee Association.* ## References . [California Legislative Information. Business and Professions Code section 7048 (as amended by AB 1170, effective January 1, 2026)]() (accessed 2026-09-27) . [Hiscox. Hiscox NOW Product Info]() (2026) . [Blitz Insurance. Contractors]() (2025) . [California Legislative Information. Business and Professions Code section 7028]() (accessed 2026-09-27) . [California Legislative Information. Business and Professions Code section 7071.6]() (accessed 2026-09-27) . [California Legislative Information. Business and Professions Code section 7125 (current version and version operative January 1, 2028)]() (accessed 2026-09-27) . [California Legislative Information. Business and Professions Code section 7159]() (accessed 2026-09-27) . [BTIS. Contractor General Liability Overview]() (2024) . [BTIS. Best Choice Contractor General Liability (CNA)]() (2025) . [RLI. Contrac Pac Classifications (CP-MK519)]() (2024) . [Thimble. Thimble's 2026 Appetite Guide]() (2026) . [Coterie. Appetite Menu]() (2025) . [THREE by Berkshire Hathaway. Target Industries]() (accessed 2026-09-27) . [California Legislative Information. Business and Professions Code section 7071.19]() (accessed 2026-09-27) . [RLI. What You Need to Know About General Contractors and Subcontractors (CPC-MK528)]() (2024) . [MGT Insurance. Navigation Guide: Artisan Contractors]() (2026) . [Surplus Line Association of California. Broker Taxes and Fees]() (accessed 2026-09-27) . [BTIS. VETA Contractor General Liability]() (2023) # Hired and Non-Owned Auto Insurance: Who Needs It, What It Covers, and What It Leaves Out (https://www.menloinsurance.com/library/guides/hired-and-non-owned-auto-insurance) What hired and non-owned auto (HNOA) liability covers when employees drive their own cars or your business rents vehicles, how symbols 8 and 9 deliver it, what it does not pay for, and whether to add it to a BOP, GL policy or commercial auto policy. Markdown version: https://www.menloinsurance.com/library/guides/hired-and-non-owned-auto-insurance.md Hired and non-owned auto insurance covers your business when someone drives a vehicle the business doesn't own to do its work. Think of an employee taking the bank deposit in their own car, a manager driving a rental at a conference, or a van you borrowed from a supplier to make a delivery. If that driver hurts someone, the injured person sues the driver and your business. The driver's personal auto policy defends the driver. It doesn't defend your company. HNOA puts your company's share of the liability on your company's own policy. You get it on a business auto policy through two covered-auto symbols, 8 for hired autos and 9 for non-owned autos. If the business owns no vehicles at all, you can add it as an endorsement to a business owners policy or general liability policy instead. Know what HNOA won't do, too. It only covers liability. It won't fix the employee's car or pay for the employee's own injuries, and it doesn't cover personal errands or the drive to and from work. If your people drive anything besides company-owned trucks, [request a commercial auto quote](https://www.menloinsurance.com/f/commercial-auto) and tell us how your employees really drive. The symbols on your declarations page should line up with that. ## Key takeaways * **Your business is a defendant even when it owns no cars**: liability for an employee's accident on company business attaches to the employer, and the employee's personal policy is not written to protect the company. * **Symbol 8 is hired, symbol 9 is non-owned**: "hired" autos are those the business leases, hires, rents or borrows; "non-owned" autos are used in the business but owned by others, typically employees. * **It protects the business, not the driver's car**: physical damage to a rented or employee-owned vehicle and injuries to the driver are outside HNOA. * **Employees themselves need a separate endorsement**: the Employees as Insureds endorsement, CA 99 33, extends non-owned liability coverage to the employee's own liability when driving their car for you. * **BOP or GL endorsement fits the no-vehicle business; a business auto policy fits everyone else**: the endorsement is a practical fit when the company owns nothing, while owned vehicles pull the exposure onto a business auto policy. ### Hired and non-owned auto liability (HNOA) Liability coverage for bodily injury and property damage a business becomes legally obligated to pay because of an accident involving a vehicle the business hires, rents, leases or borrows (hired auto) or a vehicle used in the business but owned by someone else, such as an employee (non-owned auto). ## Who needs hired and non-owned auto coverage? [#who-needs-hired-and-non-owned-auto-coverage] Any business whose people drive for it in vehicles it doesn't own. That covers more situations than most owners realize: * **Employees using personal vehicles for work.** Deliveries, client visits, supply runs, driving between job sites, taking the deposit to the bank. * **Rentals.** Cars rented for travel, vans rented for an event, trucks rented for a move or a large job. * **Borrowed vehicles.** A vehicle lent by a customer, vendor or family member for a business task. * **Contractors and trades.** Crew members driving their own trucks to job sites are a non-owned exposure even when the company also owns vehicles; this is why a contractor's business auto policy usually carries symbols 8 and 9 alongside symbol 7 for the owned trucks. * **Sole proprietors and very small firms.** If the owner drives their personal car for work and the business is a separate entity, that entity has a non-owned exposure the personal policy does not address. It all comes down to legal liability. If your employee causes a crash while working, the injured person's lawyer will name your company, because the employee was acting for you. Without HNOA, you pay to defend that suit yourself. Your general liability policy won't help, because it excludes auto liability. Our [general liability overview](https://www.menloinsurance.com/library/guides/what-does-general-liability-insurance-cover) explains why the CGL's auto exclusion is close to absolute. ## How do symbols 8 and 9 deliver the coverage? [#how-do-symbols-8-and-9-deliver-the-coverage] On the ISO [business auto coverage form (CA 00 01)](https://www.menloinsurance.com/library/forms/ca-00-01), number symbols on the declarations page decide which vehicles are covered. Our [commercial auto symbols guide](https://www.menloinsurance.com/library/guides/commercial-auto-insurance-symbols) goes through all of them. Only two matter here. | Symbol | What it covers | IRMI definition | Common gaps | | ------------------ | --------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------- | | 8, hired autos | Liability for autos the named insured leases, hires, rents or borrows | Excludes autos leased, hired, rented or borrowed from employees, partners, LLC members or members of their households | Physical damage to the hired vehicle is a separate coverage; rentals from employees fall under symbol 9 | | 9, non-owned autos | Liability for autos used in the business that the named insured does not own, lease, hire, rent or borrow | Under the business auto policy, "specifically applies to vehicles owned by employees and used for company business" | Protects the business; the employee's own liability needs CA 99 33 | When people say "HNOA" on a business auto policy, they mean these two symbols together. A business that also owns vehicles typically shows symbol 7 (specifically described autos) or symbol 2 (owned autos only) for those, and adds 8 and 9 for the rest. A business that owns nothing can carry a business auto policy with only 8 and 9, or take the same coverage as an endorsement on another policy. ### Read the symbols on your declarations page If the liability line on your commercial auto declarations shows only symbol 7 or symbol 2, your business has no liability coverage for employees' personal cars or rentals. Ask for symbols 8 and 9 to be added. The [declarations page glossary entry](https://www.menloinsurance.com/library/glossary/declarations-page) explains where to look. ## What does HNOA not cover? [#what-does-hnoa-not-cover] Everything in the right-hand column has its own fix. Damage to a rented vehicle is handled by hired auto physical damage coverage, which a business auto policy can add, or by the rental counter's damage waiver. Damage to an employee's own car goes to the employee's personal auto policy. That's one reason many employers pay mileage and require anyone who drives for work to carry their own liability limits. The employee's personal liability is picked up by the [Employees as Insureds endorsement](https://www.menloinsurance.com/library/guides/commercial-auto-insurance-symbols), CA 99 33; without it, IRMI notes, the standard auto forms exclude coverage for the liability of an employee when the employee or a household member owns the vehicle. Injuries to the driving employee are a [workers' compensation](https://www.menloinsurance.com/library/guides/workers-compensation-insurance-guide) matter. ## Should you add HNOA to a BOP or GL policy, or buy a commercial auto policy? [#should-you-add-hnoa-to-a-bop-or-gl-policy-or-buy-a-commercial-auto-policy] You can go either way. Which one fits depends on whether the business owns any vehicles. Businesses without vehicles usually buy it as an endorsement, and some carriers also sell HNOA as its own policy. The CA 99 33 option on the business auto side is the ISO Employees as Insureds endorsement. Either way, check the limits against your contracts. California's compulsory auto minimums rose for policies issued or renewed on or after January 1, 2025 to $30,000 per person and $60,000 per accident for bodily injury and $15,000 for property damage, with a further increase scheduled for 2035. Those are the minimums for a personal driver. If your business gets sued after a serious crash, you need limits based on what you could actually lose, not on the legal minimum. Our [BOP guide](https://www.menloinsurance.com/library/guides/bop-business-owners-policy-guide) explains what the package policy includes, and what it leaves out, before you add endorsements. ## How to set up HNOA correctly [#how-to-set-up-hnoa-correctly] ### Steps ### Inventory the driving List who drives for the business, in what vehicles, how often, and whether anyone rents or borrows vehicles. Include the owner's personal car if the business is an entity. ### Pick the vehicle for the coverage No owned vehicles and light exposure: an HNOA endorsement on the BOP or GL policy is usually the practical route. Owned vehicles, frequent non-owned driving, or contract requirements: a business auto policy with symbols 8 and 9 next to the owned-auto symbol. ### Add employee protection where it matters If employees regularly drive their own cars for you, ask for CA 99 33 so the employee is an insured for that business use. Pair it with a written vehicle-use policy and proof of personal auto insurance. ### Decide on hired auto physical damage If the business rents vehicles more than occasionally, hired auto physical damage on the business auto policy is usually cheaper than buying the counter waiver every time. ### Match limits to contracts and exposure Check any customer contract that names auto liability limits, and make sure an umbrella, if you carry one, lists the auto policy as underlying. Ready to close the gap? [Start a commercial auto quote](https://www.menloinsurance.com/f/commercial-auto) and tell us how your team really drives, rentals and personal cars included. We'll set the symbols and endorsements to match. If you only need the endorsement on a package policy, our [commercial auto insurance page](https://www.menloinsurance.com/commercial-auto-insurance) explains the options. ## Frequently Asked Questions ### Does my employee's personal auto insurance cover my business if they crash while working? The employee's personal policy responds for the employee. It is not designed to defend or pay on behalf of your business, which is a separate defendant. HNOA covers the business's liability; the employee's own coverage still matters for their share. ### Does hired and non-owned auto insurance cover damage to the rental car? No. HNOA is liability coverage for injury or damage to others. Damage to the rental itself is covered by hired auto physical damage on a business auto policy or by the rental company's damage waiver. ### If I own no vehicles, do I still need a commercial auto policy? Not necessarily. Many businesses with no owned vehicles add HNOA as an endorsement to their BOP or general liability policy. A business auto policy becomes the better choice when exposure is heavy, contracts demand it, or you want hired auto physical damage and employee protection. ### What are symbols 8 and 9? They are the covered-auto designations on the ISO business auto coverage form for hired autos (8) and non-owned autos (9). Our [commercial auto symbols guide](https://www.menloinsurance.com/library/guides/commercial-auto-insurance-symbols) covers all of them. ### Does HNOA cover the employee personally? Not by default. Symbol 9 protects the business. The Employees as Insureds endorsement, CA 99 33, extends non-owned liability coverage to the employee's own liability while driving their car on company business. *This guide is for educational purposes and summarizes standard policy forms and public sources. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## The Bottom Line [#the-bottom-line] If anyone drives for your business in a car the business doesn't own, your business can be sued, and neither personal auto nor general liability will cover it. Hired and non-owned auto liability fills that hole. You get it through symbols 8 and 9 on a business auto policy, or, if you own no vehicles, as an endorsement on a BOP or GL policy. It protects the business. It doesn't cover the employee's car or the employee's injuries. So add CA 99 33, put a vehicle-use policy in writing, and set limits that meet your contracts. ## References . [Insureon. Hired and Non-Owned Auto Insurance]() . [IRMI. Hired Automobile]() . [IRMI. Nonowned Automobile]() . [IRMI. Employees as Insureds Endorsement]() . [California Legislative Information. Vehicle Code section 16056]() # HOA Master Insurance Policy: What It Covers in California (https://www.menloinsurance.com/library/guides/hoa-master-insurance-policy) An HOA master policy insures common property and the association's liability. The three policy types and California's liability, D&O and crime minimums. Markdown version: https://www.menloinsurance.com/library/guides/hoa-master-insurance-policy.md An HOA master insurance policy is the association's own policy: it insures the property the owners hold in common and the association's liability, and it may or may not cover the interior of each unit. What it covers is determined by the association's governing documents and the policy form, usually one of three types: bare walls, single entity or all-in. California law adds minimum general liability, directors and officers (D\&O) and crime coverage that an association needs to adequately protect its owners and volunteer board members. This guide was written for California HOA board members, property managers and owners who want to understand what the master policy does and does not do, what California law expects of associations, and what each owner still has to insure personally. For association liability quotes, see our [HOA insurance page](https://www.menloinsurance.com/homeowners-association-insurance). ## Key takeaways * **Three kinds of master policy.** Bare walls covers the structure only, single entity adds original fixtures inside units, and all-in adds owner improvements as well. * **General liability protects owners.** With at least $2 million of coverage for 100 or fewer separate interests, or $3 million above 100, claims arising from the common areas go against the association, not individual owners. * **D\&O protects volunteers.** Volunteer directors and officers get immunity only if the association carries at least $500,000 of D\&O coverage for 100 or fewer separate interests, or $1 million above 100, plus general liability. * **Crime coverage is required.** At least the combined reserves plus three months of assessments, including computer and funds transfer fraud. * **Lenders set property rules.** Fannie Mae requires the master property limit to equal 100% of replacement cost and caps the deductible at 5% of that limit. ## What does an HOA master policy cover? [#what-does-an-hoa-master-policy-cover] The common property and the association's liability, and sometimes parts of each unit. Common property is what the owners share, such as roofs, exterior walls, hallways, pools, clubhouses, landscaping and common systems. Liability covers injury to someone on the common areas and lawsuits brought against the association. How far the property coverage extends into an individual unit depends on the policy type: | Master policy type | What it covers inside a unit | What the owner's HO-6 must cover | | ---------------------- | ------------------------------------------------------------------------- | ------------------------------------------------------------------------- | | Bare walls | Structure only; nothing inside the unit's walls | Interior walls, fixtures, cabinets, flooring, improvements and belongings | | Single entity | Structure plus the original fixtures and finishes as built | Upgrades the owner added, and belongings | | All-in (all inclusive) | Structure, original fixtures, and improvements owners added | Mainly belongings, liability and the owner's share of the deductible | Review the governing documents (CC\&Rs) along with the policy. The CC\&Rs tell you who has a duty to insure which parts, and the policy tells you what the association actually bought. ## What insurance does California require of an HOA? [#what-insurance-does-california-require-of-an-hoa] California ties important protections to specific coverage amounts in the Davis-Stirling Act: | Coverage | Amount | What it does | | ---------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------- | | General liability | At least $2,000,000 for 100 or fewer separate interests; $3,000,000 above 100 | Tort claims from the common areas must be brought against the association, not individual owners | | Directors and officers (D\&O) plus general liability | D\&O of at least $500,000 for 100 or fewer separate interests; $1,000,000 above 100 | Volunteer directors and officers acting in good faith within their duties are not personally liable | | Crime / fidelity | At least the association's reserves plus three months of assessments, with the same amount for computer and funds transfer fraud | Covers theft by directors, officers, employees and the managing agent; self-insurance doesn't count | These amounts are minimums. The governing documents can require more, and many associations buy an umbrella or excess liability policy on top. ## How do owners find out what the association carries? [#how-do-owners-find-out-what-the-association-carries] Through the annual budget report. California requires it to contain a summary of the association's property, general liability, earthquake, flood and fidelity policies, including the name of each insurer, the type of insurance, the limits and the deductibles. The summary must warn owners, in bold, that the association's policies may not cover their own property or injuries in their unit and that owners may be responsible for deductibles. If a policy lapses, is cancelled with no replacement, or is modified to reduce coverage or increase a deductible, the association must notify every member. Owners can ask the association for a copy of the full policy to see in detail what is and isn't covered; the summary cannot serve as a substitute for it. ## What is the difference between an HO-6 and a master policy? [#what-is-the-difference-between-an-ho-6-and-a-master-policy] The master policy insures the association, and an HO-6 insures the individual owner. The owner's HO-6 covers the parts of the unit the master policy leaves out, the owner's belongings, personal liability while inside the unit, and loss assessment coverage for the owner's share of an association deductible or uninsured loss. Our guide to [loss assessment coverage](https://www.menloinsurance.com/library/guides/loss-assessment-coverage) explains how to size that limit from the master deductible. ## Does the master policy cover earthquake? [#does-the-master-policy-cover-earthquake] Only if the association purchased earthquake insurance, and many did not. The budget report summary must state whether the association has earthquake and flood coverage. If it doesn't, a large earthquake may lead to a special assessment, and the owner's protection is a separate earthquake policy with its own loss assessment limit. ## What does HOA insurance cost? [#what-does-hoa-insurance-cost] It depends on the number of units, the common facilities, the building values and the claim history. Liability for an HOA is generally priced per unit: LIO's homeowner association program rates general liability on the number of units and asks about pools, security guards, a 55+ community, building height and contractors. Property on the master policy is rated on the replacement cost of the buildings, which is why Fannie Mae's 100% replacement cost rule matters for associations whose owners use conventional mortgages. Menlo quotes HOA and planned-development general liability through LIO, which lists homeowners associations, PUDs and master communities among its classes. However, LIO's condominium association product isn't available in California, so condominium associations will have to get quotes from other markets. ## Frequently Asked Questions ### What does an HOA master insurance policy cover? The association's common property and its liability. Depending on the type, bare walls, single entity or all-in, it may also cover original fixtures or owner improvements inside units. ### How do I get a copy of my HOA's master policy? Ask the association or its manager. Every year the budget report must summarize each policy's insurer, limit and deductible, but the summary is not the full policy. ### Does an HOA need D&O insurance in California? To give volunteer directors and officers immunity from personal liability, yes: at least $500,000 of D\&O for 100 or fewer separate interests, or $1 million above 100, together with general liability. ### Who pays the master policy deductible? The association, which can pass it to owners through a special assessment if the governing documents allow. Owners cover their share with loss assessment coverage on their own policy. *This guide is for educational purposes and summarizes the California Civil Code (Davis-Stirling Common Interest Development Act), Fannie Mae's Selling Guide and carrier program information. Governing documents and policies vary, and their terms control. It is not legal advice; boards should confirm requirements with the association's counsel. Menlo Insurance Services (CA license 6020106) is a licensed broker that may earn a commission on a placement and does not guarantee that any coverage or price will be available.* ## The Bottom Line [#the-bottom-line] The master policy insures what the owners share and the association's liability; whether it reaches inside units depends on its type and the CC\&Rs. In California, carry at least the Davis-Stirling liability, D\&O and crime minimums, disclose them in the budget report, and tell owners what their HO-6 must fill. ## References . [Voss Law Firm. Three Basic Types of Condo Master Insurance Policies]() (accessed 2026-09-27) . [California Legislative Information. Civil Code section 5805]() (accessed 2026-09-27) . [California Legislative Information. Civil Code section 5800]() (accessed 2026-09-27) . [California Legislative Information. Civil Code section 5806]() (accessed 2026-09-27) . [Fannie Mae. Selling Guide B7-3-03, Master Property Insurance Requirements for Project Developments]() (accessed 2026-09-27) . [California Legislative Information. Civil Code section 5300]() (accessed 2026-09-27) . [California Legislative Information. Civil Code section 5810]() (accessed 2026-09-27) . [LIO Insurance. Homeowner Association quote system (classes, per-unit liability basis, underwriting questions) and Condominium Association availability, as walked by Menlo, September 2026]() (accessed 2026-09-27) . [LIO Insurance. LIO Product Overview (January 2025)]() (2025) # Hold Harmless Agreements in California: The Three Forms, What the Law Allows, and How Insurance Backs Them (https://www.menloinsurance.com/library/guides/hold-harmless-agreement) How limited, intermediate and broad form hold harmless agreements differ, what California Civil Code sections 2782 and 2782.05 make unenforceable, and how contractual liability coverage and additional insured status stand behind the promise. Markdown version: https://www.menloinsurance.com/library/guides/hold-harmless-agreement.md A hold harmless agreement is a clause in a contract where one side agrees to take on certain legal liabilities of the other side. IRMI defines it as "a provision in a contract that requires one contracting party to respond to certain legal liabilities of the other party," and you'll almost always see it next to "indemnify" and "defend," so in practice it's a three-part promise. How much liability you take on depends on which form the contract uses. A limited form covers only your own negligence. An intermediate form covers everything except the other party's sole negligence. A broad form covers everything, even when the other party was entirely at fault. In California construction contracts the broad form is void, and since 2013 most intermediate forms have been cut back to the extent of the protected party's active negligence. Your promise is only as good as the money behind it. Your general liability policy pays for a hold harmless obligation through the insured-contract exception to its contractual liability exclusion. The party you're protecting will usually want [additional insured status](https://www.menloinsurance.com/library/guides/additional-insured-endorsements-explained) too, as a backstop. If someone has handed you one to sign, [request a general liability quote](https://www.menloinsurance.com/f/general-liability) and attach the contract. That way you know the coverage behind the promise is in place before you sign. ## Key takeaways * **Three forms, three sizes of promise**: limited (your negligence only), intermediate (everything but their sole negligence), broad (everything, including their sole negligence). * **California voids the broad form in construction**: Civil Code section 2782(a) makes a clause that indemnifies a party for its sole negligence or willful misconduct void and unenforceable in construction contracts. * **The 2013 rules trimmed the intermediate form**: for contracts on or after January 1, 2013, a subcontractor cannot be made to indemnify a general contractor for the GC's active negligence, and the sub cannot waive that protection. * **Insurance requirements survive**: the statute expressly preserves clauses that require you to buy insurance and name others as additional insureds. * **Coverage is by exception, not by grant**: the CGL excludes assumed liability, then gives it back for an "insured contract," which is why the definition of that term decides whether your carrier pays. ### Hold harmless agreement A contract provision in which one party (the indemnitor) agrees to assume specified legal liabilities of another party (the indemnitee), usually by paying claims, judgments and defense costs arising from the indemnitor's work or from a defined set of events. ## What are the limited, intermediate and broad forms? [#what-are-the-limited-intermediate-and-broad-forms] Each label tells you how much of the other party's fault you're agreeing to carry. The [hold harmless glossary entry](https://www.menloinsurance.com/library/glossary/hold-harmless-agreement) has the short version. The table below adds how California treats each one in construction. | Form | What you agree to cover | Typical wording cue | California construction treatment | | --------------------------- | ---------------------------------------------------------------------------------------- | -------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | | Limited (comparative fault) | Only claims caused by your own negligence, in proportion to your share of fault | "to the extent caused by the negligent acts or omissions of Subcontractor" | Enforceable | | Intermediate | All claims arising from the work except those caused by the indemnitee's sole negligence | "except to the extent caused by the sole negligence of Contractor" | Enforceable, but on contracts entered into on or after January 1, 2013 it is unenforceable to the extent of the indemnitee's active negligence or willful misconduct | | Broad | All claims arising from the work, including those caused entirely by the indemnitee | "regardless of whether caused in whole or in part by Contractor" | Void under Civil Code section 2782(a) to the extent it covers the indemnitee's sole negligence or willful misconduct | IRMI notes that a number of states won't enforce the broad form, and California is one of them for construction work. In California, pay the most attention to whether the indemnitee's negligence was active or passive. That's where the 2013 statutes draw the line. ## What does California Civil Code section 2782 actually say? [#what-does-california-civil-code-section-2782-actually-say] Section 2782 is the core of California's construction anti-indemnity law. The legislature has added subdivisions to it over the years. If you're reading a subcontract, these are the rules to know: * Subdivision (a) deals with sole negligence and willful misconduct. In any construction contract, a clause that purports to indemnify the promisee against liability for damages arising from its "sole negligence or willful misconduct," or from defects in designs it furnished, is against public policy and void. The same subdivision says this doesn't affect the validity of an insurance contract from an admitted insurer. * Subdivision (b) covers public agencies. Construction contracts with a public agency cannot require the contractor to indemnify the agency for the agency's active negligence. * Subdivision (c) covers private owners. For contracts entered into on or after January 1, 2013 with a private owner, indemnity for the owner's active negligence is unenforceable. A homeowner working on their own single-family home doesn't count as an owner for this rule. * Subdivision (d) covers residential construction defects. For residential construction contracts and amendments entered into after January 1, 2009, a subcontractor cannot be required to insure, indemnify or defend a builder or general contractor for construction defect claims to the extent the claims arise from the builder's or GC's negligence, or from work outside the subcontractor's scope. The protection cannot be waived. * Subdivision (e) sets out how tender and defense work. On a residential defect claim, the builder has to tender the claim in writing. The subcontractor then picks one of two options: defend the claim with its own lawyer (by written notice within 90 days), or pay its reasonable allocated share of defense fees within 30 days of getting the invoices. Section 2782.05 applies the same idea between a subcontractor and a general contractor, construction manager or another subcontractor. On contracts entered into on or after January 1, 2013, a clause that makes the sub indemnify or defend those parties is void to the extent the claim comes from their active negligence or willful misconduct, from defects in designs they furnished, or from work outside the sub's scope. The statute says nobody can waive that protection, and California law decides the question. ### What the anti-indemnity statutes leave alone Section 2782.05 lists more than a dozen exceptions. Among them: residential construction defect claims (handled by section 2782(d) and Title 7), public agency and private owner contracts (handled by section 2782(b) and (c)), wrap-up insurance programs, independent breach of contract or warranty claims, "provisions in a construction contract that require the promisor to purchase or maintain insurance" including additional insured endorsements for ongoing and completed operations, surety agreements of indemnity, and workers' compensation obligations. Because of the insurance-requirement exception, a subcontract can still make you buy coverage for the GC, even though it can't make you indemnify the GC for its own active negligence. ## How does insurance back a hold harmless agreement? [#how-does-insurance-back-a-hold-harmless-agreement] Your general liability policy has no separate "contractual liability coverage" line. It excludes liability you take on by contract, then gives some of it back through an exception for an "insured contract." IRMI describes contractual liability insurance as coverage for liability "assumed in a contract," and notes that in the CGL it is "limited to liability assumed in any of a number of specifically defined insured contracts" plus liability the insured would have had even without the contract. In the [CG 00 01 coverage form](https://www.menloinsurance.com/library/forms/cg-00-01), the insured contract definition includes the part of any other contract where you assume another party's tort liability to pay for bodily injury or property damage to a third person. A hold harmless agreement gets its coverage through that clause. Our [CGL coverages explainer](https://www.menloinsurance.com/library/guides/cgl-policy-coverages-explained) shows the exclusion and the exception in context. What that means for you: 1. It only covers tort liability. The exception pays for liability you take on for someone else's negligence toward a third person. It won't pay if you promised to cover the indemnitee's own property, reimburse contract penalties, or guarantee the quality of your work. 2. Defense costs get special treatment. Whether the indemnitee's defense costs are covered as damages, and whether they erode the limit, depends on the form edition and on conditions in the insured-contract wording about assuming the defense in the same insured contract. Have your broker check how your edition handles them. 3. The statute limits what the policy pays. If a clause is void under section 2782 or 2782.05, you never assumed that liability, so the insured-contract exception has nothing to pay. Your policy pays on the promise a court will enforce, not the one the lawyer wrote. Indemnity clauses can fail. That's why the party you protect almost always asks for additional insured status as well. IRMI describes AI status as "a way of backing up the promise of indemnification," and notes that if the indemnity agreement turns out to be unenforceable, the indemnitee may still obtain coverage for its liability by claiming directly under the indemnitor's CGL as an additional insured. With a blanket additional insured endorsement, anyone your contract requires you to add gets that status automatically. Our [named insured vs additional insured guide](https://www.menloinsurance.com/library/guides/named-insured-vs-additional-insured) explains what an additional insured actually gets. ## Which clauses should you check before signing? [#which-clauses-should-you-check-before-signing] ### Steps ### Identify the form Look for "sole negligence," "regardless of," "in whole or in part" and "to the extent." Those words tell you whether you're looking at a limited, intermediate or broad clause. In California construction, a broad form clause is void as to the indemnitee's sole negligence, but the rest of it may still work. ### Check the date and the parties The 2013 rules apply to contracts entered into on or after January 1, 2013, and the residential defect rules to contracts after January 1, 2009. Figure out who the indemnitee is: a public agency, a private owner, a homeowner working on their own house, or another contractor. Each one has its own subdivision. ### Separate the indemnity from the insurance requirements Read the insurance exhibit by itself. You can still be held to carrying limits, adding additional insureds, giving primary and noncontributory wording and [waiving subrogation](https://www.menloinsurance.com/library/guides/waiver-of-subrogation), even when the indemnity next to them gets cut back. ### Confirm the policy can fund the promise Ask your broker whether an endorsement has narrowed the policy's insured-contract definition. Some contractor programs delete or limit it. Ask how defense costs are handled, too. ### Match the additional insured endorsement to the contract Most contracts say whether they want ongoing operations, completed operations or both, and many name the ISO forms. Our [additional insured endorsements guide](https://www.menloinsurance.com/library/guides/additional-insured-endorsements-explained) lays out the common ones. ### Keep the defense mechanics in mind For residential defect claims, the statute sets deadlines for tender, election to defend and payment of allocated defense costs. Miss them and you can lose the protection the statute gives you. ### An unenforceable clause is not harmless A general contractor can still demand indemnity under a clause that section 2782.05 makes void, and fighting it costs money. The statute gives you a defense. It doesn't make the demand go away on its own. Getting the clause changed to an enforceable form before you sign is cheaper than fighting about it after a loss. Got a contract with a hold harmless clause on your desk? [Get a general liability quote](https://www.menloinsurance.com/f/general-liability) that takes into account the insured-contract wording, the additional insured forms and the waiver the contract asks for. Our [general liability insurance page](https://www.menloinsurance.com/general-liability-insurance) covers the base policy. ## Frequently Asked Questions ### Is a hold harmless agreement the same as an indemnity agreement? In practice they overlap. Indemnity is payment for a loss that already happened, and an indemnity agreement is a promise to make that payment. A hold harmless agreement is the contract language that moves the liability. Most clauses just say "indemnify, defend and hold harmless" together. Our [indemnification clause glossary entry](https://www.menloinsurance.com/library/glossary/indemnification-clause) covers the vocabulary. ### Can a California general contractor make a subcontractor indemnify it for the GC's own negligence? Not for the GC's active negligence on contracts entered into on or after January 1, 2013, and not for the GC's sole negligence or willful misconduct on any construction contract. The subcontractor cannot waive those protections. ### Does general liability insurance cover a hold harmless agreement? Yes, as long as the agreement fits the policy's definition of an insured contract. That definition covers tort liability you assume for bodily injury or property damage to a third person. It doesn't cover every promise in a contract, and an endorsement can narrow it. ### Why does the other party want additional insured status if I already signed a hold harmless clause? Because the clause might not hold up, and because they'd rather have direct rights under your policy than a claim against you. IRMI describes additional insured status as a backstop to the indemnity promise. ### Do these rules apply outside construction? Sections 2782 and 2782.05 only cover construction. Leases, service agreements and event contracts fall under general contract law and other statutes, so if you see a broad form clause in one of those, have a lawyer look at it separately. *This guide is for educational purposes and summarizes standard policy forms, public sources and California statutes. Your policy's specific terms, conditions, and endorsements control, and the enforceability of any clause depends on its wording and the facts. Talk to a licensed broker about coverage and an attorney about the contract.* ## The Bottom Line [#the-bottom-line] A hold harmless agreement shifts liability from one party to the other, and the form decides how much shifts. In California construction, the broad form is void as to the indemnitee's sole negligence. Since 2013, the intermediate form stops at the indemnitee's active negligence. The insurance requirements next to it are still fully enforceable. Your general liability policy pays for the enforceable part of the promise through the insured-contract exception, with additional insured status as a backup. Before you sign, figure out the form, check the date and who the parties are, and confirm your policy wording. ## References . [IRMI. Hold Harmless Agreement]() . [California Legislative Information. Civil Code section 2782]() . [California Legislative Information. Civil Code section 2782.05]() . [IRMI. Insured Contract]() . [IRMI. Contractual Liability Insurance]() . [IRMI. Additional Insured]() . [IRMI. Blanket Additional Insured Endorsement]() . [IRMI. Indemnity]() # Home Insurance During Renovation in California: What to Add (https://www.menloinsurance.com/library/guides/home-insurance-during-renovation-california) A California home policy can restrict coverage while a house under renovation sits empty over 60 days. When to add builders risk, and what to ask. Markdown version: https://www.menloinsurance.com/library/guides/home-insurance-during-renovation-california.md Your homeowners policy may not fully cover your house while you are renovating, so check with your insurer before work starts. California's standard fire policy lets an insurer deny a loss that happens "while the hazard is increased" by something you control or know about, or while the building is "vacant or unoccupied beyond a period of 60 consecutive days," unless the policy says otherwise in writing. For a larger renovation, a renovation builders risk policy pays for the work and materials, and it can also cover your existing home. Alchemy writes renovations starting at $10,000 of work, with terms of 1 to 12 months. This guide is for a California homeowner who plans a remodel, an addition or a complete gut renovation. It outlines what to tell your insurer, when a homeowners policy is enough, when to add builders risk, what your contractor must carry and what happens if you hire workers directly. When you're ready, [request renovation insurance quotes](https://www.menloinsurance.com/builders-renovation-insurance) and we'll send the project out to several construction markets. ## Key takeaways * **Tell your insurer first.** The standard fire policy excludes losses while the hazard is increased by means within your control or knowledge. * **60 days empty is the trigger to watch.** Unless the policy provides otherwise in writing, the standard fire policy restricts coverage when a building is vacant or unoccupied beyond 60 consecutive days. * **Builders risk covers the project.** Alchemy writes renovations from $10,000 up to $1,000,000 per job site, and the existing structure from $150,000 to $1,000,000. * **Your contractor must disclose its insurance.** California home improvement contracts must state whether the contractor carries general liability and workers' comp. * **Hiring workers yourself can make you an employer.** Your homeowners policy's personal liability includes workers' comp for household employees in California. ## Does homeowners insurance cover a house during a renovation? [#does-homeowners-insurance-cover-a-house-during-a-renovation] Often partly, and sometimes not at all. A homeowners policy is written for an occupied home. A renovation often brings open walls, materials on site, power tools, subcontractors and sometimes no one living there, and the policy's conditions deal with both. California's standard form of fire policy says that, unless otherwise provided in writing, the insurer is not liable for a loss that occurs "(a) while the hazard is increased by any means within the control or knowledge of the insured; or (b) while a described building ... is vacant or unoccupied beyond a period of 60 consecutive days." Your homeowners policy may use slightly different language, but it generally carries the same idea: a large change in the risk should be disclosed to the insurer, and a long vacancy restricts coverage. A kitchen refresh while you live in the house usually stays within an ordinary homeowners policy, but call your insurer anyway. A gut renovation, an addition, or a remodel you'll move out for is where coverage gaps appear. ## What should I tell my insurer before the work starts? [#what-should-i-tell-my-insurer-before-the-work-starts] Give the facts that change the risk: 1. The scope: rooms, structural work, roof, electrical and plumbing. 2. Whether you will live in the house during the work, and for how long it may be empty. 3. The budget and dates. 4. Who does the work: a licensed general contractor, trades you hire yourself, or you. Ask your insurer three questions and get the answers in writing: does my policy stay in force while the work is done, does the vacancy or unoccupancy clause apply, and does the policy cover materials and the new work before they're installed? If any answer is no, you need a separate policy for the project. ## When do I need renovation builders risk insurance? [#when-do-i-need-renovation-builders-risk-insurance] When a home improvement project is large enough that your homeowners insurance will not cover it, or when your lender or contractor asks for it. Builders risk covers the work in progress, materials at the job site and in transit, and, if you add it, the existing house while the renovation is underway. The California-open renovation programs we use publish these terms: | | Alchemy national program | Blitz builders risk | | ----------------------- | ---------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------- | | Paper | Admitted and surplus lines | Non-admitted | | Renovation cost covered | $10,000 to $1,000,000 per job site | Up to $5 million total insured value per location | | Existing structure | $150,000 to $1,000,000 | Existing building coverage available | | Project types | Remodeling and renovation of existing homes | Addition or minor remodel, significant non-structural renovation, structural renovation | | Term | Renovation in 1-month steps up to 12 months | 3, 6, 8, 10 or 12 months | | Who can buy | The owner or the builder | Owner, general contractor, developer or tenant | | Points to check | Defective electrical panels or polybutylene pipes are ineligible unless replaced | Occupying the building before completion needs underwriter referral | Our [builders risk cost guide](https://www.menloinsurance.com/library/guides/builders-risk-insurance-cost-california) covers minimum premiums and term pricing. If you plan to act as your own builder or to add an ADU, read our guide to [builders risk for homeowners and owner-builders](https://www.menloinsurance.com/library/guides/builders-risk-for-homeowners-owner-builders). ## What insurance should my contractor have? [#what-insurance-should-my-contractor-have] A licensed contractor brings the liability insurance and the workers' comp for its own crew. California requires every home improvement contract to include two notices: one headed "Commercial General Liability Insurance (CGL)" that states whether the contractor carries it and through which insurer, and one that states whether it carries workers' comp for all employees or has no employees and is exempt. Check both before you sign. Ask for a certificate of insurance naming you as an additional insured, and look the contractor up on the CSLB website to confirm its workers' comp record. A licensed contractor is required to keep either a workers' comp certificate or an exemption on file with the board. The contractor's general liability pays for damage its work causes to your house and for injuries to other people. It does not pay to redo its own faulty work, and it is not a builders risk policy for your materials and structure. ## What if I hire workers directly instead of a contractor? [#what-if-i-hire-workers-directly-instead-of-a-contractor] Then you may be their employer. Labor Code section 2750.5 presumes that a worker doing work that requires a contractor's license is an employee rather than an independent contractor, unless shown otherwise. In California, any policy that provides comprehensive personal liability, including the liability portion of your homeowners policy, must provide workers' compensation coverage for household employees defined in Labor Code section 3351(d). That coverage applies only if no other workers' comp policy covers the injury. A household worker isn't covered if, in the 90 days before the injury, the work was for less than 52 hours or for wages of $100 or less. This backstop does little to protect a real renovation crew, and an unlicensed worker is limited to jobs under $1,000 with no permit. For anything larger, hire a licensed contractor that has its own workers' comp. ## Frequently Asked Questions ### Do I need to tell my insurance company about renovations? Yes. The standard fire policy excludes losses while the hazard is increased by something within your control or knowledge, unless the policy provides otherwise in writing. Telling the insurer lets it confirm or adjust coverage. ### Is my house covered if I move out during the remodel? Check the vacancy and unoccupancy clause. The standard fire policy restricts coverage when a building is vacant or unoccupied beyond 60 consecutive days, unless your policy provides otherwise in writing. ### Who pays for builders risk on a home remodel? Either the owner or the contractor, as the contract says. Blitz sells the policy to owners, general contractors, developers or tenants. ### How long can a renovation builders risk policy last? Alchemy writes renovations in 1-month steps up to 12 months, and Blitz offers 3, 6, 8, 10 and 12-month terms. *This guide is general information based on California law and carrier program sheets dated 2025. Your homeowners policy's own wording controls, so read its vacancy and increased-hazard conditions. Menlo Insurance Services (CA license 6020106) is a licensed broker that may earn a commission on a placement. Non-admitted insurers are not backed by the California Insurance Guarantee Association.* ## References . [California Legislative Information. Insurance Code section 2071 (standard form of fire insurance policy)]() (accessed 2026-09-27) . [Alchemy Insurance Solutions. Builders Risk National Program (Admitted & E&S) Quick Reference Sheet: Coverage Options & Limits]() (2025) . [California Legislative Information. Business and Professions Code section 7159]() (accessed 2026-09-27) . [California Legislative Information. Insurance Code section 11590]() (accessed 2026-09-27) . [Alchemy Insurance Solutions. National Builders Risk (program one-pager)]() (2025) . [Blitz Insurance. Builder's Risk Appetite]() (2025) . [California Legislative Information. Business and Professions Code section 7125]() (accessed 2026-09-27) . [California Legislative Information. Labor Code section 2750.5]() (accessed 2026-09-27) . [California Legislative Information. Labor Code section 3352]() (accessed 2026-09-27) . [California Legislative Information. Business and Professions Code section 7048]() (accessed 2026-09-27) # Home Insurance Non-Renewal in California: What to Do Next (https://www.menloinsurance.com/library/guides/home-insurance-non-renewal-california) California insurers must give 75 days' notice and a reason before dropping your home. Your rights, the wildfire-score appeal and where to shop next. Markdown version: https://www.menloinsurance.com/library/guides/home-insurance-non-renewal-california.md If your California home insurer is not renewing your policy, you have at least 75 days to find replacement coverage, and the notice has to give you the specific reason. Insurance Code section 678 requires the insurer to deliver the notice at least 75 days before the policy expires, with "the specific reason or reasons for the nonrenewal." Use that time to check whether the decision can be reversed, then shop for a replacement in order: first other admitted insurers, then surplus lines homeowners programs, and lastly the California FAIR Plan with a difference in conditions (DIC) policy. This guide is for a homeowner holding a nonrenewal letter, or one who has just been told their insurer is leaving the area. It details what the law requires of the insurer, when a nonrenewal cannot be issued, how to appeal a wildfire risk score, and where to find new coverage before the current policy expires. If the reason is wildfire risk, our [home insurance for high fire risk areas page](https://www.menloinsurance.com/home-insurance-high-fire-risk-california) explains which markets still write those homes and starts a quote. ## Key takeaways * **75 days and a reason.** The notice must arrive at least 75 days before expiration and state the specific reasons. For policies expiring on or after July 1, 2021 it must also describe the FAIR Plan and the Department of Insurance's Home Insurance Finder. * **Some nonrenewals are frozen for a year.** After a declared wildfire emergency, insurers may not cancel or nonrenew homes in ZIP codes within or next to the fire perimeter for one year. * **You can appeal a wildfire score.** Insurers must give you your wildfire risk score at least 75 days before a nonrenewal, acknowledge an appeal within 10 calendar days and decide it within 30. * **Shop in order.** Admitted insurers first, then surplus lines homeowners programs such as Delos, then the FAIR Plan plus a DIC policy. * **Don't let the policy lapse.** A lender will force-place coverage if the home goes uninsured, and a gap makes the next application harder. ## What does the nonrenewal notice have to include? [#what-does-the-nonrenewal-notice-have-to-include] It must give the specific reason, arrive at least 75 days before the policy ends, and tell you how to contact both the insurer and the Department of Insurance. For residential policies expiring on or after July 1, 2021, section 678 also requires a notice that the California FAIR Plan is the insurer of last resort, that a FAIR Plan policy may exclude liability, theft and water damage, and that a DIC policy can help cover some of those gaps. The notice must also point you to the Department's California Home Insurance Finder. Read the reason carefully, because it determines what comes next. A reason tied to the property, such as roof condition, brush clearance or an old electrical panel, can often be corrected. A reason tied to the insurer's own plans, such as withdrawing from your ZIP code, cannot be changed, and you should begin shopping the same week. ## When can't my insurer drop me? [#when-cant-my-insurer-drop-me] For one year after the Governor declares a wildfire emergency, if your home is in a ZIP code within or adjacent to the fire perimeter. Insurance Code section 675.1 prohibits insurers from cancelling or not renewing residential property policies in those ZIP codes for one year from the declaration. The fire perimeter is established by CAL FIRE, and the Insurance Commissioner issues a bulletin listing the protected ZIP codes. The protection does not depend on whether your home was damaged. There are exceptions. An insurer may still nonrenew for a willful or grossly negligent act that increased the risk, for losses unrelated to the fire that make the home ineligible, or for physical changes that make it uninsurable. Recent moratoriums on the Department's list include the January 7, 2025 Los Angeles and Ventura fires (Palisades, Eaton, Hurst and others) and the Gann Fire in Calaveras County, declared August 6, 2026. If you had a total loss in a declared disaster, section 675.1 also requires the insurer to offer to renew for at least the next two annual renewal periods, and no less than 24 months from the date of loss, unless the loss involved your own negligence. ## How do I appeal a wildfire risk score? [#how-do-i-appeal-a-wildfire-risk-score] Ask the insurer for your wildfire risk score and file an appeal orally or in writing. Insurers are required by the Department's Safer from Wildfires regulation to give you your wildfire risk score or classification at least 75 days before any nonrenewal and at least 45 days before each renewal. If you disagree with it, you can appeal directly to the insurer, which must acknowledge the appeal within 10 calendar days and decide within 30 calendar days. The same regulation requires insurers to recognize specific mitigation, such as a Class A fire-rated roof, fine metal mesh screens over vents, enclosed eaves, a five-foot ember-resistant zone around the house, defensible space, and community programs such as Firewise USA. If you have completed mitigation, you can ask the insurer to reassess your score, and it must respond with your updated score within 30 days of your request. An appeal won't always reverse a withdrawal from a whole area, but it is worth doing when the reason is something specific about your property. If you think the insurer broke the rules, file a Request for Assistance with the Department of Insurance online or call its consumer hotline at 1-800-927-4357. ## Where do I get home insurance after being dropped? [#where-do-i-get-home-insurance-after-being-dropped] Begin with admitted insurers, then surplus lines programs, and use the FAIR Plan only when nothing else will write the home. Each step gives up something compared with the one before it, so the order matters. | Option | Who writes it | What you get | Watch for | | ------------------------------- | ----------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------- | | Another admitted insurer | Licensed California insurers | Full homeowners policy, backed by the California Insurance Guarantee Association | Many limit new business in high-fire ZIP codes; the Home Insurance Finder lists who writes where | | Surplus lines homeowners (E\&S) | Non-admitted insurers through a broker, such as Delos on Lloyd's paper, Annex Risk and Aegis's E\&S program | One HO-3 policy with fire, theft, water and liability together | Not backed by the guaranty association; eligibility is property by property | | FAIR Plan plus DIC | California FAIR Plan (fire) and a DIC insurer (everything else) | Fire, lightning, internal explosion and smoke from the FAIR Plan, with theft, water and liability from the DIC | Two policies, two bills; earthquake and flood are still separate | Surplus lines homeowners programs are the step many owners skip. Delos, a managing general agent that assesses wildfire risk at the individual parcel level, writes primary homes up to $3 million of total insured value and $1.5 million of dwelling coverage on its homeowners program. Aegis's E\&S program writes HO-3 and DP-3 forms with dwelling limits up to $1 million and liability up to $500,000. A broker with access to these markets can quote them in the same week, which matters when you have 75 days. ## Is the FAIR Plan my only option if nobody else will insure me? [#is-the-fair-plan-my-only-option-if-nobody-else-will-insure-me] No, but it is the backstop. The FAIR Plan is the state's insurer of last resort, and it covers named perils only: fire, lightning, internal explosion and smoke, with more perils available as options. It does not cover liability, theft or water damage, so most owners add a DIC policy. The Department of Insurance keeps a list of 18 admitted insurers that sell DIC policies for FAIR Plan customers. Our guide to [the best DIC insurance with the FAIR Plan](https://www.menloinsurance.com/library/guides/best-dic-insurance-california-fair-plan) compares them. The FAIR Plan charges no broker fee on its own policies, according to the Department's residential guide, and you can apply through any licensed broker. See our [California FAIR Plan guide](https://www.menloinsurance.com/library/guides/california-fair-plan) for limits, cost and how to leave the plan later. ## How do I avoid a gap in coverage? [#how-do-i-avoid-a-gap-in-coverage] Apply as soon as possible and bind the new policy to start on the date the old one expires. Most applications need similar details: the home's year built, square footage, roof type and age, updates to wiring, plumbing and heating, prior claims, and photos for some surplus lines markets. Keep a copy of the nonrenewal notice, because many insurers ask why the last one left. If you have a mortgage, send the declarations page of your new policy to your lender before your current policy expires. A lender that sees no coverage on its collateral can buy force-placed insurance and add it to your monthly loan payments, and that insurance usually protects only the lender's interest. ### Steps ### Day 1: read the reason Note the expiration date, the stated reason and whether your ZIP code is under a moratorium. ### Week 1: appeal or fix Ask for your wildfire risk score and appeal it, or schedule the repair or mitigation the insurer named. ### Weeks 2 to 6: shop Get admitted and surplus lines quotes through a broker. Price the FAIR Plan plus DIC at the same time so you can compare. ### Before expiration: bind and notify Bind the replacement to start on the old policy's expiration date and send the declarations to your lender. ## Frequently Asked Questions ### How much notice does a California insurer have to give before nonrenewing my home? At least 75 days before the policy expires, with the specific reasons for the nonrenewal. ### Can my insurer drop me after a wildfire near my home? Not for one year after a declared wildfire emergency if your home is in a ZIP code within or next to the fire perimeter, with narrow exceptions. ### Is it hard to get homeowners insurance after being dropped? It is harder in high-fire areas, but a nonrenewal is not the same as being declined. Surplus lines programs judge the individual property, and the FAIR Plan exists for homes the private market won't take. ### Can I complain to the state about a nonrenewal? Yes. File a Request for Assistance with the Department of Insurance online or call 1-800-927-4357. ### Does the FAIR Plan cover liability and theft? No. Those need a DIC policy or another companion policy. *This guide is for educational purposes and summarizes the California Insurance Code, Department of Insurance regulations and consumer pages, California FAIR Plan pages and carrier program documents. Laws, programs and eligibility change, and your policy's terms control. Menlo Insurance Services (CA license 6020106) is a licensed broker and a registered FAIR Plan broker. It may earn a commission on a placement and does not guarantee that any coverage or price will be available. Surplus lines (non-admitted) insurers are not backed by the California Insurance Guarantee Association, and each quote names its insurer and whether it is admitted.* ## The Bottom Line [#the-bottom-line] A nonrenewal notice gives you at least 75 days and a written reason. Check whether a wildfire moratorium blocks it, appeal your wildfire score if the reason is your property, and start quotes right away. Surplus lines homeowners programs often insure homes the admitted market has dropped, and the FAIR Plan with a DIC remains the fallback. ## References . [California Legislative Information. Insurance Code section 678]() (accessed 2026-09-27) . [California Legislative Information. Insurance Code section 675.1]() (accessed 2026-09-27) . [California Department of Insurance. Mandatory One Year Moratorium on Non-Renewals]() (accessed 2026-09-27) . [Legal Information Institute. Cal. Code Regs. tit. 10, § 2644.9, Consideration of Mitigation Factors; Wildfire Risk Models, subsections (h) and (i)]() (accessed 2026-09-27) . [California FAIR Plan Association. Dwelling policies]() (accessed 2026-09-27) . [Delos Insurance Solutions. Delos Guide One Sheet]() (2025) . [California Department of Insurance. Safer from Wildfires]() (accessed 2026-09-27) . [California Department of Insurance. Consumer help and complaints]() (accessed 2026-09-27) . [Aegis General Insurance Agency. Aegis General Product Overview (CA)]() (2026) . [California Department of Insurance. List of Insurers that Sell Difference in Conditions (DIC) Policies]() (accessed 2026-09-27) . [California Department of Insurance. Residential Insurance: Homeowners and Renters Guide]() (accessed 2026-09-27) # How to Read Loss Runs Like an Underwriter (https://www.menloinsurance.com/library/guides/how-to-read-loss-runs) How to read insurance loss runs column by column: paid, reserved and incurred amounts, valuation dates, how underwriters score them, and cleanup. Markdown version: https://www.menloinsurance.com/library/guides/how-to-read-loss-runs.md To read a loss run, look at three numbers for each claim, all as of the same valuation date: paid (what the carrier has already paid out), reserved (the adjuster's estimate of what is still to be paid) and incurred (paid plus reserved). Incurred is the number that drives your premium. Everything else on the report, such as claim numbers, status codes and descriptions, explains how those numbers got there and whether they are still changing. Every commercial submission includes loss runs, and too many go out exactly as they arrived. That is a pricing mistake. A reserve, the money an adjuster sets aside on a claim that is not yet settled, is priced exactly like a real loss unless someone questions it. ## Key takeaways * **Incurred equals paid plus reserved**: an open claim's cost is an estimate that changes every time the adjuster reviews the file. * **The valuation date controls everything**: the same claim can show $85,000 incurred in March and $22,000 in June, and underwriters want reports valued within about 90 days. * **Underwriters read patterns, not totals**: frequency signals broken operations and predicts future losses better than one severe year. * **Loss runs can be improved before marketing** by closing stale claims, challenging inflated reserves and ordering freshly valued reports. ### Loss Run A loss run is the insurance carrier's report of claims made under a policy, showing the amounts paid, the reserves still open, the incurred cost and the status of each claim as of a valuation date. It is the account's claim history as the carrier records it. ## What is a loss run report? [#what-is-a-loss-run-report] A [loss run](https://www.menloinsurance.com/library/glossary/loss-runs) is the carrier's official record of claims under a specific policy, printed from its claim system as of a particular date. Underwriters read loss runs the way lenders read a credit report: as the applicant's track record, from a source the applicant does not control. Loss runs are produced by line of business and by policy term, so a complete picture means collecting separate runs for general liability, auto, workers compensation and property from every carrier that wrote the account during the look-back period. Five years is the usual look-back, which matches the loss history section of the [ACORD 125](https://www.menloinsurance.com/library/forms/acord-125). If there was no prior policy or no claims were reported, the carrier issues a "no losses" letter instead. ## What does each column on a loss run mean? [#what-does-each-column-on-a-loss-run-mean] Carrier formats vary, but nearly every report uses the same core fields: | Column | What it shows | What to check | | -------------- | ----------------------------------------- | -------------------------------------------------------------------------------------- | | Claim number | The carrier's file identifier | Use it verbatim when calling the adjuster, one digit off pulls the wrong file | | Date of loss | When the occurrence happened | Confirms which policy term and experience period the claim lands in | | Claim status | Open, closed, or reopened | **Open claims are the working list**, every one carries a reserve someone can question | | Description | Cause and injury or damage type | Look for repeated causes, three lifting injuries reads worse than three random ones | | Paid | Indemnity and expense actually disbursed | This number only rises, and it is the floor of the claim's final cost | | Reserved | The adjuster's estimate of remaining cost | The soft number, set early with incomplete facts and often stale on old claims | | Incurred | Paid plus reserved | **The number underwriters price**, so every reserve dollar is a premium dollar | | Valuation date | The snapshot date for all figures | Reports older than about 90 days get bounced or discounted | Some carriers split paid and reserved amounts into indemnity and expense, and workers compensation runs also split medical from indemnity and show the claimant's name or injured body part. That detail matters. A claim with high expense and low indemnity usually points to litigation rather than a serious injury, and an underwriter who cannot see the split will assume the worst. ## Why do incurred losses change between reports? [#why-do-incurred-losses-change-between-reports] Incurred totals change because reserves change, and reserves are opinions. The adjuster sets a reserve early, before all the facts are in, and then adjusts it as medical records, repair estimates and legal developments arrive. Each adjustment changes the incurred figure on the next report. A claim can also close below its reserve, which drops incurred down to the paid amount, or a [subrogation](https://www.menloinsurance.com/library/glossary/subrogation) recovery can arrive between valuation dates and reduce the net figures. That is why underwriters insist on currently valued loss runs, meaning reports with a valuation date within about 90 days of the submission. An old report is wrong in a predictable direction: stale reserves on claims that have since closed quietly overstate the account's losses. In workers compensation, those same reserves flow into the [unit statistical data](https://www.menloinsurance.com/library/guides/experience-mod-guide) behind the [experience modification rate](https://www.menloinsurance.com/library/glossary/experience-modification-rate), so an inflated reserve costs the client twice: once in the underwriter's judgment and again in the mod. ## How do underwriters read loss runs? [#how-do-underwriters-read-loss-runs] Underwriters look at the pattern first and the dollars second, and the key question is frequency versus severity. Frequency means many small claims. It signals something structural, such as weak supervision or no return-to-work program, and it predicts future losses because the behavior behind it repeats. Severity, one large claim in an otherwise clean history, is usually read as bad luck unless the details suggest it could happen again. A $150,000 total from one freak auto loss prices better than the same total spread across eighteen slip-and-fall claims. Workers compensation rating builds that preference into its formula. The experience mod formula counts the primary portion of every loss at full weight and heavily discounts the excess portion, so ten $10,000 claims move the mod much further than one $100,000 claim. Timing matters too. A cluster of claims in the most recent year weighs more than the same number spread evenly across the years, because it suggests things are getting worse. Claims that are reported but close at zero actually help the account, because they show the insured reports incidents promptly without turning them into dollars. And costs keep rising: NCCI's 2025 State of the Line report found that indemnity and medical claim severity each rose 6% in accident year 2024, so a reserve set today tracks losses that keep getting more expensive. ## How do you request loss runs? [#how-do-you-request-loss-runs] Request loss runs in writing from each carrier, signed by the insured or sent by the [broker of record](https://www.menloinsurance.com/library/guides/broker-of-record-letter), and ask for five years of currently valued runs. Agency portals produce runs from the agency's own carriers instantly, while a prior carrier's loss run department usually takes five to fifteen business days. Some states set a deadline. New York Insurance Law Section 3426(g) requires a commercial insurer to mail or deliver loss information within ten days of a written request from the first named insured or its authorized broker. Timing is the part the broker controls. Order runs about 120 days before renewal, which leaves time to work the reserves and get a revalued report before the submission goes out. A prior carrier usually will not release runs to a broker who does not hold the account until a signed authorization from the insured is on file, so get that signature with the request, not after the first refusal. If a broker of record change is coming, or the client is leaving a carrier after a dispute, send the request before the break. The data does not get easier to obtain afterward. ## How do you clean up loss runs before marketing an account? [#how-do-you-clean-up-loss-runs-before-marketing-an-account] Cleanup is the most valuable work in the pre-marketing file, and it goes in this order: ### Steps ### Order currently valued runs early Pull five years from every carrier about 120 days before the target marketing date, and reorder any report that will be more than 90 days old at submission. ### Reconcile the runs against the client's records Flag claims the client does not recognize, claims that belong to another insured on a shared policy, and incidents that were reported but never developed. ### Work the open claims list Call the adjuster on every open claim, using the claim number from the report. Ask what is keeping the file open and whether the reserve reflects the current facts, and take stale reserves to the claims supervisor with supporting documents. Expect the first request to be declined. ### Request revalued runs after the changes post Reductions and closures help only if the underwriter sees them, so wait a few weeks and order a fresh report. If an agreed reduction has not posted in time, note it in the loss narrative with the adjuster's name and the agreed figure. ### Write the loss narrative for the submission Summarize what happened on each significant claim, what the client changed afterward, and why the pattern will not repeat. Incurred totals decide carrier appetite. A $60,000 reserve that should be a $9,000 closed claim can be the difference between a standard market placement and a [surplus lines quote](https://www.menloinsurance.com/library/guides/surplus-lines-insurance). ## Frequently Asked Questions ### What is the difference between paid, reserved, and incurred on a loss run? Paid is what the carrier has actually paid out. Reserved is the adjuster's estimate of what is still to be paid on an open claim. Incurred is the two added together, and it is the figure underwriters use to judge and price the account, which is why open reserves deserve scrutiny before marketing. ### How many years of loss runs do underwriters want? Five years is the standard look-back for most commercial lines, in line with common rating worksheets and carrier appetite guides. Some small accounts qualify with three years, while lines such as umbrella or workers compensation may ask for more than five. If any year has no loss run, provide a no-losses letter for it. ### Can you dispute a reserve on a loss run? Yes, through the adjuster handling the claim. Explain why the reserve no longer fits the facts, send supporting documents (a settlement with the claimant, a claimant who stopped responding, a lower repair estimate), and ask the adjuster to re-evaluate it. Carriers review reserves on a schedule, but they rarely reopen a specific file unless someone asks. ### Do loss runs show claims where nothing was paid? Yes. Reported incidents usually appear on loss runs even when they close with nothing paid, and that is good news for the insured. A history of prompt reporting with few paid claims reads as a disciplined operation, and underwriters give credit for it. *This guide is for educational purposes and describes common carrier and underwriting practice. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## Getting loss runs ready for renewal [#getting-loss-runs-ready-for-renewal] A loss run is the carrier's record of your claims, and it is only as accurate as its valuation date. Read the three numbers for each claim (paid, reserved and incurred), find how much is still sitting in open reserves, and work those reserves down before the file goes out, because every stale reserve dollar is priced like a real loss. Order runs about 120 days before renewal, challenge the large reserves, and give the underwriter a fresh report with an explanation for each claim. ## References . [NCCI. 2025 State of the Line Guide]() . [New York State Senate. Insurance Law Section 3426]() # Insurance Agent vs Broker: Who Actually Works for You? (https://www.menloinsurance.com/library/guides/insurance-agent-vs-broker) Agents legally represent the insurance company; brokers represent you. How captive agents, independent agents and brokers differ in binding and pay. Markdown version: https://www.menloinsurance.com/library/guides/insurance-agent-vs-broker.md An insurance agent legally represents the insurance company; an insurance broker legally represents you, the buyer. An agent is appointed by one or more insurers through an agency agreement and can usually bind coverage on the spot. A broker negotiates with many insurers on your behalf but generally cannot bind a policy until the insurer confirms it will issue it. The practical difference is whose interests each one serves when your application, renewal or claim gets complicated. Both hold the same state producer license, work in similar offices and quote many of the same products, which is why most buyers cannot tell them apart. The difference lives in agency law, not in the sales pitch. Whom the producer represents decides who owns your file and who answers for a coverage gap when something goes wrong. ## Key takeaways * **Agents represent insurers**: an agency agreement appoints them to solicit applications, collect premiums, and bind policies within the authority the carrier grants. * **Brokers represent buyers**: state licensing law defines a broker as someone who negotiates and places insurance as an agent of the insured, not the insurance company. * **Binding power differs**: agents can often bind coverage immediately, while a broker's placement is not effective until the insurer accepts it. * **Captive vs independent is a separate split**: captive agents sell one carrier's products, independent agents represent several, and both still work for the insurer side. ### Insurance Broker An insurance broker is a licensed professional who negotiates insurance contracts and places coverage as the representative of the buyer, not the insurance company. Brokers shop multiple carriers on the client's behalf and are compensated by commission, a disclosed fee, or both. ## What is the difference between an insurance agent and a broker? [#what-is-the-difference-between-an-insurance-agent-and-a-broker] The difference is legal representation, and state insurance law spells it out. California Insurance Code Section 31 defines an "insurance agent" as a person authorized to act on behalf of an insurer. Section 33 defines an "insurance broker" as a person who, for compensation and on behalf of another person, transacts insurance with, but not on behalf of, an insurer. An agent signs an agency agreement with each carrier that sets its authority to write policies, issue binders and collect premiums. A broker has no such appointment for your placement, so it approaches carriers from the outside, negotiates terms and brings you options from across the market. Here is how the two roles compare on the points that matter to a buyer: ## What is an insurance broker and what does one do? [#what-is-an-insurance-broker-and-what-does-one-do] A broker is a state-licensed producer who solicits, negotiates and places coverage as your representative rather than any insurer's, with no carrier appointment for the placement. That lets a broker go to any carrier willing to quote your risk, compare the offers on both price and terms, and recommend the placement that fits. The National Association of Insurance Commissioners (NAIC) reports more than 2 million licensed individual producers in the US. Most brokerage work is in commercial lines, where accounts have several coverage parts and need markets an appointed agent cannot reach. A broker's job covers the sale and the whole policy term. Brokers build submissions, shop them with standard and specialty carriers, point out differences in forms, limits and exclusions between competing quotes, and sit on your side of the table in a claim dispute. Hard risks are where that access pays off. A start-up, a difficult loss history or a property in a wildfire zone that no standard carrier will insure can still be placed in [non-admitted markets](https://www.menloinsurance.com/library/guides/admitted-vs-non-admitted-carriers), which requires a separate [surplus lines broker](https://www.menloinsurance.com/library/glossary/surplus-lines-broker) license. If you change brokers, you sign a [broker of record letter](https://www.menloinsurance.com/library/guides/broker-of-record-letter) that moves your file to the new brokerage. You can also check any carrier a producer recommends yourself. The NAIC's Consumer Insurance Search shows each company's complaint index, the ratio of its share of complaints to its share of premium. An index of 1.0 means an average number of complaints for its size; above 1.0 means more complaints than expected for the premium it writes. One point keeps expectations honest. In most states, a producer's baseline duty is to use reasonable care to get the coverage you asked for. In some states, and in long-standing relationships, courts have found a broader duty to advise on limits and gaps. Ask your broker to put coverage recommendations in writing, with a place for you to sign off on each coverage you decline. If you later disagree about what was discussed before the policy was issued, that record protects both sides. ## What is the difference between a captive agent and an independent agent? [#what-is-the-difference-between-a-captive-agent-and-an-independent-agent] A captive (exclusive) agent sells for one insurance company only, while an independent agent holds appointments with several. When the captive agent's one carrier is not competitive, the agent has no alternative to offer; an independent agent can quote another appointed carrier. Independent agents also usually own their expirations, meaning the client list and renewal rights belong to the agency rather than a carrier, which lets them move accounts between appointed markets. Both, however, represent insurers. For the buyer the hierarchy is simple: a captive agent shows you one insurer, an independent agent shows you the insurers that appointed it, and a broker can reach the whole market for you, including [surplus lines](https://www.menloinsurance.com/library/guides/surplus-lines-insurance) when the standard market declines. ### One license, different hats Most states issue one license that covers both roles, and many producers act as an agent on some business and as a broker on other business. What controls is the relationship on your specific policy: was the producer acting as the insurer's appointed agent, or as your representative? Your policy paperwork and the producer's disclosure should say. ## Can a broker bind coverage? [#can-a-broker-bind-coverage] Generally, no. Binding authority is the biggest practical difference between brokers and agents. It comes from the carrier through the agency agreement, so appointed agents can often put coverage in force immediately by issuing an [insurance binder](https://www.menloinsurance.com/library/glossary/insurance-binder) within their authority. A broker has no appointment, so it must submit your risk to the underwriter, and you are covered only once the carrier accepts and confirms. A few large brokerages hold written binding authority agreements with specific carriers, but that power comes from the contract, never from the broker license. Until confirmation arrives, you are not covered, however confident anyone sounds. This is where failure-to-procure lawsuits start. The client believes coverage began at the handshake, has a loss before the carrier accepts the risk, and sues the producer over a policy that was never issued. Get a binder or written confirmation of coverage before you treat anything as bound, and before you cancel the policy you are replacing. ## How do insurance brokers get paid? [#how-do-insurance-brokers-get-paid] Brokers and agents are paid mainly by commission, a percentage of your premium that the carrier builds into its rate and pays to the producer. For a broker, that commission comes from the carrier even though the broker legally represents you, a structural quirk that state disclosure rules exist to manage. New business usually pays a higher commission than renewals, and workers compensation often pays less than other lines. Because the commission comes from the carrier either way, buying through an agent or a broker usually does not change your premium on the same policy from the same carrier. What changes is how many carriers competed for your business. Brokers can also charge a broker fee on top of commission, most often on hard-to-place commercial risks where marketing the account takes real work. A broker fee is a flat charge paid directly to the brokerage, separate from the premium and from the carrier's commission. States regulate these fees closely; California, for example, requires a broker who charges a fee to use a written fee agreement signed by the client before any fee is earned. Producers on both sides are also barred from giving back part of their commission to win your business, a violation called rebating, covered with twisting and churning in our guide to [producer misconduct rules](https://www.menloinsurance.com/library/guides/rebating-twisting-churning-insurance). ## Frequently Asked Questions ### Is it better to use an insurance agent or a broker? It depends on your risk. A standard, off-the-shelf placement that one carrier's product fits can be handled well by an independent or captive agent, often with the fastest binding. For a commercial account, or exposures the standard market hesitates to write, a broker's wider market access and representation of you rather than the carrier usually produce better options. The further your risk is from average, the more broker representation matters. ### Do you pay more when you buy insurance through a broker? Usually not. The commission is built into the carrier's filed rate no matter who sells the policy, so the same policy from the same carrier generally costs the same through an agent or a broker. Some brokers charge a separate fee, which must be disclosed to you, in writing in states such as California, before you accept it. These fees are most common on complex commercial placements. ### Can the same person be both an insurance agent and a broker? Yes. Most states issue one producer license, and a producer can act as an appointed agent for carriers where it holds an agency agreement and as a broker when placing business with carriers where it has no appointment. The role depends on each placement, so ask which role applies to your policy. ### Does an insurance broker have a duty to advise me on coverage? Not automatically. Most states require producers to use reasonable care in getting the coverage the customer asked for. Courts in many states recognize a broader duty to advise only in a special relationship, for example when the producer holds itself out as an expert and you rely on that expertise over time. How far the duty reaches varies by state, so get every coverage recommendation in writing rather than counting on state law to fill the gaps. *This guide is for educational purposes and summarizes general insurance law and market practice. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## Choosing who represents you [#choosing-who-represents-you] An insurance agent works for the carrier and an insurance broker works for you, and that decides who owns your file and who answers for a coverage gap. For a typical off-the-shelf policy, a good agent who can bind on the spot is enough. For an unusual risk, a broker's wider market access and loyalty to you as the client can pay off. Ask any producer how they are paid, and get every coverage recommendation in writing. ## References . [California Legislative Information. Insurance Code Section 31]() . [California Legislative Information. Insurance Code Section 33]() . [NAIC. Producer Licensing]() . [NAIC. How to File a Complaint and Research Complaints Against Insurance Carriers]() # Landlord Insurance in Texas: Dwelling Policies, Coastal Wind and Vacancy (https://www.menloinsurance.com/library/guides/landlord-insurance-texas) Landlord insurance in Texas is usually a dwelling policy on the rented house (TDP-1, TDP-2 or TDP-3 style), not a homeowners policy. No law requires it, but lenders do. What each form covers, how coastal rentals get wind from TWIA, when the Texas FAIR Plan's TDP-1 fits, and why 60 days of vacancy between tenants matters. Markdown version: https://www.menloinsurance.com/library/guides/landlord-insurance-texas.md Landlord insurance in Texas is usually a dwelling policy on the house you rent out, not a homeowners policy. It protects the building itself, other structures such as a detached garage or fence and, on forms that include it, the rent you lose while a covered loss is repaired. Liability is often an add-on. No Texas law requires you to buy it, but if you financed the rental, your lender will. Two Texas details shape the purchase: on the coast, wind and hail may have to come from the Texas Windstorm Insurance Association (TWIA), and most insurers stop covering a house that sits vacant for 60 days or more. This guide is for a Texas owner renting out a single-family house, a duplex or a townhouse, including an owner who moved out and kept the old home as a rental. Our [landlord insurance page](https://www.menloinsurance.com/landlord-insurance) lists what a rental policy covers and what we need to know about the property. ## Key takeaways * **Not required by law.** TDI says no law requires home insurance, but a lender will if you owe money on the property. * **The form decides the coverage.** An open perils dwelling form (TDP-3 style) covers the building against any loss not excluded. A basic form such as the FAIR Plan's TDP-1 must cover only fire and lightning, with other perils optional. * **Tenants insure their own things.** The landlord's policy repairs the building, and renters insurance covers the tenant's belongings. * **Coastal rentals need a wind plan.** In the 14 coastal counties and part of Harris County, TWIA writes wind and hail on rental dwellings, and flood is always separate. * **Watch the 60-day vacancy line.** TDI says most companies stop coverage after 60 days of vacancy, though liability usually continues. ## Is landlord insurance required in Texas? [#is-landlord-insurance-required-in-texas] No. TDI's home insurance guide says "the law doesn't require you to have home insurance," but "if you still owe money on your home, your lender will require you to have it." The same applies to a rental with a mortgage. TDI also notes that a lender will probably require an all-risk policy, which on a rental means an open perils dwelling form rather than a basic named perils one. Don't leave a rental on your old homeowners policy without telling the insurer. A homeowners policy is written for a home its owner lives in, and a change in occupancy needs to be reported to the insurer. ## What does a Texas dwelling policy cover? [#what-does-a-texas-dwelling-policy-cover] Texas dwelling policies come in the same three levels as they do nationally. TDI's orders describe them by the old Texas Dwelling Policy names, TDP-1, TDP-2 and TDP-3, and insurers today file their own versions that are "analogous" to those forms. | | Basic (TDP-1 style) | Broad (TDP-2 style) | Special (TDP-3 style) | | --------------------------- | ------------------------------------------------------------------------------------------------------------------- | -------------------------------- | ------------------------------------------------------------------------------------ | | How the building is covered | Named perils. On the FAIR Plan's TDP-1, fire and lightning are required and other perils are optional | Broad named perils | All risk: any direct physical loss not excluded | | Loss settlement | FAIR Plan TDP-1: actual cash value only, no replacement cost option | Depends on the insurer's form | Depends on the insurer's form. Read the declarations | | Fair rental value | FAIR Plan policies: loss of use at 10% of the dwelling amount, where the policy includes it | Depends on the form | Included on the form TDI describes | | Landlord liability | FAIR Plan TDP-1: not available | Usually an add-on | Usually an add-on. One Texas DP-3 program offers $100,000 to $500,000 | | Theft | FAIR Plan TDP-1: not covered | Depends on the form | Personal property named perils include theft on the form TDI describes | Named perils forms are less expensive but only pay when the loss is caused by one of the perils listed, while all-risk forms cover anything that is not excluded. TDI notes that even all-risk policies usually leave out termites, wear and tear, sewer backup, flood and earthquake. Our [DP-1 vs DP-3 guide](https://www.menloinsurance.com/library/guides/dp1-vs-dp3-insurance) compares the three forms in more detail. Check occupancy before you buy, because not every Texas dwelling program takes houses rented to tenants. One carrier's Texas DP-3 guide, for example, lists "Owner Occupied only" and "Primary and Secondary Residences only" among its eligibility rules. A rental needs a program written for rentals. ## Does my landlord policy cover my tenant's belongings? [#does-my-landlord-policy-cover-my-tenants-belongings] No. TDI explains that renters insurance covers a tenant's clothes, furniture and other personal property, and "won't pay to fix the house or apartment building. The building owner's policy does that." Your policy can cover property you own as the landlord. TWIA's dwelling policy, for example, covers maintenance equipment, floor coverings, window shades, refrigerators and stoves "that you own as a landlord" at the described location. ## How do I insure a rental on the Texas coast? [#how-do-i-insure-a-rental-on-the-texas-coast] With up to three policies. In Aransas, Brazoria, Calhoun, Cameron, Chambers, Galveston, Jefferson, Kenedy, Kleberg, Matagorda, Nueces, Refugio, San Patricio and Willacy counties, and in Harris County east of Highway 146, a dwelling policy may exclude wind and hail. TWIA sells wind and hail coverage there to owners turned down by at least one private insurer, for buildings certified to the windstorm code. Its dwelling policy can insure a rental house, including the landlord-owned appliances above. Flood is the third policy. TWIA's dwelling policy states that it doesn't cover flood "even if hurricane winds and rain caused the flood to occur." Our [Texas windstorm and FAIR Plan guide](https://www.menloinsurance.com/library/guides/texas-windstorm-insurance-twia-fair-plan) explains TWIA's eligibility rules and limits. ## What happens when the house is vacant between tenants? [#what-happens-when-the-house-is-vacant-between-tenants] Coverage can shrink. TDI's guide lists "losses that occur if your house is vacant for the number of days specified by your policy" among the things most policies don't cover, and says most companies stop coverage after a house has been vacant for 60 days or more, though they usually don't stop liability coverage. A long vacancy is also a reason an insurer may nonrenew. So if a turnover runs past two months, a renovation between tenants drags on or the house sits empty waiting to sell, call your insurer before the vacancy passes the policy's limit. Ask whether coverage can continue during the vacancy or what type of policy you would need for a vacant dwelling. The FAIR Plan is not a fallback for an empty house, because TFPA lists vacant property among the reasons it can decline an application. ## Can I rent it out short term? [#can-i-rent-it-out-short-term] Check first. TDI says "most policies won't pay for damages or injuries that occur during short-term rentals," and tells owners who rent for short-term lodging to ask their agent whether they're covered. A long-term lease and a nightly rental are different risks, and the policy has to match the one you run. ## What if no insurer will write the rental? [#what-if-no-insurer-will-write-the-rental] The Texas FAIR Plan is the insurer of last resort. It writes a dwelling policy, the TDP-1, for one- and two-family rental dwellings, and it had 48,420 TDP-1 policies in force on March 31, 2026, 31,236 of them in Harris County. To apply you must have been declined by at least two insurers licensed to write and writing property insurance in Texas, and you must reapply in the private market every two years. Know what the TDP-1 leaves out: no liability, no theft, actual cash value only, and in the coastal catastrophe area no wind and hail, which go to TWIA. The maximum dwelling coverage on a TFPA policy is $1,000,000, and other structures get 10% of the dwelling amount. TFPA can also decline a residential dwelling used for business. ## How much does landlord insurance cost in Texas? [#how-much-does-landlord-insurance-cost-in-texas] There is no official average for Texas rental dwelling policies that we can point you to, so we won't quote a range. The price follows the house and its form: the location and wind exposure, age, roof and construction, the dwelling amount, your deductible, whether the form is named perils or all risk, and whether you add liability and fair rental value. On the coast, the TWIA premium is a separate bill. ## Frequently Asked Questions ### Do I need a special policy if I move out and rent my house? Yes. Tell your insurer the house is now a rental and move it to a dwelling policy written for tenant occupancy. Some Texas dwelling programs accept only owner-occupied homes. ### Does landlord insurance cover lost rent? If the policy includes fair rental value, it pays the rent you lose while a covered loss is repaired. The TDP-3 style form TDI describes includes it, and the FAIR Plan's loss-of-use limit, where it applies, is 10% of the dwelling amount. It doesn't pay for a tenant who stops paying rent. ### Should I require renters insurance from my tenants? Many landlords do, because the landlord's policy doesn't cover the tenant's belongings. Put the requirement in the lease and ask for proof at move-in. ### Is my rental covered if it sits empty for three months? Possibly not. TDI says most companies stop coverage after 60 days of vacancy, though liability usually continues. Call the insurer before the vacancy passes the policy's limit. ### Does the Texas FAIR Plan cover rental houses? Yes, on its TDP-1 dwelling policy for one- and two-family rentals, after two declines from licensed insurers. It has no liability or theft coverage and pays actual cash value. *This guide is for educational purposes. It summarizes TDI consumer guidance and orders, TDI's Texas FAIR Plan overview of June 2026, TFPA's eligibility page, TWIA's dwelling policy and eligibility rules, and one carrier's Texas dwelling guide dated 2025, all read in September 2026. Your policy's terms, conditions and endorsements control. Menlo Insurance Services is a licensed property and casualty broker in Texas and California that may earn a commission on a placement. Naming a program here doesn't mean we place it in Texas or that any coverage or price will be available.* ## The Bottom Line [#the-bottom-line] In Texas, a rental property belongs on a dwelling policy written for tenant occupancy, ideally an all-risk form with liability and fair rental value added. On the coast, plan for TWIA wind coverage and a separate flood policy, and tell your insurer before any turnover runs past 60 days. If two insurers decline the house, the FAIR Plan's TDP-1 is a basic, temporary answer. ## References . [Texas Department of Insurance. Home insurance guide]() (accessed 2026-09-29) . [Texas Department of Insurance. Home insurance policies: All risk or named peril]() (accessed 2026-09-29) . [Texas Department of Insurance. Commissioner's Order CO-03-0110, New Property Endorsements (dwelling policy forms DP 00 02TX and DP 00 03TX)]() (2003) . [Texas Department of Insurance. Texas FAIR Plan Association Overview, for quarter ending March 31, 2026]() (2026) . [Texas FAIR Plan Association. Coverage & Eligibility]() (accessed 2026-09-29) . [Texas Windstorm Insurance Association. TWIA Dwelling Policy, Windstorm and Hail (Form TWDP, edition August 31, 2023)]() (2023) . [Texas Windstorm Insurance Association. Coverage & Eligibility]() (accessed 2026-09-29) . [Bamboo Insurance (Concert Specialty Insurance Company). Texas Dwelling Fire & Landlord Quick Reference Guide (Texas DP-3), Ed. 05.05.25]() (2025) # Loss Assessment Coverage: What It Pays and How Much to Buy (https://www.menloinsurance.com/library/guides/loss-assessment-coverage) Condo policies often include only $1,000 of loss assessment coverage. How it pays your share of an HOA assessment, California's 5% rule, and what limit to buy. Markdown version: https://www.menloinsurance.com/library/guides/loss-assessment-coverage.md Loss assessment coverage pays your share of a special assessment that your condo or homeowners association charges owners after a covered loss to common property. The standard condo unit-owners form, HO 00 06, includes it as an additional coverage of only $1,000, and you can increase the limit with an endorsement. The limit matters most when the association's master policy has a large deductible, because the board can then pass that deductible on to the owners. This guide is for California condo and HOA owners. It explains when loss assessment coverage will apply and when it will not, what California law lets a board assess, and how to choose an adequate limit. If you are buying or reviewing a condo policy, our [condo insurance page](https://www.menloinsurance.com/condominium-insurance) starts a quote with loss assessment set at the level you need. ## Key takeaways * **$1,000 is the usual starting limit.** It is built into the HO 00 06 unit-owners form, and endorsement HO 04 35 raises it. * **It pays only for covered causes.** The assessment must come from direct loss to property by a peril your own policy covers. Government assessments are excluded. * **California caps most assessments, with exceptions.** Without a member vote, a board's special assessments can't exceed 5% of budgeted gross expenses in a year, except for emergencies such as unforeseen repairs. * **Earthquake needs its own policy.** A CEA condo policy offers loss assessment limits from $25,000 to $100,000, with a 5% to 25% deductible on that limit. * **Size it to the master deductible.** Your association must disclose each policy's limit and deductible every year in its budget report. ## What is loss assessment coverage? [#what-is-loss-assessment-coverage] It is coverage for your share of what the association charges all owners to pay for a loss to property the owners own together, such as the roof, hallways, pool or clubhouse. In the ISO unit-owners form it appears as an additional coverage up to $1,000, and it pays assessments resulting from "direct loss to property caused by a peril insured against." Homeowners policies for houses in a planned development often carry a similar coverage, so always check your declarations page, whether you own a house or a condo. The coverage has two parts in most forms: property assessments, for damage to common property, and liability assessments, when the association is sued and its liability insurance doesn't satisfy the whole judgment. The HO 04 35 endorsement can raise either limit or both. ## When does loss assessment coverage pay? [#when-does-loss-assessment-coverage-pay] It pays when three conditions are met: the association's loss is to property the owners own in common, the loss was caused by a peril your own policy covers, and the board actually assesses the owners. The most common case is the master policy deductible. If a fire damages the building and the master policy has a $50,000 deductible, the board can split that deductible among the owners as a special assessment, and your loss assessment coverage pays your share up to your limit. Check two limits in your own policy. Under HO 00 06, a $1,000 share of the association's deductible is included within the loss assessment limit unless you buy more. Editions of HO 04 35 before 05/11 often capped the part of an assessment that comes only from the association's deductible, for example at $1,000, even when the overall limit was higher. So it is worth asking your insurer which edition your policy uses. ## When doesn't it pay? [#when-doesnt-it-pay] It doesn't pay for routine maintenance, a reserve shortfall, upgrades, or damage from a cause your policy excludes. Assessments by a governmental body against you or the association are excluded outright. Because a standard condo policy excludes earthquake and flood damage, an assessment after an earthquake or flood isn't covered by the condo policy's loss assessment coverage either. For earthquake you need a separate earthquake policy with its own loss assessment limit (see below). | Reason for the assessment | Paid by a condo policy's loss assessment coverage? | | ----------------------------------------------------------- | ----------------------------------------------------------------------------------- | | Master policy deductible after a fire or burst pipe | Yes, if the cause is a peril your policy covers, up to your limit | | Lawsuit against the association beyond its liability limits | Yes, under the liability part, if the endorsement or form includes it | | Earthquake damage to the building | No; needs an earthquake policy's loss assessment coverage | | Reserve shortfall, new roof at end of life, upgrades | No; not a direct loss from a covered peril | | Assessment by a city or county | No; excluded | ## How much can a California HOA assess owners? [#how-much-can-a-california-hoa-assess-owners] Without approval of the members, a California board cannot impose special assessments that together exceed 5% of the association's budgeted gross expenses for the fiscal year, or increase regular assessments more than 20% over the prior year. The limits don't apply to emergencies: an expense ordered by a court, one needed to address a threat to health or safety, or an extraordinary repair that was unforeseeable when the board prepared the budget, which requires a board resolution stating why. It is this emergency exception that allows large assessments without a member vote. A building repair after a fire, or a master deductible the budget never provided for, can be assessed to owners without a membership vote. ## How much loss assessment coverage should I buy? [#how-much-loss-assessment-coverage-should-i-buy] Enough to cover your share of the master policy's largest deductible, plus room for a liability assessment. Start with your association's annual budget report: California requires it to summarize the association's property, general liability, earthquake, flood and fidelity policies, including each one's insurer, limits and deductible. Either divide the property deductible by the number of units or use your share of common expenses from the governing documents, and buy at least that much. For example, a 40-unit building with a $100,000 master policy deductible, split equally, leaves each owner with a $2,500 share. The $1,000 built into HO 00 06 would leave you $1,500 short. In the rating systems Menlo uses, Annex's condo policy begins at a loss assessment limit of $1,000, while Aegis offers loss assessment limits from $1,000 to $25,000. ## Does loss assessment coverage include earthquake? [#does-loss-assessment-coverage-include-earthquake] Not on a standard condo policy. In California, earthquake loss assessment comes from an earthquake policy. The California Earthquake Authority's condo-unit policy offers loss assessment limits of $25,000, $50,000, $75,000 or $100,000, with a deductible of 5% to 25% of that limit. The $25,000 option is available only in limited conditions. If your association has no earthquake coverage, an assessment after a large quake could be much greater than any condo policy limit, so this is the gap to check first. Our guide to [earthquake insurance cost in California](https://www.menloinsurance.com/library/guides/earthquake-insurance-cost-california) shows what condo owners paid on average in 2025. ## Frequently Asked Questions ### Is loss assessment coverage worth it? Usually, if your association's master policy has a deductible larger than $1,000 per unit. Raising the limit is often inexpensive compared with the assessment it covers, but price depends on the insurer. ### Does an HO-6 policy cover loss assessment? Yes. The HO 00 06 unit-owners form includes $1,000 of loss assessment coverage as an additional coverage, and the HO 04 35 endorsement raises it. ### Who pays for a loss assessment? The owners, in the share set by the governing documents. Your loss assessment coverage reimburses your share when the cause is a covered peril. ### Can my HOA charge a special assessment without a vote in California? Only up to 5% of budgeted gross expenses in a fiscal year, unless it is an emergency the law allows, such as a court order, a health or safety threat or an unforeseeable repair. ### Does loss assessment cover an HOA's earthquake deductible? Not under a standard condo policy. A CEA condo policy's loss assessment coverage, with limits up to $100,000, is built for that. *This guide is for educational purposes and summarizes the California Civil Code, the ISO unit-owners form and endorsement as described by FC\&S, the California Earthquake Authority's condo policy, and carrier rating systems. Forms and editions vary, and your policy's terms control. Menlo Insurance Services (CA license 6020106) is a licensed broker that may earn a commission on a placement and does not guarantee that any coverage or price will be available.* ## The Bottom Line [#the-bottom-line] Loss assessment coverage pays your share when your association charges owners for a covered loss, but on the standard condo form it begins at $1,000. Check your association's insurance summary, calculate your share of the master deductible, and increase your limit to match. For earthquake, the loss assessment limit comes only from a separate earthquake policy. ## References . [PropertyCasualty360 (FC&S Legal). Understanding Loss Assessment Coverage]() (2021) . [InsuranceXDate. Supplemental Loss Assessment Coverage, Form HO 04 35]() (accessed 2026-09-27) . [California Legislative Information. Civil Code section 5605]() (accessed 2026-09-27) . [California Legislative Information. Civil Code section 5610]() (accessed 2026-09-27) . [California Earthquake Authority. Condo-Unit Owners Coverage Options and Deductibles]() (accessed 2026-09-27) . [California Legislative Information. Civil Code section 5300]() (accessed 2026-09-27) . [Menlo Insurance Services. Condo insurance: Annex Risk condominium and Aegis rating screens (loss assessment options) as walked by Menlo, September 2026]() (accessed 2026-09-27) # What Is the MCS-90 Endorsement? A Federal Guarantee, Not Insurance (https://www.menloinsurance.com/library/guides/mcs-90-endorsement-explained) The MCS-90 endorsement is a federal judgment guarantee, not insurance. The insurer pays the injured public, then bills your trucking company back for it. Markdown version: https://www.menloinsurance.com/library/guides/mcs-90-endorsement-explained.md The [MCS-90](https://www.menloinsurance.com/library/forms/mcs-90) is a federal endorsement that guarantees payment of final court judgments against a trucking company for injuries to the public, even when the company's own insurance policy would deny the claim. It is not insurance for the trucker who carries it. The insurer pays the victim first. Then it comes back to the trucking company, with a contractual right to collect every dollar the policy itself never owed. That reimbursement clause surprises almost every owner who first learns about it after a crash. It is also only half the story. Courts have spent two decades disagreeing about when the endorsement applies at all. The chain runs one direction: a crash produces a judgment, the policy denies, the MCS-90 pays the injured person, and the reimbursement demand lands on your desk. ## Key takeaways * **Reimbursement has no cap tied to premium**: if the insurer pays something under the endorsement that the policy did not owe, you owe it back, and the clause also reaches payments caused by your own violations of the policy terms. * **It pays final judgments only**: the endorsement carries no duty to defend you, so when the policy denies, you fund your own lawyers while the guarantee stands behind whatever verdict follows. * **Its trigger is unsettled law**: courts apply at least four different tests for when a trip counts as interstate commerce, and Indiana holds the endorsement never reaches a purely intrastate haul of ordinary freight. * **Real coverage makes it a dead letter**: a policy that actually covers every truck at adequate limits pays claims on its own terms, and the MCS-90 never wakes up. ### MCS-90 Endorsement A federally mandated endorsement on a motor carrier's liability policy that obligates the insurer to pay final judgments for public liability caused by the carrier's vehicles, regardless of the policy's own terms. The carrier must then reimburse the insurer for any payment the policy did not actually cover. ## What is the MCS-90 endorsement? [#what-is-the-mcs-90-endorsement] The MCS-90 endorsement is how an interstate motor carrier proves the financial responsibility federal law demands. Congress deregulated trucking through the Motor Carrier Act of 1980. The guardrail it added was a requirement that carriers show they could pay for the harm their trucks cause, a mandate now codified at 49 U.S.C. 31139. Most carriers prove it with insurance, and the MCS-90 is the endorsement that converts an ordinary liability policy into that proof. Its promise runs to the public, not to you. When someone wins a final judgment against your company for bodily injury, property damage, or environmental restoration arising from the negligent operation of your vehicles, the insurer must pay it up to the endorsement limit. A policy exclusion does not matter. Neither does a truck missing from the schedule. Most owners read that and assume the endorsement quietly fills the holes in their own coverage. It does not. It papers over the holes for the injured stranger. Then the insurer turns around and hands you the bill, because the guarantee was always for the public's benefit rather than yours. ## Why is the MCS-90 not insurance? [#why-is-the-mcs-90-not-insurance] Courts describe the endorsement as a suretyship, with the insurer standing as guarantor of your judgment debts to the public rather than as your insurer. A guarantor who pays a debt the underlying contract never covered gets to collect from its principal. The endorsement says so in two directions: you must reimburse the insurer for any payment it would not have had to make under the policy alone, and for any payment caused by your violation of the policy's terms. The obligation also arrives stripped of the services insurance normally brings. The endorsement responds to final judgments rather than claims, so it carries no duty to defend you, and most courts treat it as a backstop of last resort that triggers only when no other collectible insurance can satisfy the judgment. The mechanics played out in full in a case that reached the Seventh Circuit in 2023. A driver for Riteway Trucking hauled freight from Illinois to Indiana, dropped it, and was driving empty toward his next load, bound for Illinois, when he collided with a man named Darnell Wright. Wright won a $400,000 default judgment. Riteway's insurer, Prime Insurance Company, had already obtained a court ruling that its policy owed Riteway no defense and no indemnity. The court ordered Prime to pay the judgment plus interest anyway under the MCS-90, and the endorsement gave Prime the right to pursue that money from its own insured, as the coverage firm Kennedys recounted in 2023. The MCS-90 turns an uncovered judgment into a debt you owe your own insurer. The endorsement guarantees that the public gets paid. It guarantees you nothing except the invoice that follows. ## Who needs an MCS-90? [#who-needs-an-mcs-90] Any trucking company running for hire in interstate commerce under FMCSA operating authority needs the endorsement, or one of the less common alternatives such as a surety bond or approved self-insurance. The requirement covers for-hire vehicles over 10,001 pounds gross vehicle weight rating hauling non-hazardous property, with a minimum limit of $750,000. Hauling oil or certain hazardous materials pushes the floor to $1 million, and the most dangerous cargo, such as Division 1.1 explosives and highway route controlled radioactive materials, requires $5 million under the schedule in 49 CFR 387.9. The hazardous materials tiers apply to private fleets as well as for-hire carriers, and unlike the general freight rule, they reach intrastate transportation too. Notice what the endorsement guarantees, and what it leaves out. Public liability means bodily injury, property damage, and environmental restoration suffered by third parties. Injuries to your own employees and damage to the freight in your trailer are excluded, which is why carriers still need workers compensation and [motor truck cargo insurance](https://www.menloinsurance.com/library/guides/motor-truck-cargo-insurance) no matter what their filings say. ## Why do courts disagree about when the MCS-90 applies? [#why-do-courts-disagree-about-when-the-mcs-90-applies] The statute ties the federal mandate to transportation of property between a place in one state and a place in another, and forty years of litigation have not settled what that covers when a truck is empty, between loads, or running a leg that never crosses a border. When Prime asked the Supreme Court to resolve the question after losing the Wright case, its petition counted a split six courts deep. The tests sort into four camps: | Approach | The test | Followed by | | -------------- | -------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | | Trip-specific | The truck must be loaded with freight and moving from one state to another at the moment of the crash | Fifth Circuit, Connecticut Supreme Court | | Fixed intent | The shipper must have a fixed intent that the freight cross state lines in the near future | Eighth Circuit, Pennsylvania Supreme Court | | Carrier-wide | Any crash involving a carrier that transports property interstate triggers the endorsement, whatever the trip | Virginia Supreme Court | | Statutory text | Traces the statute's broad definition of transportation, and reached an empty truck driving between interstate loads | Seventh Circuit | Indiana drew the line the other way. In Progressive Southeastern Insurance Co. v. B\&T Bulk, LLC, decided in 2022, the Indiana Supreme Court held the endorsement does not reach a purely intrastate trip hauling non-hazardous cargo, overruling Sandberg Trucking v. Johnson, a 2017 appellate decision that had stretched it on public policy grounds, as the subrogation lawyers at White and Williams reported. The Supreme Court declined to referee. It denied Prime's petition on October 2, 2023, leaving every test standing. Prime's petition made the practical consequence plain: insurers must price the uncertain reach of the mandate before any accident happens, and carriers pay premiums based on that guess. ## How do you keep the MCS-90 from ever mattering? [#how-do-you-keep-the-mcs-90-from-ever-mattering] Buy coverage that pays the claim on the policy's own terms, sized to the operation you actually run, so the guarantee never has anything to do. The classic reimbursement fact pattern is a tractor that never made it onto the policy schedule, often an owner-operator added mid-term with no call to the broker. Four habits close the gaps: * **Cover every auto**: a policy written with symbol 1, any auto, leaves no unscheduled-vehicle gap, while scheduled-auto symbol 7 covers only the units you listed. The [commercial auto policy symbols](https://www.menloinsurance.com/library/guides/commercial-auto-insurance-symbols) on your declarations decide which trucks are insured. * **Carry limits above the federal floor**: the $750,000 general freight minimum has not moved since the 1980s, and most shippers and freight brokers treat $1 million as the working floor before they tender a load. * **Declare owner-operators and trip leases**: trucks running under your authority are your exposure whether or not you own them, and an undeclared unit is exactly the kind the endorsement sweeps in and bills back. * **Keep the broker in the loop mid-term**: new units, new drivers, and radius changes reported as they happen keep the schedule and the operation matched, which is the whole game. ## Frequently Asked Questions ### Is the MCS-90 the same as commercial truck insurance? No. [Commercial auto insurance](https://www.menloinsurance.com/commercial-auto-insurance) pays claims on the policy's terms, defends you, and owes you nothing back. The MCS-90 guarantees final judgments to the public even when the policy denies, and it then obligates your company to reimburse the insurer for anything the policy never owed. A carrier holding an MCS-90 over thin coverage is not protected, it is financing the public's protection. ### Does the MCS-90 apply to intrastate trucking? Usually not, with exceptions. The federal mandate is written around interstate transportation, and it reaches intrastate trips only for certain hazardous materials. The Indiana Supreme Court has held the endorsement does not apply to a purely intrastate haul of non-hazardous freight, though courts elsewhere read the trigger more broadly, and your state may impose its own financial responsibility filings for intrastate authority. ### Will my insurer defend me in a lawsuit under the MCS-90? No. The endorsement responds to final judgments, not claims, so it carries no duty to defend. If the underlying policy denies coverage, you pay for your own defense even though the endorsement may ultimately guarantee whatever judgment results. That combination of no defense plus a reimbursement demand is why relying on the endorsement is the most expensive way to handle a claim. ### Can my insurer really make me pay back an MCS-90 judgment? Yes. The reimbursement clause obligates the insured to repay any amount the insurer would not have owed under the policy alone, plus any payment caused by the insured's violation of the policy terms. The amounts track the judgment rather than your premium, and insurers do pursue them. In the Wright case the exposure was a $400,000 default judgment plus interest. *This guide is for educational purposes and summarizes federal motor carrier financial responsibility law in Menlo's own words. Your policy's specific terms, your filed endorsements, and the case law of your jurisdiction control. Talk to a licensed broker about your actual exposures.* ## The Bottom Line [#the-bottom-line] The MCS-90 is a federal guarantee that the public gets paid when a regulated trucker's insurance does not, and its price is a reimbursement obligation that lands on the trucking company. Courts still disagree about which trips trigger it, and the Supreme Court has declined to decide. Treat the endorsement as a formality your filings require, buy coverage sized so it never activates, and have a broker check the gaps before a court does. ## References . [Legal Information Institute, Cornell Law School. 49 U.S. Code 31139: Minimum Financial Responsibility for Transporting Property]() . [Kennedys Law LLP. Duties in the Absence of Defense or Indemnity Obligations: A Closer Look at the MCS-90 Endorsement]() . [Legal Information Institute, Cornell Law School. 49 CFR 387.9: Financial Responsibility, Minimum Levels]() . [Supreme Court of the United States. Prime Insurance Co. v. Wright, No. 22-1006, Petition for a Writ of Certiorari]() . [White and Williams LLP. Pump the Brakes: Indiana Rules MCS-90 Endorsement Does Not Apply to Intrastate Trips]() . [Supreme Court of the United States. Docket for No. 22-1006, Prime Insurance Company v. Darnell Wright]() # Monopolistic States for Workers Comp: Placement Guide (https://www.menloinsurance.com/library/guides/monopolistic-states-workers-comp) North Dakota, Ohio, Washington and Wyoming sell workers comp only through state funds. Items 3.A and 3.C, the employers liability gap and stop gap coverage. Markdown version: https://www.menloinsurance.com/library/guides/monopolistic-states-workers-comp.md Four states, North Dakota, Ohio, Washington and Wyoming, do not let private insurers sell workers compensation. Employers there must buy it from the state fund, so there is no renewal to shop. An employer with workers in one of these states needs a separate state fund policy for that payroll, plus stop gap employers liability added to its commercial general liability (CGL) policy, because a monopolistic state can't be listed in Item 3.A or Item 3.C of the standard policy. To follow the rest, it helps to know the front page of a workers compensation policy. It has numbered items, and two of them do most of the work. ### Front of Your Workers Compensation Policy _Information Page for form WC 00 00 00 C_ ### Item 3.A. — States included under coverage The states whose workers compensation laws this policy pays benefits under. An employee injured in a state not listed will get no benefits from this policy, regardless of how high your limits are. California ### Item 3.B. — Employers liability limits The dollar limits available when an injured employee sues you instead of, or on top of, claiming benefits. These limits only reach the states listed in Item 3.A. $1,000,000 each accident ### Item 3.C. — Other states insurance A backstop list covering states where you unexpectedly start work during the policy year. It buys you time to tell your insurer about a new state, and it cannot be used for North Dakota, Ohio, Washington or Wyoming. ### Item 3.D. — Endorsements The list of attachments that change the standard policy wording. This is where stop gap coverage appears if you have it. ## Key takeaways * **Four states only**: North Dakota, Ohio, Washington and Wyoming allow no private carrier option for workers compensation. * **Items 3.A and 3.C both leave them out**: the standard policy cannot list a monopolistic state, and other states insurance excludes them by name. * **State funds pay benefits, not lawsuits**: the funds provide statutory benefits but no employers liability, so the account needs stop gap coverage on the CGL. * **Funds do not backdate**: enrollment must happen before work begins, and each fund issues its own certificate your agency never sees. ### Monopolistic State Fund Monopolistic state funds are state-created, state-owned and state-operated workers compensation insurance facilities that issue all workers compensation coverage within a specific state. This excludes private carriers, who can write no workers compensation coverage within the same state. ## What are the four monopolistic states and their funds? [#what-are-the-four-monopolistic-states-and-their-funds] The four [monopolistic states](https://www.menloinsurance.com/library/glossary/monopolistic-states) are North Dakota, Ohio, Washington and Wyoming, and each has a single state fund that writes all workers compensation there. Each fund has its own classification and rating system instead of NCCI's, so a multistate employer's class codes and experience rating do not carry over from state to state. Washington L\&I also bases premium on hours worked rather than per $100 of payroll, the only state to do so, so vacation and sick time are not part of the exposure base. Only Ohio and Washington let qualified employers self-insure. In North Dakota and Wyoming , there is no alternative: employers must buy coverage from the state's single fund. | State | Fund | Self-Insurance Option | | ------------ | ------------------------------------------ | ---------------------------- | | North Dakota | Workforce Safety and Insurance (WSI) | No | | Ohio | Ohio Bureau of Workers' Compensation (BWC) | Yes, for qualified employers | | Washington | Department of Labor and Industries (L\&I) | Yes, for qualified employers | | Wyoming | Department of Workforce Services | No | ## How do Item 3.A. and Item 3.C. handle monopolistic states? [#how-do-item-3a-and-item-3c-handle-monopolistic-states] Neither item can cover a monopolistic state. The information page of the standard [workers compensation policy](https://www.menloinsurance.com/library/guides/workers-compensation-insurance-guide) sets its territory in Items 3.A and 3.C. Item 3.A turns on Part One statutory coverage for the states listed there, but because no private carrier can write a monopolistic state, one can never be listed. Item 3.C (other states insurance) covers states where work begins after the policy starts, but it excludes these four states by name. The only exceptions are the ones each fund grants itself. Washington L\&I has reciprocal agreements with eight states, Idaho, Montana, Nevada, North Dakota, Oregon, South Dakota, Utah and Wyoming, but the Montana and Nevada agreements do not include construction work. Don't assume a reciprocal agreement applies until the fund confirms it in writing. Remote employees raise the same problem. An employee working from home in Ohio is Ohio payroll, which neither item can reach. The employer must enroll with the Ohio BWC, the private carrier's auditor will remove that payroll from the standard policy, and the fund will not backdate coverage. ## What is stop gap coverage and why do you need it? [#what-is-stop-gap-coverage-and-why-do-you-need-it] Stop gap coverage is [employers liability](https://www.menloinsurance.com/library/guides/employers-liability-insurance) for monopolistic-state employees, added by endorsement to the client's [commercial general liability policy](https://www.menloinsurance.com/library/guides/what-does-general-liability-insurance-cover). The state funds pay statutory benefits but provide no employers liability. On a standard workers compensation policy, Part Two covers suits outside the benefit system, such as third-party action-over claims, loss of consortium or dual-capacity claims, and other suits alleging the employer was negligent. Stop gap puts that protection back on the CGL, which would otherwise reject these suits under its employee injury exclusion. Most [umbrellas](https://www.menloinsurance.com/library/guides/excess-liability-insurance) require $1,000,000 of underlying employers liability, so quote stop gap at that level, not at the Part Two minimums: For a business with workers outside the monopolistic states, Menlo quotes [workers compensation insurance](https://www.menloinsurance.com/workers-compensation-insurance) on the standard policy. ## How do certificates of insurance work with state funds? [#how-do-certificates-of-insurance-work-with-state-funds] A certificate of insurance won't show the employers liability gap, because the fund issues its own certificate and your [ACORD 25](https://www.menloinsurance.com/library/forms/acord-25) cannot stand in for coverage your agency doesn't control. Show the stop gap in the general liability section of the [certificate of insurance](https://www.menloinsurance.com/library/guides/certificate-of-insurance-guide). Never enter a fund-issued policy in the workers compensation box as if your agency had placed it, a common source of errors and omissions claims. ## Frequently Asked Questions ### What is a monopolistic state? A monopolistic state is one where state law does not let private insurers sell workers compensation in competition with the state fund, so employers can only buy it from the fund. There are four: North Dakota, Ohio, Washington and Wyoming. ### Do monopolistic state funds include employers liability coverage? No. The funds pay statutory workers compensation benefits only. Employers liability protection for suits outside the exclusive remedy, such as third party action over claims or alleged employer negligence, must come from stop gap coverage endorsed onto the employer's commercial general liability policy. ### What happens if a client starts work in a monopolistic state without enrolling in the fund? The client is uninsured for that work. The standard policy excludes monopolistic states in both Item 3.A and Item 3.C, and the state funds do not backdate coverage. A client who starts work before enrolling faces state fines and penalties, and must pay any claims and lawsuits out of pocket. *This guide is for educational purposes and summarizes standard NCCI policy language. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## Monopolistic state checklist for each renewal [#monopolistic-state-checklist-for-each-renewal] For any client with work in North Dakota, Ohio, Washington or Wyoming, confirm three things at every renewal: the client is enrolled with the state fund before work starts, the state is not listed in Items 3.A or 3.C, and the stop gap endorsement is on the CGL at $1,000,000. In these four states workers compensation comes only from the state fund, which pays statutory benefits but no employers liability, and the funds do not backdate coverage. ## References . [Washington State Department of Labor and Industries. Rates for Workers' Compensation]() . [North Dakota Workforce Safety & Insurance. Workforce Safety & Insurance (WSI)]() . [Wyoming Department of Workforce Services. Workers' Compensation]() . [Washington State Department of Labor and Industries. Out-of-State Employers and Out-of-State Workers]() . [Ohio Bureau of Workers' Compensation. Applying for Coverage]() # Motor Truck Cargo Insurance: What It Is and Who Needs It (https://www.menloinsurance.com/library/guides/motor-truck-cargo-insurance) Motor truck cargo covers a trucker's liability for the freight it hauls. The Carmack Amendment, why FMCSA stopped requiring it, limits and exclusions. Markdown version: https://www.menloinsurance.com/library/guides/motor-truck-cargo-insurance.md Motor truck cargo insurance covers a for-hire trucker's legal liability for loss of or damage to the freight it hauls for others. It is an [inland marine](https://www.menloinsurance.com/inland-marine-insurance) coverage, not part of the auto policy, and it responds when a load is destroyed in a wreck, stolen from a trailer or spoiled in transit and the shipper looks to the carrier to pay. Since 2011 the FMCSA has not required most carriers to carry it, but shipper and broker contracts require proof of it before they hand over freight. For a for-hire trucking business, one bad load can mean a five-figure claim. What the carrier owes the shipper depends on the bill of lading and federal law, and more cargo claims are decided by a form's exclusions than by its limit. ## Key takeaways * **Liability coverage for freight**: motor truck cargo insurance covers what the carrier legally owes for loss of or damage to customers' goods while it is hauling them. The carrier's own trucks are covered elsewhere. * **The Carmack Amendment sets the baseline**: an interstate common carrier is strictly liable for lost or damaged cargo unless one of five narrow exceptions applies. * **Contracts drive limits**: the FMCSA dropped cargo filing requirements for all carriers except household goods carriers and freight forwarders in 2011, so shippers and brokers now set the minimum. * **Warranties decide claims**: unattended vehicle theft exclusions and reefer maintenance conditions void coverage far more often than a low limit does. ### Motor Truck Cargo Insurance Motor truck cargo insurance is an inland marine policy that covers a motor carrier's legal liability for physical loss or damage to the property of others being transported for hire. It typically applies while cargo is on a scheduled or described vehicle and, on many forms, during loading and unloading. ## What is motor truck cargo insurance? [#what-is-motor-truck-cargo-insurance] Motor truck cargo insurance protects a trucking company against liability for damage to the freight in its trailers. When a shipment is lost, stolen, short or damaged while a for-hire carrier is hauling it, the shipper claims against the carrier, and the cargo policy pays that claim, up to its limit, when a covered cause of loss is behind it. It belongs to the [inland marine insurance](https://www.menloinsurance.com/library/guides/what-is-inland-marine-insurance) family because it covers property in transit rather than at a fixed location, and it fills a gap the business auto policy leaves. Auto liability covers injury and damage the truck causes to other people, never the load inside the trailer. A business hauling only its own goods buys an owner's cargo or transportation policy instead, because it has no liability to a customer for the load. ## How does carrier liability work under the Carmack Amendment? [#how-does-carrier-liability-work-under-the-carmack-amendment] The Carmack Amendment, enacted in 1906 and now part of the ICC Termination Act, makes an interstate common carrier strictly liable for the goods it hauls. The shipper never has to prove the driver did anything wrong. It only shows that the goods left in good condition, arrived damaged or short, and how much they were worth, and then the burden shifts to the carrier. The carrier escapes in only five ways: an act of God, an act of a public enemy, an act or default of the shipper, action of public authority, or the inherent vice of the goods. Courts read these narrowly. A hijacker is not a public enemy, and driving into a forecast nor'easter gives up the act of God defense. Liability depends on the type of carrier, which is why underwriters ask how you operate: | Carrier type | Who it hauls for | Liability basis | | ---------------- | -------------------------------- | -------------------------------------------------------- | | Common carrier | The general public, for hire | Strict liability under federal law, five exceptions only | | Contract carrier | Specific shippers under contract | Whatever the contract says | | Private carrier | Own goods, owned truck | No cargo liability to a customer | The bill of lading the driver signs at pickup decides how much of a loss the carrier pays. A "released" bill of lading can limit the carrier's liability to a set amount, often a few cents per pound, but only if the shipper had a real choice of liability levels. Federal law also sets claim deadlines: under 49 U.S.C. 14706(e), the shipper must have at least 9 months to file a written claim and at least 2 years from the carrier's written denial to sue. The cargo insurer investigates before it pays, and the check rarely matches the invoice, because salvage and unpaid freight charges are deducted first. ## What does cargo coverage pay for, and what voids it? [#what-does-cargo-coverage-pay-for-and-what-voids-it] Motor truck cargo coverage pays for direct physical loss to covered freight from a covered peril while the load is in your care, typically on a scheduled power unit and usually during loading and unloading. Collision, overturn, fire and theft are the core perils on every form. Policies usually value the load at invoice value plus accrued or prepaid charges, and fall back to [actual cash value](https://www.menloinsurance.com/library/glossary/actual-cash-value) when there is no invoice. Better forms also cover debris removal and a modest pollutant cleanup limit, so chemical haulers still pair cargo coverage with pollution liability on the auto policy. The exclusions are where cargo claims fail, and most turn on conduct rather than the cause of loss. Unattended vehicle provisions are the most litigated: theft coverage often applies only if a driver or owner-operator is in or on the vehicle when the theft happens, so a driver who walks a delivery to the door and comes back to a looted trailer has no coverage. Insurers write the same idea as warranties requiring locked trailers, kingpin locks or fenced overnight lots. Refrigerated haulers face a similar trap. Base forms cover spoilage only when a covered peril, such as a collision, knocks out the refrigeration unit, so a reefer that simply fails needs its own endorsement, which comes with fuel and inspection warranties. Miss the documented inspections and a $200,000 melted load is entirely yours. Cargo forms also commonly exclude target commodities such as jewelry, precious metals, art and furs, plus contraband, money and your own employees' dishonest acts. ### A warranty breach can void coverage even for a real loss With a $100,000 cargo limit, the insurer can still owe nothing if the driver left the rig unattended, the reefer log is missing or the commodity is excluded. Before every renewal, compare the theft warranties and excluded commodities with how your drivers actually work, because underwriters enforce warranty language exactly as written. ## Is motor truck cargo insurance required by the FMCSA? [#is-motor-truck-cargo-insurance-required-by-the-fmcsa] For most carriers, no. The Federal Motor Carrier Safety Administration (FMCSA) removed its cargo insurance requirement, and the BMC-32 endorsement filing for-hire property carriers had made for decades, effective March 21, 2011. The old minimums were $5,000 per vehicle and $10,000 per occurrence, well below the value of a typical load, so the agency decided the filing did little. Household goods carriers and freight forwarders are the exception and still must show proof of cargo coverage. Cargo filing is also different from the [MCS-90](https://www.menloinsurance.com/library/forms/mcs-90) endorsement on your auto liability policy. The MCS-90 [guarantees the federal public liability minimums](https://www.menloinsurance.com/library/guides/mcs-90-endorsement-explained) for bodily injury, property damage and environmental restoration. It has nothing to do with the freight in your trailer, and having it does not mean you have cargo coverage. ## How much cargo insurance do truckers need? [#how-much-cargo-insurance-do-truckers-need] With the federal floor gone, contracts set the number, so check what your own agreements require: brokers verify the certificate before they tender a single load. A typical broker-carrier agreement requires $100,000 of cargo coverage, and shippers of refrigerated food, electronics or other easily stolen freight ask for more, commonly $250,000 for reefer loads. Set the limit at the value of the most valuable load you actually book, not the average, because the policy pays per occurrence. A $1,000 deductible is common, and carriers with theft losses see $2,500 or more on target commodities. New-authority carriers and fleets with claims often end up in the excess and surplus lines market, where forms vary even more and [non-admitted carriers](https://www.menloinsurance.com/library/guides/admitted-vs-non-admitted-carriers) are not backed by state guaranty funds. Have a broker who reads trucking forms review the quote, and make sure the certificate matches what your shipper contracts promise. ## Frequently Asked Questions ### Is motor truck cargo insurance required by law? Not federally, for most carriers. The FMCSA dropped cargo insurance filing requirements on March 21, 2011, keeping them only for household goods movers and freight forwarders. In practice it is still required, because shipper and freight broker agreements ask for proof of cargo coverage before any load is tendered, typically with a $100,000 limit. ### What is the difference between motor truck cargo insurance and a transportation policy? Motor truck cargo covers a for-hire carrier's liability for other people's freight. A transportation policy is first-party coverage a shipper buys on its own goods in transit, whether they move on its trucks or a hired carrier's. A shipper with its own transportation policy gets paid without proving the carrier was liable, and its insurer pursues the carrier afterward through subrogation. ### Does motor truck cargo insurance cover a reefer breakdown? Only if the policy includes a reefer breakdown endorsement. Base forms cover spoilage when a covered peril such as a collision damages the refrigeration unit, but not when the unit simply fails on its own. The endorsement usually comes with maintenance warranties, including monthly documented inspections, and skipping them can void the coverage entirely. ### Does the MCS-90 endorsement cover cargo? No. The MCS-90 is a public liability endorsement on your auto policy that guarantees federal minimum limits for bodily injury, property damage and environmental restoration owed to the public. The freight in your trailer is not part of that, and cargo claims are not covered by the endorsement. *This guide is for educational purposes and summarizes standard ISO and AAIS policy language. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## What to check on your cargo policy before renewal [#what-to-check-on-your-cargo-policy-before-renewal] Before your next renewal, read your unattended-vehicle and reefer warranties against how your drivers actually run, and check the excluded commodities list against what you haul. Motor truck cargo insurance pays what a for-hire trucker legally owes a shipper for freight damaged, stolen or lost in transit. No federal rule has required it since 2011, but shipper and broker contracts do, usually at $100,000 or more, and the exclusions decide most claims. ## References . [Legal Information Institute, Cornell Law School. 49 U.S. Code 14706: Liability of Carriers Under Receipts and Bills of Lading]() . [U.S. Government Publishing Office, Federal Register. Cargo Insurance for Property Loss or Damage, Final Rule (75 FR 35319)]() . [Royal Transportation Services. Common/Contract Carrier Setup Packet (broker-carrier agreement, cargo minimum)]() . [The McClure Agency. Cargo Insurance Requirements: The $100k Standard]() # Named Insured vs. Additional Insured Under CG 00 01 (https://www.menloinsurance.com/library/guides/named-insured-vs-additional-insured) Named insured vs additional insured under CG 00 01. The three insured status tiers, first named insured duties, and where endorsement status runs out. Markdown version: https://www.menloinsurance.com/library/guides/named-insured-vs-additional-insured.md A named insured is listed in the policy's declarations and holds all of the policy's rights and duties. An additional insured is an outside party added by endorsement, usually because a contract requires it, and gets narrower coverage: only for liability caused by the named insured's work, with no limits of its own and no say over the policy. Wherever the CGL says "you," it means the named insured. Clients often ask why being added to someone else's policy is not the same as having their own. The clearest answer is the three tiers of insured status that [CG 00 01](https://www.menloinsurance.com/library/forms/cg-00-01) sets up, because additional insured status only makes sense as the bottom tier. ## Key takeaways * **Three tiers of insured status**: a CGL has named insureds listed in the declarations, automatic insureds under Section II, and additional insureds added by endorsement. * **The first named insured** has duties no other insured has: paying the premium, requesting changes and receiving cancellation notice. * **Additional insured status is deliberately narrow**: it covers only liability tied to the named insured's work, shares the named insured's limits and adds no aggregate of its own. * **A certificate never creates status**: named insured status is in the declarations and additional insured status is in an endorsement, so collect the document that grants it. ### Insured Status Tiers The CGL policy recognizes insureds at three levels: named insureds listed in the declarations, automatic insureds who qualify through their relationship to a named insured under Section II, and additional insureds granted limited status by endorsement. Each tier down carries fewer rights and fewer duties. ## Who is an insured under CG 00 01? [#who-is-an-insured-under-cg-00-01] An insured under CG 00 01 is any party in one of three tiers: a named insured listed in the declarations, an automatic insured under Section II, or an additional insured added by endorsement. The top tier is the [named insured](https://www.menloinsurance.com/library/glossary/named-insured), each person or organization listed in the declarations, with all of the policy's rights and duties. The middle tier is automatic insureds, who qualify through their relationship to the named insured. The type of entity decides who is on the list: * **Sole proprietorship**: the named insured's spouse, but only for the conduct of the business. * **Partnership or joint venture**: the partners and their spouses. * **LLC**: the members and the managers. * **Corporation**: the executive officers, directors and stockholders. * **Trust**: the trustees. Employees and volunteer workers are insureds while acting within their duties. The bottom tier is [additional insureds](https://www.menloinsurance.com/library/glossary/additional-insured), outside parties written onto the policy by endorsement because a contract requires it. No one moves between tiers without a change to the policy. For a business buying its own coverage, the named insured is the entity whose operations need protecting. Menlo's [general liability insurance](https://www.menloinsurance.com/general-liability-insurance) page explains how to get a quote with the right entities named. ## What special duties does the first named insured carry? [#what-special-duties-does-the-first-named-insured-carry] The first named insured is the carrier's single point of contact when a policy lists several named insureds. It pays the premium, receives any return premium and audit bill, is the only one who can request policy changes for every insured, and is the only party entitled to notice of cancellation or nonrenewal. Put the entity that actually reads carrier mail in that first slot, because a cancellation notice sent to an inactive holding company is still valid notice. ## What does additional insured status cover, and where does it stop? [#what-does-additional-insured-status-cover-and-where-does-it-stop] Additional insured status gives real coverage, which is what separates it from being a certificate holder, a position that only receives information. On the CGL it usually comes through [CG 20 10](https://www.menloinsurance.com/library/forms/cg-20-10) for ongoing operations, [CG 20 37](https://www.menloinsurance.com/library/forms/cg-20-37) for completed operations, or a blanket form triggered by a written contract. Once endorsed, the additional insured can tender a covered suit to the named insured's carrier and receive a defense paid outside the limits. With [primary and noncontributory](https://www.menloinsurance.com/library/glossary/primary-and-noncontributory) wording, its own policy sits excess. Our guide to [additional insured endorsements](https://www.menloinsurance.com/library/guides/additional-insured-endorsements-explained) covers the full set of forms and their wording traps. Every grant in the endorsement comes with a limit. Coverage applies only to liability caused, in whole or in part, by the named insured's acts, omissions or work, so the additional insured's sole negligence is not covered under post-2004 ISO editions. New York's highest court showed what those words cost in Burlington v. NYC Transit Authority. In 2017 it held that "caused, in whole or in part" requires proximate causation by the named insured. The named insured's excavation machine had touched a live cable that NYCTA failed to identify, mark or turn off, and NYCTA acknowledged it was solely responsible. Burlington settled the injured worker's suit for $950,000, and the court held that the endorsement gave the Transit Authority no coverage. The additional insured brings no limits of its own. It shares the named insured's per occurrence and aggregate limits, has no authority over the policy, and gets no cancellation notice unless a separate endorsement adds one. None of this shows on a certificate. Additional insured status is proven by the endorsement, while the [ACORD 25](https://www.menloinsurance.com/library/forms/acord-25) certificate is for information only and does not change the coverage. A certificate that claims status the policy never granted creates E\&O exposure for the agency that issued it. According to IIABA's white paper Certificates of Insurance: Issues and Answers, about 1 in 25 agency E\&O claims involves a certificate, and 36 percent of those come from failing to add or correctly identify an additional insured. ## How do the two statuses compare side by side? [#how-do-the-two-statuses-compare-side-by-side] Every row in the additional insured column either narrows the coverage or removes a right the named insured keeps: To verify a named insured, get the declarations page. To verify additional insured status, get the endorsement itself and compare your client's exact legal name with the name on its schedule. Adjusters read that schedule strictly and extend status only to the parties it names. ## Frequently Asked Questions ### What can a named insured do that an additional insured cannot? A named insured runs the policy. The first named insured requests changes to the coverage, receives any return premium, is billed by the carrier and is notified of cancellation. A named insured also has coverage for its own independent operations, while an additional insured can only tender claims tied to the named insured's work. ### Can a policy have more than one named insured? Yes. Several entities can be listed, and nothing in the Commercial Lines Manual requires common ownership, though carriers apply their own underwriting rules. The entity listed first becomes the first named insured and takes on the premium, notice and change duties for the whole group. ### Does an additional insured get its own limits? No. All insureds share the named insured's per occurrence and aggregate limits, and no standard additional insured endorsement increases them. Current ISO editions also cap recovery at the lesser of what the contract requires and the limits available. Adding a real operating entity as only an additional insured, instead of a named insured, leaves its own operations uninsured. *This guide is for educational purposes and summarizes standard ISO policy language. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## How to confirm which status you actually have [#how-to-confirm-which-status-you-actually-have] Confirm status from the policy documents, not the certificate. A named insured owns the policy and holds its full rights and duties. An additional insured gets a narrow slice of that coverage: liability from the named insured's work only, within shared limits, with no notice rights. Pull the declarations for a named insured and the endorsement for an additional insured, then read the granting language against the contract that required it. ## References . [New York Court of Appeals. Burlington Insurance Co. v. NYC Transit Authority, 29 N.Y.3d 313 (2017)]() . [IIABA. Certificates of Insurance: Issues and Answers]() # Is ERGO NEXT the Same as Next Insurance? What the Rebrand Changes for You (https://www.menloinsurance.com/library/guides/next-insurance-ergo-next) Next Insurance rebranded as ERGO NEXT in January 2026 after Munich Re's $2.6B deal. What changes on your policy and COI, and who the carrier actually fits. Markdown version: https://www.menloinsurance.com/library/guides/next-insurance-ergo-next.md Yes. ERGO NEXT Insurance is Next Insurance operating under a new brand name, adopted on January 15, 2026, about six months after ERGO Group, the primary insurance arm of Munich Re, completed its $2.6 billion purchase of the company. So the look of the company is new, but the legal companies that actually issue the policies are the same ones as before. Almost every practical question the announcement left open comes back to that distinction, from whether your [certificate of insurance](https://www.menloinsurance.com/library/guides/certificate-of-insurance-guide) is still valid to what a landlord or general contractor should accept at renewal. Below is what changed, what stayed, and what to verify. ## Key takeaways * **Same companies on the paper**: the state licensing page still lists Next Insurance, Inc., Next First Insurance Agency, Inc., and Next Insurance US Company (NAIC 16285). * **Your COI keys off the entity**: certificate holders verify the writing company's legal name and NAIC number, and neither changed with the rebrand. * **Some policies ride other paper**: Next also sells policies written by non-affiliated carriers such as State National, so run every check against the insurer on your declarations page. * **Renewal is the moment to verify**: policy-number continuity is not publicly stated, so confirm it before a contract that references your number rolls over. ### ERGO NEXT Insurance ERGO NEXT Insurance is the brand name Next Insurance adopted after ERGO Group, Munich Re's primary insurance business, acquired the company in 2025. The legal underwriting companies behind its policies kept their original names. ## Why Did Next Insurance Change Its Name to ERGO NEXT? [#why-did-next-insurance-change-its-name-to-ergo-next] The rebrand followed a full acquisition. ERGO Group AG, which runs primary insurance for Munich Re, already held about 29 percent of Next Insurance and bought the remaining shares for $2.6 billion in a deal that closed on July 1, 2025. At the time the Palo Alto company had about 600,000 customers and $548 million in 2024 revenue. The new name arrived on January 15, 2026, by which point the customer count had passed 750,000 small businesses. Its marketing VP described the change as "visually aligning our brands," and that word choice is worth noticing. The carrier keeps selling general liability, business owner's policies, workers compensation, and professional liability online, and nothing in the corporate structure underneath the logo was reorganized as part of the rebrand. ## Is Next Insurance Legit? [#is-next-insurance-legit] Yes. Unlike most trust questions, this one can actually be checked. The risk-bearing insurer, Next Insurance US Company, carries NAIC number 16285, holds licenses across the states, and answers to state insurance regulators like any other admitted carrier. Since July 2025 it has been wholly owned by Munich Re through ERGO, one of the world's largest reinsurance and primary insurance groups. A startup brand backed by Munich Re's balance sheet is not a fly-by-night operation. Of course, when most owners ask whether a carrier is legit, they are really asking something else: will the company handle my claim well, and does its service model fit my business. That question gets its own section below. ## What Changes on Your Policy After the Rebrand? [#what-changes-on-your-policy-after-the-rebrand] It is easy to assume a new owner and a new name mean new policy terms. They do not. A rebrand is a marketing event, not a policy event: mid-term, your contract generally changes only by endorsement, and a brand change requires none. In practice it breaks down like this: | Item | After the rebrand | | -------------------------------- | ------------------------------------------------- | | Brand name, logo, website, app | **Changed** to ERGO NEXT branding | | Legal underwriting companies | **Unchanged** per the state licensing page | | Mid-term policy terms and limits | **Unchanged** by the rebrand itself | | Renewal documents | **New branding**, same entities expected | | Policy number at renewal | **Not publicly stated**, confirm with the carrier | There is one check worth running regardless of the rebrand. Not every policy sold through Next is written by a Next company: its licensing page also lists non-affiliated carriers, State National Insurance Company and National Specialty Insurance Company, behind some products. Read your declarations page first, because that is where the insurer that actually owes your claims is named. ## Is a Certificate of Insurance Naming Next Insurance Still Valid? [#is-a-certificate-of-insurance-naming-next-insurance-still-valid] Generally yes. A certificate identifies the writing company by its legal name, and that name did not change, so a COI issued before January 2026 still describes the same insurer standing behind the same policy. Certificates go stale when the underlying policy cancels, renews, or changes. A brand change does none of those things. In practice, mismatches still get flagged. Certificate-tracking services and GC compliance reviewers match carriers by name string, so "ERGO NEXT" on a new certificate against "Next Insurance" in an old contract exhibit can trigger a false rejection. The fix takes minutes: download a fresh certificate from your account and point the reviewer at the NAIC number, which follows the legal entity through any number of rebrands. ## Does the AM Best Rating Carry Over? [#does-the-am-best-rating-carry-over] An [AM Best rating](https://www.menloinsurance.com/library/guides/am-best-insurance-ratings-explained) attaches to the insurance company, not to the brand, so a name change alone cannot raise or lower it, though a change in ownership can. ERGO NEXT's site now advertises an A+ (Superior) rating from AM Best, reflecting its position inside the Munich Re group. Even so, check at the entity level. A contract that requires "A- or better" is testing the specific writing company on your declarations page, and a parent's grade does not automatically extend to every subsidiary or to non-affiliated paper. Look up your exact insurer at ambest.com before you certify compliance to anyone. ## Next Insurance Review: Who ERGO NEXT Fits [#next-insurance-review-who-ergo-next-fits] ERGO NEXT fits owners who want to buy, adjust, and document coverage entirely online. It quotes more than 1,300 professions and is built for trades and small service businesses: cleaners, contractors, consultants, food vendors. If your insurance life amounts to carrying standard limits and producing certificates on demand, the model is genuinely convenient. The tradeoffs show up once you need something the standard package does not include: One caution on review platforms: they mostly grade the buying experience, which is exactly the part Next optimized, so star averages say little about the moment that matters. Two checks are more useful. Filter recent reviews to claims and cancellations, where any direct carrier shows its real service model. Then pull the complaint index for the writing company at the NAIC's Consumer Information Source using NAIC 16285, which normalizes complaint counts against premium volume. ## What to Do If You Are Switching [#what-to-do-if-you-are-switching] Whether you are leaving Next or moving to it, getting the sequence right matters more than which direction you are going: ### Steps ### Bind the replacement policy first A gap of even one day can breach a lease or contract insurance requirement, and losses in the gap are yours alone. ### Check claims-made lines before canceling Professional liability is often claims-made, so ask about the retroactive date and tail options before the old policy ends. ### Reissue certificates to every holder Send fresh COIs from the new policy to every landlord and GC before the old ones expire in their tracking systems. ### Cancel in writing and confirm the refund Make the cancellation effective the day the new policy starts and confirm any return premium. Menlo Insurance Services is an appointed broker able to quote ERGO NEXT alongside other markets. The difference between an [agent and a broker](https://www.menloinsurance.com/library/guides/insurance-agent-vs-broker) matters here: a broker represents you, not the carrier, and the comparison across markets is the value a broker actually adds. ## Frequently Asked Questions ### Who owns Next Insurance now? ERGO Group AG, the primary insurance business of Munich Re, has owned 100 percent of Next Insurance since July 1, 2025. It held about 29 percent before buying the rest for $2.6 billion. ### Do I need a new certificate of insurance after the ERGO NEXT rebrand? Usually not, because certificates identify the writing company by its legal name and those names did not change. If a certificate holder flags the branding mismatch, download a reissued certificate from your account and reference NAIC number 16285. ### Will my policy number change at renewal? The company has not stated this publicly, so treat it as open. If any contract, lease, or lender file references your policy number, ask support to confirm continuity before renewal and send updated certificates if the number changes. ### Can a broker quote ERGO NEXT for me? Yes. ERGO NEXT sells directly online and also works with appointed brokers, including Menlo. A broker adds side-by-side quotes from other carriers and reads your contracts against the policy before you bind. *This guide is for educational purposes and reflects public information as of August 2026. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## The Bottom Line [#the-bottom-line] ERGO NEXT Insurance is Next Insurance renamed after Munich Re's ERGO Group bought it outright in 2025. The legal underwriting companies, and therefore your policy and your certificates, carried through the rebrand intact. Verify the writing company on your declarations page, confirm policy-number continuity at renewal, and if a certificate holder balks at the new name, a reissued COI plus NAIC number 16285 will settle it. ## References . [ERGO Group AG. ERGO successfully completes acquisition of US digital insurer NEXT Insurance]() . [Insurance Innovation Reporter. NEXT Insurance Rebrands as ERGO NEXT Insurance]() . [Insurance Business America. Next Insurance rebrands as ERGO NEXT following Munich Re acquisition]() . [ERGO NEXT Insurance. State Licenses and Legal Entities]() . [ERGO NEXT Insurance. About Us]() . [NAIC. Consumer Information Source: Company Complaint and Licensing Lookup]() # Occurrence vs. Claims-Made: Which Policy Pays a Claim? (https://www.menloinsurance.com/library/guides/occurrence-vs-claims-made-policies) Occurrence policies cover harm during the policy period, claims-made policies cover claims made during it. Retroactive dates, tail and switching. Markdown version: https://www.menloinsurance.com/library/guides/occurrence-vs-claims-made-policies.md An occurrence policy pays for injury or damage that happens while the policy is in force, even if the claim arrives years after it expires. A claims-made policy pays for claims first made against you while the policy is in force, usually only for incidents after the policy's retroactive date. That difference, called the coverage trigger, decides which policy answers a claim: this year's or one from a decade ago. Most buyers of general liability never have to think about it, because the standard ISO commercial general liability form ([CG 00 01](https://www.menloinsurance.com/library/forms/cg-00-01)) is written on an occurrence basis. But [professional liability](https://www.menloinsurance.com/library/guides/what-is-professional-liability-insurance), directors and officers (D\&O) and other specialty lines are usually claims-made, and switching from one trigger to the other is where gaps open. If a policy renews with a later retroactive date, for example, years of past work lose coverage without any denial letter. The gap is simply there. ## Key takeaways * **Occurrence policies** are triggered when the injury or damage happens. However late the claim comes, that year's policy pays. * **Claims-made policies** are triggered when a claim is first made against you, limited by a retroactive date that sets the earliest incident the policy covers. * **Leaving a claims-made program** without buying an extended reporting period (tail coverage) can remove coverage for work you already did. * **The standard CGL is an occurrence form**, but it still won't cover injury or damage an insured already knew about before the policy began. ### Occurrence vs. Claims-Made An occurrence policy pays for claims of injury to people or damage to property which occurs while this policy is in effect, regardless of when the claim is actually filed. A claims-made policy will pay for claims first made against the policyholder (the insured) during the time frame covered by the policy, generally for injury or damage occurring after the retroactive date provided in the insurance policy. ## What is an occurrence policy? [#what-is-an-occurrence-policy] An occurrence policy covers injury and damage that happen during the policy period, whenever the claim is made. The ISO CGL defines an "occurrence" as an accident, including continuous or repeated exposure to substantially the same general harmful conditions. The classic example is a customer tripping on a loose floor tile in a bakery. For the occurrence CGL to apply, three things must be true: 1. An occurrence caused the injury or damage, in the policy's coverage territory. 2. The injury or damage happened during the policy period. 3. Before the policy period began, no insured knew that the injury or damage had occurred, in whole or in part. When the claim is filed is not on that list. If you sell a product in 2024, it hurts someone that year, and the lawsuit arrives in 2027, your 2024 policy responds with its 2024 limits. The third condition is the occurrence form's one firm limit: a new policy does not cover a problem the insured already knew about when it started. Continuing damage that was known before the renewal stays with the old policy. ### Example A tank manufacturer had a CGL policy for calendar year 2024 and renewed it for 2025. A tank put in service in January 2024 was found leaking in July 2024, and the leak had damaged property. The leak kept causing damage into 2025. Because the insured knew about the damage before the 2025 policy began, the 2025 policy does not cover the continuing damage. The whole claim stays with the 2024 policy. ## What is a claims-made policy? [#what-is-a-claims-made-policy] A claims-made policy reverses the trigger: coverage depends on when a claim is first made against the insured, not when the injury happened. The policy in force when the claim arrives, with its current limits, responds. Most of these policies are in lines where years can pass between the act and the lawsuit: professional liability, D\&O, employment practices and [cyber insurance](https://www.menloinsurance.com/library/guides/cyber-insurance-small-business). According to the Insurance Information Institute, most professional liability policies are written on a claims-made basis. If you need that coverage, Menlo quotes [professional liability insurance](https://www.menloinsurance.com/professional-liability-insurance) for California businesses. Insurers prefer the claims-made trigger because they can close out a year's claims sooner instead of paying claims years or decades after collecting the premium. The trigger also has a history in court. In the mid-1980s insurers pushed to move the CGL from occurrence to claims-made. Nineteen state attorneys general sued, alleging an illegal antitrust agreement to force the market onto claims-made terms, and the case reached the U.S. Supreme Court as Hartford Fire Insurance Co. v. California (1993). The occurrence CGL survived, and the claims-made CGL never became the standard. ## What is a retroactive date? [#what-is-a-retroactive-date] The retroactive date is the earliest date of injury or damage a claims-made policy will cover. It is one of two features that keep the claims-made system within limits (the other is the extended reporting period, below). A claim for injury or damage that happened before this date is denied. Each time you renew with the same retroactive date, the window of covered past work gets longer. Check the retroactive date at every renewal. If a new carrier moves it forward, all work done before the new date is excluded. Prior acts coverage, the stretch between the retroactive date and today, is what protects work from earlier years when a claim finally arrives. If a new carrier will not accept your existing retroactive date, the fallback is to negotiate a nose endorsement at binding that covers prior acts. The best position for a claims-made buyer is full prior acts coverage, with no retroactive date at all. ## What is an extended reporting period (tail coverage)? [#what-is-an-extended-reporting-period-tail-coverage] An extended reporting period (ERP), usually called tail coverage, gives you extra time to report claims after a claims-made policy ends without a replacement. That happens when you retire, sell the practice or business, or move to an occurrence form. Without it, a claim made after the last policy ends has nowhere to go. The ERP lets you report claims for injury or damage that happened before the policy ended. The claims-made CGL includes a basic ERP automatically when the policy is canceled or not renewed, or when it renews with a later retroactive date. It costs nothing, and its length depends on the claim. In general it lasts 60 days. For an occurrence reported to the insurer within 60 days after the policy ends, it lasts five years. For more time, you buy a supplemental ERP. It can be unlimited in length, but you must ask for it in writing within 60 days after the policy period ends. Miss that window and you cannot buy it later. The tail is not cheap. Under the ISO form its premium is capped at 200 percent of the annual premium, so plan for a one-time charge that can approach two full years of premium, paid up front. ## How do occurrence and claims-made policies compare? [#how-do-occurrence-and-claims-made-policies-compare] The trigger difference carries through to limits, key dates and what happens after the policy ends: An occurrence form asks nothing of you when the policy ends: there is no tail to buy and no retroactive date to check. That is why contracts that require general liability (or [workers compensation](https://www.menloinsurance.com/library/guides/workers-compensation-insurance-guide)) assume occurrence forms. A claims-made program rewards discipline. A lapse at renewal, or a new carrier moving the retroactive date forward, creates a gap. Older claims also use up the current limits they share with new claims. ## How do you switch between claims-made and occurrence coverage? [#how-do-you-switch-between-claims-made-and-occurrence-coverage] The main risk when switching is a claim that falls between the two programs, usually a suit filed after the old claims-made policy ended when no tail was bought. Talk to your broker before you move: * **List your triggers.** For each liability policy, note whether it is occurrence or claims-made, and the retroactive date of each claims-made policy. * **Keep the retroactive date.** When moving from one claims-made policy to another, make sure the new insurer keeps your current retroactive date. If it refuses (common after a claim or in a hard market), price the old carrier's tail against the new carrier's nose and buy whichever covers the same window for less. * **Buy the tail when you leave.** When moving from claims-made to occurrence, or closing the business, buy the supplemental extended reporting period before the 60-day election window closes. A new occurrence policy does not cover acts from before it started. * **Check what your contracts require.** Many construction and service contracts require occurrence general liability, and a certificate reviewer will reject a claims-made form before work starts. Before you bind a switch, check how your [certificate of insurance](https://www.menloinsurance.com/library/guides/certificate-of-insurance-guide) will read under the new program. For what a general liability policy actually covers once it responds, see [what general liability insurance covers](https://www.menloinsurance.com/library/guides/what-does-general-liability-insurance-cover). ## Frequently Asked Questions ### Is a standard general liability policy occurrence or claims-made? The standard ISO CGL form most insurers use (CG 00 01) is an occurrence form. It covers bodily injury and property damage that happen during the policy period, whenever the claim is made. Claims-made CGL forms exist but are much less common. ### What happens if a claim comes in after my occurrence policy expires? The occurrence policy that was in force when the loss happened still covers it, even if that policy expired years ago. That is the point of the occurrence trigger, and it is why you should keep copies of all your policies, including expired ones. ### What is tail coverage and when do I need it? Tail coverage is the extended reporting period on a claims-made policy. It gives you extra time to report claims for injury or damage that happened before the policy ended. You need it when claims-made coverage ends without a new policy that keeps the same retroactive date: at retirement, when you sell the business, or when you switch to an occurrence form. ### Can I have both occurrence and claims-made policies at the same time? Yes, and most businesses do. An occurrence general liability policy alongside claims-made professional liability or D\&O coverage is common. Know which trigger each policy uses so you handle each renewal and cancellation correctly. *This guide is for educational purposes and summarizes standard ISO policy language. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## Checking the trigger on each of your policies [#checking-the-trigger-on-each-of-your-policies] Go through every liability policy you hold and write down two things: its trigger and, for claims-made policies, its retroactive date. An occurrence policy pays for injury that happens during the policy period and asks nothing of you after it ends. A claims-made policy pays for claims first made during the policy period, back to its retroactive date, and requires you to protect that date and buy a tail if you ever leave. Review the list with your broker before the next renewal. ## References . [Insurance Information Institute. Professional Liability Insurance]() . [Legal Information Institute, Cornell Law School. Hartford Fire Insurance Co. v. California, 509 U.S. 764 (1993)]() # Insurance for Older Mobile Homes in California (https://www.menloinsurance.com/library/guides/older-mobile-home-insurance) Mobile homes built before June 15, 1976 predate the HUD Code. Who insures older mobile homes in California, what they ask, and what it costs. Markdown version: https://www.menloinsurance.com/library/guides/older-mobile-home-insurance.md Older mobile homes can be insured in California; however, there are fewer insurers willing to take them, and most of those will only pay actual cash value rather than replacement cost. The dividing line is June 15, 1976: every manufactured home built after that date must be certified to HUD's federal construction and safety standards and carry a red HUD label, while earlier "mobile homes" were built before those standards existed. As a result, specialty dwelling programs and the California FAIR Plan write many older units that standard home insurers would otherwise decline. This guide is for owners and buyers of an older mobile or manufactured home in California, located in a park or on their own land. It covers how age affects your options, what insurers look for when you apply, where coverage comes from, and generally what it will cost. To get quotes, begin at our [manufactured home insurance page](https://www.menloinsurance.com/manufactured-home-insurance). ## Key takeaways * **1976 is the line.** Homes built after June 15, 1976 are certified to the HUD Code and carry a red label on each section. Earlier units don't. * **Age limits vary by program.** Green Shield's dwelling program writes manufactured homes in California on DP-1 and DP-3 forms, and its sheet lists those forms as available "up to 35 yrs; CA up to 40 yrs." * **The FAIR Plan takes anchored mobile homes.** Its dwelling policy writes mobile homes permanently anchored to a foundation, but its replacement cost option excludes mobile homes. * **The state average is public.** California mobilehome policies averaged $1,164.64 in 2025, and mobilehome earthquake coverage averaged $339.68. * **Updates open doors.** A newer roof, updated wiring and plumbing, tie-downs and skirting are what move an older home from "declined" to "quotable." ## Can you get insurance on a 30- or 40-year-old mobile home? [#can-you-get-insurance-on-a-30--or-40-year-old-mobile-home] Yes, but the number of insurers drops as the home gets older. Many standard carriers set an age limit for new business, so a home from the 1980s or 1990s will often go to a specialty program. Green Shield, whose dwelling program lists manufactured homes in California among its target classes, shows both its DP-1 and DP-3 forms as available "up to 35 yrs; CA up to 40 yrs." Its program also requires at least 100-amp circuit breakers and excludes knob-and-tube wiring, aluminum wiring, fuse panels and wood stoves as the primary heat source. For many older units, those rules may prove more important than age itself. ## What is the difference between a mobile home and a manufactured home? [#what-is-the-difference-between-a-mobile-home-and-a-manufactured-home] The build date. HUD says that all manufactured homes built in the U.S. after June 15, 1976 must be certified by the manufacturer to its Manufactured Home Construction and Safety Standards, and each section carries a red certification label. California's Department of Housing and Community Development describes the label as a 2-inch by 4-inch red metal plate on the outside rear of each section at floor level. Homes built before that date are the ones insurers usually mean by "mobile home," and they are the hardest to place. Find the label, or the data plate inside the home, before you ask for quotes. Insurers ask for the year built and the manufacturer, and the label is how they confirm it. ## What do insurers ask about an older mobile home? [#what-do-insurers-ask-about-an-older-mobile-home] The same core questions every program uses, answered more carefully for an older home: | Question | Why it matters | | ------------------------------------ | -------------------------------------------------------------------------------------------------------------- | | Year built and manufacturer | Sets eligibility; pre-1976 units have fewer options | | Tie-downs, or a permanent foundation | Wind and earthquake resistance; the FAIR Plan requires permanent anchoring | | Roof type and age | A frequent reason older homes are declined | | Electrical panel and wiring | Breakers of at least 100 amps; no fuse panels, aluminum or knob-and-tube wiring on some programs | | Heating source | Wood stoves as primary heat are excluded on some programs | | In a park or on owned land | Park location affects fire protection and liability | | Occupancy | Owner-occupied, rented, seasonal or vacant each price differently | ## Who insures older mobile homes in California? [#who-insures-older-mobile-homes-in-california] Three kinds of markets, in this order: 1. **Specialty manufactured-home insurers.** National programs built for manufactured homes, such as Foremost's, write owner-occupied units with homeowners-style coverage, including additional living expense of 20% of the dwelling limit. 2. **Dwelling fire programs.** Green Shield writes manufactured homes in California on DP-1 or DP-3 forms, with other structures at 20% of the dwelling limit, contents at 50%, and liability up to $1 million available. Our guide to [DP-1 vs. DP-3](https://www.menloinsurance.com/library/guides/dp1-vs-dp3-insurance) explains the two forms. 3. **The California FAIR Plan.** It writes mobile homes that are permanently anchored to a foundation; an unanchored mobile home is ineligible. Coverage is named perils only, with no liability, theft or water damage, so owners usually add a DIC policy. Menlo quotes older manufactured homes through Green Shield and the California FAIR Plan. ## How much does insurance for an older mobile home cost? [#how-much-does-insurance-for-an-older-mobile-home-cost] In California, mobilehome policies averaged $1,164.64 a year in 2025 across 290,099 policies, according to the Department of Insurance's annual data call. That average applies to all ages and values of homes, so an older unit in a high fire risk area can cost more. Mobilehome owners also had the highest earthquake take-up rate of any residential group, at 18.95%, with an average earthquake premium of $339.68. Deductibles can be percentage-based. For example, Foremost's updated manufactured home policy offers new-business deductibles ranging from 0.5% ($500 minimum) to 5% ($3,000 minimum) of the dwelling limit. Ask each insurer whether its deductible is a flat dollar amount or a percentage. ## Will insurance pay to replace an older mobile home? [#will-insurance-pay-to-replace-an-older-mobile-home] Typically not the full replacement cost. Older units are commonly insured at actual cash value, which subtracts depreciation. The FAIR Plan's dwelling replacement cost option explicitly excludes mobile homes. Ask whether a program offers replacement cost for your year and, if not, set the dwelling limit as close as possible to what a comparable home would cost to buy and place, not what you paid for your home years ago. ## Frequently Asked Questions ### What is the oldest mobile home that can be insured? There is no single cutoff. It depends on the program and the home's condition. Green Shield's sheet lists its dwelling forms "up to 35 yrs; CA up to 40 yrs," and pre-1976 homes usually need a specialty market or the FAIR Plan. ### What makes a mobile home uninsurable? Common reasons are no tie-downs or foundation anchoring, an old roof, fuse panels or aluminum wiring, a wood stove as the main heat, or poor condition. ### Does the California FAIR Plan cover mobile homes? Yes, if the home is permanently anchored to a foundation. It covers named perils only, and its replacement cost option excludes mobile homes. ### Who registers mobile homes in California? The Department of Housing and Community Development (HCD) titles and registers mobilehomes and manufactured homes, not the DMV. A home installed on a foundation system is no longer registered by HCD. *This guide is for educational purposes and summarizes HUD and California HCD information, Department of Insurance data, California FAIR Plan documents and carrier program sheets. Eligibility and prices change, and your policy's terms control. Menlo Insurance Services (CA license 6020106) is a licensed broker and a registered FAIR Plan broker. It may earn a commission on a placement and does not guarantee that any coverage or price will be available. Some dwelling programs are written by non-admitted insurers, which are not backed by the California Insurance Guarantee Association. Each quote names its insurer and whether it is admitted.* ## The Bottom Line [#the-bottom-line] An older mobile home can be insured, but the build date, anchoring, roof and wiring decide where. Look for specialty manufactured-home and dwelling programs first, keep the FAIR Plan as the fallback for anchored homes, and expect actual cash value on older units. ## References . [U.S. Department of Housing and Urban Development. Manufactured Housing Homeowner Resources]() (accessed 2026-09-27) . [California Department of Housing and Community Development. Where to Look for an Insignia or HUD Label]() (accessed 2026-09-27) . [Green Shield Risk Solutions. Dwelling Fire: Specialty Lines program sheet]() (2026) . [California FAIR Plan Association. Broker policy system, Dwelling Fire application (mobile home permanently anchored to the foundation), reviewed by Menlo]() (accessed 2026-09-25) . [California FAIR Plan Association. Optional Dwelling Replacement Cost Addendum (CFP-RCAD-2): mobile homes not eligible]() (2016) . [California Department of Insurance. Earthquake Premium and Policy Count Data Call: Summary of 2025 Residential Totals (edition 7/03/2026)]() (2026) . [Foremost Insurance Group. Manufactured Home Coverage Comparison]() (2017) . [California FAIR Plan Association. Dwelling policies]() (accessed 2026-09-27) . [Foremost Insurance Group. Manufactured Home Policy Highlights]() (2025) . [California Department of Housing and Community Development. Registration & Titling]() (accessed 2026-09-27) # One-Day Event Insurance in California: What It Covers, Who Requires It, and How to Get It in Time (https://www.menloinsurance.com/library/guides/one-day-event-insurance-california) One-day event insurance is short-term general liability for a single event, usually $1 million per occurrence. What it covers (injuries, host liquor, damage to the rented venue, the venue as additional insured), what it leaves out, what California venues and cities such as San Diego require, and how far ahead to buy it. Markdown version: https://www.menloinsurance.com/library/guides/one-day-event-insurance-california.md One-day event insurance is a short-term general liability policy that covers you as the host of one event. If a guest gets hurt, or someone else's property gets damaged, and you're held responsible, it pays. Most people buy the limit that venues and cities ask for: $1 million per occurrence and $2 million aggregate. The City of San Diego, for example, requires exactly that for permitted events of up to 9,999 attendees. It also requires the city to be named as an additional insured by endorsement and $1 million of liquor liability if alcohol is served. So yes, you can insure a single event. When it comes from a licensed carrier through a licensed broker, it's a real, regulated insurance policy. Finding coverage usually isn't the hard part. Getting the right coverage, worded the way the venue wants, into the venue's hands before its deadline is. Menlo shops special event liability for California hosts. To start, [request a special event insurance quote](https://www.menloinsurance.com/f/special-event) with your date, venue and guest count. Below: what the policy covers, what it doesn't, who asks for it, and how to avoid scrambling at the last minute. ## Key takeaways * **It is liability insurance for one event.** It covers injuries and property damage to others that arise from your event, usually at $1 million per occurrence and $2 million aggregate. * **Venues want to be named.** Most will ask to be an additional insured, and some, like the City of San Diego, require a copy of the actual endorsement rather than a line on the certificate. * **Alcohol changes the policy.** Serving alcohol as a host is different from selling it. Venues and cities often require separate liquor liability when alcohol is served. * **Cancellation is a different product.** Event liability does not refund deposits if the event is called off. That is event cancellation insurance. * **Buy early.** San Diego wants insurance approved 21 business days before the event. Private venues set their own deadlines. ### Special event liability insurance A short-term commercial general liability policy that insures the host of a specific event, on specific dates at a specific location, against claims for bodily injury and property damage to others that arise from the event. ## What does one-day event insurance cover? [#what-does-one-day-event-insurance-cover] At its core it's general liability for the event. It pays for guest injuries and damage to other people's property when you're legally responsible, and it pays to defend you against those claims. Think of a guest slipping on a wet dance floor, a rented tent coming down on a parked car, or someone tripping over a speaker cable in the aisle. A good event policy also has three pieces venues care about. The first is coverage for damage to the rented venue. A standard general liability policy includes a "damage to premises rented to you" sublimit. IRMI describes it as covering property damage to premises the insured occupies for 7 days or less from any covered cause of loss, and to premises rented for 7 or more consecutive days from fire only. A one-day rental lands in the broader first group. The sublimit is smaller than the main liability limit and only applies to the space you actually use, so compare that number with what the venue contract asks for. The second is host liquor liability. IRMI defines host liquor liability as liability for injury or damage arising from serving alcohol "by a party not engaged in this activity as a business enterprise," and notes it is insurable under standard general liability policies. A wedding or company party with free drinks is textbook host liquor. Once you sell alcohol, or charge a ticket price that includes drinks, you may no longer be a host. Now you have the kind of exposure a liquor liability policy covers. That coverage often comes from the licensed bartender or caterer. If you plan to charge for drinks, talk to your broker before the event. The third is additional insured status. Venues, cities and park districts will ask to be added as an [additional insured](https://www.menloinsurance.com/library/glossary/additional-insured). That gives them rights under your policy for claims that come out of your event. For a named venue, the usual endorsement is the designated-person form, which we explain on our [CG 20 26](https://www.menloinsurance.com/library/forms/cg-20-26) page. The venue gets proof as a [certificate of insurance](https://www.menloinsurance.com/library/guides/certificate-of-insurance-guide). But a certificate only describes coverage. The endorsement is what actually gives it. ## What does one-day event insurance not cover? [#what-does-one-day-event-insurance-not-cover] Event liability pays when you harm someone else. It won't pay your own losses, and it won't cover the other businesses working your event. | Situation | Covered by event liability? | Where the coverage comes from | | ------------------------------------------------------ | ----------------------------------------------------- | --------------------------------------------------------------------------------------- | | A guest trips and breaks a wrist | Yes | Your event general liability | | You damage the venue's floor during load-in | Yes, up to the rented-premises sublimit | Your event general liability | | A guest drinks at your open bar and causes an accident | Often, as host liquor, if you are not selling alcohol | Your event general liability; confirm the policy has no liquor exclusion for your event | | You sell drinks or tickets that include drinks | Usually not under host liquor | Liquor liability policy, or the licensed caterer's policy | | Rain, illness or a venue closure cancels the event | No | Event cancellation insurance (a separate product) | | Your caterer's food makes guests sick | Only for your own share of the blame | The caterer's own general liability for its work; ask for its certificate | | Your paid staff are injured setting up | No | Workers' compensation | | Your rented sound equipment is stolen | No | Inland marine or equipment coverage | People mix this up with cancellation more than anything, because the names overlap. A lot of consumer sites use "special event insurance" to mean cancellation cover. The Insurance Information Institute describes it as covering cancellations caused by adverse weather or natural disasters, or by the death, illness or injury of a key participant, with liability offered as an add-on. When a venue asks for "event insurance," it almost always means the liability policy. If you want your deposits protected too, ask for both, and check which one you're actually buying. ## Who requires event insurance in California? [#who-requires-event-insurance-in-california] Usually three groups: venues, public permit offices and, on bigger events, the vendors and sponsors you sign contracts with. Start with venues. Hotels, wineries, event halls and private estates usually put a certificate requirement in the rental agreement. It'll list a liability limit, say the venue must be named as additional insured, and give a deadline. Read that clause before you sign. You can usually negotiate the limit and the wording beforehand. Afterward, rarely. Cities and counties come next. If you need a public event permit, expect insurance conditions attached. The City of San Diego's special event insurance requirements show you what a California permit office typically asks for: | San Diego requirement | What it says | | ---------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | | General liability, up to 9,999 attendees | $1 million per occurrence / $2 million general aggregate | | General liability, over 10,000 attendees | $2 million per occurrence / $4 million general aggregate | | Additional insured | "The City of San Diego, its elected officials, representatives, employees and agents," by endorsement, with a copy of the actual endorsement; listing the city on the certificate is not enough | | Liquor liability | $1 million if alcohol will be served | | Workers' compensation | $1 million from each insured entity with paid employees, with a waiver of subrogation in favor of the city | | Coverage period | The whole event, including set-up and tear-down dates | | Who must insure | The host organization, and as applicable the organizer, private security, medical provider and others the city requires | | Deadline | Insurance approved at least 21 business days before the event, effective January 5, 2026 | San Diego also asks for the permit application itself at least 60 days before the event and recommends 120. Other California cities and counties set their own terms. Get the requirement in writing from the permit office and forward it to your broker exactly as written. Then there are your own contracts. A sponsor or vendor may also ask to be named as an additional insured. One policy can usually add several, but each one has to be listed. ## What does California law say about serving alcohol at an event? [#what-does-california-law-say-about-serving-alcohol-at-an-event] California goes easier on social hosts than many states. Civil Code section 1714 says that, except for the case below, no social host who furnishes alcoholic beverages to any person may be held legally accountable for damages resulting from the consumption of those beverages. The exception comes up at family events. An adult who knowingly furnishes alcohol at their residence to someone they know, or should have known, is under 21 can be held responsible for resulting injuries or death. The statute gives you a defense, and somebody still has to defend you before a court applies it, so you still want coverage. It also doesn't stop a venue or a city from requiring liquor coverage for the rental or the permit. San Diego does. If a licensed caterer or bartender is serving, get their certificate showing liquor liability and ask to be named as an additional insured on it. ## What events need one-day insurance? [#what-events-need-one-day-insurance] Any event where someone else wants proof of liability coverage, or where you'd be on the hook personally if a guest got hurt. In California, the common ones are: * Weddings, receptions and rehearsal dinners at rented venues * Birthday, anniversary and quinceañera parties in rented halls or parks * Company parties, meetings, workshops and trade show booths * Nonprofit fundraisers, galas and auctions * Festivals, farmers markets, concerts, fairs and cultural events on public property * Amateur sports tournaments, charity runs and walks (these often need a sports-specific program) An event where cannabis is sold or consumed needs state cannabis event licenses before any insurance question comes up. Our [California cannabis license guide](https://www.menloinsurance.com/library/guides/california-cannabis-license-bond-insurance) covers what the Department of Cannabis Control requires. Riskier events usually get underwritten one at a time instead of through an instant online program. That means fireworks, amusement rides, animals, motorsports, or big crowds with alcohol. Give yourself more time for those. ## How quickly can you get event insurance? [#how-quickly-can-you-get-event-insurance] For a simple event, like a wedding or party at a licensed venue with nothing unusual going on, an online program can often quote and bind it fast. What slows you down is paperwork. The additional insured endorsement, the venue's exact wording and the certificate all have to be right before the venue's deadline. In San Diego, insurance has to be approved 21 business days out, so if you buy the week before, you've already missed it. ### Steps ### Get the requirement in writing Ask the venue or permit office for its insurance clause. You want the limits, the additional insured wording, the liquor requirement and the deadline. ### Describe the event fully Date or dates including set-up and tear-down, venue address, expected attendance, activities, whether alcohol is served or sold, and who is serving it. ### Match the policy to the clause Before you pay, line up the quote's limits, rented-premises sublimit and liquor terms against the venue's clause. ### Deliver the endorsement and certificate Send the certificate and, where required, a copy of the endorsement itself to the venue well before its deadline. ### Collect your vendors' certificates Get certificates from your caterers, bartenders, rental companies and entertainers. Your policy doesn't insure their work. ## How much does one-day event insurance cost? [#how-much-does-one-day-event-insurance-cost] It depends on your event. There's no fixed rate card. What moves the price most: how many people come, what kind of event it is and what happens there, whether and how alcohol is served, the limits the venue wants, how many days including set-up, and where the venue is. Here's one published number: Blitz Insurance, a managing general underwriter for surplus lines programs, advertises special event general liability for events up to five days at $1 million / $2 million limits "starting at $65 + taxes & fees." Treat that as the floor for the simplest events in one program, not a quote. Liquor liability, bigger crowds and higher limits all push it up. Our guide to [Blitz Insurance](https://www.menloinsurance.com/library/guides/blitz-insurance) explains how that program works through brokers. For a price on your own event, [start a special event quote](https://www.menloinsurance.com/f/special-event), or read more on our [special event insurance page](https://www.menloinsurance.com/special-event-insurance). ## Frequently Asked Questions ### Can I get insurance for a single event? Yes. A special event liability policy is written for one event, on specific dates, at a specific location. Some programs cover several days under the same policy, set-up and tear-down included. ### Is one-day event insurance legit? It's a real insurance policy if a licensed or eligible surplus lines carrier issues it and a licensed producer sells it. Make sure the policy names an insurance company, not just a website brand. Your certificate should show the carrier, policy number, limits and dates. In California you can look up a producer's license on the Department of Insurance website. ### Does my homeowners policy cover a party I host? It might cover liability for a get-together at your own home, depending on the policy. It isn't built for events at rented venues, and venues usually won't accept it, because they want to be named as an additional insured on an event policy. Check with your broker before you count on it. ### Does event insurance cover cancellation? The liability policy doesn't. For cancellation and postponement you need a separate event cancellation policy. It pays back deposits and costs when the event can't go ahead for a covered reason, such as severe weather or a key participant's illness. ### Do I need liquor liability if I am not selling alcohol? Host liquor liability, for alcohol you give away instead of sell, normally comes with a general liability policy. But venues and cities often want separate liquor liability any time alcohol is served. San Diego requires $1 million of it for permitted events with alcohol. Go by what the written requirement says. *This guide is for educational purposes and summarizes published definitions, a sample California city requirement and California statute. Venue and permit requirements vary, and your policy's specific terms, conditions and endorsements control. Menlo Insurance Services (CA license 6020106) is a licensed California broker, may earn a commission on policies it places, and does not guarantee that any coverage or price will be available; talk to a licensed broker about your actual exposures.* ## The Bottom Line [#the-bottom-line] One-day event insurance is general liability for one event. California venues and cities usually want $1 million per occurrence, want to be named as additional insured by endorsement, and want liquor coverage if alcohol is served. It won't cover cancellation, your vendors' work or your own equipment. Get the venue's requirement in writing first, buy well ahead of the deadline, and send the endorsement along with the certificate. When you have the date and the venue, [request a special event insurance quote](https://www.menloinsurance.com/f/special-event). ## References . [City of San Diego. Special Events Insurance Requirements (November 2025)]() . [IRMI. Damage to Premises Rented to You]() . [IRMI. Host Liquor Liability]() . [California Legislative Information. Civil Code section 1714]() . [Insurance Information Institute. Special event insurance]() . [Blitz Insurance. Special Events Program]() . [City of San Diego. Special Events and Filming]() # Ordinance or Law Coverage (CP 04 05) Explained (https://www.menloinsurance.com/library/guides/ordinance-or-law-coverage) Ordinance or law coverage (CP 04 05) pays code-enforcement losses your property policy excludes, from forced demolition to rebuilding to current code. Markdown version: https://www.menloinsurance.com/library/guides/ordinance-or-law-coverage.md Ordinance or law coverage is a [commercial property](https://www.menloinsurance.com/commercial-property-insurance) endorsement, ISO form CP 04 05, that pays for losses caused by building code enforcement after covered damage. It buys back three costs the standard policy excludes: the lost value of an undamaged part of the building you are required to demolish, the cost of that demolition, and the extra cost of rebuilding to current code. The most expensive misunderstanding is this: a standard policy pays to rebuild what the fire destroyed, but not a dollar more to meet codes that changed after the building went up. A building that is 40% burned can become a total loss once the building department gets involved, because a demolition ordinance can require the whole building to come down once damage passes a threshold. Without this endorsement, the owner pays that difference. ## Key takeaways * **Excluded by default**: the Causes of Loss Special Form bars payment for any loss from code enforcement, including demolition of undamaged property. * **Three buy-backs**: Coverage A covers the undamaged portion, Coverage B the demolition cost, and Coverage C the increased cost of construction. * **Rebuild required**: Coverage C pays nothing unless the building is repaired or replaced within two years. * **Tenants too**: CP 04 26 extends the same three coverages to a tenant's improvements and betterments. ### Ordinance or Law Coverage Ordinance or law coverage pays for losses that result from enforcement of building, zoning, or land use laws after a covered property loss. It restores protection the base property policy excludes. ## What Is Ordinance or Law Coverage? [#what-is-ordinance-or-law-coverage] Ordinance or law coverage, also called ordinance and law or building ordinance coverage, is an endorsement to a [commercial property policy](https://www.menloinsurance.com/library/guides/commercial-property-insurance-explained) that pays code-enforcement costs caused by a covered loss, such as the building department requiring demolition and upgrades after a fire. It pays only for what the ordinance requires. Upgrades you choose to make beyond what the law requires are not covered. ## What Does the Base Commercial Property Policy Exclude? [#what-does-the-base-commercial-property-policy-exclude] The base policy excludes code-enforcement losses. The [Causes of Loss Special Form](https://www.menloinsurance.com/library/forms/cp-10-30) has an Ordinance or Law exclusion that bars loss from enforcing any ordinance that regulates the construction, use or repair of a property or requires a building to be demolished. It applies bluntly. If a fire damages 55% of your building and the city orders the whole building demolished, the unendorsed policy pays only for the fire-damaged part. The adjuster works from the building official's substantial-damage letter, so make sure a copy is in the claim file. Demolition triggers vary by jurisdiction. Communities in floodplains that enforce FEMA's substantial damage standard must require full compliance with current codes once repair costs reach 50% of the structure's pre-damage market value, counting damage from any cause. So a fire in a flood zone can trigger elevation requirements even though flooding had nothing to do with it, a determination FEMA's Substantial Improvement/Substantial Damage Desk Reference walks building officials through. The base [CP 00 10](https://www.menloinsurance.com/library/forms/cp-00-10) includes only a token amount. Its Increased Cost of Construction coverage applies only under the [replacement cost](https://www.menloinsurance.com/library/glossary/replacement-cost) option and is capped at the lesser of $10,000 or 5% of the building limit, which is small for most buildings. CP 04 05 exists to close that gap. ## What Are the Three Coverages in CP 04 05? [#what-are-the-three-coverages-in-cp-04-05] CP 04 05 has three separate coverages, and each applies only if it is selected on the endorsement schedule. They work together in a single loss but are priced, limited and triggered differently: | Coverage | What it pays | Limit structure | Coinsurance | | --------------------------------- | -------------------------------------------------------------------- | -------------------------------------------------------- | ------------------------------- | | A: Undamaged portion | Loss in value of the undamaged part the law requires you to demolish | Included within the building limit, does not increase it | Applies, 80% or higher required | | B: Demolition cost | Cost to demolish undamaged parts and clear the site | Separate scheduled limit | Does not apply | | C: Increased cost of construction | Extra cost to rebuild to current code | Separate scheduled limit, or combined with B | Does not apply | Coverage A (undamaged portion) adds no extra dollars of protection. It sits inside your building limit, and ISO rules require [coinsurance](https://www.menloinsurance.com/library/glossary/coinsurance) of 80% or more. If you rebuild under the replacement cost option, the insurer pays what you spend, up to your limit. If you don't rebuild, recovery drops to [actual cash value](https://www.menloinsurance.com/library/glossary/actual-cash-value). Coverage C has the most conditions. It requires the replacement cost option, and nothing is paid until the building is actually repaired or replaced, within two years. That sounds generous until you rebuild after a regional disaster, when permit backlogs and contractor shortages use up most of it. The insurer can extend the deadline, but only in writing and only within the two years, so ask well before it runs out. One more rule affects owners with mixed losses. When covered and uncovered damage together trigger an ordinance, the insurer pays only the share caused by covered damage. In areas exposed to flood or earthquake, pair this endorsement with flood and earthquake coverage. ## How Much Should You Buy, and What About Tenants? [#how-much-should-you-buy-and-what-about-tenants] Buy Coverage B and C limits from real contractor estimates, because Coverage A needs no separate limit. For Coverage B, get a demolition contractor's price to take down and clear a building of your size and type, keeping in mind that clearing after a partial demolition is slower than a clean teardown. For Coverage C, the key factor is how old the building is compared with the current code cycle: being one cycle behind can mean sprinkler, seismic, energy and accessibility upgrades all at once. Price both from a contractor estimate, not a rule-of-thumb percentage. Tenants face the same exposure on a smaller scale. Improvements a tenant builds are the tenant's insurable interest, but CP 04 05 attaches to the owner's policy and does not reach them. ISO's parallel form, CP 04 26, applies the same A, B and C structure to those improvements, so tenant accounts should carry it. ## Frequently Asked Questions ### Does my commercial property policy automatically include ordinance or law coverage? No. The Causes of Loss Special Form excludes losses from enforcement of any ordinance, and CP 00 10 limits the built-in Increased Cost of Construction coverage to the lesser of $10,000 or 5% of the building limit. Real protection requires purchasing CP 04 05 and selecting each coverage option. ### Is ordinance or law coverage worth it for a newer building? Usually, yes. A building built to the latest code will not necessarily meet the next code revision. Demolition ordinances are triggered by how badly the building is damaged, not its age, so a newer building damaged past the local threshold can still face forced demolition of its undamaged parts. ### What happens if I choose not to rebuild after a loss? Coverage C pays nothing, because it pays only after the property is repaired or replaced within two years, unless the insurer extends that period in writing. Coverage A still responds, but only at actual cash value. *This guide is for educational purposes and summarizes standard ISO policy language. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## How to check your ordinance or law coverage [#how-to-check-your-ordinance-or-law-coverage] Pull your property policy's schedule, confirm that Coverages A, B and C of CP 04 05 are all selected, and set the B and C limits from a real contractor estimate. The endorsement buys back three code-enforcement costs the property policy excludes: the lost value of an undamaged part you must demolish, the demolition itself, and rebuilding to current code. The built-in version tops out at $10,000 or 5% of the building limit, which disappears quickly on a real building. ## References . [Legal Information Institute. 44 CFR 59.1, Definitions]() . [FEMA. Substantial Improvement/Substantial Damage Desk Reference (FEMA P-758)]() # Pacific Specialty Vacant Home Insurance in California: The DP1 Policy, What It Covers and How to Buy It (https://www.menloinsurance.com/library/guides/pacific-specialty-vacant-home-insurance) Pacific Specialty Insurance Company sells vacant home insurance in California on its Basic Dwelling (DP1) policy, for homes empty more than 30 days. The nine named perils it covers (vandalism included), actual cash value settlement, who it fits (for sale, inherited, renovation, foreclosure), how to buy it through an agent, and what Menlo can quote instead. Markdown version: https://www.menloinsurance.com/library/guides/pacific-specialty-vacant-home-insurance.md Yes, Pacific Specialty Insurance Company sells vacant home insurance in California. It writes it on its Basic Dwelling (DP1) policy for homes that "have remained unoccupied for more than 30 days," and it says the program is available in California, with plans to expand. The DP1 covers nine named perils, including fire, windstorm and vandalism, on the dwelling, other structures and loss of use, and it pays actual cash value, not replacement cost. You buy it through a Pacific Specialty agent. Menlo is not appointed with Pacific Specialty, so we can't quote it. We quote the California FAIR Plan, Delos, Green Shield and Aegis for vacant homes instead. This guide is for a California owner with an empty house: listed for sale, just bought, inherited or under renovation. It covers what the Pacific Specialty policy covers and leaves out, who it fits, and how to get a quote. For how vacancy clauses work and how to name an estate or trust, read our guide to [insuring a vacant or inherited home](https://www.menloinsurance.com/library/guides/vacant-inherited-home-insurance-california). To compare programs Menlo can quote, start on our [vacant property insurance page](https://www.menloinsurance.com/vacant-property-insurance). ## Key takeaways * **California program, DP1 form.** Pacific Specialty offers vacant home insurance through its Basic Dwelling (DP1) policy, available in California. * **Empty more than 30 days.** The program is for homes unoccupied for more than 30 days: for sale, newly bought, inherited and held for sale, under renovation or in foreclosure. * **Nine named perils, vandalism included.** Fire or lightning, windstorm or hail, explosion, riot, aircraft, vehicles, smoke, vandalism or malicious mischief, and volcanic eruption. * **Actual cash value.** The DP1 settles at actual cash value, so depreciation comes off a claim. * **Menlo can't quote it.** Pacific Specialty sells through its own appointed agents. Menlo isn't one of them. ### Basic Dwelling (DP1) policy The most basic dwelling fire form. It insures the house against a list of named perils and settles at actual cash value. Pacific Specialty's DP1 covers the main dwelling, other structures and loss of use. ## Does Pacific Specialty insure vacant homes in California? [#does-pacific-specialty-insure-vacant-homes-in-california] Yes. Pacific Specialty says "vacant home insurance is available in the state of California" and that it plans to expand the coverage nationwide. The company is based in Anaheim and describes more than 40 years in business. It is also on the Department of Insurance's list of insurers that sell a DIC policy to pair with the California FAIR Plan. ## Who is the Pacific Specialty vacant policy for? [#who-is-the-pacific-specialty-vacant-policy-for] Owners of houses that have been empty more than 30 days. Pacific Specialty names the situations it has in mind: vacant homes for sale, new purchases not yet occupied, inherited properties held for sale, homes under renovation and properties in foreclosure. It describes the DP1 as fitting homes that are "temporarily vacant and without personal assets," such as during repairs, a pending sale or between tenants. ## What does the Pacific Specialty DP1 cover? [#what-does-the-pacific-specialty-dp1-cover] Nine named perils on the house. Pacific Specialty lists them as fire or lightning, windstorm or hail, explosion, riot or civil commotion, aircraft, vehicles, smoke, vandalism or malicious mischief, and volcanic eruption. The coverage applies to the main dwelling, other structures such as sheds, workshops and detached garages, and loss of use. | Coverage | In the Pacific Specialty DP1? | Why it matters on an empty house | | ------------------------------- | ------------------------------------------- | ----------------------------------------------------------------------------------------------------------------- | | Dwelling, nine named perils | Yes | Fire, wind and the other listed causes of damage | | Vandalism or malicious mischief | Yes, as a named peril | Many vacant programs sell it only as an add-on | | Other structures | Yes | Detached garage, shed, workshop | | Loss of use | Yes | Lost rent or extra costs while repairs are made | | Theft | Not a listed peril | Stolen fixtures or materials aren't covered unless added | | Water from plumbing or freezing | Not a listed peril | A slow leak in an empty house can run for weeks | | Liability | Not stated on the vacant page | Ask the agent. Pacific Specialty notes owners can still be liable for injuries on a vacant property | | Settlement | Actual cash value | Depreciation is subtracted from repairs | Vandalism being a named peril is the notable difference. On Delos's vacant program, for example, vandalism is an endorsement you pay for, and the FAIR Plan needs a vacancy permit endorsement to cover it. ## What does it leave out? [#what-does-it-leave-out] Anything that isn't on the named-peril list. Theft and water damage from plumbing or freezing aren't among the nine perils, and actual cash value settlement means depreciation comes off a partial loss. Pacific Specialty's public vacant pages don't state terms, limits, deductibles, liability options or prices, so get those from the agent in writing. Pacific Specialty also expects the owner to look after the house: regular inspections, lawn care and keeping the structure secured against unauthorized entry and deterioration. ## How do I get a Pacific Specialty vacant home quote? [#how-do-i-get-a-pacific-specialty-vacant-home-quote] Through a Pacific Specialty agent. Its vacant home page tells buyers to contact an agent or use its "Find a producer" search. Have ready the date the house became empty and why, the plan (sale, rental, move-in or renovation), the owner's exact name as on the deed, the home's age, construction and roof, and any claims in recent years. Menlo isn't appointed with Pacific Specialty, so we can't submit to it. If you want a second opinion from programs we can quote, the California FAIR Plan takes homes vacant up to a year, Delos writes vacant homes on a DP-3 form from a $1,500 minimum, and Green Shield takes residential vacancies up to 48 months. Our comparison of [the best vacant home insurance in California](https://www.menloinsurance.com/library/guides/best-vacant-home-insurance-california) sets them side by side. ## Frequently Asked Questions ### Does Pacific Specialty sell vacant home insurance in California? Yes, on its Basic Dwelling (DP1) policy, for homes unoccupied for more than 30 days. ### Does Pacific Specialty's vacant home policy cover vandalism? Yes. Vandalism or malicious mischief is one of the nine named perils on its DP1. ### Does it cover theft or water damage? Theft and water damage from plumbing or freezing are not among the nine named perils Pacific Specialty lists for the DP1. Ask the agent whether anything can be added. ### Is it replacement cost or actual cash value? Actual cash value, according to Pacific Specialty's DP1 description. ### Can Menlo quote Pacific Specialty? No. Menlo isn't appointed with Pacific Specialty. We quote vacant homes with the California FAIR Plan, Delos, Green Shield and Aegis. *This guide is for educational purposes and summarizes Pacific Specialty's public pages as of September 27, 2026 and other carrier documents. Programs, forms and availability change, and your policy's terms control. Menlo Insurance Services (CA license 6020106) is a licensed broker that is not appointed with Pacific Specialty, may earn a commission on placements with other insurers, and does not guarantee that any coverage or price will be available.* ## The Bottom Line [#the-bottom-line] Pacific Specialty writes vacant California homes on its DP1 policy once a house has been empty more than 30 days. It covers nine named perils, including vandalism, on the dwelling, other structures and loss of use, at actual cash value, and it leaves out theft and water damage. You buy it from a Pacific Specialty agent. Menlo can't quote it, but we can quote the FAIR Plan, Delos, Green Shield and Aegis if you want to compare. ## References . [Pacific Specialty Insurance Company. Vacant Home Insurance]() (accessed 2026-09-27) . [Pacific Specialty Insurance Company. DP1 Insurance Explained]() (accessed 2026-09-27) . [Pacific Specialty Insurance Company. Pacific Specialty (home page)]() (accessed 2026-09-27) . [California Department of Insurance. List of Insurers that Sell Difference in Conditions (DIC) Policies]() (accessed 2026-09-27) . [Pacific Specialty Insurance Company. Vacant Property: Understanding Risks]() (accessed 2026-09-27) . [Delos Insurance Solutions. Delos Vacant Home Product & Underwriting Overview, v1.1]() (2024) . [California FAIR Plan Association. Dwelling Application Checklist and Application for Dwelling Insurance (ACORD 854 CA)]() (2020) . [California FAIR Plan Association. Plan of Operation, Ed. 9/3/25, section IV.A]() (2025) . [Green Shield Risk Solutions. Vacant Property, Specialty Lines]() (2026) # Performance and Payment Bonds in California: Rules and Cost (https://www.menloinsurance.com/library/guides/performance-and-payment-bonds-california) California public works over $25,000 need a 100% payment bond. When performance bonds apply, their cost (about 0.5% to 3%) and how to qualify. Markdown version: https://www.menloinsurance.com/library/guides/performance-and-payment-bonds-california.md A performance bond assures the project owner that the job will be completed, and a payment bond guarantees that subcontractors and suppliers will be paid for their work. In California, a direct contractor on a public works contract over $25,000 must obtain a payment bond of at least 100% of the contract price before commencing work. Performance bond amounts are set by the agency or the contract. Bonding "typically costs 1 percent of the contract amount," and contractors can expect a performance bond to be a one-time premium of about 0.5% to 3%, according to the National Association of Surety Bond Producers (NASBP). This guide is intended to help a California contractor facing a first bonded job, a public bid or a private owner who wants bonds. It outlines when each type of bond is required, how the bond amounts are set, what the surety reviews, what bonds cost and what happens if something goes wrong. Once you have the contract's bond requirement in hand, [send it to us through our surety bond request](https://www.menloinsurance.com/surety-bonds) and a qualified bond specialist will review it. ## Key takeaways * **Public works over $25,000 need a payment bond.** At least 100% of the contract price, from an admitted surety insurer, before work starts. * **State agency contracts need both bonds.** Under the State Contract Act, each bond is at least half the contract price, except the payment bond, which follows the 100% rule. * **Federal jobs over $150,000 need both at 100%.** The Miller Act rule in FAR Part 28. * **Cost is a one-time premium.** About 1% of the contract is typical, with a range of 0.5% to 3% for performance bonds. * **A bond is credit, not insurance.** The owners of the business sign an indemnity agreement and repay any loss the surety pays. ## What is the difference between a performance bond and a payment bond? [#what-is-the-difference-between-a-performance-bond-and-a-payment-bond] They protect different people. A performance bond gives the owner assurance that if the contractor defaults, the surety will complete the work, pay to finish it, or reimburse the owner's damages up to the amount of the bond. A payment bond protects the people who work under the contractor: if the contractor or a subcontractor doesn't pay for labor or materials provided, the surety pays those claimants. | | Performance bond | Payment bond | | ------------------------------ | --------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------ | | Guarantees | The contract is performed | Subs, suppliers and workers are paid | | Who can claim | The project owner (obligee) | Claimants allowed by Civil Code section 9100, plus certain amounts owed to the EDD | | California public works amount | Set by the agency. At least half the contract for State Contract Act work | At least 100% of the contract price | | Federal work over $150,000 | 100% of the contract price | 100% of the contract price | | Private work | Only if the owner, contract or lender requires it | Only if the owner, contract or lender requires it | The payment bond matters so much on public projects because a mechanics lien can't be placed against public property. NASBP notes that the payment bond may be the only protection those claimants have. ## When does California require these bonds? [#when-does-california-require-these-bonds] On public works, the payment bond is set by statute. California Civil Code section 9550 requires a payment bond on a public works contract "involving an expenditure in excess of twenty-five thousand dollars ($25,000)," and the public entity must say so in its call for bids. Section 9554 specifies that the bond be no less than 100% of the total payable, that an admitted surety insurer provide it, and that no deposit can substitute for the bond. State agency contracts under the State Contract Act go further. Every contract must provide for separate performance and payment bonds from an admitted surety insurer, and each must equal at least one-half of the contract price, except where Civil Code section 9554 sets the payment bond higher. Cities, counties and districts set the performance bond amount in their bid documents. Read through the instructions to bidders, since 100% is common. Federal work follows the Miller Act. FAR Part 28 requires both performance and payment bonds on any federal construction contract over $150,000, each at 100% of the original contract price. Private work has no legal mandate for either bond. Owners and construction lenders will often require them anyway, and many general contractors also require bonds from their subcontractors. ## How much does a performance and payment bond cost? [#how-much-does-a-performance-and-payment-bond-cost] NASBP puts it this way: "Bonding typically costs 1 percent of the contract amount. The cost of a performance bond is a one-time premium between 0.5 percent and 3 percent of the contract amount." Sureties file their rates with state insurance departments, and many reduce the rate for established, financially strong firms. Newer firms may pay more. The two bonds are usually priced together. NASBP states that payment bonds are usually issued with performance bonds "for no additional charge," and gives an example: on a $5 million contract, a premium of $26,500 to $40,500 could buy both a performance bond and a payment bond providing $10 million of protection in total. A sample using those figures: on a $500,000 public contract, 1% would be $5,000, and the 0.5% to 3% range would run from $2,500 to $15,000. The actual rate is determined by the surety's evaluation of your company. The premium is typically included in your bid, and NASBP notes the owner generally pays it through the first pay request. If you use the SBA's surety bond guarantee (below), SBA charges the small business a fee of 0.6% of the contract price on performance and payment bonds, on top of what the surety charges in premium. ## What does a surety check before issuing a bond? [#what-does-a-surety-check-before-issuing-a-bond] You are borrowing the surety's credit, so the surety underwrites your business like a lender. NASBP lists the factors: credit history and financial strength, experience, equipment, work in progress, management capacity and character. Expect to provide: 1. Company financial statements, and for larger programs, statements prepared by a CPA. 2. Personal financial statements of the owners. 3. A work-in-progress schedule and a list of completed jobs. 4. Your bank line and references. 5. The contract or bid documents with the bond form and amount. Before issuing any bond, the surety almost always requires each owner, the owners' spouses and often affiliated companies to sign a general agreement of indemnity (GIA). That agreement is why a bond is not insurance for you: if the surety pays out on a claim against the bond, it recovers that money from you. ## What if I'm a small or new contractor? [#what-if-im-a-small-or-new-contractor] Two routes help. Sureties have programs for small contractors that often require less paperwork than standard applications. RLI Surety, for example, writes bid, performance and payment bonds for small contractors through its First Step and Next Step programs. The SBA's Surety Bond Guarantee program backs sureties so they will take on small businesses they might otherwise decline. It covers contracts up to $9 million for non-federal work and up to $14 million for federal work, and SBA charges no fee on bid bond guarantees. It is best to build bonding capacity before you need it. A surety that already has your financials can issue a bond for a bid deadline within days, whereas a first-time applicant who finds out the day before usually cannot. ## What happens if there is a claim? [#what-happens-if-there-is-a-claim] The surety investigates. If it finds you in default, it may complete the remaining work, hire another contractor or pay the owner's damages up to the bond amount. On a payment bond it pays valid claims from subs and suppliers, and the court may award attorney's fees in an action to enforce the bond. After that, the surety goes back to the indemnity agreement to recover from you and the other indemnitors. A contractor's license bond is a completely different bond that serves a different purpose. See our guide to the [California contractor license bond](https://www.menloinsurance.com/library/guides/california-contractor-license-bond) for the $25,000 CSLB bond. ## Frequently Asked Questions ### Is a performance bond required on private construction in California? Not by law. Private owners and lenders may require one in the contract or the loan, and many do on larger jobs. ### How much is a $100,000 performance bond? Using NASBP's figures, a one-time premium of about $500 to $3,000, with about $1,000 typical. Your surety's rate depends on your financials and experience. ### Can I post cash instead of a payment bond on a California public job? No. Civil Code section 9554 requires a bond executed by an admitted surety insurer, not a deposit in lieu of a bond. ### Do I get the bond premium back when the job is done? No. The premium is the surety's fee for extending credit. It isn't a deposit. *This guide is general information based on California and federal law and industry sources dated 2024–2026. Bond requirements come from your contract and the public entity's bid documents, which control. Menlo Insurance Services (CA license 6020106) is a licensed broker that may earn a commission on a placement and does not guarantee that a surety will issue any bond.* ## References . [California Legislative Information. Civil Code section 9550]() (accessed 2026-09-27) . [California Legislative Information. Civil Code section 9554]() (accessed 2026-09-27) . [National Association of Surety Bond Producers. What Are Surety Bonds?]() (2024) . [California Legislative Information. Public Contract Code section 10221]() (accessed 2026-09-27) . [California Legislative Information. Public Contract Code section 10222]() (accessed 2026-09-27) . [Acquisition.gov. Federal Acquisition Regulation Part 28, Bonds and Insurance]() (accessed 2026-09-27) . [U.S. Small Business Administration. Surety bonds]() (accessed 2026-09-27) . [RLI Surety. Transactional Commercial Surety (SD-MK510)]() (2021) # Personal Umbrella Insurance Cost and How Much to Buy (https://www.menloinsurance.com/library/guides/personal-umbrella-insurance-cost) A $1 million personal umbrella often costs a few hundred dollars a year. What raises the price, the underlying limits you need, and how much to buy. Markdown version: https://www.menloinsurance.com/library/guides/personal-umbrella-insurance-cost.md A typical $1 million personal umbrella policy usually costs a few hundred dollars a year. According to Progressive, citing a report from ACE Private Risk Services, the average is $383 a year for a household that owns one home, has two cars and has two drivers. Each additional million generally costs less than the first. Premiums go up with more drivers or younger drivers, or if you own rental properties, pools, dogs or boats. Generally you must carry at least $250,000 of liability coverage on your auto policy and at least $300,000 on your homeowners policy underneath it to get an umbrella. This article discusses what drives umbrella pricing, the underlying limits insurance companies require, and how to choose an adequate limit for your coverage; it also covers your options if your home insurer will not sell you an umbrella. Menlo quotes stand-alone personal umbrellas that sit on top of your existing home and auto policies; our [umbrella insurance page](https://www.menloinsurance.com/umbrella-insurance) starts a quote. ## Key takeaways * **A few hundred dollars for $1 million.** The published average is $383 a year for one home, two cars and two drivers. * **Underlying limits come first.** Most insurers want $250,000 of auto liability and $300,000 of home liability before a $1 million umbrella. California's legal minimum for auto is only $30,000/$60,000/$15,000. * **Your household sets the price.** Drivers, violations, homes, rentals, boats and other vehicles all count. * **You don't have to switch carriers.** Stand-alone umbrellas such as Monoline's sit over your existing home and auto policies, with limits from $1 million to $5 million. * **California has the most dog bite claims.** 2,830 in 2025, averaging $81,789 per claim, which is one reason a $300,000 home liability limit can run out. ## How much does a personal umbrella policy cost? [#how-much-does-a-personal-umbrella-policy-cost] Normally a few hundred dollars a year for the first $1 million. The most-cited figure (which Progressive cites from an ACE Private Risk Services report) is $383 per year for a household with one house, two cars and two drivers; Progressive also states, citing Money.com, that each additional $1 million typically costs about $75 more. Use these as rough national benchmarks: what you'll pay depends on your own household and state. An umbrella is so much cheaper than auto or homeowners insurance because it only pays out once you exhaust the limit of your underlying policy. Most claims do not get there. ## What makes an umbrella more or less expensive? [#what-makes-an-umbrella-more-or-less-expensive] The number and kind of things you have, at home and on the road, that could lead to a lawsuit. Progressive lists location, driving record, prior home claims, credit history and how many homes, cars and other vehicles you own, like boats, motorcycles and RVs. Monoline's application lists each one separately: all the drivers in your household along with their driver's license numbers, and counts of autos and motorcycles, watercraft, golf carts, ATVs and RVs, secondary residences, rental dwellings and vacant lots. | Household factor | Effect on price | | -------------------------------------------- | ------------------------------------------------------------------------- | | More drivers, especially teenage drivers | Raises it; auto accidents are the most common large claims | | Violations or accidents on a driver's record | Raises it, or can make the household ineligible | | Rental properties you own | Raises it; each rental adds tenant and visitor exposure | | Pool, trampoline or dog | Raises it; injuries on your property are a liability claim | | Boats, jet skis, ATVs, RVs | Raises it; each must also carry its own underlying liability | | Higher umbrella limit | Raises it, but each extra million costs less than the first | ## What underlying coverage do I need for an umbrella? [#what-underlying-coverage-do-i-need-for-an-umbrella] Typically $250,000 of liability on an auto policy and $300,000 on a homeowners policy are required to buy a $1 million umbrella. Monoline will accept auto limits of $250,000/$500,000/$100,000 from underlying carriers rated B+ or higher. It is worth checking this before you shop for an umbrella, since many California drivers carry far lower limits. The state minimum limits increased on January 1, 2025 to $30,000 per person, $60,000 per accident and $15,000 for property damage. If your auto policy is near the minimum, you will need to raise your limit as well, and that is part of the real cost of the umbrella. If the umbrella calls for a specific limit and your underlying policy has a lower one, you could find yourself paying the difference out of pocket after a claim, so make sure your underlying limits match what the umbrella requires. ## How much umbrella insurance do I need? [#how-much-umbrella-insurance-do-i-need] Enough to cover what a successful lawsuit could reach: your savings, investments, home equity and future wages. Begin by calculating your net worth, add an allowance for future income you will earn, and round up to the next million. Most households start at $1 million and go higher when they own rental property, have teenagers who drive, or have more assets to protect. California's statistics show how the underlying limits alone can run out. In 2025 there were 2,830 insurance claims in California for dog bites and dog-related injuries, more than any other state, and those claims averaged $81,789 each. An auto accident that seriously injures several people could exceed a $250,000 auto limit by itself. A stand-alone umbrella lets you buy $1 million to $5 million of coverage, and Monoline also offers an optional additional $1 million of uninsured and underinsured motorist coverage. ## What if my home insurer won't sell me an umbrella? [#what-if-my-home-insurer-wont-sell-me-an-umbrella] Buy a stand-alone umbrella. Many home insurers only sell an umbrella to the home and auto customers they already serve. In California that leaves out owners whose home is on the FAIR Plan or a surplus lines policy, and people who keep home and auto with different companies. A stand-alone umbrella is placed above whichever eligible policies you already have. Monoline's is filed and admitted, issued through Concert Group Insurance and reinsured by Convex, which A.M. Best rates A (Excellent). Its coverage applies over both short-term and long-term rentals, as well as over motorcycle, boat, jet ski, RV and golf cart policies. One issue for FAIR Plan owners is that the FAIR Plan dwelling policy has no liability coverage, so any home liability an umbrella requires will have to come from a DIC policy or another liability policy underneath it. Our guide on [home insurance after a non-renewal](https://www.menloinsurance.com/library/guides/home-insurance-non-renewal-california) explains how to combine the FAIR Plan and a DIC. A personal umbrella does not cover business liability; see [umbrella vs. excess liability](https://www.menloinsurance.com/library/guides/umbrella-vs-excess-liability) for the commercial version. ## Frequently Asked Questions ### How much should a $1 million umbrella policy cost? A few hundred dollars a year for many households. The published average is $383 a year for one home, two cars and two drivers. ### At what net worth should you get an umbrella policy? There is no fixed number. If a judgment larger than your auto or home liability limit could reach your savings, home equity or future wages, an umbrella is worth pricing. ### What underlying limits does an umbrella need? Usually $250,000 of auto liability and $300,000 of home liability. Monoline accepts auto limits of $250,000/$500,000/$100,000. ### Can I buy an umbrella from a different company than my home and auto insurer? Yes. A stand-alone umbrella sits over qualifying policies from other insurers, so you can keep your current carriers. ### Does an umbrella cover my rental property? It can, if the rental's own liability policy meets the umbrella's underlying requirement and the rental is listed on the application. Monoline's umbrella covers over short-term and long-term rentals. *This guide is for educational purposes and summarizes published consumer information from the Insurance Information Institute and Progressive, California law, and carrier program information. Price figures are national averages published by others, not a Menlo quote. Coverage, eligibility and prices change, and your policy's terms control. Menlo Insurance Services (CA license 6020106) is a licensed broker that may earn a commission on a placement and does not guarantee that any coverage or price will be available.* ## The Bottom Line [#the-bottom-line] A typical $1 million personal umbrella usually costs a few hundred dollars a year, with a published average of $383 to insure one home, two cars and two drivers. First line up the underlying limits, usually $250,000 on auto and $300,000 on home, then size the umbrella based on how high a lawsuit might reach. If your home insurer will not write one, a stand-alone umbrella can sit over the other policies you currently have in place. ## References . [Progressive. How much does umbrella insurance cost?]() (accessed 2026-09-27) . [Insurance Information Institute. Should I purchase an umbrella liability policy?]() (accessed 2026-09-27) . [California Legislative Information. Senate Bill 1107 (2022): minimum auto liability limits from January 1, 2025]() (accessed 2026-09-27) . [Monoline. Personal umbrella application (eligibility, drivers and exposure counts) as walked by Menlo, September 2026]() (accessed 2026-09-25) . [Monoline. Personal umbrella insurance for agents]() (accessed 2026-09-27) . [Insurance Information Institute. Spotlight on: Dog bite liability]() (accessed 2026-09-27) . [California FAIR Plan Association. Dwelling policies]() (accessed 2026-09-27) # Plumber Insurance in California: Coverage, Programs and Cost (https://www.menloinsurance.com/library/guides/plumber-insurance-california) California plumbers need liability, workers' comp and tools cover. Which programs take plumbing, what they exclude (sewer, medical gas) and pricing. Markdown version: https://www.menloinsurance.com/library/guides/plumber-insurance-california.md A California plumber needs general liability for damage or injuries that result from the work, workers' compensation for any employee, and coverage for the tools and the materials being installed. Several contractor programs Menlo uses list plumbing as a target class, including RLI Contrac Pac (residential and commercial plumbing), MGT's contractor BOP, Coterie and THREE. The type of plumbing determines which program fits: service and repair is written very broadly, while new construction, work deeper than 6 feet underground, sewer work and medical gas lines are excluded by some programs. This guide is for a California plumbing contractor, whether it's a one-person service business or a crew that completes remodels and commercial projects. It covers the coverage plumbers need, which programs take plumbing and what each excludes, how workers' comp is classed, what sets the price and what to prepare. Once you're ready, begin the [contractor general liability application](https://www.menloinsurance.com/contractors-general-liability-insurance) and select plumbing as your trade. ## Key takeaways * **Water damage is the plumber's big exposure.** General liability covers damage to other people's property, not the cost of redoing your own work. * **Plumbing is a standard class.** RLI rates residential plumbing under class 98483 and commercial under 98482. * **Some work narrows the market.** Coterie excludes new construction, work over 6 feet underground and medical gas lines, and NEXT excludes sewer work. * **New ventures are harder.** RLI accepts new ventures with three years' experience, but excludes plumbers from that rule. * **Workers' comp splits at $35 an hour.** From September 1, 2026, plumbing employees below $35.00 go in class 5183 and those at or above in 5187. ## What insurance does a plumbing contractor need in California? [#what-insurance-does-a-plumbing-contractor-need-in-california] Four coverages cover most plumbing businesses: | Coverage | What it pays for | Required? | | ------------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------- | | General liability | Injury to others and damage to their property from your work, including after the job is done | Not by the CSLB for most licensees, but clients and GCs ask for it, and an LLC licensee must carry at least $1,000,000 aggregate | | Workers' compensation | Your employees' work injuries | Required for any employee. A licensee must file a certificate or a no-employee exemption | | Tools and installation property | Your tools, and pipe, fixtures and water heaters before they're installed | No, but general liability doesn't cover your own property | | Commercial auto | Your service vans and trucks | California minimum limits apply to every vehicle | Your license also needs a $25,000 contractor's bond, and every home improvement contract must tell the owner whether you carry commercial general liability and workers' comp. ## Does general liability cover water damage from a plumbing job? [#does-general-liability-cover-water-damage-from-a-plumbing-job] It covers damage to property owned by others when your work causes it, subject to the policy. For example, if a fitting you installed fails and floods a client's kitchen and the unit below, the damage to the floors, cabinets and the neighbor's unit is the kind of loss general liability is for, even after you have completed the job. What it does not cover is repairing your own work. Replacing the defective part and redoing the job will be your responsibility. Some programs offer faulty workmanship coverage for that gap, usually with a small limit. At renewal, two things need close attention. Insurers look closely at water claims in a plumber's loss history, and MGT, for instance, requires no more than 2 claims in the past 5 years. And your certificate should show completed operations coverage for additional insureds, because a leak often appears months after the job. ## Which insurers write plumbers in California, and what do they exclude? [#which-insurers-write-plumbers-in-california-and-what-do-they-exclude] Plumbing is in appetite for most contractor programs, but each draws its own lines: | Program | Paper | Plumbing position | | -------------------------- | ----------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | | RLI Contrac Pac Quickwrite | Admitted | Plumbing residential (98483) and commercial (98482). Trade contractors up to $3 million receipts. New ventures need three years' experience, and plumbers are excluded from that rule | | MGT contractor BOP | Admitted | Plumbing is a target class. Established businesses of 3+ years, $30,000 to $300,000 payroll, direct labor only (no subcontractors), at least 75% of revenue from installation, service or repair. Tools coverage from $5,000 to $100,000 included | | Coterie | Admitted | Plumbers eligible, but not new building or new home construction, work more than 6 feet underground, or medical gas line work | | THREE (Berkshire Hathaway) | Admitted | Plumbing, HVAC and electrical in its contractor segment | | NEXT contractor program | Admitted | Plumbing covered. Sewer work, and exterior work more than 6 feet below ground, are ineligible | | Thimble | Admitted carriers | Commercial, residential, or commercial and residential plumbing | A plumber doing new tract homes, deep underground or sewer work, or with recent large water claims, usually goes to a program that writes larger contractors or to the surplus lines market. ## How is a plumber's workers' comp classified in California? [#how-is-a-plumbers-workers-comp-classified-in-california] By hourly wage. The WCIRB splits plumbing into two classes. Beginning September 1, 2026, employees who earn $35.00 an hour or more are reported in class 5187 and those who earn less in class 5183, up from a $32.00 threshold before. Keep your payroll records organized by hourly wage, because the split changes the premium at audit. The overall market is rising: the average advisory pure premium rate for policies starting on or after September 1, 2026 is $1.65 per $100 of payroll, a 6.6% increase. Our [workers' comp cost guide](https://www.menloinsurance.com/library/guides/workers-comp-insurance-cost-california) shows how the premium is figured. Today a licensed plumber with no employees can file an exemption with the CSLB, but as of January 1, 2028, almost every licensee will need a workers' comp policy regardless of whether it has employees. ## What sets the price of plumber insurance? [#what-sets-the-price-of-plumber-insurance] The same exposures as for other trades, plus the type of plumbing: 1. **Service and repair versus new construction.** New construction and tract work raise the price or end eligibility. 2. **Residential versus commercial** work, which RLI rates in separate classes. 3. **Payroll and subcontracting.** Uninsured subcontractors are rated as your employees. 4. **Water damage claims** in the past five years. 5. **Years in business.** Plumbers can't use RLI's new-venture rule, and MGT wants three years. We don't publish a typical plumber premium, because our plumbing placements are too few to average honestly. Our [contractor general liability cost guide](https://www.menloinsurance.com/library/guides/contractor-general-liability-insurance-cost-california) lists the published minimums. ## Frequently Asked Questions ### Do plumbers need general liability insurance in California? The CSLB doesn't require it for most licensees, but a plumbing LLC must carry at least $1,000,000 aggregate liability insurance, and home improvement contracts must disclose whether you carry it. Most clients and GCs require a certificate. ### Can a new plumbing business get insurance? Yes, though fewer programs take a brand-new plumber. RLI's new-venture rule excludes plumbers and MGT wants three years in business, so a new plumber usually goes to other admitted or surplus lines programs. ### What workers' comp class code is plumbing in California? 5183 for employees earning under $35.00 an hour and 5187 for those earning $35.00 or more, from September 1, 2026. ### Is medical gas work covered? Not by every program. Coterie excludes medical gas line work, so tell us if you do it and we'll send the application to a program that writes it. *This guide is general information based on California law, WCIRB filings and carrier program sheets dated 2023–2026. Programs change, and your policy's terms control. Menlo Insurance Services (CA license 6020106) is a licensed broker that may earn a commission on a placement.* ## References . [RLI. Contrac Pac Classifications (CP-MK519)]() (2024) . [MGT Insurance. Navigation Guide: Artisan Contractors]() (2026) . [Coterie. Appetite Menu]() (2025) . [THREE by Berkshire Hathaway. Target Industries]() (accessed 2026-09-27) . [NEXT Insurance. Contractors Coverage Guide]() (2023) . [RLI. Contrac Pac Program Features (CP-MK500)]() (2024) . [WCIRB (filed with the California Department of Insurance). California Workers' Compensation Insurance Regulatory Filing Effective September 1, 2026, CDI File REG-2026-00001]() (accessed 2026-09-27) . [California Legislative Information. Business and Professions Code section 7071.19]() (accessed 2026-09-27) . [California Legislative Information. Business and Professions Code section 7125 (current version and version operative January 1, 2028)]() (accessed 2026-09-27) . [California Legislative Information. Vehicle Code section 16056]() (accessed 2026-09-27) . [California Legislative Information. Business and Professions Code section 7071.6]() (accessed 2026-09-27) . [California Legislative Information. Business and Professions Code section 7159]() (accessed 2026-09-27) . [Thimble. Thimble's 2026 Appetite Guide]() (2026) . [California Department of Insurance. Commissioner Lara takes action to maintain stable workers' compensation market amid rising costs (July 10, 2026)]() (accessed 2026-09-27) . [RLI. What You Need to Know About General Contractors and Subcontractors (CPC-MK528)]() (2024) # Rebating, Twisting and Churning in Insurance (https://www.menloinsurance.com/library/guides/rebating-twisting-churning-insurance) What rebating, twisting and churning mean, where rebates are legal (California, Florida and the 2020 NAIC change), and the penalties for each. Markdown version: https://www.menloinsurance.com/library/guides/rebating-twisting-churning-insurance.md Rebating in insurance means giving a customer something of value that is not in the policy to get them to buy it, most often a share of the producer's commission. It is illegal in most states. California and Florida allow commission rebates under their own rules, and a December 2020 change to the NAIC model law lets states permit value-added services such as loss control tools. Twisting and churning are replacement abuses, and they are illegal in every state. Twisting is using false or misleading statements to get a client to drop a policy and buy one from another insurer. Churning is replacing a client's existing policy, often with the same insurer, mainly to earn a new commission. ## Key takeaways * **Rebating** is offering a customer anything outside the policy's terms to get them to buy. Most states prohibit it. * **Twisting** is a false or misleading comparison between two policies to get a customer to switch insurers. * **Churning** is replacing an existing client's policy mainly so the producer earns a new commission, classically paid for with the cash value of the client's existing life insurance. * **Rule changes**: the NAIC revised its model law in December 2020 to permit value-added services, but states have adopted it in different ways. ### Rebating Rebating is offering a client anything of value not stated in the insurance policy as an inducement to buy it. The classic form is a producer returning part of the commission to the buyer, but the definition reaches gifts, services, and side agreements of any kind. ## What is rebating in insurance? [#what-is-rebating-in-insurance] A rebate is anything of value, not written into the insurance contract, that is offered to get someone to buy the policy. The classic example is a producer handing back part of the commission on the [insurance premium](https://www.menloinsurance.com/library/glossary/insurance-premium) to win the business. The ban reaches beyond cash: paying an inspection fee, covering a client's deductible or offering free tax preparation are rebates too, because they give value outside the policy. The ban exists to stop unfair discrimination. Rates filed by [admitted carriers](https://www.menloinsurance.com/library/guides/admitted-vs-non-admitted-carriers) apply to everyone equally, and a side payment to one insured undercuts the rate everyone else pays. Not every courtesy crosses the line. Most states allow small promotional gifts that are not tied to a sale, and Florida caps them at $100 per insured or prospective insured per calendar year under Section 626.9541. A branded coffee mug is fine almost everywhere. A $500 gift card that depends on binding a policy is not. ## Which states allow rebating? [#which-states-allow-rebating] California and Florida have allowed commission rebates for many years, under different rules. In California, voter-approved Proposition 103 (1988) repealed the state's anti-rebate law, so producers may rebate commissions on the property and casualty lines it covers. Florida's Section 626.572 allows rebates only on strict terms: the rebate must follow a schedule the agent files with the insurer, apply equally to everyone who buys the same policy for the same amount of insurance, be posted in the agent's office, and be kept on file for five years. A one-off rebate for a single favored client is illegal in Florida even though rebating in general is allowed. The bigger change came in December 2020, when the National Association of Insurance Commissioners (NAIC) amended Section 4(H) of its Unfair Trade Practices Act, Model 880, to let insurers and producers offer value-added products or services for free or at a discount. To qualify, the product or service must relate to the insurance coverage, help reduce the insured's losses, and cost a reasonable amount compared with the premium. Examples include a water leak sensor with a property policy or telematics on a fleet program. States have adopted versions of this language since then, but no two match exactly, so the same benefit can be legal in one state and a violation in the next. ### Legal in your state does not mean legal in your client's state. Rebating rules follow where the insured and the risk are, not where the producer is. A California producer cannot take Proposition 103 to a client operating in a strict anti-rebating state. For an account like that, check each state's rules separately. ## What is twisting in insurance? [#what-is-twisting-in-insurance] Twisting is getting a policyholder to drop a policy and buy a new one from another company by misrepresenting the old coverage or the new one. The dishonesty is what makes it illegal. A producer who says the client's insurer is failing when it is not, or hides a surrender charge so the new product looks free, is twisting. Replacing a policy is legal, and often good for the client, when the comparison is truthful. Accuracy is what separates a legitimate remarketing from twisting. States regulate replacements most closely for life insurance, because a replacement restarts the two-year contestability period and can lose some or all of the old contract's cash surrender value. New York's Regulation 60 is the best-known strict rule : it requires a written comparison disclosure before a life insurance or annuity replacement closes. For property and casualty accounts, a truthful side-by-side comparison of limits, forms and exclusions is the producer's best protection against errors and omissions (E\&O) claims. ## What is churning in insurance? [#what-is-churning-in-insurance] Churning is replacing a client's policies with new ones mainly to generate new commissions, not to improve the client's position. What sets churning apart is that the producer works the client's existing business, often with the same insurer. In cash value life insurance, the classic pattern is telling the customer to borrow against or surrender the current policy and use the money to fund a new one. The producer earns a first-year commission on the new policy, and the customer starts a new surrender period and a new contestability period. The customer rarely sees the harm right away. It often takes years to show up as lost cash value or a lapsed policy. Two protections help. Every state gives the buyer a "free look" period after delivery, typically 10 to 30 days, to cancel for a full refund. And under the NAIC Replacement Model Regulation, Model 613, the replacing insurer must notify the existing insurer within five business days, which gives the original insurer a chance to keep the policy. ## How do rebating, twisting, and churning compare? [#how-do-rebating-twisting-and-churning-compare] The three differ in what the producer does. Moving value outside the policy to get the sale is rebating. Replacing a client's existing policy to earn a fresh commission is churning. Moving a client to another carrier by misrepresenting either policy is twisting: | Practice | What the producer does | Who is harmed | Legal status | | -------- | ---------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------- | ------------------------------------------------------------------ | | Rebating | Gives value outside the policy, usually shared commission, to induce a sale | Other insureds paying the filed rate, competing producers | **Illegal in most states, permitted with conditions in CA and FL** | | Twisting | Makes false statements about policies to get an insured to buy from another carrier | The policyholder who loses benefits in the switch | **Illegal in every state** | | Churning | Sells an existing client a replacement policy, often from the same carrier, to earn a new commission | The client, who pays for the new sale out of their own policy's values | **Illegal in every state** | ## What are the penalties for rebating, twisting, or churning? [#what-are-the-penalties-for-rebating-twisting-or-churning] All three are unfair trade practices, and state insurance codes give the commissioner a common set of penalties. In California, Insurance Code Section 790.035 sets a civil penalty of up to $5,000 per act, or up to $10,000 per act if the violation is willful, and lets the commissioner decide what counts as an act. The commissioner can also suspend or revoke the producer's license, and revocation ends careers. The industry's biggest churning scandal involved Prudential. In 1997 a federal district court in New Jersey approved a nationwide class settlement over Prudential's life insurance sales practices from 1982 through 1995, calling its value "extraordinary" and uncapped. Prudential also entered consent orders with all 50 states. - $410M — Minimum Prudential has agreed to undertake for policyholder remedies. — [U.S. District Court, D.N.J., 1997]() - 8M+ — Members of the Prudential Class Action regarding churning. — [U.S. District Court, D.N.J., 1997]() - $5,000 — California civil penalty per act, up to $10,000 if willful. — [Cal. Insurance Code 790.035]() Insurance usually won't pay for the producer's defense either. Agents E\&O policies are written on [claims-made forms](https://www.menloinsurance.com/library/guides/occurrence-vs-claims-made-policies), and nearly all exclude intentional, dishonest or fraudulent acts, so the misconduct that earned the commission also removes the coverage that would have defended it. ## Frequently Asked Questions ### Is rebating legal in California? Generally yes, for producer commission rebates. Proposition 103, passed by California voters in 1988, repealed the anti-rebate law, so a California licensee can share commission with a client on the property and casualty lines it covers. The permission does not travel. It applies to California business only, and other states' anti-rebating laws apply to risks in those states. ### What is the difference between twisting and churning? Twisting is moving a client to a different carrier by misrepresenting the old policy or the new one. Churning is replacing a client's current policy, often with the same carrier, mainly to earn another commission, typically by using up cash value in a life insurance policy to pay for the replacement. Both are illegal replacement abuses. They differ in which carrier the client ends up with and how the producer gets there. ### How do I report an agent for twisting or churning? File a complaint with your state's department of insurance against the producer who sold you the policy. The department licenses producers and investigates suspected dishonesty, and it can fine the producer or suspend or revoke the license. In most states, though, it cannot order the producer or agency to pay you back for your losses. Getting money back takes the free look window, the carrier's own remediation, or a lawsuit. Include the old and new policies and any written comparisons or illustrations with your complaint. *This guide is for educational purposes and summarizes state insurance law in general terms. Your state's statutes and regulations, and your own policy's terms, control. Talk to a licensed broker about your situation.* ## How to protect yourself when a producer suggests a replacement [#how-to-protect-yourself-when-a-producer-suggests-a-replacement] Ask for a written, side-by-side comparison of the old and new policies before you accept any replacement, and check it against both policies yourself. Rebating is giving value outside the policy to make a sale, and only a few states allow it under strict rules. Twisting, a replacement built on misrepresentation, and churning, a replacement made mainly for a new commission, are illegal everywhere. If a comparison turns out to be false, use the free look period and report the producer to your state's department of insurance. ## References . [Florida Senate. Section 626.9541, Florida Statutes: Unfair Methods of Competition and Unfair or Deceptive Acts]() . [UC Law SF, California Ballot Propositions. Proposition 103 (1988): Insurance Rates, Regulation, Commissioner]() . [Florida Legislature. Section 626.572, Florida Statutes: Rebating, When Allowed]() . [NAIC. Unfair Trade Practices Act, Model 880]() . [NAIC. Life Insurance and Annuities Replacement Model Regulation, Model 613]() . [California Legislative Information. Insurance Code Section 790.035]() . [U.S. District Court, District of New Jersey. In re the Prudential Insurance Co. of America Sales Practices Litigation, 962 F. Supp. 450 (1997)]() . [New York Department of Financial Services. Regulation 60 Notices, Filings and Forms]() # Roofing Contractor Insurance in California: What's Required (https://www.menloinsurance.com/library/guides/roofing-contractor-insurance-california) California C-39 roofers must carry workers' comp even with no employees. Which liability programs take roofers, their exclusions, and pricing. Markdown version: https://www.menloinsurance.com/library/guides/roofing-contractor-insurance-california.md A California roofing contractor needs two policies before anything else: workers' compensation and general liability. Workers' comp is required of all California roofing contractors. A contractor holding the C-39 roofing classification must keep a workers' comp certificate on file with the Contractors State License Board (CSLB), regardless of whether it has employees, and the board will remove the C-39 classification from the license when this document is not on file. General liability can also be difficult for roofers to obtain, because several small-business programs exclude either roofing in general or methods such as torch-down and hot tar, so roofers are usually placed with contractor programs that list the class. This guide is for a California roofer, whether a one-truck residential re-roofer or a commercial crew. It covers the state law requirements that apply to your trade, which programs accept roofers and what they exclude, how roofing is rated, and what a general contractor's certificate request usually needs. Once you are ready, begin the [contractor general liability application](https://www.menloinsurance.com/contractors-general-liability-insurance). Roofing is one of the trades we submit to specialty programs by hand, so describe the work in great detail. ## Key takeaways * **C-39 means workers' comp, no exemption.** The no-employee exemption doesn't apply to C-39 licensees, or to C-8, C-20, C-22 and D-49. * **No certificate, no C-39.** Without a valid certificate, the registrar removes the C-39 classification from the license. * **Some programs exclude roofing.** MGT's contractor BOP lists roofing as ineligible, and Coterie bars roofing for handymen. * **Method matters.** NEXT's contractor program excludes hot tar roofing, torch-down roofing and exterior work above 30 feet. * **Roofing is rated as a high-hazard class.** The WCIRB's expected loss rate for roofing class 5552 is 6.087 per $100 of payroll, against 0.093 for clerical class 8810. ## What insurance does California require for roofing contractors? [#what-insurance-does-california-require-for-roofing-contractors] The license brings three requirements. You are required to keep a $25,000 contractor's bond on file. You are also required to have a workers' compensation certificate on file, and for roofers there is no exemption from this requirement: section 7125 allows a licensee who has no employees to file an exemption only if the licensee does not hold a C-8, C-20, C-22, C-39 or D-49 classification. Additionally, every home improvement contract must tell the owner whether you carry commercial general liability insurance, and with which insurer. A lapse in workers' comp hits the roofing classification first. If a license that includes C-39 has no valid workers' comp certificate on file with the registrar, the registrar will remove the C-39 classification as opposed to suspending the entire license. A licensee found employing workers without workers' compensation coverage faces civil penalties of at least $10,000 per violation for a sole owner and at least $20,000 per violation for an entity. If your business is organized as an LLC, the license also requires liability insurance with an aggregate limit of at least $1,000,000 when five or fewer individuals are listed on the personnel of record. ## Why is roofing general liability hard to place? [#why-is-roofing-general-liability-hard-to-place] Because the claims are severe and take time to appear. A dropped bundle falls on someone underneath, a fire is started by a torch, or a roof leaks two years after the job and damages the interior of the building. Insurers usually react with exclusions, eligibility limits or higher rates, and some small-business programs decline the class outright. | Program | Roofing position | | ----------------------- | --------------------------------------------------------------------------------------------------------------------------------------------- | | MGT contractor BOP | Roofing, tree trimming and solar installation are ineligible. Exterior work above 30 feet is ineligible | | Coterie | Handymen may not do roofing. Pressure washers may not wash roofs | | NEXT contractor program | Roofers are a listed trade. Hot tar roofing, torch-down roofing and exterior work more than 30 feet above ground are ineligible | | Thimble | Roofing appears among its contractor activities | A roofer who doesn't fit one of these programs goes to the surplus lines market, where a broker can place a risk after admitted insurers have declined it. Our guide to [contractor general liability after a non-renewal](https://www.menloinsurance.com/library/guides/contractor-general-liability-after-nonrenewal-california) explains how this process works. ## What do roofing insurers ask about? [#what-do-roofing-insurers-ask-about] The application for a roofer goes deeper than for most trades. Expect questions on: 1. **Method.** Shingle, tile, metal, single-ply, torch-down, hot tar or spray foam. NEXT, for example, excludes torch-down and hot tar. 2. **Residential versus commercial** work, and the height of the buildings. 3. **New construction versus re-roofing and repair.** Tract and subdivision work raises the price or ends eligibility in many programs. 4. **Payroll and subcontracting.** Uninsured subcontractors are rated as your employees. 5. **Safety practices.** Fall protection, fire watch after hot work and a written safety program. 6. **Claims** for the past five years, especially leaks and water damage. ## How much does roofing insurance cost? [#how-much-does-roofing-insurance-cost] Roofing costs more than most trades, and this is reflected in the state's own numbers. The WCIRB sets expected losses for each classification, with low-wage roofing (class 5552) at 6.087 per $100 of payroll, while clerical office employees (class 8810) are at 0.093. These figures are expected loss rates used for experience rating purposes, not premiums; however, they demonstrate why a roofer's workers' comp rate sits far above the state average of $1.65 per $100. Roofing workers' comp is broken into two classes based on the employee's hourly pay. Beginning September 1, 2026, employees who earn $33.00 an hour or more will be classified in class 5553, and all employees earning less in class 5552. You should keep hourly pay records for your employees, because the split changes the premium. For general liability, we don't publish a typical premium for roofers. Pricing varies greatly depending on method, the mix of residential and commercial projects and past claims, and we do very few placements in this market, so we cannot establish an honest average. Our [contractor general liability cost guide](https://www.menloinsurance.com/library/guides/contractor-general-liability-insurance-cost-california) covers the published minimums and how contractors are rated. ## What does a general contractor usually ask a roofing sub for? [#what-does-a-general-contractor-usually-ask-a-roofing-sub-for] A certificate of insurance showing general liability and workers' comp, with endorsements that give the GC protection under your policy: * **Additional insured** status for ongoing and completed operations, because a roof claim often comes after the job ends. * **Waiver of subrogation** on both general liability and workers' comp. * **Primary and non-contributory** wording, so your policy pays before the GC's. Ask for these endorsements when you apply for coverage, not when a GC asks for them. Some programs will include them at no cost, while others may charge an additional fee per endorsement or exclude completed operations coverage for additional insureds. Our guide to [additional insured endorsements](https://www.menloinsurance.com/library/guides/additional-insured-endorsements-explained) explains the forms. ## Frequently Asked Questions ### Do roofers need workers' comp in California if they have no employees? Yes. The CSLB's no-employee exemption doesn't apply to a licensee holding the C-39 roofing classification. ### What happens if a roofer's workers' comp lapses? The registrar removes the C-39 classification from the license unless a valid certificate is received. Employing workers without coverage can also bring civil penalties of $10,000 or more per violation. ### Does general liability cover a roof I installed that leaks later? Damage the leak causes to the building's interior may be covered as completed operations, subject to the policy. The cost to redo your own roofing work is generally excluded. ### Why was my roofing business declined? Some small-business programs exclude roofing, or heat-applied methods such as torch-down and hot tar. A broker can take a declined roofer to programs that list the class and to the surplus lines market. *This guide is general information based on California law, WCIRB and Department of Insurance filings, and carrier program sheets dated 2023–2026. Programs change, and your policy's terms control. Menlo Insurance Services (CA license 6020106) is a licensed broker that may earn a commission on a placement. Non-admitted insurers are not backed by the California Insurance Guarantee Association.* ## References . [California Legislative Information. Business and Professions Code section 7125]() (accessed 2026-09-27) . [MGT Insurance. Navigation Guide: Artisan Contractors]() (2026) . [NEXT Insurance. Contractors Coverage Guide]() (2023) . [Coterie. Appetite Menu]() (2025) . [WCIRB (filed with the California Department of Insurance). California Workers' Compensation Insurance Regulatory Filing Effective September 1, 2026, CDI File REG-2026-00001]() (accessed 2026-09-27) . [California Legislative Information. Business and Professions Code section 7071.6]() (accessed 2026-09-27) . [California Legislative Information. Business and Professions Code section 7159]() (accessed 2026-09-27) . [California Legislative Information. Business and Professions Code section 7125.4]() (accessed 2026-09-27) . [California Legislative Information. Business and Professions Code section 7071.19]() (accessed 2026-09-27) . [Thimble. Thimble's 2026 Appetite Guide]() (2026) . [RLI. What You Need to Know About General Contractors and Subcontractors (CPC-MK528)]() (2024) . [California Department of Insurance. Commissioner Lara takes action to maintain stable workers' compensation market amid rising costs (July 10, 2026)]() (accessed 2026-09-27) # Self-Insured Retention vs Deductible: Who Pays First, Who Defends, and What Erodes (https://www.menloinsurance.com/library/guides/self-insured-retention-vs-deductible) How a self-insured retention (SIR) differs from a deductible on a liability claim, with a side-by-side table, a worked example, how an umbrella SIR works, California's insolvency rule, and what to negotiate. Markdown version: https://www.menloinsurance.com/library/guides/self-insured-retention-vs-deductible.md A self-insured retention (SIR) is money you pay yourself, for defense and damages, before a liability policy starts paying. A [deductible](https://www.menloinsurance.com/library/glossary/deductible) runs the other direction. The insurer handles the claim and pays it from the first dollar, then sends you a bill for the deductible. Either way, you end up paying the same first slice of the loss. What changes is who pays first, who runs the defense, and who's stuck if the money isn't there. You'll run into this most in the markets Menlo works in. Umbrella and excess policies, surplus lines general liability and bigger professional liability programs often use SIRs where small-business policies use deductibles. Below we put the two side by side, run one claim through both, then cover how the SIR on an umbrella works and what to negotiate before you sign. For the one-paragraph definition, see our glossary entry on [self-insured retention](https://www.menloinsurance.com/library/glossary/self-insured-retention). ## Key takeaways * **Who pays first:** under a deductible the insurer pays, then collects from you. Under an SIR you pay first, and the insurer pays only after the retention is used up. * **Who defends:** under a deductible the insurer runs the defense from the start. Under an SIR you usually pay for, and often manage, the defense inside the retention. * **Limits:** a deductible is usually not taken out of the policy limit. With an SIR, the policy limit usually sits above the retention. * **Insolvency:** California requires liability policies to state that the insured's bankruptcy does not release the insurer. Whether the insurer will pay an SIR the insured cannot fund depends on the policy wording. * **Umbrellas:** an umbrella that covers a claim the underlying policies exclude usually applies an SIR to that claim. ### Self-Insured Retention (SIR) A self-insured retention is a dollar amount stated in a liability policy that the insured must pay before the policy responds to a loss. Until the retention is reached, the insured pays the defense and indemnity costs; after that, the insurer pays the covered amounts above it. ## What is the difference between a self-insured retention and a deductible? [#what-is-the-difference-between-a-self-insured-retention-and-a-deductible] It comes down to where the insurer stands in the claim. IRMI defines an SIR as an amount "that must be paid by the insured before the insurance policy will respond to a loss." Under a deductible, by contrast, "the insurer pays the defense and indemnity costs associated with a claim on the insured's behalf and then seeks reimbursement." Here's how they compare, point by point. ## How does the money flow on the same claim? [#how-does-the-money-flow-on-the-same-claim] Take one made-up liability claim that costs 200,000 in defense and settlement. Compare a policy with a 50,000 deductible and a policy with a 50,000 SIR. These are round example figures, not a quote. | Step | With a 50,000 deductible | With a 50,000 SIR | | ---------------------- | --------------------------------------------------- | ---------------------------------------------------------- | | Claim reported | Insurer opens the file and appoints defense counsel | You (or your administrator) open the file and fund defense | | First 50,000 of cost | Insurer pays it | You pay it | | Remaining 150,000 | Insurer pays it | Insurer pays it, once you show the retention was spent | | After the claim closes | Insurer bills you 50,000 | Nothing more to bill | | Your total cost | 50,000 | 50,000 | You pay the same total. The timing, the control and the risk are different. With a deductible, you get a bill after the claim. With an SIR, you're writing the checks and running the defense while the claim is open. IRMI notes that for a deductible, "Usually, the amount of the deductible is not subtracted from policy limits," while a policy with an SIR usually starts its limit above the retention. Check your own policy on both. Some forms let defense costs eat into the limit, and some deductibles only apply to damages. ## Who controls the defense under an SIR? [#who-controls-the-defense-under-an-sir] Usually you do, inside the retention, within the insurer's rules. You're paying defense and indemnity costs until you reach the SIR, so you normally fund the defense and often run it. How much room the insurer gives you depends on the policy. Expect rules about reporting serious claims early, getting the insurer's OK before you settle near the retention, and keeping claim records the insurer can audit. Before you bind, check the SIR endorsement for these: * What counts toward the SIR? Does the policy count only what you paid yourself? Or do payments from another insurer, an additional insured's carrier or a subcontractor's carrier count too? * Notice. Which claims do you have to report even while they're still inside the retention? * Settlement consent. Can you settle within the retention without asking, and what happens if you settle above it without consent? * Defense costs. Do they count toward the SIR, and do they reduce the limit once the insurer is paying? ## What happens if the insured cannot pay the SIR? [#what-happens-if-the-insured-cannot-pay-the-sir] This is where an SIR gets risky, and the risk cuts two ways. With a deductible, the insurer pays first and has to collect from you later. That's why a large deductible may need to be backed by security. With an SIR, the injured claimant is the one exposed: the first layer of what they recover depends on whether you can pay. California sets one floor. Insurance Code section 11580 says a liability policy issued in the state must provide "that the insolvency or bankruptcy of the insured will not release the insurer" from paying for injury or damage during the policy period. It also lets a claimant with a judgment against the insured sue the insurer on the policy, "subject to its terms and limitations." So your policy doesn't die if you go bankrupt. That alone doesn't make the insurer pay the retention, or "drop down" into it. Whether the insurer steps in when you can't fund the SIR depends on the policy wording, so get that wording in writing. Lenders and project owners who require your insurance often ask the same question in their contracts. Workers' comp shows the contrast best. California won't let a workers' comp deductible leave an injured worker unpaid. A deductible endorsement must say the insurer pays all benefits "notwithstanding the deductible," and that any amount inside the deductible is an advance you must repay. That's why big workers' comp programs use a large deductible plan, where the insurer handles the claims and bills you back, instead of a true SIR. ## How does a self-insured retention work on an umbrella policy? [#how-does-a-self-insured-retention-work-on-an-umbrella-policy] On a commercial umbrella, the SIR applies to claims the umbrella covers and your underlying policies don't. IRMI says an umbrella does three jobs. It adds limits above the underlying policies. It "drops down" when an underlying aggregate limit is used up. And it covers some claims the underlying policies exclude, "subject to the assumption by the named insured of a self-insured retention." The drop-down provision is the clause that lets the umbrella sit over underlying aggregate limits that have been reduced or used up. When they drop down, some umbrellas keep their own terms and others follow the primary policy. So on an ordinary claim your general liability or auto policy pays, the umbrella SIR never comes into play. It only applies in the gap, where the umbrella covers more than the policies under it. Our guide to [umbrella vs excess liability](https://www.menloinsurance.com/library/guides/umbrella-vs-excess-liability) explains why a follow-form excess policy has no such gap. For quotes above a general liability policy, see [commercial excess and umbrella coverage](https://www.menloinsurance.com/f/commercial-excess). There's a cousin called the corridor SIR, sometimes called a "bikini deductible." It's a self-insured layer between a primary layer and the excess layer above it. People use it to bring down the cost of excess or umbrella insurance, or to get it at all. ## Where do self-insured retentions show up? [#where-do-self-insured-retentions-show-up] You'll see SIRs most often in four places: * Umbrella and excess liability, on claims the umbrella covers but the underlying policies do not (see above). * Surplus lines general liability for contractors, habitational and other hard-to-place risks. When you get a surplus lines quote, ask whether it uses an SIR or a deductible. They play out differently once a claim comes in. Our guide to [surplus lines insurance](https://www.menloinsurance.com/library/guides/surplus-lines-insurance) explains that market. * Professional liability for firms with larger revenue, where a retention often includes defense costs. See [what professional liability insurance covers](https://www.menloinsurance.com/library/guides/what-is-professional-liability-insurance). * Large-account casualty programs, where the insured has a claims administrator and the cash to fund losses. ## What are the pros and cons of an SIR? [#what-are-the-pros-and-cons-of-an-sir] ## Is self-insuring worth it? [#is-self-insuring-worth-it] It's worth it if you can predict the retained layer and pay for it. Retention means any way of keeping risk yourself, from deductibles all the way to formal self-insurance. If your business has steady, frequent small claims and the cash to pay them, keeping that layer often saves money. If your worst year would wipe out your cash, it usually doesn't. In California, fully self-insuring workers' comp is a regulated status. You can't just decide to keep the risk. You need a certificate of consent to self-insure from the Director of Industrial Relations. ## What should you negotiate on an SIR? [#what-should-you-negotiate-on-an-sir] Before you take a retention, get straight answers on these: 1. The amount, per claim and in total. Is there an annual aggregate that caps your total retained cost across all claims? 2. Defense costs. Are they inside the SIR, and do they erode the limit above it? 3. Who can satisfy the SIR? Only you, or also other insurers and contractual indemnitors? 4. Insolvency wording. What does the insurer do if you cannot fund the retention? 5. Claims handling standards: reporting thresholds, approved counsel and consent to settle. 6. Premium credit. What does the SIR save you compared with a deductible of the same size? Your broker should show you both options. ## Frequently Asked Questions ### What does self-insured retention mean on an umbrella policy? It's what you pay on a claim the umbrella covers but your underlying policies don't. If your general liability or auto policy covers the claim, the umbrella sits on top and there's no SIR. The SIR only kicks in where the umbrella is broader than the policies below it. ### Does a self-insured retention reduce the policy limit? Usually not. The limit normally sits above the retention, so once you've paid the SIR the insurer's full limit is there. The defense cost wording can change that. If defense costs are inside the limit, they cut into what's left for damages. ### Can another insurer's payment satisfy my SIR? Only if your policy says so. Some SIR endorsements count only payments from the named insured. Others accept payments from other insurers or indemnitors. That wording often decides whether an additional insured's carrier can fund the retention for you, so check it before you bind. ### What are the disadvantages of self-insuring? You need cash on hand while the claim is open, you pay to handle claims, and a bad year lands straight on your balance sheet. You also take on collection and credit risk that, with a deductible, stays with the insurer until it bills you. An SIR fits a business that can fund and manage claims. It doesn't fit one that a single large loss would hurt. *This guide is for educational purposes and summarizes common policy practice, IRMI definitions and California statutes. Your policy's specific terms, conditions and endorsements control. Menlo Insurance Services is a licensed California insurance broker (license 6020106) and may earn a commission on policies it places. Talk to a licensed broker about your actual exposures.* ## The Bottom Line [#the-bottom-line] On a given claim, a deductible and a self-insured retention can cost you exactly the same. What differs is who pays first and who runs the claim. With a deductible, the insurer defends and pays, then bills you. With an SIR, you pay defense and damages until the retention runs out, and the insurer pays above it. Pick an SIR if you can fund and manage that layer. Before you sign, get three things in writing: what counts toward the retention, whether defense costs eat into the limit, and what the insurer does if you can't pay. ## References . [IRMI. Self-insured retention (SIR)]() (accessed 2026-09-23) . [IRMI. Deductible (DED)]() (accessed 2026-09-23) . [California Legislative Information. Insurance Code section 11580]() (accessed 2026-09-23) . [California Legislative Information. Insurance Code section 11735]() (accessed 2026-09-23) . [IRMI. Large deductible plan]() (accessed 2026-09-23) . [IRMI. Umbrella liability (UL) policy]() (accessed 2026-09-23) . [IRMI. Drop down provision]() (accessed 2026-09-23) . [IRMI. Corridor self-insured retention]() (accessed 2026-09-23) . [IRMI. Retention]() (accessed 2026-09-23) . [California Legislative Information. Labor Code section 3700]() (accessed 2026-09-23) # Surplus Lines Insurance: What It Is and When You Need It (https://www.menloinsurance.com/library/guides/surplus-lines-insurance) Surplus lines insurance covers risks licensed insurers turn down. How non-admitted placements work, what they cost in taxes and fees, and the trade-offs. Markdown version: https://www.menloinsurance.com/library/guides/surplus-lines-insurance.md Surplus lines insurance is coverage bought from a non-admitted insurer, one that is not licensed in your state, because no licensed (admitted) insurer will write your risk. It lets hard-to-insure businesses, such as new ventures, companies with a poor claims history or high-hazard operations, buy coverage instead of going without. Two trade-offs come with it: the policy is not backed by the state guaranty fund, and its rates and forms are not approved by the state. Being placed in surplus lines rarely means you did something wrong. It usually means the standard market changed its appetite, not that your business is a bad risk. Surplus lines is the normal market for hard-to-place coverage, and Menlo places it through the [excess and surplus lines market](https://www.menloinsurance.com/excess-and-surplus-insurance) when admitted carriers say no. ## Key takeaways * **Surplus lines means non-admitted**: the insurer is not licensed in your state, so it can set its own prices and policy wording instead of using state-approved rates and forms. * **It is the market of last resort by design**: brokers usually must document that licensed insurers declined your risk before placing it in surplus lines. * **No guaranty fund safety net**: if a surplus lines insurer fails, no state fund pays your claim, so the insurer's financial strength rating matters more. * **Taxes and fees come on top of premium**: surplus lines placements carry a state premium tax and often a stamping fee, which your broker collects and pays to the state. ### Surplus Lines Insurance Surplus lines insurance, also called excess and surplus (E\&S) insurance, is coverage bought from an insurer that is not licensed in the buyer's state. It is legal when placed through a licensed surplus lines broker. The E\&S market is the insurance industry's safety valve for risks the standard market will not write. ## What is surplus lines insurance? [#what-is-surplus-lines-insurance] Surplus lines insurance is coverage placed with a non-admitted carrier, an insurer that is not licensed in your state. Every state has two markets. Admitted carriers are licensed there, file their rates and policy forms with the state insurance department, and are backed by a state guaranty fund if they fail. The surplus lines (non-admitted) market is where a risk goes when admitted carriers say no. Lloyd's of London is the best-known non-admitted insurer writing American business this way. The difference is freedom. A surplus lines insurer does not file its rates and forms with the state, so it can price a roofer with two past losses, or write wording for a risk the standard forms never anticipated. You cannot buy from the E\&S market directly: you reach it through a licensed [surplus lines broker](https://www.menloinsurance.com/library/glossary/surplus-lines-broker). Our guide to [admitted vs non-admitted carriers](https://www.menloinsurance.com/library/guides/admitted-vs-non-admitted-carriers) compares the two markets. "E\&S," "excess and surplus" and "surplus lines" all mean the same market. ## Why was my business placed in surplus lines? [#why-was-my-business-placed-in-surplus-lines] Your business was placed in surplus lines because your broker could not find a licensed (admitted) insurer to write it on acceptable terms. That is common. Your type of business may be one admitted carriers avoid, such as demolition or nightclubs. Your claims history may be past a carrier's limit, so review your [loss runs](https://www.menloinsurance.com/library/glossary/loss-runs) before renewal. You may be a new business with no track record. Or your property may be in a [high-risk wildfire area](https://www.menloinsurance.com/library/guides/delos-insurance-california) or on the coast, where many admitted carriers have pulled back. That pullback has pushed the [California FAIR Plan](https://www.menloinsurance.com/library/guides/california-fair-plan) to 696,562 policies in force as of June 2026. The move from admitted to E\&S insurers is often temporary. In a hard market, admitted carriers tighten underwriting and push many ordinary businesses into E\&S, then take them back when the market eases. The E\&S market keeps growing either way. According to the Wholesale & Specialty Insurance Association, premium reported to the surplus lines stamping offices reached $72.7 billion in 2023, up 14.6% from the year before, and $90.3 billion in 2025. What matters for you is that your broker explains what changed in the policy wording, because a surplus lines form does not have to match the one you had before. ## What are examples of surplus lines insurance? [#what-are-examples-of-surplus-lines-insurance] The E\&S market is easiest to understand through the businesses that buy there. These are classes brokers commonly place in surplus lines, with the reason the admitted market declines each: | Business or risk | Why the admitted market declines it | | ---------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | | Cannabis operations | Federal illegality keeps most licensed carriers out. The NAIC's 2023 cannabis white paper reports the substantial majority of cannabis premium is placed in surplus lines . California lets a licensed distributor meet its liability requirement with a surplus lines policy ([cannabis license guide](https://www.menloinsurance.com/library/guides/california-cannabis-license-bond-insurance)) | | Vacant buildings | Standard property forms cut off key coverages after about 60 days of vacancy | | Bars and nightclubs | Heavy liquor sales bring dram shop and assault and battery claims admitted carriers avoid | | Roofers and demolition contractors | High-hazard construction classes with severe injury potential | | Wildfire and coastal property | Catastrophe concentration exceeds admitted carriers' appetite in high-risk zones | | New ventures and poor loss history | No track record, or a record admitted underwriters will not touch | ## How does a surplus lines placement work? [#how-does-a-surplus-lines-placement-work] A surplus lines placement follows set steps that a broker cannot skip for convenience. The first is the diligent search: your broker submits your risk to licensed insurers that write that type of coverage, and state law requires proof that they declined. In California, declinations from three admitted insurers that actually write the coverage, reported on the SL-2 form, are the accepted proof. Some coverages skip this step because the state publishes an export list of risks regulators have already found the admitted market will not write. The submission then goes to a wholesaler. A retail broker rarely has a direct account with an E\&S carrier, so a wholesale broker or managing general agent (MGA) with those relationships places the risk and takes its own commission or fee. The licensed surplus lines broker then files the placement and pays the state premium tax and stamping fee. Since the federal Nonadmitted and Reinsurance Reform Act took effect in July 2011, only your home state's tax and licensing rules apply, however many states your business operates in. ## Is surplus lines insurance more expensive? [#is-surplus-lines-insurance-more-expensive] Surplus lines insurance usually costs more, but not because anyone is padding the bill. The premium prices a risk the standard market refused, without a state-filed rate to anchor it, and each placement adds state charges. In California that is a 3.0% surplus lines premium tax plus a 0.18% stamping fee paid to the Surplus Line Association of California, the rate in place since January 1, 2023. On a $20,000 premium that adds $636. Other states' rates are in our [surplus lines tax rates by state](https://www.menloinsurance.com/library/guides/surplus-lines-tax-by-state) table. Compare total costs, not bare premiums. An admitted quote has taxes built into the filed rate, while a surplus lines quote adds them separately, so the two are not comparable until those charges are included. Your quote should list the premium, any wholesaler fee and each state charge on its own line. ## What are the risks of a surplus lines policy? [#what-are-the-risks-of-a-surplus-lines-policy] The main risk is that there is no safety net. An admitted insurer pays into a state guaranty fund that covers claims, up to a legal limit, if the insurer becomes insolvent. Surplus lines insurers do not. California requires every surplus lines policy to say so in bold type on its front page: the insurer "does not participate in any of the insurance guarantee funds created by California law." If your E\&S carrier fails in the middle of a claim, no state fund steps in. That is why financial strength ratings matter so much in the E\&S market, and why a careful broker places with insurers holding a strong [AM Best rating](https://www.menloinsurance.com/library/guides/am-best-insurance-ratings-explained) and tells you the rating before you bind. A surplus lines policy is not backed by your state guaranty fund, and its wording is not state-approved. Before you bind, ask your broker for the insurer's AM Best rating and a plain-language summary of how the policy's exclusions differ from a standard form. The second risk is the policy wording. Because these forms are not filed with the state, E\&S carriers often use manuscript forms, wording the carrier drafts itself, instead of standard ISO language. Check for added exclusions, whether defense costs reduce your limit, and whether any definitions are narrower. The third risk comes if you cancel early. E\&S policies commonly carry a 25% minimum earned premium, so however soon you cancel, the carrier keeps at least a quarter of the annual premium. Ask about each of these terms before you bind, not after. ## Frequently Asked Questions ### What does surplus lines mean in insurance? Surplus lines insurance is coverage from a non-admitted insurer, one not licensed in the policyholder's state, used when licensed insurers have declined the risk. It is called "surplus" because the risk is beyond what the standard (admitted) market will insure. The same market is often called excess and surplus (E\&S). ### Is surplus lines insurance legal and safe? Surplus lines insurance is legal when placed through a licensed surplus lines broker, and states keep lists of the non-admitted insurers eligible to write in them. There is no state guaranty fund behind a surplus lines policy, so safety depends on the individual insurer. Many E\&S insurers, including Lloyd's syndicates, hold financial strength ratings as high as those of admitted insurers. ### Who regulates surplus lines insurance? The insurer is regulated by its home state or country. Your state regulates the placement: it licenses the surplus lines broker, sets the diligent search and filing rules, and collects the premium tax. Your state does not approve the insurer's rates or policy forms. *This guide is for educational purposes and summarizes standard ISO policy language. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## Three things to get before you bind a surplus lines policy [#three-things-to-get-before-you-bind-a-surplus-lines-policy] Surplus lines insurance comes from an insurer that is not licensed in your state, used because licensed insurers declined your risk. Ending up there is normal for a hard-to-place business, not a black mark. Before you bind, get three things from your broker: an all-in quote showing premium plus taxes and fees, the insurer's AM Best rating, and a clear comparison of the new policy's exclusions with those in your previous policy. ## References . [California FAIR Plan. Key Statistics & Data]() . [Wholesale & Specialty Insurance Association. Stamping Office Premium and Item Report, 2024 Annual Report (media release)]() . [NAIC. Understanding the Market for Cannabis Insurance: 2023 Update]() . [Surplus Line Association of California. SL-2 Form: Diligent Search Report]() . [Surplus Line Association of California. 2023 Stamping Fee Decrease Procedures]() . [Wholesale & Specialty Insurance Association. Stamping Offices and Surplus Lines Associations]() . [California Legislature. California Insurance Code section 1763]() . [California Legislature. California Insurance Code section 1764.1]() # Surplus Lines Tax Rates by State (2026) (https://www.menloinsurance.com/library/guides/surplus-lines-tax-by-state) 2026 surplus lines tax rates and stamping fees for all 50 states and DC, from 0.925% in Iowa to 6%, with a worked example and the NRRA home-state rule. Markdown version: https://www.menloinsurance.com/library/guides/surplus-lines-tax-by-state.md Surplus lines tax is a state tax on the premium of a policy placed with a non-admitted insurer. In 2026 the rate runs from 0.925% in Iowa to 6% in Alabama, Oklahoma and South Carolina, and it is always the rate of the insured's home state. The licensed surplus lines broker collects it from you as a separate line on the invoice and pays it to the state, and many states add a small stamping or transaction fee on top. The tax cannot be negotiated. The broker cannot discount it or choose a cheaper state: federal law sets the home state as the only state that taxes the policy, wherever the risk sits. Some states stack more than one charge on the same premium. Kentucky, for example, adds a 1.8% surcharge and local government premium taxes to its 3% base rate. ## Key takeaways * **Rate range**: 0.925% to 6% of premium in 2026. Iowa is lowest, and Alabama, Oklahoma and South Carolina are highest. * **Who pays**: the insured pays it as a separate invoice line, and the surplus lines broker files and remits it. * **Extra fees**: fifteen states have a stamping office that charges a fee (0.04% in Texas, Illinois and Minnesota up to 0.5% in Idaho), and nine states that file through SLIP+ charge a 0.175% transaction fee. * **Home-state rule**: under the NRRA, 100% of the tax goes to the insured's home state, even on a policy covering several states. ### Surplus Lines Tax Surplus lines tax is a percentage-of-premium tax that a state charges on coverage bought from an insurer that is not licensed in that state. Because a non-admitted insurer pays no premium tax to that state itself, the tax is collected on each placement through the licensed broker who places the policy. ## What is surplus lines tax? [#what-is-surplus-lines-tax] Surplus lines tax is the premium tax a state charges when coverage is placed with a non-admitted insurer in the [surplus lines market](https://www.menloinsurance.com/library/guides/surplus-lines-insurance). A licensed (admitted) insurer pays premium tax to the state directly as a condition of its license. A non-admitted insurer has no license in your state, so the state cannot tax the insurer. It taxes the transaction instead and makes the licensed [surplus lines broker](https://www.menloinsurance.com/library/glossary/surplus-lines-broker) collect and remit the tax on every placement. The tax is a fixed percentage of premium, and each state sets its own rate by statute. Most states fall between 2% and 5%. Some add a second layer: South Carolina's 6% is a blend of a 4% state tax and a 2% municipal tax, Kentucky adds local taxes to its base, and several states charge extra on fire coverage. The tax applies to the policy premium and, in most states, to additional premium from later endorsements and audits at the rate that applied when the policy started. If your business needs coverage that admitted carriers won't write, Menlo places it through the [excess and surplus lines market](https://www.menloinsurance.com/excess-and-surplus-insurance), and every quote shows the tax and fees as their own lines. ## Who pays surplus lines tax? [#who-pays-surplus-lines-tax] The insured pays the surplus lines tax, but the broker sends it to the state. The licensee who placed the policy is the taxpayer of record. Your invoice shows the premium, then the surplus lines tax, then any stamping or transaction fee. The licensee files the policy with the state or its stamping office and pays the tax on the state's schedule, which is monthly, quarterly or yearly depending on the state. That licensee is usually not the retail agent you deal with. On most placements the wholesale broker that reached the insurer holds the surplus lines license and makes the filing. The money moves from your invoice to the retail agent, then to the wholesaler, then to the state. A quote often shows "taxes and fees" as one figure, and the invoice after binding shows how it splits. If a surplus lines quote has no tax line, ask why. The tax is not optional, and a late payment costs the filing broker real money: in California, unpaid tax draws a 10% penalty plus 1% interest per month until it is paid. For background on why these policies are regulated differently, see [admitted and non-admitted carriers](https://www.menloinsurance.com/library/guides/admitted-vs-non-admitted-carriers). ## How do you calculate surplus lines tax? [#how-do-you-calculate-surplus-lines-tax] Multiply the premium by your home state's tax rate, then add any stamping or transaction fee, calculated the same way. That is the whole formula, which is why most stamping offices publish rate tables rather than calculators. The two common mistakes are the wrong state and the wrong date. The rate comes from the insured's home state, not the state where the property or operation is. And fees follow the policy's effective date, not the date the broker files it. In Florida, for example, a policy that starts before July 1, 2026 keeps the old 0.06% service fee even if it is filed after that date. Here is the math on a California placement: ### Example A California business buys a surplus lines liability policy with a $20,000 premium. California's tax rate is 3% and the SLA of California stamping fee is 0.18%. The tax is $20,000 x 3% = $600. The stamping fee is $20,000 x 0.18% = $36. Tax and fees total $636, so the insured pays $20,636 before any broker or carrier policy fees. The taxable base also differs by state. Some states tax broker fees and inspection fees as part of the premium and others do not, so two otherwise identical policies can have slightly different tax bills. The broker's filing system applies each state's definition, but on a large placement it is worth confirming what the base includes. ## What is a stamping fee? [#what-is-a-stamping-fee] A stamping fee is a service charge from a state's surplus lines stamping office, a nonprofit that reviews each filing for completeness and compliance. Fifteen states have one: Arizona, California, Florida, Idaho, Illinois, Minnesota, Mississippi, Nevada, New York, North Carolina, Oregon, Pennsylvania, Texas, Utah and Washington. The fee pays for the office's work, so it is small (0.04% to 0.5% of premium in 2026) and changes separately from the tax rate. Offices change their fees when their budgets change. Florida's service fee dropped from 0.06% to 0.03% for policies effective on or after July 1, 2026. Washington's rose from 0.10% to 0.30% for policies starting on or after January 1, 2025. Oregon and Pennsylvania charge flat amounts instead: $10 and $20 per filing. A newer charge works the same way. States that file through the SLIP+ platform charge a 0.175% transaction fee on gross premium: Alabama, Colorado, Kansas, Louisiana, Montana, Oklahoma, South Dakota, Tennessee and Wyoming as of 2026, with Arkansas joining for policies effective on or after January 1, 2027. A stamping or transaction fee is not a tax, but you pay it the same way, as a line on the invoice. ## What are the surplus lines tax rates by state in 2026? [#what-are-the-surplus-lines-tax-rates-by-state-in-2026] The table lists each state's 2026 surplus lines tax rate and any stamping, transaction or other fee. Rates were checked on September 27, 2026 against the state or stamping office page where one was available (see References), and against WSIA's April 2026 compliance chart and Troutman Pepper Locke's Excess and Surplus Lines Laws Manual. ¹ Florida's FSLSO service fee dropped from 0.06% to 0.03% for policies effective on or after July 1, 2026. Policies that started earlier, and endorsements on them, keep the 0.06% fee. ² Iowa is lowering its rate in steps: 0.925% for 2026, then 0.9% from 2027. ³ Kentucky's total rate depends on where the risk is: the 3% state tax, a 1.8% surcharge, and a local government premium tax that differs by city and county. ⁴ Louisiana adopted SLIP+ in LDI Bulletin 2026-03. The 0.175% fee applies to policies and endorsements effective on or after July 1, 2026. ⁵ Washington's 0.30% stamping fee, up from 0.10%, applies to policies starting on or after January 1, 2025. Rates change by law, so treat any table, this one included, as a starting point and confirm with the state or stamping office before quoting a large account. ## What are the rates in the biggest surplus lines states? [#what-are-the-rates-in-the-biggest-surplus-lines-states] California, Texas and Florida are the three largest surplus lines states. Stamping offices reported $90.3 billion of premium for 2025, up 7.8% from 2024, and Texas passed Florida for second place that year. * **California**: 3% tax plus a 0.18% stamping fee. * **Texas**: 4.85% tax plus a 0.04% stamping fee. * **Florida**: 4.94% tax plus the 0.03% FSLSO fee (0.06% for policies that started before July 1, 2026). * **New York**: 3.6% tax plus a 0.15% ELANY stamping fee. * **Illinois**: 3.5% tax plus a 0.04% stamping fee, and a 1% fire marshal tax on the fire portion of property premium. Illinois is the one that surprises buyers: it looks like 3.54% until the fire marshal tax is added to a property policy. The spread between states is wide. A Missouri insured pays 5% and a Virginia insured pays 2.25% on the same premium, more than twice as much. ## Which state taxes a multi-state policy under the NRRA? [#which-state-taxes-a-multi-state-policy-under-the-nrra] Only the insured's home state taxes a surplus lines policy, however many states the coverage touches. The Nonadmitted and Reinsurance Reform Act (NRRA), part of the 2010 Dodd-Frank Act, set this rule. Before it, a broker placing a multi-state risk split the premium by state and paid each state its share, which caused duplicate and conflicting assessments. Now the home state taxes 100% of the premium and no other state may tax it. The NRRA also let states agree to share that money through a compact, but neither attempt worked. The NIMA clearinghouse dissolved effective October 1, 2016, after most member states, including Florida, withdrew, and SLIMPACT never reached the ten member states it needed to start. With no compact running, all of the tax stays with the home state. The home state is where the insured has its principal place of business (a company) or principal residence (a person). If none of the insured risk is in that state, the home state is the state with the largest share of the premium. So a Texas company insuring warehouses in six states pays Texas's 4.85% tax and 0.04% fee on the whole premium, and moving its headquarters to another state would change the tax on every surplus lines policy it buys. ## Why do surplus lines tax rates differ by state? [#why-do-surplus-lines-tax-rates-differ-by-state] Rates differ because each legislature sets its own, and most set the surplus lines rate at or near the premium tax admitted insurers pay. That keeps the surplus lines market from having a tax advantage over admitted carriers. States with high admitted premium taxes, such as Alabama and Oklahoma, have 6% surplus lines rates. Iowa has gone the other way and is lowering its rate each year, to 0.9% from 2027. The rest of the difference comes from extra charges layered on the base rate for certain lines or places: fire marshal taxes in Illinois and Oregon, Montana's fire tax, Mississippi's 3% windstorm association fee, Kentucky's local premium taxes, and the SLIP+ transaction fee. Two states with the same headline rate can bill different totals once these apply, which is why brokers calculate taxes and fees in their filing software rather than from memory. ## Frequently Asked Questions ### What is surplus lines tax? Surplus lines tax is a state premium tax on insurance bought from a non-admitted insurer, one that is not licensed in the buyer's state. Because that insurer pays no premium tax to the state itself, the state taxes each placement instead. The licensed surplus lines broker calculates the tax, collects it from the insured on the invoice and sends it to the state. In 2026 rates run from 0.925% in Iowa to 6% in Alabama, Oklahoma and South Carolina. ### Which state has the highest surplus lines tax? Alabama, Oklahoma and South Carolina have the highest base rate, 6% in 2026. South Carolina's 6% is a 4% state tax plus a 2% municipal tax. Kentucky's total can be higher once its 1.8% surcharge and local premium taxes are added to the 3% base. The lowest rate is Iowa's 0.925%, which falls to 0.9% in 2027. ### Is there a surplus lines tax calculator? You rarely need one. Multiply the premium by your home state's tax rate, then add the stamping or transaction fee if your state has one. A $20,000 California premium carries $600 of tax and $36 of stamping fee, $636 in total. Several stamping offices, including SLTX, FSLSO and SLAI, publish rate tables or calculators, and broker filing systems calculate the tax automatically. ### Do I pay surplus lines tax if my policy covers property in several states? Yes, but only to one state. Under the federal NRRA, the insured's home state, usually the principal place of business, taxes 100% of the premium at its own rate, and no other state may tax the same policy. A Georgia company with buildings in five states pays Georgia's 4% on the whole premium, including the part for buildings outside Georgia. *This guide is for educational purposes. Tax rates and stamping fees change by statute, and your home state's current filing rules control. Talk to a licensed broker about your actual exposures.* ## What to check on your surplus lines invoice [#what-to-check-on-your-surplus-lines-invoice] Check three things on a surplus lines invoice: that the tax rate is your home state's, that any stamping or SLIP+ fee matches the policy's effective date, and what the taxable base includes. The tax itself is set by law, runs from 0.925% to 6% of premium in 2026, and cannot be negotiated. On a large account, confirm the rate and the base with the state or stamping office before you accept the quoted total. ## References . [Surplus Line Association of California. Broker Taxes and Fees]() . [SLTX. Stamping Fees and Taxes]() . [Troutman Pepper Locke. Surplus Lines Tax Laws by State]() . [WSIA. Stamping Offices and Surplus Lines Associations]() . [Insurance Journal. Florida Exits Multi-State Surplus Lines Clearinghouse NIMA]() . [Kentucky General Assembly. KRS 304.10-180, Taxes on surplus lines]() . [South Carolina Department of Insurance. 2026 Surplus Lines Filing Instructions]() . [Florida Surplus Lines Service Office. Tax / Fee / Assessment Table]() . [Surplus Line Association of Washington. Taxes and Fees]() . [WSIA. Compliance Chart: Tax Filing and Reporting Procedures (April 2026)]() . [SLIP+. SLIP+ states and transaction fee]() . [Iowa Insurance Division. Premium Tax Filing Instructions for Surplus Lines Producers]() . [Louisiana Department of Insurance. Bulletin 2026-03, Adoption of SLIP+ for Reporting]() . [The Insurer. WSIA: Stamping office surplus lines premium up 8% in 2025 to $90.3 billion]() . [Excess Line Association of New York. Procedures Manual: Fees]() . [Surplus Line Association of Illinois. Calculating and Remitting Taxes: Fire Marshal Tax]() . [Legal Information Institute. 15 U.S.C. Chapter 108, Nonadmitted and Reinsurance Reform]() . [South Dakota Division of Insurance. Bulletin 16-05, NIMA dissolution]() # Texas Windstorm Insurance: TWIA, the Texas FAIR Plan and How They Fit Together (https://www.menloinsurance.com/library/guides/texas-windstorm-insurance-twia-fair-plan) On the Texas coast a home policy may exclude wind and hail, and TWIA sells wind-and-hail-only policies to owners turned down by one insurer, up to $1,773,000 for a dwelling. The Texas FAIR Plan is a separate last-resort policy for owners declined by two insurers, and on the coast it excludes wind. Who needs which, and how they pair with flood. Markdown version: https://www.menloinsurance.com/library/guides/texas-windstorm-insurance-twia-fair-plan.md Texas windstorm insurance covers damage from high winds and hail, from a small hailstorm to a hurricane. In most of Texas it is already part of your homeowners policy. Along the coast it often isn't, and you have to buy it separately, usually from the Texas Windstorm Insurance Association (TWIA), which sells wind-and-hail-only policies in 14 coastal counties and part of Harris County. The Texas FAIR Plan Association (TFPA) is something else. It is a statewide insurer of last resort that provides basic home coverage when two insurers have turned you down, and on the coast it excludes wind and hail, so it pairs with TWIA rather than replacing it. This guide is for a Texas homeowner or landlord who has been told to "get TWIA" or has been sent to the FAIR Plan, and who wants to understand what each one covers, who qualifies and how both fit with a regular policy and flood insurance. Menlo Insurance Services is licensed in Texas, and like any licensed agent we can explain the options available at your address. Our [homeowners insurance page](https://www.menloinsurance.com/homeowners-insurance) outlines the parts of a standard homeowners policy. ## Key takeaways * **Inland, wind is in your home policy.** On the coast it may not be, and TDI tells coastal owners they may need a separate windstorm policy. * **TWIA is wind and hail only.** It covers the 14 first-tier coastal counties and Harris County east of Highway 146, after one private insurer turns you down, with a windstorm certificate. * **The FAIR Plan needs two declines.** TFPA sells limited home, dwelling, condo and tenant policies statewide, and you must reapply in the private market every two years. * **On the coast, the FAIR Plan excludes wind.** A coastal FAIR Plan policy carries a windstorm and hail exclusion, and wind goes to TWIA. * **Neither covers flood.** TWIA's own policy says flood isn't covered "even if hurricane winds and rain caused the flood." ## What is the difference between TWIA and the Texas FAIR Plan? [#what-is-the-difference-between-twia-and-the-texas-fair-plan] They cover different perils in different places. TWIA insures wind and hail on the coast. The FAIR Plan insures basic property risks such as fire and theft anywhere in Texas, for owners the private market won't take. The table sets them side by side. | | TWIA | Texas FAIR Plan (TFPA) | | -------------------- | ----------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------- | | What it covers | Windstorm and hail only | Limited home, dwelling, condo and tenant coverage: fire, lightning, theft, vandalism and other named perils | | Where | 14 first-tier coastal counties and Harris County east of Highway 146 | Statewide | | Wind and hail | Yes, that is all it covers | Included inland, excluded in the coastal catastrophe area | | Who qualifies | Turned down for wind and hail by at least 1 insurer writing it in the area | Declined by at least 2 licensed insurers writing property insurance in Texas, and no valid offer of comparable coverage | | Building requirement | Certified to the windstorm building code (WPI-8, WPI-8-E or WPI-8-C), with limited exceptions | Must meet underwriting standards. Vacant, condemned or damaged property can be declined | | Top dwelling limit | $1,773,000 | $1,000,000 | | Liability | None | $100,000 or $300,000 on home, condo and tenant policies, none on the dwelling policy | | Staying on it | Eligibility can be rechecked at any time, and depopulation programs offer private-market takeouts | Reapply in the private market every 2 years | | How to buy | Through a licensed agent | Through a licensed agent authorized by TFPA | | Governing law | Texas Insurance Code Chapter 2210 | Texas Insurance Code Chapter 2211 | ## What is TWIA and who qualifies? [#what-is-twia-and-who-qualifies] TWIA is a not-for-profit insurer created by the Texas Legislature in 1971 to provide wind and hail coverage on the coast. It is not a state agency and doesn't receive state general revenue. Every insurer licensed to write property insurance in Texas is a member of TWIA. As of March 31, 2026 TWIA insured 286,251 properties, and in 2024 it held 53% of the residential market within its coverage area. To qualify, the property and the applicant must meet five conditions: 1. The property is in Aransas, Brazoria, Calhoun, Cameron, Chambers, Galveston, Jefferson, Kenedy, Kleberg, Matagorda, Nueces, Refugio, San Patricio or Willacy County, or in Harris County east of Highway 146. 2. At least one insurer actively writing wind and hail in the area has turned you down. 3. The structure has a certificate of compliance showing it was built to the windstorm code, with limited exceptions. TDI issues the WPI-8 for work inspected during construction and the WPI-8-E for completed work. 4. Property in flood zones V, VE or V1-30 that was built, altered, remodeled or enlarged on or after September 1, 2009 has flood insurance, where the NFIP offers it. 5. The building is in insurable condition, in good repair with no unrepaired damage. Timing matters too. TDI warns that you can't get a TWIA policy while a hurricane is in the Gulf of Mexico. ## How much can TWIA cover? [#how-much-can-twia-cover] TWIA's maximum limits for 2026 depend on the type of property. They are $1,773,000 for a dwelling or individually owned townhouse, $374,000 for the contents of an apartment, condo or townhouse, $4,424,000 for a commercial structure and its contents, and $119,000 for a manufactured home. Few policies reach those limits. The average residential amount of insurance is $349,754. Because a home can cost more to rebuild than TWIA's limit, and the rest of its wind coverage then has to come from elsewhere, coastal owners often compare TWIA with private wind policies. ## What is the Texas FAIR Plan and who qualifies? [#what-is-the-texas-fair-plan-and-who-qualifies] The FAIR Plan is the insurer of last resort for basic residential property coverage. The Legislature authorized it in 1995, and the Commissioner put it into operation in December 2002. It had 124,445 policies in force on March 31, 2026, 62,098 of them in Harris County. It offers four residential policies: a homeowner policy (HO-A), a dwelling policy (TDP-1) for one- and two-family homes including rentals, a condominium policy and a tenant policy. To apply, you must have been declined by at least two insurers licensed to write and actually writing property insurance in Texas, and you can't have a current policy, a renewal offer or a valid offer of comparable coverage from a Texas-licensed insurer. Offers from surplus lines insurers don't count against you. FAIR Plan coverage is intentionally narrower than a standard policy. TFPA lists the perils it doesn't cover, including falling trees and objects, collapse, glass breakage, weight of ice or snow, frozen pipes, mold remediation, sewer backup and sudden discharge of water or steam, though a limited water endorsement can be added to the homeowner, tenant and condo policies. Losses are paid at actual cash value unless you buy replacement cost on the HO-A, and the TDP-1 has no replacement cost option. Deductibles are 1% or 2%. ## How do TWIA and the FAIR Plan fit with a regular policy? [#how-do-twia-and-the-fair-plan-fit-with-a-regular-policy] Think of three separate pieces: the home policy, the wind and hail policy and the flood policy. Where you live and who will insure you decide who provides each piece. | Your situation | Home policy (fire, theft, liability) | Wind and hail | Flood | | ------------------------------------------ | ----------------------------------------------------------------- | ------------------------------------------------- | --------------------------------------------------------------------- | | Inland, standard insurer | Private homeowners policy | Included in the home policy | Separate flood policy if you want it | | Coast, standard insurer that excludes wind | Private homeowners policy | TWIA or a private wind policy | Separate flood policy, required by TWIA in some V zones | | Coast, declined by 2 insurers | FAIR Plan HO-A, with a windstorm and hail exclusion | TWIA | Separate flood policy | | Inland, declined by 2 insurers | FAIR Plan HO-A or TDP-1 | Included in the FAIR Plan policy | Separate flood policy | | Coastal rental house | Private dwelling policy, or FAIR Plan TDP-1 after 2 declines | TWIA, which writes rental dwellings | Separate flood policy | TFPA says it directly: if you live in the TWIA area and qualify for the FAIR Plan, "you may have to carry both a TFPA and TWIA policy." Add flood and a coastal home can carry three policies with three deductibles. ## Is windstorm insurance required in Texas? [#is-windstorm-insurance-required-in-texas] Not by law. TDI says windstorm insurance "isn't required by law in Texas," but if you live near the coast and have a mortgage, your lender will likely require it. Home insurance in general works the same way: no law requires it, but a lender will. ## Does TWIA or the FAIR Plan cover flood? [#does-twia-or-the-fair-plan-cover-flood] No. TWIA's dwelling policy tells the policyholder that it "does not include coverage for damage resulting from a flood even if hurricane winds and rain caused the flood to occur." TDI's home insurance guide lists flooding among the losses most home policies don't cover. Storm surge counts as flood, so on the coast the flood policy is the one that covers water coming in from outside. ## How do TWIA claims work? [#how-do-twia-claims-work] You have one year from the storm to file a TWIA claim. TWIA has 60 days to accept or deny it, and once it has the information it needs and accepts the claim, it has 10 days to pay. If you disagree with the amount, you can request appraisal within 60 days after TWIA's decision. TDI's Coastal Outreach and Assistance Services Team can help with TWIA questions and complaints. ## Can I leave TWIA for a private policy? [#can-i-leave-twia-for-a-private-policy] Yes, when a private insurer will write the wind. TWIA runs two depopulation programs. The voluntary program lets participating insurers make offers one policy at a time at renewal, and 4,536 policies have been bound through it. The assumption program moved more than 16,000 policies from TWIA to private insurers from 2016 to 2023, and no rounds have run since 2023 because of a lack of insurer interest. Before you switch, compare the wind deductible, how each policy settles a roof claim and whether the private policy's wind limit is higher than TWIA's. California has a FAIR Plan too, but it works differently. Its dwelling policy is built around fire, lightning, internal explosion and smoke, and most owners pair it with a difference in conditions policy. Our [California FAIR Plan guide](https://www.menloinsurance.com/library/guides/california-fair-plan) explains that system. ## Frequently Asked Questions ### Is TWIA the only windstorm insurance in Texas? No. Inland, wind and hail are normally part of the homeowners policy. On the coast, TWIA is the market of last resort, and you must be turned down by at least one private insurer before it will write you. TDI's advice is to ask your agent about your options before assuming TWIA is the only one. ### Which counties are in TWIA's area? Aransas, Brazoria, Calhoun, Cameron, Chambers, Galveston, Jefferson, Kenedy, Kleberg, Matagorda, Nueces, Refugio, San Patricio and Willacy, plus the part of Harris County east of Highway 146. ### Is the Texas FAIR Plan good insurance? It is limited insurance by design. It exists for owners two insurers have declined, it leaves out perils such as falling trees, frozen pipes and water discharge, and it pays actual cash value unless you add replacement cost on the homeowner policy. Use it as a bridge and reapply in the private market, which TFPA requires every two years. ### Can I buy TWIA directly? No. TWIA and the FAIR Plan both sell only through licensed insurance agents. ### Does the FAIR Plan cover a rental house? Yes, on its dwelling policy, the TDP-1, for one- and two-family rental dwellings. The TDP-1 has no liability or theft coverage. Our [Texas landlord insurance guide](https://www.menloinsurance.com/library/guides/landlord-insurance-texas) covers rentals in more detail. *This guide is for educational purposes. It summarizes TDI consumer guidance and TDI's Texas FAIR Plan overview of June 2026, TWIA's eligibility rules, fact book and dwelling policy, and TFPA's eligibility page, all read in September 2026. Limits and rules change each year, and your policy's terms, conditions and endorsements control. Menlo Insurance Services is a licensed property and casualty broker in Texas and California that may earn a commission on a placement. Nothing here guarantees that any coverage or price will be available.* ## The Bottom Line [#the-bottom-line] Inland Texas homes usually have wind and hail inside the homeowners policy. On the coast, wind and hail often come from TWIA, which needs one private decline and a windstorm certificate, while the Texas FAIR Plan provides the basic home coverage for owners two insurers have declined and excludes wind there. Flood is always a separate policy, so a coastal home can need all three. ## References . [Texas Department of Insurance. What is windstorm insurance?]() (accessed 2026-09-29) . [Texas Windstorm Insurance Association. Coverage & Eligibility]() (accessed 2026-09-29) . [Texas Windstorm Insurance Association. Fact Book, Data & Information as of Q1 2026]() (2026) . [Texas FAIR Plan Association. Coverage & Eligibility]() (accessed 2026-09-29) . [Texas Department of Insurance. Texas FAIR Plan Association Overview, for quarter ending March 31, 2026]() (2026) . [Texas Department of Insurance. Home insurance guide]() (accessed 2026-09-29) . [Texas Department of Insurance. What you need to know about windstorm inspections]() (accessed 2026-09-29) . [Texas Windstorm Insurance Association. TWIA Dwelling Policy, Windstorm and Hail (Form TWDP, edition August 31, 2023)]() (2023) # Umbrella vs. Excess Liability: What Is the Difference? (https://www.menloinsurance.com/library/guides/umbrella-vs-excess-liability) Both add limits above your primary policies, but only an umbrella can drop down to pay claims they exclude. Follow form, SIRs and which to buy. Markdown version: https://www.menloinsurance.com/library/guides/umbrella-vs-excess-liability.md Umbrella and excess liability policies both add limits above your primary liability and auto policies. The difference is what happens when no underlying policy covers a claim. An excess policy pays only when an underlying policy does. A [commercial umbrella](https://www.menloinsurance.com/commercial-umbrella-insurance) can be broader and "drop down" to pay a claim the underlying policies exclude, after you pay a self-insured retention (SIR). Every umbrella is a type of excess policy, but not every excess policy is an umbrella. Buyers, and even some policies, use the two labels interchangeably, so the safe move is to read what the form actually does rather than what the cover page calls it. ## Key takeaways * **Both add limits**: both sit above a schedule of underlying insurance, typically your CGL, business auto and employers liability, and pay after those limits are used up. * **Both drop down for exhausted aggregates**: when claims use up an underlying aggregate limit, either policy takes the underlying policy's place. * **Only an umbrella can be broader**: a commercial umbrella can pay a claim no underlying policy covers, acting as primary coverage after a self-insured retention. * **Follow form means the excess mirrors the underlying policy**: true follow form is uncommon, and most forms are conditional and can give less coverage where their own terms differ. ### Excess Liability Insurance Excess liability insurance provides additional limits above one or more underlying liability policies listed on its schedule of underlying insurance. A commercial umbrella is the broadest type, because it can also cover some claims the underlying policies exclude. ## What do umbrella and excess liability policies do? [#what-do-umbrella-and-excess-liability-policies-do] Both policies exist because primary limits run out and jury awards can be very large. According to Marathon Strategies, U.S. juries returned 135 verdicts of $10 million or more against corporate defendants in 2024, totaling $31.3 billion. A standard [commercial general liability policy](https://www.menloinsurance.com/library/guides/cgl-policy-coverages-explained) or business auto policy often has a $1,000,000 per occurrence limit, and a serious injury verdict can pass that quickly. An umbrella or excess policy adds a second layer, commonly $1,000,000 to $10,000,000 or more, that pays the part of a covered loss above the underlying limit. The excess layer also matters for defense. Once a primary policy's limit is used up, its duty to defend usually ends, and the excess insurer can take over the defense. Whether that defense reduces your limit depends on the form: the ISO umbrella pays defense costs in addition to its limits, while many non-ISO excess forms count defense as part of the loss, so a long lawsuit uses up the limit you bought. Both policy types have a second job. Your [aggregate limit](https://www.menloinsurance.com/library/glossary/aggregate-limit) caps what the underlying policy pays for all claims in a policy year. When claims reduce or use up that aggregate, the excess policy drops down and responds in the underlying policy's place. ### Example A delivery driver causes an accident that settles for $1,800,000. The company's business auto policy has a $1,000,000 limit, which is not enough. The company also has a $2,000,000 excess liability policy scheduled over the auto policy. The auto insurer pays its full $1,000,000 and the excess policy pays the remaining $800,000. Without the excess layer, the company would have paid that $800,000 itself. ## What is the difference between an umbrella and an excess liability policy? [#what-is-the-difference-between-an-umbrella-and-an-excess-liability-policy] The difference is what happens when no underlying policy responds to a loss. A plain [excess liability policy](https://www.menloinsurance.com/library/guides/excess-liability-insurance), whether follow form or written on its own terms, only adds limits. Even a stand-alone excess policy with broader wording than the underlying policies cannot drop down to provide primary coverage when no underlying policy responds. An umbrella, such as one written on the ISO Commercial Liability Umbrella Coverage Form CU 00 01 04 13, has its own insuring agreements, which can be broader than the underlying ones in some areas. If a loss falls under the umbrella but under none of the underlying policies, the umbrella drops down and pays as the first layer. You pay the self-insured retention (SIR) shown on the umbrella's declarations first. That third ability is the whole distinction. The rest of the mechanics compare like this: Some carriers sell both in one contract, a bifurcated policy with a follow-form part and an umbrella part, each with its own exclusions. On those, the answer can differ from one line of coverage to the next within the same policy. ## What does follow form mean? [#what-does-follow-form-mean] A follow-form excess policy adopts the terms, conditions and exclusions of the underlying policies on its schedule. If the underlying policy covers a claim, so does the follow-form excess, at a higher layer, and if the underlying policy excludes it, so does the excess. The form is short because it does not write its own terms, and predictable because the excess layer is never broader than what sits below it. The catch is that true follow form is rare. Most policies described as "follow form" are conditional follow form: they follow the underlying wording except where the excess policy's own provisions differ. Where they conflict, the excess can pay less than the underlying policy would have, so a claim your CGL covers can still be denied by the layer above it. For example, a pollution or drone exclusion added to the excess layer by endorsement applies whether or not the underlying policy would have paid. Read every exclusion in the excess policy and sort them into absolute exclusions, which always apply, and conditional ones, which give way when the underlying policy provides coverage. ## How does the self-insured retention work? [#how-does-the-self-insured-retention-work] The [self-insured retention](https://www.menloinsurance.com/library/glossary/self-insured-retention) (SIR) is a dollar amount on a commercial umbrella's declarations, and it applies to only one kind of claim: one where the umbrella is broader than the underlying policies and drops down to pay as the primary insurer. You pay the SIR before the umbrella responds. An SIR is not a deductible. A deductible is taken from each loss the insurer pays from the first dollar, while the SIR is paid by you before the policy responds, and it never applies to ordinary excess claims. If a $1,500,000 loss is covered by your $1,000,000 underlying policy and the umbrella pays the $500,000 above it, no SIR applies. No SIR applies either when the umbrella replaces an exhausted underlying aggregate, because under the CU 00 01 definition the retention does not apply to occurrences the underlying insurance would have covered if its limits had not been used up. Plain excess policies have no SIR, because they never drop down for broader coverage. The SIR differs by policy, often $10,000 and sometimes $0, and some insureds take a higher retention to lower the premium. The retention applies per occurrence or per policy period, and the umbrella's limits sit above the retention rather than being reduced by it. ## How do these policies stack with your aggregate limits? [#how-do-these-policies-stack-with-your-aggregate-limits] The excess layer works together with your underlying aggregates, and that is where buyers lose money. Excess insurers usually require you to keep the underlying policies on the schedule, such as commercial general liability, business auto liability and [employers liability](https://www.menloinsurance.com/library/guides/employers-liability-insurance), at specified limits. Most also require those aggregates to be unimpaired, meaning fully available, on the excess policy's effective date. Only paid claims impair an aggregate. A large reserve on an open claim does not, so a policy with a $500,000 reserve under a $2,000,000 aggregate still counts as unimpaired until the money is actually paid. Timing is another trap. When an excess policy's dates don't match the underlying policy's dates, the layers are "non-concurrent." Claims paid before the excess policy started can use up the aggregate the excess insurer assumed was full. Umbrellas are especially exposed on timing, because they drop down only for injury that happens during their own policy period. The math can be harsh. A contractor's CGL runs January to January with a $1,000,000 occurrence limit and a $2,000,000 aggregate. In June the contractor adds a $3,000,000 umbrella with the same expiration date. Two accidents from before June settle for a total of $1,100,000, leaving $900,000 in the aggregate when a $2,000,000 crane collapse happens. The CGL pays its remaining $900,000. The umbrella responds as if the aggregate were unimpaired and pays only above the full $1,000,000 occurrence limit. The contractor pays the $100,000 difference. The clean fixes are to write the layers on the same dates, cancel and rewrite so the dates line up, or have the insurer add non-concurrency wording. Ask your broker which one your placement uses. ## When does each policy fit? [#when-does-each-policy-fit] Choose follow-form or stand-alone excess when your underlying policies already cover your real exposures and the only problem is the size of the limit. That is common when contracts require $5,000,000 or $10,000,000 in total liability limits. It is the simpler and usually cheaper option. How much limit to buy keeps rising, and the rise can be measured. According to an analysis by Triple-I and the Casualty Actuarial Society, legal system abuse increased U.S. liability insurance losses by $231.6 billion to $281.2 billion over the ten years ending in 2024, driven by claim severity, not claim frequency. If one number should size your layer, it is $51,000,000, the median nuclear verdict in 2024 in Marathon's data, up from $21,000,000 in 2020. A limit that covered your worst case five years ago may not cover a median verdict today. Choose an umbrella when the extra layer also needs to fill gaps. Because its insuring agreement is broader than a primary policy's, it can pick up claims the underlying policies miss. In exchange you take on the SIR and a longer form to read. Contractors and businesses with contractual liability beyond what a standard CGL covers use umbrellas most, but anyone whose operations outgrow off-the-shelf primary forms can buy one. Whichever you buy, match the policy period to your underlying terms and keep the required underlying limits in force. Check the schedule of underlying insurance at every renewal, because a lapsed underlying policy can leave the excess layer with nothing beneath it. Keeping the underlying policies in place is a policy duty, not just good practice. CU 00 01 04 13 requires the insured to notify the umbrella insurer in writing, as soon as practicable, when an underlying policy is canceled, not renewed, replaced, or changed in limits or scope. In a brokered placement, your broker sends that notice. Broadening underlying coverage mid-term without telling the umbrella insurer also works against you: the umbrella pays no more than it would have before the change, so the new exposure has no excess layer above it. ## Frequently Asked Questions ### Is umbrella insurance the same as excess liability insurance? Not quite. Every commercial umbrella is an excess policy, but it is the broadest type. A plain excess policy only adds limits above underlying coverage, while an umbrella can also cover some claims the underlying policies exclude, dropping down to pay as primary subject to a self-insured retention. ### What is the difference between a self-insured retention and a deductible? A self-insured retention (SIR) is an amount your business pays before the policy responds, and the policy limits sit on top of it rather than absorbing it. With a deductible, the insurer handles the claim from the first dollar and then collects the deductible from you. On a commercial umbrella, the SIR applies only when the umbrella drops down to cover a claim no underlying policy covers, never to ordinary excess claims. ### Does a commercial umbrella cover claims my general liability policy excludes? Sometimes, and that possibility is what separates an umbrella from plain excess. The umbrella has its own insuring agreement. Where that agreement is broader than the CGL's, the umbrella provides primary coverage after you pay the self-insured retention. Umbrella coverage is not unlimited, though. Each umbrella form has its own exclusions, and some are narrower than a standard CGL's. ### How much umbrella or excess coverage does my business need? Start with what your contracts require, because owners and general contractors routinely set minimum total limits. Then estimate your worst realistic loss: auto fleets, work at heights and public exposure all raise severity. Excess layers are sold in $1,000,000 increments and priced partly on the underlying limits you carry, so the underlying program affects what the excess layer costs. *This guide is for educational purposes and summarizes standard ISO policy language. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## What to check at your next umbrella or excess renewal [#what-to-check-at-your-next-umbrella-or-excess-renewal] Read the form itself, not the cover page, to see which kind of policy you have. Both types add limits above your primary coverage, but only a commercial umbrella can be broader and drop down to pay claims the underlying policies never covered, after its self-insured retention. At renewal, confirm that the dates and required underlying limits line up across every layer, and compare your schedule of underlying insurance with each exclusion in the excess layer. ## References . [Marathon Strategies. Corporate Verdicts Go Thermonuclear, 2025 Edition]() . [Insurance Information Institute and Casualty Actuarial Society. Legal System Abuse Drives Liability Insurance Losses by More Than $230 Billion Over Past 10 Years]() # Uninsured Motorist Coverage: How It Works, How Much to Buy (https://www.menloinsurance.com/library/guides/uninsured-motorist-coverage) How uninsured and underinsured motorist coverage works, UM bodily injury vs property damage, offset vs excess UIM states and California rules. Markdown version: https://www.menloinsurance.com/library/guides/uninsured-motorist-coverage.md Uninsured motorist (UM) coverage pays for your injuries, and in some states your car, when the at-fault driver has no liability insurance or can't be identified after a hit-and-run. Underinsured motorist (UIM) coverage pays when the at-fault driver's limits are too low to cover your loss. Both are part of your own auto policy, so you claim against your own insurer instead of chasing a driver who may have nothing to collect. The premium is small for what it protects, and in most states removing it takes a signed written waiver. In the Insurance Research Council's 2025 study "Uninsured and Underinsured Motorists: 2017 to 2023," 15.4% of U.S. drivers were uninsured in 2023, more than one in seven, and one in three were either uninsured or underinsured. Here is how the coverage works on personal and commercial policies. ## Key takeaways * **UM bodily injury** pays medical bills, lost income and pain and suffering from an accident caused by an uninsured driver. **UM property damage** pays for damage to your car, usually with a low cap. * **Underinsured motorist (UIM)** applies when the at-fault driver has insurance but not enough. Your state decides whether your UIM limit sits on top of the other driver's payment or only fills the gap up to your own limit. * **You cannot collect more UM than you bought.** Most carriers sell UM/UIM only up to your own liability limits, which is another reason to buy real liability limits. * **Rejecting it takes paperwork.** States like California require insurers to include the coverage unless you sign a written waiver, and that waiver stays with the policy at every renewal. ### Uninsured Motorist Coverage Uninsured motorist coverage is first-party [auto insurance](https://www.menloinsurance.com/car-insurance) that pays for bodily injury, and sometimes vehicle damage, caused by an at-fault driver who carries no liability insurance or flees the scene. It substitutes your own insurer for the missing one, up to the UM limit you purchased. ## What Is Uninsured Motorist Coverage? [#what-is-uninsured-motorist-coverage] Uninsured motorist (UM) coverage is first-party coverage on your own auto policy that stands in for the liability insurance the at-fault driver should have had. If an uninsured driver injures you, your UM coverage pays what their liability coverage would have paid: reasonable medical expenses, lost income and other damages for your injuries, up to your UM limit. With UM limits of 100/300, you could collect up to $100,000 per injured person and $300,000 for everyone injured in one crash, from your own insurer. The coverage also applies when the at-fault driver's insurer denies coverage or goes bankrupt, and in most states when a hit-and-run driver can't be identified. Because you are claiming against your own insurer, disputes usually go to arbitration rather than a lawsuit against a driver who can't be found. UM coverage generally follows people rather than vehicles, so it covers you and family members living with you as pedestrians, cyclists and passengers in other cars. - 15.4% — U.S. drivers who were uninsured in 2023 — [Insurance Research Council, 2025]() - 1 in 3 — Drivers who are uninsured or underinsured — [Insurance Research Council, 2025]() ## What Is the Difference Between UM Bodily Injury and UM Property Damage? [#what-is-the-difference-between-um-bodily-injury-and-um-property-damage] UM has two parts that you buy separately: bodily injury covers people, and property damage covers your car. Uninsured motorist bodily injury (UMBI) pays for injuries to you and your passengers, and state law sets its rules. Uninsured motorist property damage (UMPD) pays to repair or replace your vehicle, and it usually comes with a cap, a deductible or an identification requirement that UMBI does not have. Buyers often confuse the two. If you carry collision coverage, UMPD adds little, because collision pays for your car whoever was at fault. UMPD is worth the most to drivers without collision, and in states where it pays your collision deductible when an uninsured driver hits you. Here is how the parts fit together: | Coverage | What it pays | Watch for | | --------------------- | -------------------------------------------------------------------------- | ------------------------------------------------------------------------------------- | | UM bodily injury | Medical bills, lost wages, pain and suffering for you and your passengers | The core coverage. Limits written per person / per accident, like 100/300 | | UM property damage | Repair or total loss of your vehicle | Low caps in some states ($3,500 in California), and hit-and-run claims often excluded | | Underinsured motorist | The shortfall when the at-fault driver's limits are less than your damages | Offset and excess math differ by state | ## How Does Underinsured Motorist Coverage Work? [#how-does-underinsured-motorist-coverage-work] Underinsured motorist coverage applies when the at-fault driver has liability insurance but not enough to pay for your injuries. If a driver with a state-minimum policy causes $200,000 of injuries, most of your claim is uncovered. How much UIM pays depends on whether your state is an offset state or an excess state. In an offset state (also called a gap or reduced-by state), every dollar the at-fault driver's insurer pays is subtracted from your UIM limit. In an excess state, your UIM limit sits on top of what the at-fault driver's insurer pays. With the same limits, the difference can be large. ### Example You have $100,000 of UIM coverage and $150,000 of damages. The at-fault driver has $50,000 of liability insurance, and that insurer pays all of it. In an offset state such as California, your UIM limit is reduced by that $50,000, so your UIM insurer owes at most $50,000 and you absorb the rest. In an excess state such as Colorado or Arizona, your $100,000 sits on top of their $50,000, so you recover the full $150,000. In an offset state, if your UIM limit equals the at-fault driver's liability limit, UIM pays nothing. Offset states create a practical problem: a UIM limit equal to the state minimum can be wiped out entirely once the at-fault driver's payment is credited. In offset states, brokers should quote UIM limits well above the minimum, because only the difference can ever be paid. Settling is the other hazard. Many states, including California, let the insurer deny UIM if you settle with the at-fault driver without your insurer's written consent (Insurance Code section 11580.2). Cash the other carrier's policy-limits check before you have your insurer's consent letter and your UIM claim can disappear. ## How Does Uninsured Motorist Coverage Work in California? [#how-does-uninsured-motorist-coverage-work-in-california] California requires UM bodily injury coverage on every auto liability policy under Insurance Code section 11580.2. The named insured can delete it or lower its limits only by signing a written waiver, and the waiver stays in effect until the named insured revokes it. California is also an offset state for UIM and does not allow stacking, so only one limit applies per accident. Starting January 1, 2025, Senate Bill 1107 raised California's minimum liability limits to $30,000 per person and $60,000 per accident, which also raised the UM limits insurers must provide. You can carry UMBI limits equal to your liability limits, but the insurer is not required to offer more than 30/60. UMPD is a separate coverage under Insurance Code section 11580.26. If you carry collision, it pays your collision deductible when an uninsured driver hits you. If you don't, it pays the lesser of your car's [actual cash value](https://www.menloinsurance.com/library/glossary/actual-cash-value) or $3,500. Either way, it pays only if there was physical contact, the uninsured driver or vehicle is identified, and the accident is reported to your insurer within 10 business days. There is also a deadline for UM bodily injury claims: under section 11580.2(i), within two years of the accident you must sue the uninsured driver, reach a written agreement on damages with your insurer, or demand arbitration by certified mail, or the claim is barred. ### The waiver you signed years ago still controls In California, a signed UM waiver or reduction stays in effect at every renewal until you revoke it in writing. Many drivers who waived UM years ago to save on premium still have no UM coverage today. Ask your broker to pull the waiver, not just the declarations page. In California, waiving UMBI saves very little and gives up your only realistic way to recover from the state's many uninsured drivers. Keep it, and match it to your liability limits. ## How Much Uninsured Motorist Coverage Should You Buy? [#how-much-uninsured-motorist-coverage-should-you-buy] Buy UM limits equal to your liability limits. Most insurers won't write a UM limit above your liability limit, so your liability choice sets the ceiling, and UM usually costs only a small share of the liability premium. The reasoning is simple: the injuries that made you buy $250,000 of liability coverage for strangers are the same injuries you and your passengers could suffer. Buying 250/500 liability with 30/60 UM says a stranger's back is worth more than yours. Check your umbrella too. A personal [umbrella policy](https://www.menloinsurance.com/library/guides/umbrella-vs-excess-liability) raises your liability limits but usually excludes UM/UIM unless you add an "excess UM" or "umbrella UM" endorsement, which only some carriers offer. If your household's potential injuries exceed the UM limit on your auto policy, that endorsement is the only way to bring UM up to your umbrella limit. ## How Does UM/UIM Work on a Commercial Auto Policy? [#how-does-umuim-work-on-a-commercial-auto-policy] On a business auto policy, UM and UIM appear as their own lines on the declarations and are added by a state-specific endorsement, not the [CA 00 01](https://www.menloinsurance.com/library/forms/ca-00-01) coverage form itself. ISO publishes a separate UM endorsement for each state in its CA 21 series. Each coverage line also needs a [covered auto symbol](https://www.menloinsurance.com/library/guides/commercial-auto-insurance-symbols) beside it. Symbols 2, 3, 4 and 7 can be used for UM, and symbol 6 applies to autos garaged in states where UM cannot be rejected. Every state where vehicles are garaged has its own offer, rejection and limit selection forms. A missing or defective rejection form can put UM into the policy at the full bodily injury liability limit by law. Florida is an example: Section 627.727 of the Florida Statutes sets UM equal to the bodily injury liability limits unless a named insured signs a written rejection or selects lower limits. So a $1,000,000 liability policy with a badly completed rejection form carries $1,000,000 of UM. ## Frequently Asked Questions ### Is uninsured motorist coverage required by law? It depends on the state. Some states make UM bodily injury mandatory and impossible to reject, which is why business auto symbol 6 exists. Many others, including California, require it unless you reject it in writing. No state stops you from buying it, and a signed written waiver is the only legitimate way to remove it from your policy. ### Does uninsured motorist coverage pay for damage to my car? Only the property damage part, UMPD, and only where it is available. UM bodily injury never pays for vehicles. UMPD often has limits, like California's $3,500 cap, and usually requires the uninsured driver or vehicle to be identified. If you carry collision, your car is already covered, and UMPD mostly covers your collision deductible. ### What happens if I rejected UM coverage and an uninsured driver hits me? Your own policy does not pay for your injuries, and your only claim is against a driver who, by definition, has no insurance and often little money to collect. Health insurance covers some treatment but not lost wages or pain and suffering. You can revoke a UM waiver at any renewal, and often mid-term, by asking your insurer in writing. ### Is underinsured motorist coverage worth it if I already have health insurance? Yes, for most people. Health insurance pays only medical bills, after your deductible and within its network, and your health insurer may place a lien on any accident recovery you receive. UIM also pays lost income and pain and suffering, which no health plan covers, and it protects your passengers too. The two coverages overlap much less than their names suggest. *This guide is for educational purposes and summarizes standard ISO policy language. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## Two things to check on your auto policy today [#two-things-to-check-on-your-auto-policy-today] Check two things: that your UM/UIM limits match your bodily injury liability limits, and that there is no old UM waiver on file. UM/UIM makes your own policy the payer when the at-fault driver has no insurance or not enough, and it costs little. With more than one in seven drivers uninsured, it is the only reliable way to recover for injuries such a driver causes. In an offset state like California, a minimum UIM limit can pay nothing at all. ## References . [Insurance Research Council. One in Three Drivers Are Either Uninsured or Underinsured in the U.S.]() . [California Legislative Information. Insurance Code Section 11580.2]() . [California Legislative Information. Senate Bill 1107 (2023-2024), Protect California Drivers Act]() . [California Legislative Information. Insurance Code Section 11580.26]() . [Florida Senate. Section 627.727, Florida Statutes]() # Insuring a Vacant or Inherited Home in California: Vacancy Clauses, Estates and Trusts, and What It Costs (https://www.menloinsurance.com/library/guides/vacant-inherited-home-insurance-california) A California house left empty after a death, a move or a tenant leaving loses fire coverage after 60 days of vacancy under the standard fire policy. Which programs insure it (FAIR Plan up to a year vacant, Delos from $1,500 a year, Green Shield up to 48 months), how an estate or trust is named, and what to prepare. Markdown version: https://www.menloinsurance.com/library/guides/vacant-inherited-home-insurance-california.md An empty California house needs a policy written for vacancy, because the ordinary one stops working. Under Insurance Code section 2071, the insurer is not liable for fire losses once a building "is vacant or unoccupied beyond a period of 60 consecutive days," unless the policy says otherwise. The fix is to tell the insurer the house is empty and move it to a vacant-home program: the California FAIR Plan takes 1–4 unit homes vacant up to one year, Delos writes vacant homes on Lloyd's paper from a $1,500 annual minimum premium, and Green Shield's program accepts residential vacancies of up to 48 months. This guide is for the person holding the keys to an empty house: an heir, an executor or administrator in probate, a trustee, or an owner who moved out and hasn't sold yet. It covers when the old policy stops protecting you, which kinds of programs take an empty home, how to name an estate or trust, and what vacant coverage costs. Menlo Insurance Services submits vacant homes to several of these markets. To start, use our [vacant property insurance page](https://www.menloinsurance.com/vacant-property-insurance). ## Key takeaways * **The clock starts when the house empties.** California's standard fire policy drops fire coverage after 60 consecutive days of vacancy, and the FAIR Plan's vandalism coverage stops after 30 days unless a vacancy permit endorsement is added. * **Vacant programs set limits on how long.** The FAIR Plan declines buildings vacant over a year (unless under construction), Delos declines homes vacant more than 36 months, and Green Shield caps residential vacancy at 48 months. * **An estate or trust can be the insured.** The FAIR Plan application offers Estate and Trust as applicant types, and Delos writes in the name of a trust or LLC if the deed matches the entity's name exactly. * **Minimum premiums are published.** Delos's vacant home program has a $1,500 base annual minimum before taxes and fees, with 25% of the premium earned the day it starts. * **Theft, vandalism and water are add-ons.** Vacant forms leave them out or cap them, so check each one on the quote. ### Vacancy clause A policy condition that removes or reduces coverage once a building has been empty for a set number of days. In California the standard fire policy uses 60 consecutive days. Many policies also treat "vacant" (no furnishings) and "unoccupied" (furnished, but nobody living there) differently, so read your own policy's definitions. ## When does my homeowners policy stop covering an empty house? [#when-does-my-homeowners-policy-stop-covering-an-empty-house] After 60 consecutive days for fire, under the California standard fire policy, unless your policy grants more in writing. Other perils can end sooner. The FAIR Plan's dwelling policy, for example, excludes vandalism and malicious mischief if the home "has been vacant or unoccupied for more than 30 consecutive days immediately before the loss," and it counts a house as "unoccupied" when nobody is lawfully living in it, furnished or not. For an inherited home, the count usually starts on the day the last resident died or moved to care, not on the day the estate opened. If the house has been empty for weeks already, call the current insurer, say so in writing, and ask what it will do. Some insurers endorse a short vacancy permit, others ask you to move the house to a vacant program. Don't let the policy renew on the assumption that someone lives there. ## Who can buy insurance on an inherited house? [#who-can-buy-insurance-on-an-inherited-house] Whoever holds the insurable interest, named the way the title reads. That is usually the estate (through the executor or administrator) while probate is open, the trustee if the house is in a trust, or the heirs once title passes to them. The FAIR Plan's application lists Individual, Corporation, LLC or LP, Estate and Trust as applicant types. Delos writes a vacant home in the name of an LLC, LLP or trust, but "the deed to the property must exactly match the name of the respective entity," and the entity must be US-based. Delos also declines an applicant with no ownership interest in the property. So before you shop, have the recorded deed or the letters of administration and the trust's exact name. A policy issued to the wrong name is the most avoidable problem in an estate claim. ## Which programs insure a vacant home in California? [#which-programs-insure-a-vacant-home-in-california] Four kinds of markets take an empty California house. Each has its own time limit, value range and add-ons. | Program | Who issues it | How long it can be vacant | Dwelling limit | Published minimum premium | | ---------------------------------- | -------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------- | ------------------------------------------------------------------ | ------------------------------------------------ | | California FAIR Plan dwelling fire | California FAIR Plan Association (state insurer of last resort) | Up to one year. Over a year is ineligible unless under construction | Up to $3 million total per location | Not published. Rated per home | | Delos vacant home | Lloyd's (non-admitted), DP-3 form | Not more than 36 months | $100,000 to $1,500,000 | $1,500 a year, plus taxes and fees | | Green Shield vacant property | A-rated markets through Green Shield, DP-1 or DP-3 | Up to 48 months (residential) | Up to $4 million ($750,000 in protection class 9/10) | Not published | | Aegis dwelling fire | DB Insurance (admitted) or Lloyd's via Hiscox (surplus lines), through Aegis General | Vacant is a listed occupancy | Up to $900,000 DP-3 or $750,000 DP-1 | Not published | The FAIR Plan covers named perils only: fire, lightning and internal explosion, with extended coverage and vandalism as options. It leaves out theft, water damage and liability, which is why a vacant FAIR Plan policy is often paired with a difference in conditions policy. Our [DIC guide](https://www.menloinsurance.com/library/guides/difference-in-conditions-insurance) explains that pairing. The FAIR Plan also asks a vacancy questionnaire: when and why the house became vacant, whether it is open to trespass, boarded up, for sale or being remodeled, and whether you want the vacancy permit endorsement. Delos and Green Shield are surplus lines programs built for empty homes. We cover the named programs in more depth in our guides to [Aegis](https://www.menloinsurance.com/library/guides/aegis-insurance-vacant-home), [American Modern](https://www.menloinsurance.com/library/guides/american-modern-vacant-home-insurance), which writes 3-, 6- and 12-month vacant terms, and [Foremost](https://www.menloinsurance.com/library/guides/foremost-vacant-home-insurance-california), which reopened its vacant policy to new California customers in 2025. ## How much does vacant home insurance cost in California? [#how-much-does-vacant-home-insurance-cost-in-california] The clearest published number is Delos's: a base annual minimum written premium of $1,500, before taxes and fees, and 25% of the premium is earned the moment the policy starts, so canceling early doesn't refund all of it. Its policy fee, stamping fee and state tax are charged every year, and a card payment adds a 3% processing fee. On any surplus lines policy in California, add the 3% surplus lines tax and the 0.18% stamping fee to the premium. Above the minimum, the price follows the house: its replacement value, construction and roof, wildfire exposure, how long it has been empty and what you add. Delos's optional coverages each carry a premium charge: vandalism, water damage from plumbing and freezing, theft of the dwelling's fixtures, theft of building materials and cosmetic renovation. The FAIR Plan prices each home from its own rate book and lists the estimated premium only on the application's pricing page. We don't publish a typical vacant-home price. Programs differ too much, and we don't have enough completed vacant-home quotes of our own to give a representative figure. ## What does a vacant home policy leave out? [#what-does-a-vacant-home-policy-leave-out] More than a homeowners policy. Plan to check these on every quote: * **Vandalism.** Delos excludes it unless you add the vandalism endorsement. The FAIR Plan needs its vacancy permit endorsement for vandalism once the home is empty. * **Theft.** Delos's vacant policy excludes theft of personal property and offers theft of the dwelling's fixtures and of building materials as endorsements. Green Shield caps theft of building materials at $10,000. * **Water.** Delos excludes water damage unless you add its water, steam and freezing endorsement. * **Renovation.** Delos declines structural renovation, including a roof replacement, and covers cosmetic work up to $400,000 or 50% of the dwelling limit, whichever is less. Green Shield takes no structural renovations and covers cosmetic work up to 50% of building value or $400,000. Structural work belongs on a [builders risk policy for homeowners](https://www.menloinsurance.com/library/guides/builders-risk-for-homeowners-owner-builders). * **Liability.** Delos offers $100,000 to $1,000,000 of personal liability, with a $100,000 cap on pool claims and no coverage for dog bites. ## What do I need to apply? [#what-do-i-need-to-apply] ### Steps ### The vacancy facts The date the house became empty, the reason (death, move, tenant left, sale) and the plan: sell, rent, move in or renovate, with rough dates. ### Who owns it The exact name on the deed, or the estate or trust name, and who will sign. Have the letters of administration or the trust's name ready. ### The house Year built, construction, roof type and age, square footage, and any updates to wiring, plumbing and heating. Delos, for example, declines knob-and-tube wiring and certain electrical panels. ### Security and condition Whether the house is locked and secured, who checks on it, and any damage. Green Shield asks for photos under $500,000 and an inspection above it. The FAIR Plan asks for 2 or 3 date-stamped photos taken within 7 days. ### The current policy The expiring insurer and policy number, and any claims in the last three to five years. When you have these, [start the vacant property application](https://www.menloinsurance.com/vacant-property-insurance). The first question asks what is on the property, and a house continues with the vacant-home questions. If the property is only land, see our guide to [what vacant land insurance costs](https://www.menloinsurance.com/library/guides/vacant-land-insurance-cost-california). ## Frequently Asked Questions ### How long can a house be vacant before insurance stops covering it in California? Sixty consecutive days for fire under the California standard fire policy, unless the policy grants more. On a FAIR Plan dwelling policy, vandalism coverage ends after 30 days of vacancy unless the vacancy permit endorsement is added. ### Can an estate in probate buy insurance on the house? Yes. The FAIR Plan's application offers Estate as an applicant type, and surplus lines programs such as Delos write to an entity as long as its name matches the deed. ### Does the FAIR Plan insure vacant homes? Yes, 1–4 unit homes vacant up to one year. Buildings vacant for more than a year are ineligible unless they are under construction. ### What is the cheapest way to insure an empty house? There is no single cheapest program. Delos's published minimum is $1,500 a year before taxes and fees. A FAIR Plan fire policy is often the base, with a DIC policy added for theft, water and liability. A broker can quote several programs side by side. ### What happens when the house sells or someone moves in? Tell the insurer. A vacant policy is priced for an empty house, so it is changed or canceled when that stops being true. Delos keeps 25% of the premium as earned, and FAIR Plan and other policies refund by their own rules. *This guide is for educational purposes and summarizes California law, the California FAIR Plan's public documents and carrier program guides dated between 2020 and 2026. Programs, forms, eligibility and prices change, and your policy's specific terms, conditions and endorsements control. Menlo Insurance Services (CA license 6020106) is a licensed broker that may earn a commission on a placement and does not guarantee that any coverage or price will be available. Delos's vacant program is written by Lloyd's on a non-admitted (surplus lines) basis, and non-admitted insurers are not backed by the California Insurance Guarantee Association. Each quote names its insurer and whether it is admitted.* ## The Bottom Line [#the-bottom-line] An empty house in California loses fire coverage 60 days into a vacancy on a standard policy, and some coverages end sooner. Tell the insurer as soon as the house empties, name the right owner (the estate, the trust or the heirs), and move the house to a program built for vacancy. The FAIR Plan takes homes vacant up to a year, Delos up to 36 months from a $1,500 minimum, and Green Shield up to 48 months. Whatever you choose, confirm vandalism, theft, water and liability on the quote before you pay. ## References . [California Legislative Information. Insurance Code Section 2071 (California Standard Form Fire Insurance Policy)]() (accessed 2026-09-27) . [California FAIR Plan Association. Dwelling Application Checklist and Application for Dwelling Insurance (ACORD 854 CA)]() (2020) . [Delos Insurance Solutions. Delos Vacant Home Product & Underwriting Overview, v1.1]() (2024) . [Green Shield Risk Solutions. Vacant Property, Specialty Lines]() (2026) . [California FAIR Plan Association. Dwelling Fire Policy (sample), effective 3/17/2026]() (2026) . [California FAIR Plan Association. Plan of Operation, Ed. 9/3/25, section IV.A]() (2025) . [California FAIR Plan Association. Broker policy system, Dwelling Fire application (applicant types, coverages, photo requirements), reviewed by Menlo]() (accessed 2026-09-25) . [Aegis General Insurance Agency. Aegis Specialty Division Adds Hiscox E&S Capacity for California Home and Fire Programs]() (2025) . [Aegis General Insurance Agency. Aegis General Product Overview (CA)]() (2026) . [Surplus Line Association of California. Broker Taxes and Fees]() (accessed 2026-09-27) # How Much Does Vacant Land Insurance Cost in California? Real Quotes, Limits and Terms (https://www.menloinsurance.com/library/guides/vacant-land-insurance-cost-california) Vacant land insurance in California is liability coverage, and a September 2026 request for a 1–10 acre parcel drew two real quotes of about $980 and $1,018 a year for $1 million of liability, taxes and fees included. What goes into the price, who writes it (USLI through BTIS, Green Shield), acreage limits of 250 to 1,000 acres, and short terms. Markdown version: https://www.menloinsurance.com/library/guides/vacant-land-insurance-cost-california.md For a small California parcel, expect vacant land liability insurance to cost roughly $1,000 a year for a $1 million limit, all in. In September 2026, one customer's request for a 1–10 acre parcel drew two quotes: $980.60 a year from USLI's Mount Vernon Fire Insurance Company through BTIS ($805 premium plus a $150 wholesaler fee and state tax and stamping fee), and an indicative $1,018.39 from Green Shield ($537 premium plus $481.39 in fees and taxes). Those are two quotes for one parcel, not an average, and larger, busier or wetter land costs more. Vacant land insurance is liability only: it pays when someone is hurt on your land or damage spreads from it, not for damage to the land itself. This guide covers what drives the price, which programs write California land, the acreage and term limits, and what to have ready. To get your own number, use our [vacant land insurance application](https://www.menloinsurance.com/vacant-land-insurance). ## Key takeaways * **Two real quotes, about $1,000 each.** For one 1–10 acre California parcel in September 2026: $980.60 from USLI (via BTIS) for $1 million of personal liability, and an indicative $1,018.39 from Green Shield for $1 million per occurrence and $2 million aggregate. * **Fees are a big share on small policies.** BTIS charges a fixed $150 broker fee, and Green Shield's fees and taxes were $481.39 on a $537 premium. * **Acreage limits differ.** USLI's personal land policy goes to 250 acres and its commercial one to 1,000 acres. Green Shield's goes to 500 acres at one location. * **Land must be empty and unused.** Green Shield requires no structures, no construction and no activity of any kind. USLI allows only a locked shed or garage of up to 500 square feet for land upkeep. * **Short terms exist.** USLI's commercial land policy offers annual, 3-, 6- and 9-month terms. ### Vacant land insurance A liability policy for undeveloped land with no buildings or activity. It covers claims that someone was injured on the land, or that something starting there, such as a fire, damaged a neighbor's property, plus small medical payments regardless of fault. It does not insure the land's value. ## What did real vacant land quotes cost in California? [#what-did-real-vacant-land-quotes-cost-in-california] Here are the two quotes published for one real customer request in September 2026, for land in California of 1 to 10 acres. We've left out anything that identifies the customer or the parcel. | | USLI (Mount Vernon Fire) via BTIS | Green Shield | | ------------------ | --------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------- | | Insurer status | Non-admitted, A.M. Best A++ (Superior) | Not shown on the indicative quote | | Coverage | Comprehensive personal liability $1,000,000. Medical payments $5,000 | Premises liability $1,000,000 / $2,000,000. Medical payments $1,000 | | Premium | $805.00 | $537.00 | | Fees and taxes | $175.60: $150 wholesaler fee, 3% surplus lines tax and 0.18% stamping fee | $481.39 | | **Total per year** | **$980.60** | **$1,018.39** (indicative) | Source: Menlo quote records, September 2026. Green Shield's figure was an indicative premium that the carrier said "will form the basis of the quote," and it noted that a credit may be available. The USLI quote was valid for about two months. The pattern is worth noticing. The lower premium didn't make the lower total, because fees are fixed amounts and weigh heavily on a small premium. Always compare the total payable. ## What makes vacant land insurance cost more or less? [#what-makes-vacant-land-insurance-cost-more-or-less] * **Acreage.** Both programs ask how many acres are at the location. USLI's commercial form asks for acres (rounding under one acre up to one), and Green Shield rates by acreage band. * **The limit.** USLI offers $100,000, $300,000, $500,000 or $1,000,000 per occurrence. Lower limits cost less but leave you more exposed. * **Water.** USLI asks whether there are lakes or ponds, and Green Shield excludes levees, dams and reservoirs over one acre. * **Use.** Farming, hunting, business activity, leasing the land to others or any construction moves the parcel out of these programs or into a different class. * **Hazards on the land.** Green Shield declines dump sites, abandoned equipment, caves, oil and gas wells, mines, quarries, railroads and underground fuel storage. USLI asks about logging, landfills, quarries, mines, caves, wells, dams and vehicle bridges. * **Term.** USLI's commercial form offers 3, 6 and 9 months as well as annual, so a parcel you'll sell soon doesn't need a full year. * **Taxes and fees.** On a non-admitted policy California adds 3% surplus lines tax and a 0.18% stamping fee, plus any wholesaler or policy fee. ## Which programs write vacant land in California? [#which-programs-write-vacant-land-in-california] | Program | Form | Acreage | Limits | What must be true | | ----------------------------------------------- | ------------------------------- | -------------------------------------------------------------- | ----------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------- | | USLI Vacant Land (Personal Liability), via BTIS | Personal liability | Up to 250 acres combined, including RV pad sites | $100,000 to $1,000,000 | No boat dock, no structures (a small maintenance shed allowed), no construction scheduled | | USLI Vacant Land (commercial GL), via BTIS | Commercial general liability | Up to 1,000 acres at one location | Up to $1M per occurrence, $2M aggregate | Not cancelled or non-renewed in 3 years for reasons other than vacancy, no activities, not leased to others | | Green Shield Vacant Land | Standard ISO premises liability | Up to 500 acres, one location per policy | Up to $1M per occurrence, $2M aggregate | 100% vacant, no structures, no construction, not in use | Individuals usually fit the personal form, and an LLC, a business or a larger parcel the commercial one. Our [vacant land page](https://www.menloinsurance.com/vacant-land-insurance) takes land owned by a person, an LLC or a trust. If there is a house on the land, it isn't vacant land. See our guide to [insuring a vacant or inherited home](https://www.menloinsurance.com/library/guides/vacant-inherited-home-insurance-california) instead. ## Does vacant land insurance cover fire spreading from my land? [#does-vacant-land-insurance-cover-fire-spreading-from-my-land] It covers your liability if a fire or other damage that starts on your land harms someone else's property and you are found responsible, within the policy's terms. It doesn't pay to restore your own land. Green Shield's program excludes structures and construction activity entirely, so a shed or a building project needs other coverage. ## What do I need to get a quote? [#what-do-i-need-to-get-a-quote] ### Steps ### Owner and address The exact owner name (you, the LLC or the trust), the parcel address or APN, and a mailing address. ### Acreage and a legal description Green Shield asks for a legal description and acreage confirmation. ### What is on the land Water, structures, equipment, trails, fencing and any "no trespassing" signs, and whether anyone uses it for farming, hunting or recreation. ### Plans Whether you plan to build during the policy term. Construction takes the parcel out of these programs. ### Written confirmation Green Shield asks for written confirmation that the land is vacant and not in use. ## Frequently Asked Questions ### How much is vacant land insurance per year in California? In September 2026, two quotes for one 1–10 acre California parcel came to $980.60 and $1,018.39 a year with taxes and fees for $1 million of liability. Your price depends on acreage, limit, water, use and term. ### Do I need insurance on vacant land? Usually it's your choice, unless a lender, a buyer or a purchase contract asks for it. Without it, the owner defends and pays any injury claim from its own pocket, and that is just as true when the owner is an LLC or a trust. ### Can I buy vacant land insurance for less than a year? Yes on USLI's commercial land form, which offers 3-, 6- and 9-month terms as well as annual. ### Does homeowners insurance cover a separate vacant lot? Ask your insurer. Some homeowners policies extend liability to other land you own and some don't. Get the answer in writing, or buy a separate land policy. ### What makes land ineligible? Structures, construction, activity on the land, leasing it to others, dumps, mines, wells, larger bodies of water, and more acreage than the program allows. *This guide is for educational purposes and summarizes carrier program guides, the carrier applications as Menlo walked them in September 2026, and two quote records for one customer request in September 2026. Prices, programs and eligibility change, and your policy's terms control. Menlo Insurance Services (CA license 6020106) is a licensed broker that may earn a commission on a placement and does not guarantee that any coverage or price will be available. Mount Vernon Fire Insurance Company is non-admitted in California, and non-admitted insurers are not backed by the California Insurance Guarantee Association.* ## The Bottom Line [#the-bottom-line] Vacant land insurance is liability coverage, and for a small California parcel it cost about $1,000 a year all in on the two real quotes we received in September 2026: $980.60 from USLI via BTIS and $1,018.39 indicative from Green Shield. Fees are a large share of a small policy, so compare totals. Keep the land empty and unused, check the acreage limit (250, 500 or 1,000 acres depending on the form), and ask about a short term if you'll sell or build soon. ## References . [United States Liability Insurance Group (via BTIS). Vacant Land (Personal Liability) quote, Mount Vernon Fire Insurance Company, September 2026 (Menlo quote record; customer details withheld)]() (accessed 2026-09-27) . [Green Shield Risk Solutions. Vacant Land indicative premium, September 2026 (Menlo quote record; customer details withheld), and Vacant Land program sheet]() (accessed 2026-09-27) . [BTIS / USLI. USLI Vacant Land (commercial and personal liability) applications as walked by Menlo, September 2026]() (accessed 2026-09-27) . [Green Shield Risk Solutions. Vacant Land, Specialty Lines]() (2026) . [Surplus Line Association of California. Broker Taxes and Fees]() (accessed 2026-09-27) # Waiver of Subrogation: What It Is, Why Contracts Require It, and What It Costs (https://www.menloinsurance.com/library/guides/waiver-of-subrogation) What a waiver of subrogation does, why owners and general contractors demand one, which endorsements deliver it on GL, workers' comp and auto policies, and how blanket and scheduled waivers differ. Markdown version: https://www.menloinsurance.com/library/guides/waiver-of-subrogation.md A waiver of subrogation is your insurer agreeing that, once it pays your claim, it won't turn around and sue the other party to your contract to get the money back. Subrogation is the right an insurer picks up, from the policy or by law, after it pays a loss. It steps into your shoes and goes after whoever caused the damage. The waiver turns that right off for one named party, or for anyone you have a written contract with. IRMI describes it as "an acknowledgment by an insurer that it has no right to subrogate against a liable third party." Owners and general contractors insist on it because they don't want your policy to pay a claim on Monday and your carrier to sue them over it on Tuesday. You give the waiver by adding an endorsement to each policy the contract names. Most often that's the [CG 24 04 on your general liability policy](https://www.menloinsurance.com/library/forms/cg-24-04) and the [WC 00 03 13 on your workers' compensation policy](https://www.menloinsurance.com/library/forms/wc-00-03-13). If you're bidding a job that asks for one and your current policy doesn't have it, [request a general liability quote that builds the waiver in](https://www.menloinsurance.com/f/general-liability) so the certificate is right the first time. Contractors can start from our [contractor general liability](https://www.menloinsurance.com/contractors-general-liability-insurance) page, where several programs offer a blanket waiver. ## Key takeaways * **It is the insurer's promise, not yours**: a sentence in your contract saying you waive subrogation binds only you; the other party wants the endorsement because that is what binds your carrier. * **Waive before the loss, never after**: a waiver written into a contract before a loss does not void coverage, but giving one up after a loss is a different matter and standard liability wording treats it as impairing the insurer's rights. * **Blanket beats scheduled for busy contractors**: a blanket waiver applies automatically to anyone your written contract requires, so you stop chasing per-project endorsements. * **California treats the insurance requirement separately from the indemnity**: the anti-indemnity rules in Civil Code section 2782.05 void certain indemnity clauses, but they expressly leave a contract's insurance-purchase requirements alone. ### Waiver of subrogation A policy endorsement, or a policy provision, under which the insurer gives up its right to recover a paid loss from a specific third party, usually because the insured agreed to that waiver in a written contract signed before the loss. ## Why do owners and general contractors require a waiver? [#why-do-owners-and-general-contractors-require-a-waiver] Say a subcontractor's employee gets hurt on a job site. The sub's workers' comp carrier pays the medical bills and wage benefits. Without a waiver, that carrier can go after anyone whose negligence helped cause the injury to get its money back, and the GC running the site is the obvious target. A waiver of subrogation in favor of the GC closes that door. The loss stays with the policy that was bought to pay it. General liability and property claims work the same way. Whoever sits higher up the contract chain priced the project assuming each trade's insurance would be the first and last stop for that trade's losses. The waiver is how they make sure that's true. IRMI puts it plainly: the other contracting party wants "proof - in the form of a waiver of subrogation from the insurer," not just a waiver clause between the two businesses. You'll usually see the waiver alongside two other requirements: [additional insured status](https://www.menloinsurance.com/library/guides/additional-insured-endorsements-explained) and [primary and noncontributory wording](https://www.menloinsurance.com/library/glossary/primary-and-noncontributory). With all three in place, the lower-tier contractor's policy pays first, the upper-tier party is protected directly, and the lower-tier carrier can't claw the money back. ## Which endorsement delivers the waiver on each policy? [#which-endorsement-delivers-the-waiver-on-each-policy] Every policy line has its own waiver endorsement, and your certificate of insurance should show the right one for each line the contract lists. Our [certificate of insurance guide](https://www.menloinsurance.com/library/guides/certificate-of-insurance-guide) covers how the waiver appears on the [ACORD 25](https://www.menloinsurance.com/library/forms/acord-25). | Policy | Endorsement | What it does | Blanket version available? | | ---------------------------- | --------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------- | | Commercial general liability | [CG 24 04](https://www.menloinsurance.com/library/forms/cg-24-04) (Waiver of Transfer of Rights of Recovery Against Others to Us) | Waives the insurer's recovery right against the person or organization shown in the schedule for losses arising out of your ongoing operations or "your work" for that party | Yes, when the schedule reads "any person or organization when required by written contract" | | Workers' compensation | [WC 00 03 13](https://www.menloinsurance.com/library/forms/wc-00-03-13) (Waiver of Our Right to Recover from Others) | Waives the carrier's recovery right for injuries to your employees connected to work you perform for the scheduled party | Yes, most carriers offer a blanket schedule | | Business auto | Carrier-specific waiver endorsement to the [business auto coverage form](https://www.menloinsurance.com/library/forms/ca-00-01) | Waives recovery for auto losses arising out of work for the scheduled party | Varies by carrier; ask for the form number before the certificate is issued | Two limits trip people up when certificates get reviewed. First, the GL waiver is tied to your operations or work for the scheduled party. It doesn't waive recovery on unrelated claims. Second, the endorsement only matters where the insurer would otherwise have a subrogation right. If the other party caused a loss your policy never pays, there's nothing to waive. For more on the workers' comp version, including why some contractors worry about their experience mod, read the [waiver of subrogation glossary entry](https://www.menloinsurance.com/library/glossary/waiver-of-subrogation) and our [experience mod guide](https://www.menloinsurance.com/library/guides/experience-mod-guide). ## Blanket or scheduled: which should you carry? [#blanket-or-scheduled-which-should-you-carry] The blanket version has a condition tucked into it. The waiver only applies when a written contract requires it, and on many carrier forms, only if that contract was signed before the loss. A handshake deal won't trigger a blanket waiver. Neither will a purchase order signed after the incident. Keep each signed contract on file with the certificate you issued for it. ## How much does a waiver of subrogation cost? [#how-much-does-a-waiver-of-subrogation-cost] There's no single market price. It depends on the carrier, the policy line and whether the waiver is blanket or scheduled. Some programs throw it in at no extra charge. For example, one excess and surplus lines contractors program published by Blitz Insurance advertises an additional insured bundle of blanket additional insured, primary and noncontributory, and waiver of subrogation at no charge. On workers' comp, carriers commonly charge a percentage of the premium for the work you do for the party being waived. Each carrier's filed rules set that percentage and any minimum charge, so any figure you see online is that carrier's number, not a rule. The bigger cost is indirect. When your carrier can't recover a loss from whoever caused it, the whole loss stays on your record. That can affect your renewal pricing and, on workers' comp, your [experience modification rate](https://www.menloinsurance.com/library/glossary/experience-modification-rate). Build the waiver into your bid. Don't refuse it. The contract requirement is usually non-negotiable. ### A waiver clause in the contract is not enough Contracts often contain a sentence like "the parties waive all rights of subrogation against each other." That sentence binds the two businesses. It doesn't bind an insurer that never signed it. If the carrier hasn't endorsed the policy, it may still go after recovery, and you could be on the hook for breach of contract. For every waiver clause, get the endorsement on the policy it refers to. ## How does California law treat the waiver requirement? [#how-does-california-law-treat-the-waiver-requirement] California's construction anti-indemnity statutes limit how much liability one party can push onto another by contract. Civil Code section 2782 voids construction-contract clauses that indemnify a party for its own sole negligence or willful misconduct, and later amendments limit indemnity for a public agency's or private owner's active negligence. Section 2782.05 does the same for subcontractor-to-general-contractor indemnity on contracts entered into on or after January 1, 2013. Those statutes deal with indemnity, not insurance. Section 2782.05 lists exceptions, and one of them preserves "provisions in a construction contract that require the promisor to purchase or maintain insurance," including additional insured endorsements for ongoing and completed operations. A requirement to carry a waiver of subrogation falls on the insurance side of that line. That's why California contractors still see it on nearly every subcontract, even though the indemnity clauses next to it have been narrowed. IRMI notes that in some states, anti-indemnity laws reach insurance requirements too. If you work across state lines, check each state. Don't assume California's rules come with you. Our [hold harmless agreement guide](https://www.menloinsurance.com/library/guides/hold-harmless-agreement) walks through the indemnity side in detail. ## What should you check in the contract before you sign? [#what-should-you-check-in-the-contract-before-you-sign] ### Steps ### Find every waiver requirement in the contract Go through the insurance exhibit and the indemnity article. Write down which policies the waiver applies to (GL, workers' comp, auto, umbrella, property) and in whose favor (owner, GC, lender, their officers and agents). ### Match each requirement to an endorsement Confirm your GL policy carries the CG 24 04 or a carrier equivalent, your workers' comp policy carries the WC 00 03 13, and your auto policy carries its waiver form. Ask your broker for copies of the endorsements, not just the certificate. ### Prefer a blanket schedule If you sign more than a couple of contracts a year, a blanket waiver tied to written contracts saves you the scramble on every project. Check whether the blanket wording requires the contract to be signed before the loss. ### Check the other party's waiver runs both ways when it should Mutual waivers between owner and contractor are common on property and builders risk policies. If the contract promises a mutual waiver, make sure the owner's policy has one too. ### Keep the paper trail Keep the signed contract, the certificate you issued and the endorsement together. A blanket waiver only helps if you can prove the written contract existed when the loss happened. If your renewal is coming up, or a contract just showed up with an insurance exhibit you haven't seen before, [start a general liability quote](https://www.menloinsurance.com/f/general-liability) and send the contract with it. We build the waiver, additional insured and primary wording into the quote instead of tacking them on after binding. Our [general liability insurance overview](https://www.menloinsurance.com/general-liability-insurance) explains what the base policy does before any endorsements. ## Frequently Asked Questions ### Does a waiver of subrogation mean I am giving up my own coverage? No. The waiver gives up the insurer's right to recover a paid loss from the named party. Your policy still pays your covered claims. Your carrier just can't go after the other party for the money afterward. ### Can I add a waiver of subrogation after a claim has happened? The endorsements are built for a waiver written into a contract before a loss. Standard liability policies say you can't impair the insurer's recovery rights after a loss, and IRMI notes a post-loss waiver would violate the principle of indemnity, so a carrier won't honor one. Get the endorsement in place when you sign the contract. ### Is a blanket waiver of subrogation the same as blanket additional insured? No. They're two different endorsements that often get requested together. Additional insured status gives the other party its own rights under your policy. The waiver stops your insurer from recovering against that party. Our [named insured vs additional insured guide](https://www.menloinsurance.com/library/guides/named-insured-vs-additional-insured) explains the first half. ### Does a waiver of subrogation raise my workers' comp premium? It can. Carriers usually charge for the waiver. And a loss that can't be recovered from a negligent third party stays on your loss record and feeds into your experience mod. Each carrier's filed rating rules set the actual charge. ### Which endorsement number should appear on my certificate for the GL waiver? The ISO form is [CG 24 04](https://www.menloinsurance.com/library/forms/cg-24-04), Waiver of Transfer of Rights of Recovery Against Others to Us. If your carrier uses its own forms, you'll see a different number. If the certificate reviewer pushes back, ask for the endorsement itself. *This guide is for educational purposes and summarizes standard policy forms, public sources and California statutes. Your policy's specific terms, conditions, and endorsements control, and contract enforceability depends on the wording and the facts. Talk to a licensed broker and, for contract questions, an attorney about your actual exposures.* ## The Bottom Line [#the-bottom-line] A waiver of subrogation is your insurer's promise not to recover a paid loss from the party your contract protects. You give it by endorsement, most often the CG 24 04 on general liability and the WC 00 03 13 on workers' comp. A blanket schedule saves you from redoing paperwork on every project. California's anti-indemnity statutes narrow indemnity clauses but leave insurance requirements alone. So expect the waiver on every subcontract, price it into your bid, and make sure the endorsement is on the policy before work starts. The sentence in the contract isn't enough. ## References . [IRMI. Subrogation]() . [IRMI. Waiver of Subrogation]() . [California Legislative Information. Civil Code section 2782.05]() . [IRMI. Primary and Noncontributory]() . [Blitz Insurance. Contractors Program]() . [California Legislative Information. Civil Code section 2782]() . [IRMI. Anti-Indemnity Statute]() # Wedding Liability Insurance in California: What Venues Require and What It Costs (https://www.menloinsurance.com/library/guides/wedding-liability-insurance-california) Most California wedding venues ask for $1 million per occurrence and $2 million aggregate of liability with the venue named as additional insured, as California State Parks does. Host liquor vs. a cash bar under ABC rules, primary and waiver wording, certificate deadlines (14 days at Crystal Cove), and published starting prices from event programs such as Blitz ($65 plus taxes and fees) and LIO ($1M/$3M with host liquor included). Markdown version: https://www.menloinsurance.com/library/guides/wedding-liability-insurance-california.md Wedding liability insurance in California is a one-event general liability policy, and most venues decide what it must say. The usual ask is $1 million per occurrence and $2 million aggregate with the venue named as additional insured, which is exactly what California State Parks requires for special events, along with a certificate delivered before a deadline. Published starting prices are low: Blitz's special event program starts at $65 plus taxes and fees for events of up to five days with $1 million/$2 million limits, and weddings are on its list. If you pour alcohol you bought for your guests, that's host liquor, which LIO's special event program includes. Selling drinks is a different exposure that needs a licensed seller. This guide is for a couple, a parent or a planner booking a California wedding: a winery or vineyard, a hotel ballroom, a state park beach or a family property. It covers what venues ask for, how alcohol changes the policy, what event programs cost and how fast you can get a certificate. To request quotes, use our [special event insurance page](https://www.menloinsurance.com/special-event-insurance). For events other than weddings, see our [one-day event insurance guide](https://www.menloinsurance.com/library/guides/one-day-event-insurance-california). ## Key takeaways * **The venue sets the requirements.** California State Parks asks for $1M per occurrence and $2M aggregate with the State as additional insured, and Crystal Cove adds primary wording and a certificate 14 days before the event. * **Starting prices are published.** Blitz's special event program starts at $65 plus taxes and fees for events up to five days. * **Host liquor is usually included, selling isn't.** LIO includes host liquor and offers liquor liability. Under ABC rules, the host must buy all the alcohol in advance, and a hired bartender can't sell drinks. * **Some weddings don't fit online programs.** Thimble's host program knocks out a rented private residence, water activities and vendors without insurance naming the host. * **Menlo quotes four event programs.** Thimble, LIO, Blitz and Green Shield. Online sellers such as Wedsure and The Event Helper sell directly too. ## What do California wedding venues require? [#what-do-california-wedding-venues-require] A liability limit, their name on your policy, and a certificate by a deadline. California State Parks, for example, requires special event permittees to carry "general liability insurance of at least $1,000,000 per occurrence and $2,000,000" with the State of California as additional insured. At Crystal Cove State Park, which rents beach sites for wedding ceremonies, the endorsement must also make the coverage primary over the State's own insurance and bar cancellation during the permit without 30 days' notice, and the certificate is due 14 days before the event. Private venues, wineries and vineyards included, set their requirements in the rental contract. Read it before you buy, and send it to whoever sells you the policy. The items that trip couples up are the ones Crystal Cove spells out: the exact additional insured name, primary wording, a cancellation-notice clause and a deadline weeks before the date. Some contracts also ask for a waiver of subrogation. Our guide to [certificates of insurance](https://www.menloinsurance.com/library/guides/certificate-of-insurance-guide) and our page on the [CG 20 26 additional insured form](https://www.menloinsurance.com/library/forms/cg-20-26) explain the paperwork. ## How does alcohol change wedding liability insurance? [#how-does-alcohol-change-wedding-liability-insurance] It depends on whether you give alcohol away or sell it. If you buy the alcohol and serve it free, you're a host, and host liquor liability is part of many event policies. LIO's special event program, for example, includes host liquor and offers liquor liability as a separate coverage. A cash bar is selling alcohol, which needs a license. California's Department of Alcoholic Beverage Control says unlicensed bartenders are allowed at parties, but "the host of the party can only pay the bartender for the services of bartending and not for alcohol sales," the host "must purchase all of the alcohol for the party in advance," and hired bartenders "cannot bring alcohol and charge by the glass." If you want a cash bar, use a licensed caterer, who needs ABC authorization for each catered event, and ask for its liquor liability certificate. State Parks adds its own alcohol rules: beer or wine only, a paid ranger monitor, and service ending an hour before the event does. ## How much does wedding liability insurance cost? [#how-much-does-wedding-liability-insurance-cost] The published floors start under $100. Blitz's special event program lists minimum premiums starting at $65 plus taxes and fees, with $1 million/$2 million limits and setup and teardown included, for events of up to five days. Above the floor, the price follows the attendance, the number of days, the venue, alcohol and the limits you choose. Thimble, for example, prices its host event policy on the attendee count, up to 1,000. LIO writes $1 million/$3 million, with $2 million/$4 million available, but doesn't publish a starting price. We don't publish a typical wedding price, because we don't yet have enough of our own completed event quotes to give a representative figure. ## Which event programs write California weddings? [#which-event-programs-write-california-weddings] Several, with different limits and rules. These are the ones Menlo quotes, from their own program sheets and applications: | Program | Limits | Alcohol | Other terms | Published starting price | | ---------------------------------- | ---------------------------------------------- | -------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------- | | Blitz Special Events | $1M/$2M | Alcohol vendors are on its excluded list | Events up to 5 days, setup and teardown included, weddings listed | $65 plus taxes and fees | | LIO Special Events | $1M/$3M, $2M/$4M available | Host liquor included, liquor liability available | Additional insured for premises automatic, waiver of subrogation automatic, $1M damage to rented premises, weddings listed | Not published | | Thimble Special Event (hosts only) | $1M/$1M default, $1M/$2M offered | Liquor liability asked after the quote | Up to 5 days and 1,000 attendees. Not for a rented private residence or water activities | Not published | | Green Shield Special Event | Not published | Not published | Quoted through Green Shield's portal | Not published | LIO's automatic additional insured status for premises and waiver of subrogation line up with what venues like State Parks ask for. Check the Thimble default: $1 million aggregate is below the $2 million many venues ask for, so choose $1M/$2M on the quote. ## How fast can I get a certificate for my venue? [#how-fast-can-i-get-a-certificate-for-my-venue] It can be fast, but plan around the venue's deadline, not the insurer's speed. Thimble's widget prices as soon as the attendee count is entered, and its quote expires one hour before the event starts. Venues set their own lead times, and some are long: Crystal Cove wants the certificate 14 days ahead, and State Parks doesn't offer rush permits. Buy as soon as you have the venue's requirements and the date is firm. ## Should I buy from an online wedding insurer or a broker? [#should-i-buy-from-an-online-wedding-insurer-or-a-broker] Either can work. Online sellers such as Wedsure and The Event Helper sell wedding and event liability directly, and for a simple wedding at a venue with standard requirements that's often the fastest route. A broker helps when the wedding doesn't fit a standard online program: a rented private home, a venue that wants specific primary or waiver wording, alcohol sold by someone other than a licensed caterer, a multi-day celebration, or vendors whose certificates need checking. Menlo can quote Thimble, LIO, Blitz and Green Shield at once through our [special event insurance page](https://www.menloinsurance.com/special-event-insurance). ## Frequently Asked Questions ### How much liability insurance do I need for a wedding in California? Whatever your venue's contract says. Many ask for $1 million per occurrence and $2 million aggregate with the venue as additional insured, which is what California State Parks requires. ### How much does wedding liability insurance cost in California? Published starting prices begin at $65 plus taxes and fees on Blitz's special event program, for events of up to five days. Attendance, days, alcohol and limits raise it. ### Does wedding liability insurance cover alcohol? Host liquor, when you supply free drinks, is included on programs such as LIO's. Selling drinks needs an ABC-licensed seller, such as a licensed caterer with its own liquor liability. ### Can I have a cash bar at my wedding in California? Only through a licensed seller. ABC says the host must buy all alcohol in advance and a hired bartender can't charge by the glass. ### Does wedding liability insurance cover cancellation? No. Liability insurance pays claims by others. Refunds for a cancelled wedding come from event cancellation insurance, a separate product. Our [one-day event guide](https://www.menloinsurance.com/library/guides/one-day-event-insurance-california) explains the difference. *This guide is for educational purposes and summarizes California State Parks and ABC public pages, carrier program sheets dated 2023–2026 and Menlo's walks of carrier applications in September 2026. Venue contracts, programs and prices change, and your policy's terms control. Menlo Insurance Services (CA license 6020106) is a licensed broker that may earn a commission on a placement and does not guarantee that any coverage or price will be available. Some event programs use non-admitted insurers, which are not backed by the California Insurance Guarantee Association.* ## The Bottom Line [#the-bottom-line] Start with your venue's contract: most California venues want $1 million per occurrence and $2 million aggregate, their name as additional insured, often primary and waiver wording, and a certificate by a set date. Event programs start at $65 plus taxes and fees on Blitz, LIO includes host liquor, and a cash bar needs a licensed seller under ABC rules. Buy as soon as the date and venue are set, and check the aggregate limit on any quote against the contract. ## References . [California State Parks. FAQs: Special Events]() (accessed 2026-09-27) . [Crystal Cove State Park. Insurance Regulations]() (accessed 2026-09-27) . [Blitz Insurance. Special Events]() (2025) . [LIO Insurance. Special Events: Tailored Coverage to Meet Your Special Event Needs]() (2023) . [California Department of Alcoholic Beverage Control. Frequently Asked Questions (private parties and hired bartenders)]() (accessed 2026-09-27) . [Crystal Cove State Park. 2024 Special Event Information and Application]() (2024) . [Thimble. Special Event Insurance (Hosts Only) broker widget, walked by Menlo in September 2026]() (accessed 2026-09-27) . [California Department of Alcoholic Beverage Control. Caterer's Permit]() (accessed 2026-09-27) . [Blitz Insurance. Special Events program; excluded activities attestation as shown in the Blitz application walked by Menlo, September 2026]() (accessed 2026-09-25) # What Does General Liability Insurance Cover? (https://www.menloinsurance.com/library/guides/what-does-general-liability-insurance-cover) General liability covers injury and damage you cause others, plus defense. CGL Coverages A, B and C, the main exclusions, cost, and endorsements to watch. Markdown version: https://www.menloinsurance.com/library/guides/what-does-general-liability-insurance-cover.md General liability insurance covers your business when it is legally responsible for bodily injury or property damage to someone else. It also covers personal and advertising injury, such as libel and slander, medical payments for people hurt on your premises, and the cost of defending those claims. It does not cover injuries to your own employees, damage to your own property or professional mistakes, which need separate policies. Many owners assume their liability policy protects the business against its own losses. It is the other way around: general liability protects other people from your business, not your business from itself. That one idea explains most coverage surprises. The standard commercial general liability (CGL) form, ISO [CG 00 01](https://www.menloinsurance.com/library/forms/cg-00-01), is written on an occurrence basis, which our guide to [occurrence vs. claims-made policies](https://www.menloinsurance.com/library/guides/occurrence-vs-claims-made-policies) explains. To price a policy for your business, start with Menlo's [general liability insurance](https://www.menloinsurance.com/general-liability-insurance) page. ## Key takeaways * **Three coverage parts**: Coverage A (bodily injury and property damage), Coverage B (personal and advertising injury) and Coverage C (medical payments). * **What it follows**: your business activities, premises, products and completed work, plus liability you take on under many common contracts. * **What it excludes**: injuries to your employees, professional errors and damage to your own work, which belong to workers compensation, professional liability and other policies. * **Endorsements can narrow it**: a designated premises endorsement, for example, can remove coverage for anything that happens away from the listed locations. ### Commercial General Liability (CGL) Insurance Commercial general liability insurance covers a business's legal responsibility for bodily injury or property damage to third parties, personal and advertising injury offenses, medical payments to people injured on its premises, and the defense costs those claims create. Employee injuries, damage to the business's own property and professional errors are excluded. ## What are the three coverage parts of a CGL policy? [#what-are-the-three-coverage-parts-of-a-cgl-policy] The CGL has three coverage parts, each with its own insuring agreement and exclusions: | Coverage | What it pays for | Typical example | | ---------------------------------- | ------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------ | | A, Bodily Injury & Property Damage | Damages you're legally liable for because a third party was injured or their property was damaged | A customer slips on an unmarked hazard in your store | | B, Personal & Advertising Injury | Offenses like libel, slander, wrongful eviction, or misappropriating another business's advertising idea | Your ad copy disparages a competitor and they sue | | C, Medical Payments | Medical expenses for third parties injured on your premises or by your operations, paid without a finding of fault | A visitor twists an ankle in your lobby and you pay the urgent care bill | Coverage C does a lot of quiet work. Because it pays regardless of fault, it lets you settle minor injuries before they turn into lawsuits. The usual medical expense limit, though, is only $5,000 per person: enough for an urgent care visit and an x-ray, not a hospital stay. All three parts include the insurer's duty to defend you. Under the policy's supplementary payments section, defense costs are paid in addition to your limits, so they don't reduce the money available to pay a judgment. ## What business activities does Coverage A cover? [#what-business-activities-does-coverage-a-cover] Coverage A covers the six kinds of liability a business creates in its everyday work: * **Premises liability**: keeping your premises reasonably safe for visitors, whether you own, rent or lease them. * **Operations liability**: injury or damage caused while doing your work, often on someone else's property. * **Products liability**: injuries caused by products you make, sell or distribute after they leave your premises. * **Completed operations liability**: damage caused after a finished job is put into use, such as a water heater that leaks weeks after installation and ruins the customer's floor. * **Contractual liability**: liability you take on for another party in a contract, usually an indemnification clause in a lease or construction agreement. * **Contingent (vicarious) liability**: your responsibility for people you hire to act for you, including employees and sometimes independent contractors. Restaurants are a common exception. The standard products definition assumes injuries happen away from the owner's premises, so a guest who gets sick from food eaten in the dining room falls outside it. The Products-Completed Operations Hazard Redefined endorsement (CG 24 07) fixes that and covers someone harmed at the table. ## What does general liability insurance not cover? [#what-does-general-liability-insurance-not-cover] A CGL policy pays for accidents that injure others, not for costs that land on your own business. Injuries to your employees, damage to your own property or work, and professional errors are all outside it. The most common exclusions are: * **Injuries to your own employees**: an injured worker is covered by [workers compensation insurance](https://www.menloinsurance.com/library/guides/workers-compensation-insurance-guide). An employee who swings a ladder into a coworker is not a CGL claim. * **Professional services**: advice, design and health care need [professional liability (E\&O) coverage](https://www.menloinsurance.com/library/guides/what-is-professional-liability-insurance). * **Damage to your own property or your own work**: fixing or replacing your own defective work for a customer is treated as a cost of doing business, not a covered loss. * **Electronic data**: property damage means damage to tangible property, and electronic data is not tangible, so [cyber liability insurance](https://www.menloinsurance.com/library/guides/cyber-insurance-small-business) fills this gap. * **Expected or intended injury, pollution, aircraft, auto and watercraft, and liquor liability**: each needs its own policy. ### Watch for coverage-narrowing endorsements Some insurers add the Limitation of Coverage to Designated Premises, Project or Operation endorsement (CG 21 44), which limits coverage to the locations or projects listed on its schedule. Anything that happens somewhere else is simply not covered. If you work at customer sites or several locations, read the endorsement schedule carefully. ## How much does general liability insurance cost? [#how-much-does-general-liability-insurance-cost] Most small businesses buy limits of $1,000,000 per occurrence and a $2,000,000 general aggregate, with a separate $2,000,000 products-completed operations aggregate. For that package, Insureon reports its customers pay an average of about $45 per month. Averages vary widely by trade: Your price depends on your class of business and the payroll or sales it is rated on. A low-traffic office tenant can pay a few hundred dollars a year, while a roofer or restaurant can pay several thousand. The number to watch is the aggregate, not the per-occurrence limit. Every damages payment during the year comes out of the aggregate, and once it is used up the insurer owes nothing more, including your defense. The Insurance Information Institute notes that smaller or lower-risk businesses can often buy general liability, property and business interruption together in one businessowners policy (BOP). ## Do small businesses need general liability insurance? [#do-small-businesses-need-general-liability-insurance] Yes, in practice. No state law requires a CGL policy, but commercial landlords write minimum liability limits into leases, often $1,000,000 per occurrence, general contractors ask for proof before subcontractors come on site, and larger clients ask for a certificate of insurance on the [ACORD 25](https://www.menloinsurance.com/library/forms/acord-25) form before they sign. No certificate, no contract. The claims behind those requirements have grown. In The Hartford's claim studies from 2015 and 2025, slip, fall and customer injury claims doubled as a share of small business claims, from 10% to 20%, and the average small business claim more than doubled, from $20,000 to $45,000, which The Hartford links in part to higher litigation costs. A home-based sole proprietor is not exempt either: homeowners policies exclude most business liability, so a client hurt during an in-home consultation would be paid out of your own pocket. ## Frequently Asked Questions ### Is general liability insurance required by law? No. Unlike workers compensation or auto liability, no state law requires a CGL policy. But general contractors and landlords almost always ask for a certificate of insurance showing CGL coverage before they sign a contract with you. ### Does general liability cover my employees' injuries? No. Injuries to your own employees at work are excluded from the CGL. Workers compensation covers your employees' work injuries, and your CGL covers other people, such as customers, clients, vendors and guests. ### What's the difference between general liability and professional liability? General liability covers physical harm, meaning bodily injury and property damage, plus specific personal and advertising injury offenses. Professional liability (E\&O) covers financial harm caused by your professional advice, designs or services. A consultant whose bad advice costs a client money has an E\&O claim, not a CGL claim. *This guide is for educational purposes and summarizes standard ISO policy language. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## What to check before you buy general liability [#what-to-check-before-you-buy-general-liability] Before you get a quote, list the limits your leases and contracts require, and after you buy, read the endorsement schedule for designated premises limits. General liability protects your business against injury and damage claims from other people, such as customers and vendors, and pays to defend them. It does not cover employee injuries (workers compensation), damage to your own work, or professional mistakes (E\&O). ## References . [Insureon. General Liability Insurance Cost]() . [Insurance Information Institute. Commercial General Liability Insurance]() . [The Hartford. Water And Freezing Damage, Burglary Lead The Hartford's Top Five Small-Business Claims]() # What Is an Insurance Binder? How Long It Lasts in California and Why Your Lender Asks for One (https://www.menloinsurance.com/library/guides/what-is-an-insurance-binder) An insurance binder is temporary written proof that coverage is in force until the policy is issued. In California, Insurance Code 382.5 limits a binder to 90 days and makes it valid proof of insurance for lenders. What a binder contains, who can issue one, and how it differs from a certificate of insurance and a declarations page. Markdown version: https://www.menloinsurance.com/library/guides/what-is-an-insurance-binder.md An insurance binder is a short written agreement that puts your insurance in force before the full policy is issued. It names you, the property, the coverage and how much, the insurer, the agent who issued it and the start date. Until the policy shows up, the insurer is on the hook for that coverage. California's Insurance Code section 382.5 goes a step further. A binder issued under it "shall be deemed an insurance policy for the purpose of proving that the insured has the insurance coverage." It lasts for the period it states, up to 90 days, or 90 days if it states none, and it ends when the policy is issued. So yes, a binder is proof of insurance. It's also a real contract of insurance, just a temporary one. Most people first see a binder at a home closing, when escrow needs proof of homeowners insurance before the lender will fund. If you're buying a home and need coverage bound in time, [request a homeowners quote](https://www.menloinsurance.com/f/homeowners) and give us your closing date. Below: what goes in a binder, who can issue one, how long it lasts, and how it's different from a certificate of insurance and a declarations page. ## Key takeaways * **A binder is temporary coverage in writing.** It commits the insurer to the coverage described while the policy is being issued. * **California caps it at 90 days.** A binder under Insurance Code 382.5 is valid for the stated period, up to 90 days, and ends when the policy issues. * **Lenders must accept a proper binder.** In California, refusing a compliant binder as proof of insurance without reasonable cause is a breach of contract. * **Only an authorized agent or the insurer can issue one.** An agent who issues a binder without the insurer's authority can lose their license. * **The policy replaces it.** Once the policy and its declarations page arrive, those documents control your coverage. ### Insurance binder A written, short-term agreement issued by an insurer or its authorized agent that provides temporary insurance coverage, on the usual terms of the policy it anticipates, until the policy is issued or the binder expires. ## What is an insurance binder? [#what-is-an-insurance-binder] The California Department of Insurance defines a binder as "a short-term agreement that provides temporary insurance coverage until the policy can be issued or delivered." IRMI's definition is similar: a legal agreement issued by an agent or an insurer to provide temporary evidence of insurance until the policy is issued. IRMI adds that a binder should be in writing, have a fixed time limit, name the insurer, and state the amount and type of coverage and, for property, the perils covered. Binders exist because it takes an insurer time to issue a policy. The underwriter may want an inspection. The forms have to be put together. A big or unusual risk may go to a senior underwriter. Meanwhile, the house closes escrow, the truck leaves the lot, or the lease starts. The binder covers you in between. And the coverage is real. If you have a covered loss the day after binding, it gets paid on the terms the binder describes. If the binder leaves something out, California law fills it in. Unless the binder clearly says otherwise, it's treated as including all the usual terms of the policy it's standing in for, plus any endorsements it names. ## What does an insurance binder contain? [#what-does-an-insurance-binder-contain] California's statute spells out what a binder has to include to count under section 382.5: | Required item | What it looks like on a homeowners binder | | ---------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------- | | Name and address of the insured | The buyer or buyers taking title | | Additional named insureds, mortgagees or lienholders | The lender, with its loan number and mortgagee clause | | Description of the insured property, if applicable | The property address | | Nature and amount of coverage | For example, dwelling, other structures, personal property, loss of use and liability limits, and the deductible | | Special exclusions not in a standard policy | Any unusual exclusion, such as a wildfire or roof limitation | | Identity of the insurer | The legal name of the insurance company, not only the agency | | Identity of the agent executing the binder | The agent or broker who issued it | | Effective date of coverage | Usually the closing date | | Binder number, or policy number for an extension | The reference the lender uses to follow up | A lot of binders are written on the ACORD 75 form, and lenders often get property evidence on an ACORD 27. Our pages on [ACORD 75, the insurance binder](https://www.menloinsurance.com/library/forms/acord-75) and [ACORD 27, evidence of property insurance](https://www.menloinsurance.com/library/forms/acord-27) go through those forms field by field. Here's a made-up example, not a real document: a binder issued June 10, effective at 12:01 a.m. on June 12, naming the buyers and their lender, for a $650,000 dwelling limit with a $2,500 deductible, expiring in 60 days or on issuance of the policy. ## Who issues an insurance binder? [#who-issues-an-insurance-binder] The insurer, or an agent the insurer has authorized to bind. In California, an agent's license rides on that authority: the Insurance Commissioner may suspend or revoke the license of an agent who issues, or claims to issue, a binder the insurer has not authorized. A lender may also refuse a binder when the agent does not provide written evidence of the authority to bind. In practice, you get it from the agent or broker who placed your policy. If your broker can't bind with that carrier, it asks the carrier, or the managing general agent that underwrites the program, for the binder (see our guide to what an MGA is). Whoever you ask, you'll end up back with the person who sold you the policy. ## How long does an insurance binder last in California? [#how-long-does-an-insurance-binder-last-in-california] A binder under section 382.5 is good for the period written on it, up to 90 days from the date it was signed. If no period is written, it lasts 90 days. It stops being valid the day the policy is issued. And if a binder just runs out, that doesn't count as a cancellation or nonrenewal under the statutes that limit an insurer's right to cancel. That last part matters. The protections you get when a policy is cancelled or nonrenewed don't apply when a binder runs out. If your binder is close to its end date and you still don't have a policy, call your broker. Don't assume you're still covered. Section 382.5 has two limits you should know about. It doesn't apply to life or disability insurance, or to binders for $1 million or more of insurance. Larger temporary coverage falls under the older Insurance Code section 382 on "covering notes." That section also requires a policy to be issued within 90 days, unless the Commissioner approves a longer extension. ## Why do mortgage lenders and escrow ask for a binder? [#why-do-mortgage-lenders-and-escrow-ask-for-a-binder] A lender won't fund a loan on an uninsured house, and on closing day the policy usually doesn't exist yet. The binder is what lets escrow close. It shows the lender that a named insurer has to cover the home from the closing date, with the lender listed as mortgagee. California gives you real leverage here as a buyer. If a contract calls for proof of insurance and someone refuses a compliant binder without reasonable cause, the law treats that as a breach of contract. The other side can seek an injunction, damages and reasonable attorney's fees. The statute lists what counts as reasonable cause to refuse: 1. The coverage or its terms are inadequate or inappropriate for the lender's, vendor's or lessor's interest. 2. The insurer fails financial standards the lender lawfully applies to all insurers for that type of loan. 3. The lender cannot confirm that the insurer is licensed in California for that line. 4. The agent does not give the lender written evidence of authority to bind. 5. The binder does not comply with section 382.5. If escrow rejects your binder, ask which of these five reasons they're using. Most rejections can be fixed. Usually it's a missing loan number, the wrong mortgagee clause, or a dwelling limit below what the lender requires. The Department of Insurance also recommends checking that the application or binder shows the limits, deductibles and coverage you bought, the insurer's name, the start and end dates and the insured property. ## How is a binder different from a certificate of insurance or a declarations page? [#how-is-a-binder-different-from-a-certificate-of-insurance-or-a-declarations-page] People mix these three up because all of them show coverage. Only the binder is a temporary contract. | | Insurance binder | Certificate of insurance | Declarations page | | ---------------------------- | --------------------------------------------------------------------------------- | ----------------------------------------- | ------------------------------------ | | **What it is** | A temporary contract of insurance | A summary of coverage that already exists | The first pages of the issued policy | | **When you get it** | Before the policy is issued | Any time after coverage is in force | When the policy is issued | | **Does it create coverage?** | Yes, for its term | No | It is part of the policy that does | | **How long it lasts** | Up to 90 days in California under 382.5, or until the policy issues | Reflects coverage on the date issued | For the policy period | | **Who relies on it** | Lenders, escrow, lessors | Landlords, clients, project owners | You, your adjuster and your broker | | **Typical form** | ACORD 75 | ACORD 25 (liability) | Insurer's own form | A [certificate of insurance](https://www.menloinsurance.com/library/guides/certificate-of-insurance-guide) tells someone else what coverage you have. It doesn't give the certificate holder any rights of its own. A [declarations page](https://www.menloinsurance.com/library/glossary/declarations-page) is the summary sheet at the front of the policy: named insured, policy period, limits, deductibles, premium and forms. Once the policy is issued, the declarations page and the policy forms decide every claim. The binder describes what the policy is going to be. The declarations page shows what it actually is. For a one-paragraph refresher, see the [insurance binder](https://www.menloinsurance.com/library/glossary/insurance-binder) glossary entry. ## Do you have to pay for an insurance binder? [#do-you-have-to-pay-for-an-insurance-binder] Usually not separately. A binder is the temporary version of the policy you're buying, and your premium pays for the policy. Carriers often want the first payment, or proof it's coming through escrow, before they'll bind. Check that the binder, and the policy after it, match what you paid for. ## Frequently Asked Questions ### Is an insurance binder just proof of insurance? It's more than proof. A binder is a temporary contract. Until the policy is issued, the insurer has to provide the coverage the binder describes. In California, a binder that meets Insurance Code 382.5 is also deemed a policy for the purpose of proving you have the coverage. ### Where do I get my insurance binder? From the agent or broker who placed your policy, or from the insurer directly. The binder has to name the insurer and the agent who issued it, so ask whoever sold you the policy. If it's for a closing, give them the lender's mortgagee clause and loan number so they get it right the first time. ### How long is a binder good for in California? For the period written on it, up to 90 days from the date it was signed, or 90 days if no period is written. It ends as soon as the policy is issued. Binders for $1 million or more of coverage fall under a separate covering-note rule that also expects a policy within 90 days. ### Can a lender refuse my insurance binder? Only with reasonable cause. California law lists the reasons, like inadequate coverage, an insurer the lender cannot confirm is licensed, or an agent who cannot show authority to bind. A lender that refuses a compliant binder without reasonable cause is treated as in breach of the contract. ### What does a binder look like? Usually one or two pages, often on the ACORD 75 form or the insurer's own layout. It shows the insured, any lender or other interest, the property, coverages and limits, deductibles, the insurer, the issuing agent, the effective date and time, the expiration, and a binder number. *This guide is for educational purposes and summarizes the California Insurance Code and Department of Insurance guidance. It is not legal advice. Your binder and policy's specific terms, conditions and endorsements control. Menlo Insurance Services (CA license 6020106) is a licensed California broker, may earn a commission on policies it places, and does not guarantee that any coverage or price will be available; talk to a licensed broker about your actual exposures.* ## The Bottom Line [#the-bottom-line] An insurance binder is your coverage in writing before the policy exists. In California it can last up to 90 days, it counts as proof of insurance, and a lender can't refuse a compliant one without reasonable cause. Check that it names the right insurer, lender, limits and dates. Then keep an eye out for the policy, because your claims will be decided by the declarations page, not the binder. If you're closing on a home, [start a homeowners quote](https://www.menloinsurance.com/f/homeowners) early enough that the binder is ready before escrow asks for it. ## References . [California Legislative Information. Insurance Code section 382.5]() . [California Legislative Information. Insurance Code section 382]() . [California Department of Insurance. Residential Insurance: Homeowners and Renters Guide]() . [IRMI. Binder]() # What Is Equipment Breakdown Coverage? Do You Need It? (https://www.menloinsurance.com/library/guides/what-is-equipment-breakdown-coverage) Equipment breakdown pays for what property insurance excludes: mechanical breakdown, electrical arcing and boiler explosion, plus spoilage and lost income. Markdown version: https://www.menloinsurance.com/library/guides/what-is-equipment-breakdown-coverage.md Equipment breakdown coverage pays for damage from a sudden, accidental equipment failure that your property policy excludes: mechanical breakdown, electrical arcing and steam boiler explosion. It pays to repair or replace the broken equipment and other property the failure damaged, and, when it is tied to your business income coverage, the income you lose while operations are down. Most owners assume their commercial property policy covers the equipment that runs the business. It does, but only when the damage comes from outside the machine, such as fire, wind or theft. When the damage starts inside the machine, such as a burned-out compressor, an electrical arc in a panel or a cracked boiler, the property policy won't pay for the repair. That is the gap [equipment breakdown insurance](https://www.menloinsurance.com/equipment-breakdown-insurance) fills. ## Key takeaways * **It covers what property insurance excludes**: the Causes of Loss Special Form excludes mechanical breakdown, artificially generated electrical energy including arcing, and steam boiler explosion. * **Two ways to buy it**: the Equipment Breakdown Cause of Loss Endorsement (CP 10 46) added to your property policy, or the standalone Equipment Breakdown Protection Coverage Form (EB 00 20). * **Income losses follow**: because CP 10 46 modifies the Causes of Loss Special Form, your business income coverage responds when a breakdown shuts down your operations. * **Inspections come with it**: equipment breakdown insurers inspect boilers and pressure vessels, and their commissioned inspectors can perform the state operating-certificate inspection. ### Equipment Breakdown Coverage Equipment breakdown coverage insures against sudden, accidental breakdown of covered equipment, mechanical failure, electrical arcing, and steam explosion, causes that standard commercial property policies exclude. ## What does equipment breakdown coverage pay for that property insurance excludes? [#what-does-equipment-breakdown-coverage-pay-for-that-property-insurance-excludes] Equipment breakdown coverage pays for the internal equipment failures your property policy lists as exclusions. The Causes of Loss Special Form ([CP 10 30](https://www.menloinsurance.com/library/forms/cp-10-30)) excludes mechanical breakdown, including rupture or bursting caused by centrifugal force. It excludes damage from artificially generated electrical, magnetic or electromagnetic energy, which covers the arcing and current surges that melt wiring, devices and computer systems. And it excludes explosion of steam boilers, steam pipes, engines and turbines that you own, lease or operate. The property policy still pays for some of the resulting damage. After a boiler explosion, it pays for fire damage that follows, but not for the boiler itself or anything else damaged directly by the excluded cause. When a business owner asks for "mechanical breakdown insurance," this is the product a commercial broker quotes. Hartford Steam Boiler, an equipment breakdown specialist, describes the risks commercial equipment faces, such as electrical short circuits, excess mechanical force, overloading and control failures, which most other property is not exposed to. Here is how the main excluded causes compare: | Cause of loss | Your property policy | With equipment breakdown coverage | | -------------------------------------------------- | -------------------------------------------------------- | ---------------------------------------------- | | Mechanical breakdown (seized motor, thrown rotor) | Excluded, except resulting elevator collision damage | **Covered** | | Electrical arcing or artificial current surge | Excluded for the damaged wiring, devices, and systems | **Covered** | | Steam boiler, pipe, engine, or turbine explosion | Only resulting fire or combustion explosion is covered | **Covered**, including the boiler itself | | Spoilage from breakdown of refrigeration equipment | Temperature change from mechanical breakdown is excluded | Typically covered by spoilage coverage options | ISO offers two ways to buy the coverage. The Equipment Breakdown Cause of Loss Endorsement (CP 10 46) adds equipment breakdown to the covered causes of loss on your standard property policy. The standalone Equipment Breakdown Protection Coverage Form (EB 00 20) provides similar coverage as its own coverage part. Small commercial businesses usually add CP 10 46 to their package policy. Large industrial equipment schedules are usually written on a separate (monoline) policy through specialists such as Hartford Steam Boiler, one of the oldest names in the business. Either way, ordinary wear and tear stays excluded. Coverage is triggered by a sudden, accidental breakdown, not slow deterioration. ## What does equipment breakdown coverage cover? [#what-does-equipment-breakdown-coverage-cover] Equipment breakdown covers much more than the boiler room. The industry still calls it boiler and machinery (B\&M) insurance, a name from its early days, when inspectors mainly examined pressure vessels. Older B\&M policies listed each covered piece of equipment as an "object," and that word still appears on equipment schedules today. Equipment typically covered includes: * **Boilers and pressure vessels**: steam boilers, hot water heaters, and other fired or unfired vessels operating under pressure or vacuum. * **Electrical distribution equipment**: panels, switchgear, transformers and the building wiring that arcing destroys. * **Air conditioning and refrigeration**: chillers, compressors, walk-in coolers and the cooling systems whose failure can spoil your product. * **Mechanical equipment**: electric motors, fans, pumps, engines and other machines with moving parts that can fail suddenly. * **Computers and communications gear**: servers, phone systems and diagnostic equipment that a power surge can destroy. * **Production machinery**: the equipment that makes the products you sell. Insurers define covered equipment differently, so check your policy schedule. Some equipment must be described specifically, and equipment being tested may have separate terms. ## Does equipment breakdown coverage replace lost income? [#does-equipment-breakdown-coverage-replace-lost-income] Yes, it can. A transformer failure can shut down a business as well as damage equipment, and the lost income from the shutdown is often far larger than the cost of replacing the equipment. With CP 10 46 attached, equipment breakdown becomes a covered cause of loss under your commercial property program, so a [business income](https://www.menloinsurance.com/library/glossary/business-income) form such as [CP 00 30](https://www.menloinsurance.com/library/forms/cp-00-30) responds to a breakdown shutdown the same way it responds to a fire. The standalone EB 00 20 form has its own business income and extra expense options. With neither, a transformer burnout that closes your business for three weeks gives you no property claim and no income claim. Deductibles work differently on equipment breakdown. Business income coverage usually has a waiting period measured in hours, often 24, separate from the dollar deductible on the equipment damage. The breakdown deductible may apply per object or as a multiple of average daily value. So even with a low dollar deductible, a full day of downtime may not be covered. Read the deductible page of the quote, not just the limit. Spoilage has the same gap. The property form excludes loss from a change in temperature or humidity caused by a breakdown of refrigeration, cooling or humidity control equipment, which is how a grocery store or restaurant usually loses its inventory. Spoilage coverage added alongside equipment breakdown closes that gap. ### Example The compressor in a restaurant's walk-in freezer arced and burned out on a Friday night. By Monday, $18,000 of inventory had spoiled, and without cold storage the kitchen stayed closed for ten days until replacement parts arrived. Under the property policy alone, there are three problems. It excludes the arcing damage. It excludes spoilage from a refrigeration failure. And because there was no covered cause of loss, it pays no business income claim. With CP 10 46 and spoilage coverage added, the compressor, the spoiled inventory and the income lost while the kitchen was closed are all covered. Wear and tear is still the most common dispute, even on compressors and motors, because it stays excluded under breakdown policies. The insurer's first question is whether the failure was sudden or whether the part simply wore out over time. That one word, "sudden," decides whether the whole claim is paid. At the teardown, the insurer's engineer opens the failed component and reads the damage. A scored bearing surface and carbonized winding insulation point to gradual wear, while a fractured shaft or a single clean arc mark points to a sudden failure. The failed part is your best evidence if the insurer's engineer denies the claim as wear and tear. Don't let the repair contractor haul the dead compressor away, because once it is gone you have nothing to show the engineer. ## Why does the insurer inspect your equipment? [#why-does-the-insurer-inspect-your-equipment] The insurer inspects your equipment because, in equipment breakdown, inspection is part of the product. Insurers that write this coverage employ inspectors who examine boilers and pressure vessels on a regular schedule and get failing parts repaired before they burst. The causes are ordinary: when the National Board of Boiler and Pressure Vessel Inspectors reviewed its incident data, low water, operator error and poor maintenance led the list, and the Board recorded 2,087 incidents in 1996 alone. The visits do two jobs. State boiler safety laws require an operating certificate renewed after a periodic inspection by an inspector holding a National Board inservice commission, a credential the National Board issues for this work. Where the state lets the insurer's own inspectors do those required inspections, one visit serves the insurer and keeps the operating certificate current, without paying a separate third party. The inspection also has an enforcement power found nowhere else in commercial insurance: under the EB 00 20 conditions, if the inspector finds covered equipment in a dangerous condition, the insurer can suspend coverage on that equipment immediately by delivering written notice, with no advance notice period. ## Frequently Asked Questions ### Is equipment breakdown coverage the same as a warranty or service contract? No. A warranty covers defects in a product, and a service contract covers maintenance and wear. Equipment breakdown insurance covers sudden, accidental failures across all your covered equipment regardless of brand or age, plus the resulting property damage, spoilage, and lost income that no warranty touches. ### Does my property policy cover a power surge that fries my computers? Generally no. The Causes of Loss Special Form excludes damage from artificially generated electrical energy, including arcing and current surges, to wiring, devices, systems, and networks. Equipment breakdown coverage is the standard way to buy that exposure back. ### Do I need equipment breakdown coverage if I don't have a boiler? Almost certainly yes. The coverage long ago outgrew boilers, and today the most frequent claims involve electrical distribution equipment, HVAC systems, refrigeration, and electronics. If your business stops when a compressor, transformer, or server fails, you have the exposure. ### Should I buy the endorsement or a separate equipment breakdown policy? For most small and midsize businesses, add the CP 10 46 endorsement. It gives you one carrier, one adjuster and one claim when a failure damages equipment, spoils inventory and shuts down your operation. A separate EB 00 20 policy makes sense for heavy production machinery or an engineered boiler and pressure vessel schedule, which go to a monoline specialist with its own equipment engineers. Either way, check the deductibles, including the business income waiting period. *This guide is for educational purposes and summarizes standard ISO policy language. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## How to check whether you already have equipment breakdown coverage [#how-to-check-whether-you-already-have-equipment-breakdown-coverage] Ask your broker whether your property policy has the CP 10 46 endorsement, or whether you have a standalone EB 00 20 policy, and read the business income waiting period before you sign. Equipment breakdown coverage protects you against the sudden mechanical or electrical failure, arcing or boiler explosion that a standard property policy leaves out. Often the income lost while you are shut down for repairs costs more than the equipment itself. ## References . [National Board of Boiler and Pressure Vessel Inspectors. The Trend of Boiler and Pressure Vessel Incidents: On the Decline?]() . [National Board of Boiler and Pressure Vessel Inspectors. Commissioned Inspectors]() . [Hartford Steam Boiler. Commercial Equipment Breakdown Insurance]() # What Is Gap Insurance and How Does It Work? (https://www.menloinsurance.com/library/guides/what-is-gap-insurance) Gap insurance pays the difference between your car loan balance and the car's actual cash value after a total loss. What it costs and when it is worth it. Markdown version: https://www.menloinsurance.com/library/guides/what-is-gap-insurance.md Gap insurance pays the difference between what you still owe on a car loan or lease and what the car is actually worth if it is totaled or stolen. Your regular auto policy pays only the car's depreciated market value, so when your loan balance is higher, gap coverage pays the shortfall instead of you. Added to your own auto policy it typically costs $50 to $150 a year, and it costs much more bought from a dealer. Owing more than the car is worth is common with new cars, because they lose value faster than most car loans are paid down. The cost of the coverage, from about $50 a year to several hundred dollars, depends almost entirely on where you buy it. You can add gap coverage when you get an [auto insurance](https://www.menloinsurance.com/car-insurance) quote from Menlo. ## Key takeaways * **Coverage trigger**: gap coverage pays only when the car is declared a total loss or stolen, and only if your loan balance is more than the insurer's payment. * **Price spread**: gap added to an auto policy typically costs $50 to $150 a year. The Insurance Information Institute notes that buying it from a dealer can cost up to 10 times as much. * **Optional by law**: according to the Consumer Financial Protection Bureau (CFPB), you can refuse gap coverage when you buy the car, and you can cancel it later and get the unearned part refunded. * **Lease duplication**: most leases already include gap protection, so buying it again means paying for it twice. ### Gap Insurance Gap insurance, also called guaranteed asset protection (GAP), is optional coverage that pays the difference between your car's actual cash value and the amount you still owe on the loan or lease if the car is declared a total loss. You can buy it as an endorsement on your auto policy or as a waiver sold with dealer financing. ## What Does Gap Insurance Cover? [#what-does-gap-insurance-cover] Gap insurance covers one thing: the negative equity, or deficiency, left after your auto insurer settles a total loss or theft. Collision and comprehensive coverage pay the car's [actual cash value](https://www.menloinsurance.com/library/guides/actual-cash-value-vs-replacement-cost), its market value, minus your [deductible](https://www.menloinsurance.com/library/glossary/deductible). If that payment is less than your loan or lease balance, gap coverage pays the difference to your lender. The check goes to the lienholder, not to you, and gap coverage never pays for repairs. The shortfall comes from fast depreciation: according to the Insurance Information Institute, a new car loses about 20% of its value in the first year, and a long loan barely reduces the principal in that time. Gap coverage has limits too: your deductible is subtracted unless you buy a waiver, and items rolled into the loan, such as extended warranties and negative equity from a prior loan, are capped or excluded. ## How Does Gap Insurance Work? [#how-does-gap-insurance-work] Gap coverage pays only after your primary auto insurer has paid a total loss. Your insurer declares the car a total loss, sets its actual cash value, subtracts your deductible and pays the lienholder. The gap provider then compares that payment with your remaining loan balance and pays the shortfall, up to the limits in your contract. Keep making loan payments until the payoff posts, which can take about a month. Here is an example: ### Example You put $1,500 down on a $36,000 SUV with a 72-month loan. Fourteen months later the SUV is stolen and never recovered, and you still owe the lender $32,000. Your comprehensive adjuster values the SUV at $26,500 and pays $26,000 after your $500 deductible. Without gap coverage, you would still owe the lender $6,000 for a car you no longer have. With gap coverage, the gap provider pays the $5,500 difference between the car's value and your balance, and depending on the contract you may settle the loan by paying only the $500 deductible. Don't assume the check will cover the whole shortfall, because administrators first subtract excluded items like negative equity and financed add-ons. The CFPB's 2024 auto finance review even found gap benefits miscalculated after covered total losses. If the payment is short, dispute it in writing. ## How Much Is Gap Insurance? [#how-much-is-gap-insurance] Where you buy gap insurance matters more than whether you buy it. On an auto policy that already has collision and comprehensive, gap typically adds about $50 to $150 a year to your [premium](https://www.menloinsurance.com/library/glossary/insurance-premium), and the Insurance Information Institute notes a stand-alone gap product can cost up to 10 times more. Dealer waivers are usually financed into the loan at several hundred dollars, so you pay interest on the coverage for years, an issue the Consumer Financial Protection Bureau has raised. The dealer's price is negotiable: ask the finance manager to print the addendum before you sign, and mention that your own insurer quotes gap for under $150. ## Is Gap Insurance Worth It? [#is-gap-insurance-worth-it] Gap insurance is worth buying when you will owe more than the car is worth for a significant stretch of the loan. The Insurance Information Institute lists the situations: * Your down payment was less than 20%. * Your loan is 60 months or longer. * Your model loses value quickly. * You rolled negative equity over from a prior loan. If any of these apply, $50 to $150 a year is cheap protection against a four- or five-figure loss. Skip it if you paid cash or made a large down payment, and check your lease first, since most leases already include gap. ## How Do You Cancel Gap Insurance and Get a Refund? [#how-do-you-cancel-gap-insurance-and-get-a-refund] You can cancel gap coverage at any time, and if you prepaid through a dealer, you are owed a refund of the unearned portion when you pay off the loan, refinance or sell before the loan ends. Send a written cancellation to the gap administrator, not the salesperson, with your payoff letter, and send a copy to your lender so the refund is applied to any remaining balance. Removing a gap endorsement from your auto policy is simpler: ask your agent to take it off. Colorado's House Bill 23-1181, effective January 1, 2024, caps the cancellation fee at $25 and sets a 30-day refund deadline. If a lender says gap is mandatory, ask for that requirement in writing. ## Frequently Asked Questions ### Does gap insurance cover my deductible? Usually not. Most gap products subtract your deductible from what they pay. Some dealer waivers include it: GM Financial's GAP deficiency waiver, for example, covers the primary deductible up to $1,000, and you pay anything above that. ### Do I need gap insurance on a lease? Usually not as a separate purchase, because most lease contracts already include gap protection. Check your lease for gap or waiver language before you buy. If your lease has none, adding a gap endorsement to your auto policy costs less than buying gap from the dealer. ### When should I drop gap insurance? Drop it once your loan payoff is less than the car's market value. Compare your lender's payoff quote with a current private-party value every six months. Once you have equity, the coverage can never pay a claim. ### Can I get a gap insurance refund after paying off my car early? Yes. If you prepaid through a dealer, the unearned part of the premium is refundable when you pay off, refinance or sell the car before the loan's original end date. Send a written cancellation to the administrator with your payoff letter and copy your lender. Some states now require prorated refunds by fixed deadlines. *This guide is for educational purposes and summarizes common gap coverage terms. Your policy's or contract's specific terms control. Talk to a licensed broker about your situation.* ## When to buy gap insurance and when to drop it [#when-to-buy-gap-insurance-and-when-to-drop-it] Buy gap coverage only while your loan balance is higher than the car's actual cash value, buy it from your own insurer for $50 to $150 a year rather than from the dealer, and cancel it once you owe less than the car is worth. Gap coverage pays your lender the difference between what you owe and the car's actual cash value after a total loss, and nothing else. ## References . [Insurance Information Institute. What Is Gap Insurance?]() . [Consumer Financial Protection Bureau. What Is Guaranteed Asset Protection (GAP) Insurance?]() . [Consumer Financial Protection Bureau. Supervisory Highlights: Auto Finance Special Edition, Issue 35 (Fall 2024)]() . [Colorado General Assembly. HB23-1181: Guaranteed Asset Protection Agreements]() . [GM Financial. GAP Coverage Plans]() # What Is Inland Marine Insurance? What Does It Cover? (https://www.menloinsurance.com/library/guides/what-is-inland-marine-insurance) Inland marine insures business property that moves: tools, equipment, goods in transit and customer property. Floaters, the 100-foot limit and valuation. Markdown version: https://www.menloinsurance.com/library/guides/what-is-inland-marine-insurance.md Inland marine insurance covers business property that moves: equipment traveling between job sites, goods in transit, materials waiting to be installed and customers' property in your care. Despite the name, it has nothing to do with boats. You need it because a commercial property policy mostly stops at your building, and most businesses have property that leaves it. Why would a construction company need "marine" coverage? The word is a leftover from history, not a sign that you work near water. The coverage solves a very current problem, and Menlo quotes [inland marine insurance](https://www.menloinsurance.com/inland-marine-insurance) for California businesses. ## Key takeaways * **Movement is the trigger**: inland marine covers property that moves or travels, anywhere in the coverage territory, not just at an address listed on your policy. * **The 100-foot problem**: a commercial property policy covers business personal property only inside the described building or within 100 feet of it, plus small extensions beyond that. * **Floaters are the usual format**: transportation, contractors equipment, installation, builders risk and bailee floaters each cover one kind of mobile exposure. * **Valuation differs by form**: the same machine can be insured at actual cash value, replacement cost or an agreed amount, and that choice decides what a claim pays. ### Inland Marine Insurance Inland marine insurance is property coverage for equipment and goods that move: between job sites, in transit, in storage, or in someone else's care. It grew out of ocean marine insurance (coverage for cargo shipped by sea) and fills the gaps a standard location-based property policy leaves open. ## Why is it called inland marine insurance? [#why-is-it-called-inland-marine-insurance] The name comes from ocean cargo insurance. Marine policies insured cargo crossing the ocean, while early property (fire) policies insured a building in one place against fire and little else. When cargo left the ships and kept moving by barge, rail and wagon, marine insurers followed it onto land, and the policies they wrote were called inland marine. The name stuck long after the coverage grew beyond goods in transit. The Insurance Information Institute still describes the original split: marine insurance covers goods moved over water, and inland marine covers goods moved over land. Regulators later wrote this history into rules. The Nationwide Marine Definition was first adopted at the national convention of insurance commissioners in 1922 and last revised by the NAIC in 1976, and it still decides what states let insurers write as marine business. It covers property in transit, property in the care of a bailee, and "instrumentalities of transportation and communication," such as bridges and radio towers. That is how bridges, radio towers and the inventory in a plumber's van ended up in the same line. Inland marine is also largely a non-filed line, so insurers write their own policy wording and two contractors equipment policies can read differently. Many standard forms come from the American Association of Insurance Services (AAIS), which is why their numbers look like IM 7000 instead of the CP and CG numbers used elsewhere in your policy. ## What does inland marine insurance cover? [#what-does-inland-marine-insurance-cover] Inland marine is a category of insurance, not a single policy: it covers business property that moves or travels. It is sold as separate floaters, each covering one exposure, and nearly every business has at least one: * **Property in transit**: a transportation floater covers your goods while they travel, and [motor truck cargo coverage](https://www.menloinsurance.com/library/guides/motor-truck-cargo-insurance) protects a trucker hauling other people's freight. * **Contractors equipment**: [contractors equipment insurance](https://www.menloinsurance.com/library/guides/contractors-equipment-insurance), written on the AAIS Contractors' Equipment Coverage form (IM 7000 04 04), covers cranes, backhoes, generators, forklifts and tools on your premises, at the job site and on the truck. * **Installation floaters**: the AAIS Installation Floater Coverage form (IM 7100 08 10) covers a contractor's materials from the moment they leave the supplier, through transit and job site storage, until they are installed and accepted. * **Builders risk**: covers a structure under construction and can extend to materials in transit to the site or stored off-site. Our [builders risk guide](https://www.menloinsurance.com/library/guides/builders-risk-insurance-guide) covers it in depth. * **Bailee coverage**: protects customers' property in your care, such as the clothes on a dry cleaner's racks or the item on a repair shop's bench. Once a customer's insurer pays for property you damaged, it can seek reimbursement from you, and your liability policy probably won't respond. * **Electronic data processing (EDP) floaters**: cover computer hardware and electronic data on broader terms than the property policy. A contractor who hauls and installs usually carries a few floaters: an equipment floater for machines and tools, an installation floater for materials headed to job sites, and, for the building itself, often the general contractor's builders risk policy. The coverage is often not optional either: rental companies ask for a certificate of insurance before they lease equipment, and the equipment floater has a separate limit for rented equipment. Newly bought machines are covered automatically for 60 days under IM 7000 04 04, and coverage ends if you don't report them within that time. ## How is inland marine different from commercial property insurance? [#how-is-inland-marine-different-from-commercial-property-insurance] The main difference is location. A [commercial property policy](https://www.menloinsurance.com/library/guides/commercial-property-insurance-explained) written on the Building and Personal Property Coverage Form ([CP 00 10](https://www.menloinsurance.com/library/forms/cp-00-10)) covers business personal property inside the described building or in the open within 100 feet of the building or premises. Beyond that, coverage drops sharply. The off-premises and in-transit extensions are small, and contractors' machinery and tools away from your premises are covered only for specified causes of loss, which do not include theft. Inland marine policies follow your property wherever it goes, usually on an open perils basis with limits you choose. According to Verisk CargoNet, the average cargo theft in the United States and Canada was $273,990 in 2025, and total losses that year were an estimated $725 million. Organized theft rings target loaded trailers, not buildings, and the property policy's $5,000 transit extension would cover less than 2% of the average theft. Here is how the two compare once property leaves the building: | Exposure | Commercial property policy | Inland marine floater | | --------------------------------- | ---------------------------------------------------------------------- | ---------------------------------- | | Property at your building | Covered up to your BPP limit | Covered, same territory | | Property in the open outside | Only within 100 feet of the building or premises | Covered anywhere in the territory | | Property at another location | $10,000 off-premises extension | Full scheduled or blanket limit | | Property in transit | $5,000, limited perils, your own vehicle only | Full limit (typically open perils) | | Theft of equipment from job sites | Theft is not listed as a specified cause of loss, so it is not covered | **Covered** | Inland marine forms are usually broader than property forms for the same risk. Contractors equipment floaters often cover flood and earthquake, which the standard property policy excludes outright. The trade-off is that many inland marine forms carry higher theft deductibles and limit theft coverage for equipment left in unattended vehicles. ## How is property valued under an inland marine policy? [#how-is-property-valued-under-an-inland-marine-policy] Valuation matters as much as the limit. Contractors equipment is often insured at [actual cash value](https://www.menloinsurance.com/library/glossary/actual-cash-value), which is [replacement cost minus depreciation](https://www.menloinsurance.com/library/guides/actual-cash-value-vs-replacement-cost), and many insurers offer replacement cost only for equipment about five years old or newer. Installation floaters usually pay the actual cost to repair or replace with materials of like kind and quality, plus labor, overhead and delivery. An agreed amount option locks in a value when you buy the policy, which helps with equipment that is hard to value or has been modified. Ask which method applies to each piece of equipment before you sign, not after a claim. Coinsurance can cut a claim on floating equipment. Many floaters have an 80%, 90% or 100% coinsurance clause, which reduces what a partial loss pays if you insure the equipment for less than the required share of its value. For example, a contractor with $30,000 of job site materials insures them for $20,000 under an 80% coinsurance clause, when the clause required a $24,000 limit. A $10,000 partial loss then pays about $8,333 before the deductible. Values move with the used-equipment market, so review your schedules every year, and remember that book value and original purchase price are the two most common wrong answers. ## Frequently Asked Questions ### Is inland marine insurance only for businesses near water? No. The marine in the name is purely historical, inherited from the ocean cargo policies this coverage descends from. Inland marine covers land-based property that moves, and a contractor in Kansas is a more typical buyer than anyone who owns a boat. ### Do I need inland marine coverage if I already have a commercial property policy? You do if meaningful property leaves your building. The property policy caps off-premises coverage at $10,000, transit at $5,000, and gives no theft coverage for builders' equipment away from your premises. If your tools and materials regularly travel, those small extensions are not a plan. ### What is a floater in insurance? A floater covers insured property wherever it is. The name comes from coverage that "floats" with the item instead of being tied to a listed address. Most commercial inland marine policies are floaters, which is why contractors talk about their equipment floater and installation floater. ### Does inland marine cover my customers' property in my shop? Yes. Bailee coverage is one of the main forms of inland marine. It pays for damage to customers' property in your care, either when you are legally liable or, on broader direct damage forms, regardless of fault. Paying regardless of fault helps you keep customers after a loss. *This guide is for educational purposes and summarizes standard ISO and AAIS policy language. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## How to find the gaps in your moving property [#how-to-find-the-gaps-in-your-moving-property] List every tool, machine, material and customer item that leaves your building, then ask your broker which floater covers each one and read the valuation basis on the schedule before you sign. Inland marine covers business property in transit or on the move, and it fills the gap your commercial property policy leaves once property is more than 100 feet from the building. The property policy's $5,000 and $10,000 extensions were never meant for mobile tools, equipment, materials or customer goods. ## References . [Insurance Information Institute. Understanding Inland Marine Insurance]() . [Inland Marine Underwriters Association. Nationwide Marine Definition]() . [Verisk. Cargo Theft Losses Surge to Estimated $725 Million in 2025, Verisk CargoNet Analysis Reveals]() # What Is Professional Liability Insurance? (https://www.menloinsurance.com/library/guides/what-is-professional-liability-insurance) Professional liability (E&O) pays when a client says your work or advice cost them money. How it differs from general liability, who needs it and cost. Markdown version: https://www.menloinsurance.com/library/guides/what-is-professional-liability-insurance.md Professional liability insurance protects your business when a client claims your work or advice was wrong, incomplete or negligent and cost them money. It pays your legal defense and any settlement or judgment for these financial-loss claims, which general liability does not cover. Depending on the profession it is also called errors and omissions (E\&O), malpractice insurance or professional indemnity. If you charge clients for expertise, you need a policy behind it. One detail catches buyers who compare only limits: on most E\&O policies, your legal defense is paid out of the same limit. On a $1,000,000 policy, spending $300,000 on defense leaves $700,000 for the claim. Below is what the coverage includes, how it differs from the general liability you probably already have, and how claims-made rules decide whether a past mistake is still covered. Menlo quotes [professional liability insurance](https://www.menloinsurance.com/professional-liability-insurance) for California businesses. ## Key takeaways * **It covers financial harm, not physical harm**: professional liability covers a client's financial loss from your error, omission or negligence, even when no one is injured and nothing is damaged. * **General liability will not step in**: standard liability policies exclude professional services, so the two policies cover different kinds of failure. * **It is almost always claims-made**: coverage depends on when the claim is first made against you, not when the mistake happened, so continuous coverage and your retroactive date matter a great deal. * **E\&O, malpractice and professional indemnity are one product**: the name depends on the profession and the country, and the protection is the same under all three. ### Professional Liability Insurance Professional liability insurance covers claims that a business's professional services, advice, or work product were negligent, erroneous, or incomplete and caused a client financial loss. It pays defense costs, settlements, and judgments for these claims, which fall outside general liability coverage. ## What does professional liability insurance cover? [#what-does-professional-liability-insurance-cover] Professional liability covers three kinds of claims: errors, omissions and negligent advice. An error is something the professional did wrong, such as an accountant misapplying a tax election or an engineer undersizing a load-bearing beam. An omission is something the professional failed to do, such as an insurance broker leaving out coverage the client asked for. Negligent advice is guidance a competent colleague in the same field would not have given, meaning it falls below the standard of care for that profession. When a client makes one of these claims, the policy pays the firm's defense costs, including attorney fees, plus any settlement or judgment. The policy defends you even if the claim has no merit, and a meritless lawsuit can still take a year and six figures in legal fees. It excludes deliberate dishonesty, fraud and intentional failure to perform a contract, and it does not pay to redo your own faulty work. Before you choose on price and limits alone, read each form's defense provision. Most E\&O policies pay defense within the limit, so every dollar spent on lawyers reduces what is left to settle the claim. ## What is the difference between professional liability and general liability? [#what-is-the-difference-between-professional-liability-and-general-liability] The two policies divide claims by the kind of harm. [General liability](https://www.menloinsurance.com/library/guides/what-does-general-liability-insurance-cover) covers bodily injury and property damage to others, such as a customer slipping in your lobby or a server rack your technician drops. Professional liability covers pure financial loss caused by a failure in your professional services, such as an audit that missed fraud or a design that failed code review. Standard general liability (CGL) policies give no protection for professional work, and insurers fence it off with exclusions. They routinely attach professional services exclusions to CGL policies, and the [businessowners policy](https://www.menloinsurance.com/library/guides/bop-business-owners-policy-guide) has a professional liability exclusion built into its form. The two differ in the harm they cover, their trigger, and who requires them: If you meet clients in person and sell them your judgment, you need both. ## How does claims-made coverage work? [#how-does-claims-made-coverage-work] Nearly every professional liability policy is claims-made: the policy that responds is the one in force when a client first makes a claim against you, not the one in force when you did the work. Each policy also has a retroactive date, and work done before that date is never covered. The system works as long as coverage is continuous. If coverage lapses, or a renewal moves your retroactive date forward without you noticing, every completed project before the new date can lose coverage. Our guide to [occurrence vs claims-made policies](https://www.menloinsurance.com/library/guides/occurrence-vs-claims-made-policies) explains the trigger in more detail. When you retire, sell the firm or change insurers, tail coverage (an [extended reporting period](https://www.menloinsurance.com/library/glossary/extended-reporting-period)) lets you report claims after the policy ends. At each renewal, compare the quote with your expiring declarations and confirm the retroactive date still matches the start date of your first policy. If your broker can't confirm that, the quote isn't finished. ## Who needs professional liability insurance? Consultants and small businesses [#who-needs-professional-liability-insurance-consultants-and-small-businesses] Any business paid for its expertise has the exposure, and for many small firms the coverage is required in practice: * **Design professionals**: architects, engineers and surveyors, whose exposure is so well known that ISO wrote a professional services exclusion aimed at them for general liability policies. * **Medical and allied health providers**: physicians, nurses, therapists and clinics, where the product is called malpractice insurance and is often required for licensing or hospital privileges. * **Lawyers and accountants**: state bars and client engagement letters often require proof of malpractice or E\&O coverage. * **Insurance agents, brokers and real estate professionals**: transaction-based advice with clear money damages when it goes wrong. * **Consultants, marketing agencies and IT firms**: professional liability for consultants is now a routine contract requirement, and clients ask for E\&O limits of $1 million or more before work starts. Most first purchases are driven by a contract. The requirement usually appears in a master services agreement, which sets a per-claim limit and asks for a certificate of insurance before the first invoice. ## How much does professional liability insurance cost? [#how-much-does-professional-liability-insurance-cost] Professional liability costs more when your advice could cause bigger losses and when clients are more likely to claim. Underwriters start with your profession: a structural engineer's worst day costs more than a copywriter's, so it is priced higher. Then they look at annual revenue, number of employees, limits and retention, years in practice and past claims. Insureon, which publishes premium data from its small business customers, reports an average of about $88 a month, or roughly $1,051 a year. Architects and engineers average about $144 a month, and accountants about $42. Medical professionals are at the far end, because malpractice premiums are set by specialty and county rather than revenue. The AMA's analysis of malpractice insurers' rate filings showed a 2021 base premium for obstetrics of $49,804 in Los Angeles County and $215,649 in Miami-Dade, more than four times as much for the same specialty because of location. The main cost lever you control is how much of each claim you keep. Check whether that amount is a true deductible, where the insurer defends from the first dollar, or a [self-insured retention](https://www.menloinsurance.com/library/glossary/self-insured-retention) you pay yourself before the policy responds. ## Is E\&O the same as professional liability insurance? [#is-eo-the-same-as-professional-liability-insurance] Yes. Errors and omissions, malpractice and professional indemnity insurance work the same way. The names follow industry custom: medical and legal professionals say "malpractice," insurance agents, real estate professionals and technology firms say "E\&O," and many markets outside the United States say "professional indemnity." What matters is the form behind the name. General liability has one standard ISO form ([CG 00 01](https://www.menloinsurance.com/library/forms/cg-00-01)), but professional liability has none, so read the policy's definition of covered services carefully. If you perform services outside that definition, the insurer will not respond when a claim arrives. ## Frequently Asked Questions ### What does professional liability insurance actually cover? It covers claims that your professional services were negligent, wrong or incomplete and caused a client to lose money. It pays attorney fees, settlements and judgments, even for groundless claims. It excludes intentional dishonesty, fraud and the cost of redoing your own faulty work. ### Do I need professional liability insurance if I already have general liability? Yes, if you sell expert advice. General liability covers only bodily injury and property damage, and insurers exclude professional services from it. Without an E\&O policy, a claim over bad advice or a work mistake is paid by your business alone. ### What is a retroactive date on a professional liability policy? It is the earliest date of work the policy covers. Claims from work done before the retroactive date are excluded, even if the claim is made during the policy period. Keep the date fixed at the start date of your first policy through every renewal and every change of carrier. ### Is E&O insurance different from professional liability insurance? No. E\&O, malpractice and professional indemnity are industry names for the same coverage. The wording differs by insurer, not by name, so compare the definition of covered services, the exclusions and the retroactive date rather than the label. *This guide is for educational purposes and summarizes standard ISO policy language. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## What to read before you buy or renew professional liability [#what-to-read-before-you-buy-or-renew-professional-liability] Before you buy or renew, read two things in the policy: the definition of covered services and where defense costs come from. Professional liability pays your defense and any settlement when a client says your work or advice cost them money, a financial-loss claim general liability never covers. Almost all of these policies are claims-made, so keep coverage continuous and keep your retroactive date tied to your first policy. ## References . [Insureon. How Much Does Professional Liability Insurance Cost?]() . [American Medical Association. AMA Analysis Shows 3-Year Surge in Medical Liability Premium Increases]() # Who Underwrites Classic Car Insurance? Five Brands, One Carrier (https://www.menloinsurance.com/library/guides/who-underwrites-classic-car-insurance) Grundy, American Collectors, J.C. Taylor, Condon Skelly, and Heacock Classic now share one carrier group. See who underwrites each classic car insurance brand. Markdown version: https://www.menloinsurance.com/library/guides/who-underwrites-classic-car-insurance.md If you shop [classic car insurance](https://www.menloinsurance.com/classic-car-insurance), the five names you keep running into now share one corporate foundation. On October 31, 2025, Philadelphia Insurance Companies bought the collector vehicle business behind American Collectors Insurance, J.C. Taylor, Condon Skelly, and Heacock Classic for $615 million, the largest acquisition in its 63-year history. The fifth familiar name, Grundy Insurance, already quotes and renews its collector policies through Philadelphia's own online portal at collectorvehicle.phly.com. The brands still compete for your business, and the chain behind them has three links. The brand sells you the program and sets its rules. The underwriting carrier issues the policy and holds your premium. And when your car is totaled, the check comes from the carrier's balance sheet, not the brand's. Which means a collector who diligently gathers five quotes from five familiar websites may be comparing five prices that rest on one insurance group. ## Key takeaways * **Brand is not carrier**: Grundy, American Collectors, J.C. Taylor, Condon Skelly, and Heacock Classic are sales and service brands. The insurance company named on your policy is the one that pays the claims. * **Program terms still differ**: deductibles, mileage rules, and garaging requirements are set brand by brand, so even under one owner the five are not interchangeable. * **In-force policies lag the deal**: an acquisition does not rewrite existing policies, and carrier paper typically moves at renewal, so read each renewal offer. * **Carrier diversity survives elsewhere**: Hagerty, OpenRoad, and State Farm Classic+ each sit on a different carrier's balance sheet. ### Underwriting Carrier An underwriting carrier is the licensed insurance company that issues a policy, collects the premium, and pays claims from its own funds. Many collector vehicle brands are agencies or program administrators selling policies that a separate carrier underwrites. ## Who Owns Grundy, American Collectors, J.C. Taylor, Condon Skelly, and Heacock Classic? [#who-owns-grundy-american-collectors-jc-taylor-condon-skelly-and-heacock-classic] Philadelphia Insurance Companies, a member of the Tokio Marine Group, now owns four of the five and runs the quoting systems behind the fifth. Insurance Journal reported the $615 million purchase of American Collectors Insurance, J.C. Taylor, Condon Skelly, and Heacock Classic from Carlyle-backed Ignyte Insurance on October 31, 2025, a deal that moved more than 250 employees and hundreds of thousands of policyholders in one transaction. All four brands operate from Mt. Laurel, New Jersey. Grundy's legal position is different, though the practical result looks much the same. The Horsham, Pennsylvania agency was founded in 1947 and says its founder invented agreed value coverage that year. It remains independently branded, yet its online quote and renewal payment traffic runs through collectorvehicle.phly.com, a Philadelphia Insurance domain. Trade coverage of the Ignyte deal described the acquisition as complementing Philadelphia's existing relationship with the Grundy agency. Add it up and one insurance group has a hand in all five logos. ## What Is the Difference Between the Brand and the Underwriting Carrier? [#what-is-the-difference-between-the-brand-and-the-underwriting-carrier] Most collectors assume the name on the quote is the insurance company, and it usually is not. The collector brands are agencies and program administrators. They design the program, advertise it, quote it, and answer the phone when you call, while the carrier files the policy forms with your state, holds the reserves, and pays the losses. It is roughly the split between an [insurance agent or broker](https://www.menloinsurance.com/library/guides/insurance-agent-vs-broker) and the company whose policy they sell, except that a program brand also controls eligibility and coverage terms. Two things follow from that. The financial strength you are relying on belongs to the carrier, which is why the [AM Best rating](https://www.menloinsurance.com/library/guides/am-best-insurance-ratings-explained) that matters is the carrier's, not anything the brand publishes about itself. And the carrier's name appears on your [declarations page](https://www.menloinsurance.com/library/glossary/declarations-page), usually with an NAIC number. That page tells you whose balance sheet stands behind your car, whatever logo sits on the marketing email. ## Does It Matter That One Carrier Group Backs Five Brands? [#does-it-matter-that-one-carrier-group-backs-five-brands] On financial strength, the consolidation is arguably good news, since Philadelphia advertises an A++ rating from AM Best. On shopping, though, it changes what a stack of quotes proves. Price differences between the four acquired brands are now differences between programs under one owner, not carriers bidding against each other, and Grundy's program runs on that same group's systems. Appetite still varies brand to brand, so a modified hot rod one program declines may fit another, because eligibility rules, agreed value wording, and mileage plans stay at the program level. ### Your declarations page controls An acquisition does not change an in-force policy mid-term. Your current carrier keeps paying claims until the policy renews, and any move to new paper must show up in the renewal offer. Check the carrier name and NAIC number on each renewal before you pay it. So compare programs on their rules, then check the dec page to see whether you have actually diversified carriers. Two quotes on the same paper are one carrier's opinion, twice. ## Grundy vs Hagerty: How Do the Two Programs Compare? [#grundy-vs-hagerty-how-do-the-two-programs-compare] Of all the matchups collectors argue about, Grundy vs Hagerty is at least a genuine two-carrier comparison. Grundy's collector program runs through Philadelphia Insurance, while Hagerty's policies are underwritten by [Essentia Insurance Company](https://www.menloinsurance.com/library/guides/essentia-insurance-company), or by a Nationwide company in some states. Both sell agreed value coverage, the collector market's answer to the [actual cash value](https://www.menloinsurance.com/library/glossary/actual-cash-value) settlements that standard auto policies pay. Past that shared promise, the published rules part ways: | Feature | Grundy | Hagerty | | -------------------- | ---------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------- | | Underwriting carrier | Philadelphia Insurance Companies | Essentia Insurance Company, or a Nationwide company in some states | | Agreed value promise | 100% of agreed value, no depreciation | Guaranteed Value, paid minus your deductible and any salvage you keep | | Deductible | Drops 25% each claim-free year until it reaches $0 | $0 offered for most vehicles, other options vary by state | | Mileage | No mileage restrictions for pleasure driving | No published cap, but occasional pleasure use only, never daily commuting | | Garaging | Secured enclosed garage required when the car is not in use, with an exception for overnight stops on tours and events | No blanket garaging rule in its public FAQ, storage is reviewed when you apply | | Driver rules | Clean record with no major violations in the past 3 years | Every driver fully licensed, and 10 years licensed for motorcycles and high-performance cars | Which one fits comes down to your own habits. Grundy suits the collector with a locked garage who actually drives, since mileage is unrestricted and the deductible erodes to nothing over claim-free years. Hagerty suits the owner who wants an ecosystem around the policy: roadside service through its Hagerty Drivers Club membership, guaranteed flatbed towing included, and valuation tools the hobby treats as a reference point. And a recently licensed owner of a high-performance car has no choice to make, because Hagerty's 10-year licensing rule decides it. ## Which Classic Car Insurers Still Use Different Carriers? [#which-classic-car-insurers-still-use-different-carriers] Genuine carrier diversity does survive, and it is not hard to map. Hagerty writes through Essentia and, in some states, Nationwide companies. OpenRoad, a newer collector program, writes through National Interstate Insurance Company, an Ohio domiciled carrier authorized in every state and Washington, D.C. under NAIC number 32620. State Farm Classic+ is underwritten by State Farm Classic Insurance Company, a wholly owned subsidiary of State Farm Mutual, and is sold through State Farm agents. There is one wrinkle that shows how tangled the market has become. Classic+ was built in partnership with Hagerty, which supplies features and services to State Farm's program, so even the diversity column has Hagerty's fingerprints on it. The balance sheet is still State Farm's, though. If what you want is a second independent opinion on your car, any of these three puts a different carrier behind the quote than the Philadelphia group of brands does. ## Frequently Asked Questions ### Is Grundy the same company as Hagerty? No. Grundy is an independent Pennsylvania agency whose collector program runs through Philadelphia Insurance Companies, while Hagerty policies are underwritten by Essentia Insurance Company or Nationwide companies depending on the state. They are separate brands on separate carrier paper, with different deductible, garaging, and driver rules. ### Who owns American Collectors Insurance, J.C. Taylor, Condon Skelly, and Heacock Classic? Philadelphia Insurance Companies, a Tokio Marine Group member, has owned all four brands since October 31, 2025, when it bought the collector vehicle business of Ignyte Insurance for $615 million. The brands continue to operate under their own names from Mt. Laurel, New Jersey. ### Will the Philadelphia acquisition change my existing classic car policy? Not mid-term. An acquisition leaves in-force policies with their current carrier until renewal, and any move to new paper has to appear in your renewal offer. Read the carrier name on each renewal declarations page, and ask your broker to explain any change before you pay. ### Should I still get more than one classic car insurance quote? Yes, but count carriers, not logos. Program rules on mileage, garaging, and deductibles differ even between brands backed by the same group, and quotes from Hagerty, OpenRoad, or State Farm Classic+ add carriers that are genuinely independent of the Philadelphia brands. *This guide is for educational purposes and summarizes publicly reported transactions and each program's published terms as of August 2026. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## The Bottom Line [#the-bottom-line] Classic car insurance brands are mostly agencies, and since late 2025 one carrier group, Philadelphia Insurance, stands behind Grundy, American Collectors, J.C. Taylor, Condon Skelly, and Heacock Classic. The brands still differ where it counts: mileage, garaging, and deductible rules. Compare those terms, then check the carrier on your declarations page. If you want a second balance sheet in the mix, add a Hagerty, OpenRoad, or State Farm Classic+ quote. ## References . [Insurance Journal. PHLY Makes Largest Acquisition in Its History With Collector Car Business Expansion]() . [Grundy Insurance. Collector Vehicle Insurance (quote and renewal portal)]() . [CollisionWeek. Philadelphia Insurance Acquires Collector Vehicle Business of Ignyte Insurance]() . [Philadelphia Insurance Companies. About PHLY: AM Best Rating]() . [Hagerty. US Auto Underwriting Disclosures]() . [Grundy Insurance. Insurance 101: Program Requirements]() . [Hagerty. Insurance Frequently Asked Questions]() . [OpenRoad Insurance. Terms of Use and Underwriting Disclosure]() . [Hagerty Newsroom. Hagerty Will Join Forces With State Farm Classic Insurance Company]() # Workers Comp Audit: What Happens and What You Owe (https://www.menloinsurance.com/library/guides/workers-comp-audit-guide) A workers comp audit replaces your estimated premium with the final one. What it checks, why uninsured subs and miscoded payroll raise it, how to dispute. Markdown version: https://www.menloinsurance.com/library/guides/workers-comp-audit-guide.md A workers comp audit is your insurer's review, after the policy year ends, of what you actually paid your workers and what work they did. The premium you paid during the year was an estimate, so the audit replaces it with the final premium and bills you for the difference or refunds what you overpaid. You agreed to the audit when you bought the policy, and refusing it costs far more than going through it. An audit does not mean your insurer suspects you of anything. It is how every workers comp policy is settled. The money usually turns less on the payroll you reported than on the people you didn't report, mostly subcontractors, and on the class codes the auditor assigns to each employee. Menlo quotes [workers compensation insurance](https://www.menloinsurance.com/workers-compensation-insurance) with payroll estimates set to match your real operations. ## Key takeaways * **Uninsured subcontractors cost the most**: without proof that each sub carried its own workers comp for every day it worked for you, the auditor bills you as if its workers were on your payroll. * **Your records decide the class codes**: if payroll isn't split by employee and job, all of an employee's payroll goes to the highest-rated code that applies. * **Overtime relief is conditional**: most states let you exclude the premium portion of overtime pay, but only if your records show it separately. * **Stonewalling is the expensive option**: for blocking an audit, a carrier can charge up to double your estimated premium, three times it in California, and cancel you as well. ### Workers Comp Premium Audit A premium audit is your insurer's review of your payroll records at the end of the policy term. It sets your final workers compensation premium from what you actually paid your employees and the work each one did. The insurer bills you for any amount above the estimated premium you paid during the year and refunds any overpayment. ## What is a workers comp audit and why is your premium only an estimate? [#what-is-a-workers-comp-audit-and-why-is-your-premium-only-an-estimate] A workers comp audit replaces the estimated premium you paid with the final [premium](https://www.menloinsurance.com/library/glossary/insurance-premium) your actual exposures produce. Workers comp rates are charged per $100 of payroll, so the estimated annual payroll on your policy's information page was only a projection of a year that had not happened yet. The information page is the workers comp version of a [declarations page](https://www.menloinsurance.com/library/glossary/declarations-page). Payroll also means more than base wages: the policy counts all remuneration, including salary, bonuses, commissions and vacation pay. The policy says this itself. Part Five, "Premium," states that the premium shown is an estimate and that the final premium is set by actual payroll after the term ends. The insurer can audit your records during the policy period and for up to three years after it ends, so a closed policy is not a finished one. Our [workers compensation guide](https://www.menloinsurance.com/library/guides/workers-compensation-insurance-guide) walks through Item 4 of the information page, the rate and classification table. ## What does the auditor examine? [#what-does-the-auditor-examine] The auditor checks three things: how much you paid, who did what work, and whether your subcontractors had their own workers comp. The second test depends on class codes, the numbers that tie each kind of work to a rate, which is why a roofer pays many times more per dollar of payroll than a bookkeeper. Auditors don't rely on your summaries. They use source documents and check them against each other: | Records requested | What the auditor is testing | | ---------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------ | | Payroll journals, quarterly federal payroll tax returns (the 941s), state unemployment returns | That the payroll you report matches what you actually paid and already reported to tax authorities | | Job descriptions, payroll split by employee and duty | That each employee is in the right class code, and that any split of one person's wages across codes is documented | | Overtime records | That the extra portion of overtime pay is identified separately, so it can be excluded where your state allows | | Subcontractor ledger and certificates of insurance | That each subcontractor carried its own workers comp for the whole time it worked for you | | General ledger, cash disbursements | That no labor cost is hidden outside payroll, in casual labor or 1099 payments | Two of these tests carry most of the money. If there's no record supporting a payroll split, the auditor puts the whole employee in the highest-rated code that applies. And without a certificate of insurance from a subcontractor, all of that sub's labor cost is assigned to you. A certificate is one page from your sub's insurer, and it counts only if it names the sub and shows coverage in force for every day the sub worked for you. Have yourself named as the [certificate holder](https://www.menloinsurance.com/library/glossary/certificate-holder) so you get notice if the sub's policy is canceled during your job. ## What are the most common audit surprises? [#what-are-the-most-common-audit-surprises] Most additional premium comes from three patterns, and paperwork you can collect months in advance prevents all three: * **An uninsured subcontractor becomes your employee**: with no valid certificate in the file, the sub's payroll is added to yours at audit. If you can't document that payroll, the auditor charges you on the full contract price. And if you hire [an uninsured subcontractor](https://www.menloinsurance.com/library/guides/workers-comp-ghost-policy), state law usually makes you the employer of its injured workers anyway, so you carried that injury risk all year regardless. * **The clerical code stops applying**: many owners think anyone who works at a desk some of the time falls under the office code (8810). They don't. If an employee coded 8810 also pulls stock or visits job sites, that person goes into the code for most of your operations, the governing classification, and the auditor only needs to see it once. * **Overtime stays in the number**: most states let you exclude the premium portion of overtime (the amount above straight time), but only if your records show it separately. Report gross wages in one column and you pay premium on the higher gross figure. Severance works the same way, and so do officers' salaries above your state's maximum. ## What happens if you ignore the audit? [#what-happens-if-you-ignore-the-audit] Ignoring the audit turns a paperwork issue into a financial one. Refusing to provide records breaks your promise under Part Five, and most policies also carry the Audit Noncompliance Charge Endorsement (WC 00 04 24). Where the state allows it, that endorsement lets the carrier charge a penalty based on your estimated annual premium, commonly up to two times that premium. Check the actual multiplier on your own copy of the endorsement. California sets a bigger penalty by statute. Under Insurance Code Section 11760.1, an employer that fails to give the insurer access to its records owes a total premium equal to three times the insurer's current estimate of the annual premium, plus the insurer's audit costs once the employer has ignored three requests over at least 90 days. The carrier can also cancel for refusing to cooperate, and that cancellation follows you: the next carrier will know why the last one dropped you. ## How do you prepare for a workers comp audit and dispute the bill? [#how-do-you-prepare-for-a-workers-comp-audit-and-dispute-the-bill] Prepare from the first day of the policy year, not the week before the auditor calls. Summarize payroll by employee, class code and state, keep overtime on its own line, and reconcile it with your quarterly 941 filings every quarter instead of at year end. Collect a subcontractor's certificate before anyone starts work. During the audit, hand over exactly what is asked for and nothing more, because auditors test whatever they receive. To dispute an audit, first ask for the auditor's worksheets, because arguing with a summary bill goes nowhere. The worksheets show how employees were coded and who was counted as a subcontractor. Send the carrier's premium audit department a written list of each disputed item with evidence attached, and watch the dispute deadline, often 60 days. Pay the undisputed part of the bill while the rest is pending. If the carrier won't fix a classification, go above it. Class codes are set and enforced by a rating bureau, NCCI in most states and the WCIRB in California, which decides whether a code fits your business. In California, if you disagree with the bureau's decision, Insurance Code Section 11737 lets you appeal to the Insurance Commissioner. Fixing the code matters beyond this bill, because your audited payroll feeds the report that sets your [next experience mod](https://www.menloinsurance.com/library/guides/experience-mod-guide), the factor that moves your premium at renewal. ## Frequently Asked Questions ### How long after the policy ends can a workers comp audit happen? Your insurer can audit during the policy period and for up to three years after it ends. Most audits happen within 90 days of expiration, but a carrier can come back later inside that window, so keep payroll records and subcontractor certificates at least that long. ### Can a workers comp audit result in a refund? Yes. Final premium is your actual payroll times the rates, and that math runs both directions. If your audited payroll lands under the estimate you paid, the carrier owes you money back, which is a good reason to finish the audit promptly in a year when the business shrank. ### Do 1099 workers need workers comp coverage at audit? Often yes, at least for premium. The auditor checks your 1099 payments against your state's employment tests. A 1099 worker counts as payroll if they work like an employee, or if they are a subcontractor with no certificate on file. The tax form doesn't decide it. How you work together, and whether you have a certificate, does. *This guide is for educational purposes and summarizes standard NCCI policy language. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## How to avoid a surprise audit bill [#how-to-avoid-a-surprise-audit-bill] Collect a certificate from every subcontractor before the job starts, reconcile payroll with your 941s every quarter, and have your broker update the premium estimate at each renewal so the next audit adjustment is small. A workers comp audit replaces the premium you estimated with the premium your actual payroll, class codes and any uninsured subcontractors produce, and those surprises are preventable. ## References . [California Legislature. Insurance Code Section 11760.1]() . [California Legislature. Insurance Code Section 11737]() # Workers' Comp Exemption in California: Who Is Exempt, the CSLB Form, and the 2028 Contractor Rule (https://www.menloinsurance.com/library/guides/workers-comp-exemption-california) Who must carry workers' comp in California under Labor Code 3700, who is excluded or can waive coverage (sole owners, officers, partners, LLC managers, household workers), how the CSLB exemption works, what changes for contractors on January 1, 2028, and the penalties for going uninsured. Markdown version: https://www.menloinsurance.com/library/guides/workers-comp-exemption-california.md In California, every employer except the state has to carry [workers' compensation insurance](https://www.menloinsurance.com/library/guides/workers-compensation-insurance-guide) or hold a state certificate to self-insure. That's true even if you have one employee. There's no general exemption for small businesses. What the law does have is a list of people who don't count as employees. A sole owner with no employees is one. Owners who sign a written waiver are another: qualifying corporate officers and directors, general partners and LLC managing members. And licensed contractors with no employees can file an exemption with the Contractors State License Board (CSLB). For almost all contractors, that option goes away on January 1, 2028. Below we sort out who's exempt, who can opt out and how, what the CSLB exemption covers, and what happens if you get caught without coverage. If you have employees, or you're about to hire one, [request a workers' comp quote](https://www.menloinsurance.com/f/workers-compensation) before their first day, not after. ## Key takeaways * **One employee is enough.** California requires coverage for any employer with even one employee. Anyone working for you is presumed to be an employee unless the law says otherwise. * **Owners can step out, employees cannot.** Qualifying officers, directors, general partners and LLC managing members can sign a waiver under penalty of perjury. There is no waiver for ordinary employees. * **A sole shareholder is excluded automatically.** An officer or director who owns all the shares of a private corporation is excluded unless they choose coverage. * **The CSLB exemption has a deadline.** Contractors with no employees can file an exemption today, except C-8, C-20, C-22, C-39 and C-61/D-49 license holders. From January 1, 2028, only joint ventures with no employees can use it. * **Going uninsured is costly.** Penalties include a stop order on all employee labor, penalty assessments per employee, possible criminal charges, and a lawsuit from any injured worker. ### Workers' comp exemption (California) In California, a workers' compensation "exemption" usually means one of three things: a person the Labor Code does not treat as an employee, an owner who has signed a written waiver of coverage, or a licensed contractor's certificate to the CSLB that it has no employees. ## Who must carry workers' comp in California? [#who-must-carry-workers-comp-in-california] Every employer except the state. Labor Code section 3700 says "every employer except the state shall secure the payment of compensation," either with insurance from a licensed carrier or with a certificate of consent to self-insure from the Director of Industrial Relations. An "employer" includes every person "which has any natural person in service." The Division of Workers' Compensation says it plainly: California employers must have workers' comp "even if they have only one employee." The law defines "employee" broadly. It covers anyone working under any appointment or contract of hire, spoken or written, "whether lawfully or unlawfully employed," including minors and non-citizens. From July 1, 2020, it also includes anyone who is an employee under Labor Code section 2775, the ABC test for [independent contractors](https://www.menloinsurance.com/workers-comp-1099-independent-contractors). Anyone doing work for you, other than as an independent contractor or a person the law expressly excludes, "is presumed to be an employee." Calling someone a contractor, or paying them on a 1099, doesn't change that. The facts of the work do. ## Who is exempt from workers' comp in California? [#who-is-exempt-from-workers-comp-in-california] Being small doesn't exempt anyone. The people below either fall outside the definition of employee or are allowed to opt out in writing. The table groups them by how the exemption works. | Person | Status under the Labor Code | What it takes | | ------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------- | | Sole proprietor with no employees | Not an employer, so no coverage required | Nothing, until you hire anyone. The CSLB still requires a filed exemption for licensed contractors. | | Officer or director who is the sole shareholder of a private corporation | Excluded | Automatic, unless the officer, director or corporation elects coverage | | Officer or director owning at least 10% of the stock (or 1% if a parent, grandparent, sibling, spouse or child owns 10%) | Employee if paid for service; may be excluded | Written waiver under penalty of perjury, accepted by the insurer. The statute also refers to health coverage. | | General partner or LLC managing member | Employee if receiving wages regardless of profits; may be excluded | Written waiver under penalty of perjury, accepted by the insurer | | Owner-practitioner of a professional corporation | May be excluded | Written waiver stating they have health coverage, copied to the other owners | | Household worker employed by their parent, spouse or child | Excluded | Automatic | | Household worker who in the 90 days before injury worked under 52 hours or earned $100 or less | Excluded | Automatic | | Unpaid volunteer for a public agency or private nonprofit | Excluded | Only meals, transport, lodging or incidental expenses may be provided | Sources: Labor Code sections 3300, 3351 and 3352. Two warnings about that table. First, the family exclusion only covers household work, like childcare or housekeeping for a parent, spouse or child. If a relative works in your business for pay, they're an employee like anyone else. Second, a waiver is only as good as the facts behind it. The insurer, agent and broker don't have to check those facts, and whoever signs a waiver is conclusively presumed not to be covered. ## How do corporate officers, partners and LLC members opt out? [#how-do-corporate-officers-partners-and-llc-members-opt-out] You sign a written waiver and the insurer has to accept it. If you're a corporate officer or director, the waiver has to say, under penalty of perjury, that you're a qualifying officer or director. It kicks in when the corporation's insurer receives and accepts it. With your consent, the insurer can backdate acceptance by up to 15 days. The waiver stays in place until you send the insurer a written withdrawal. General partners and LLC managing members use the same process under their own paragraph of the statute. The waiver takes you off the policy. If the business has other employees, you still need the policy. If you stay on it, you pay premium on your own pay, within limits the rating bureau sets. For policies starting on or after September 1, 2026, the WCIRB counts executive officers, partners, individual employers and covered LLC members at no less than $66,300 and no more than $171,600 of yearly pay each. ## How does the CSLB workers' comp exemption work? [#how-does-the-cslb-workers-comp-exemption-work] If you're a licensed contractor, you have to keep one of two things on file with the CSLB. One is a valid Certificate of Workers' Compensation Insurance, or a certificate of self-insurance from the Department of Industrial Relations. The other is a signed exemption certifying that they have no employees. You can download the exemption form from the CSLB website or order it as Form #32. You can't file the exemption if any of these is true: * You employ anyone in a way that is subject to California workers' comp law. * Your license is qualified by a Responsible Managing Employee (RME). * You hold a C-8 Concrete, C-20 Warm-Air Heating, Ventilating and Air-Conditioning, C-22 Asbestos Abatement, C-39 Roofing or C-61/D-49 Tree Service classification. These must carry workers' comp "whether or not they have employees." The exemption doesn't last forever. At renewal, you have to either recertify it or file a current certificate of insurance. The CSLB allows a retroactive renewal if the missing document arrives within 30 days after it notifies you. The day you hire anyone, the exemption is no longer valid. The CSLB has to get proof of coverage within 90 days of the hire. After that, coverage has to stay in place. If it lapses, your license is suspended, and any work you do while suspended counts as unlicensed. Lots of contractors have one. On July 31, 2026, 121,679 active licenses, about 50 percent, had a current workers' comp exemption on file. Another 114,219, about 47 percent, had current coverage. ## What changes for contractors on January 1, 2028? [#what-changes-for-contractors-on-january-1-2028] For almost everyone, the no-employee exemption goes away. SB 1455 (Chapter 485, Statutes of 2024) moved the start date of the all-contractors rule from January 1, 2026 to January 1, 2028. The version of Business and Professions Code section 7125 that takes effect on that date requires every applicant and licensee to have a workers' comp certificate or self-insurance certificate on file. Only a licensee "organized as a joint venture" with no employees may file the no-employee statement instead. A license that is inactive on CSLB records needs no certificate while it stays inactive. The same bill required the CSLB to set up a process by January 1, 2027 to verify that licensees claiming the exemption are eligible. It may include an audit or proof. So if you've seen posts saying every contractor needed coverage by January 2026, that date got pushed back. The five classifications listed above need coverage already. Everyone else with a CSLB exemption has until January 1, 2028. If you work solo, you may be able to meet the rule with a minimum-premium policy that excludes you as the owner. Our guide to the [workers' comp ghost policy](https://www.menloinsurance.com/library/guides/workers-comp-ghost-policy) explains how that works and where it goes wrong. ## What are the penalties for not having workers' comp in California? [#what-are-the-penalties-for-not-having-workers-comp-in-california] They hit you from several sides at once: * A stop order. The Director of Industrial Relations issues a stop order, and you can't use any employee labor until you're insured. The order takes effect when you're served. You have to pay affected employees for up to 10 days of lost time. * A penalty assessment. The stop order comes with a penalty of $1,500 per employee on the payroll at the time. If you were uninsured for more than a week in the prior year, the penalty is twice the premium you would have paid or $1,500 per employee, whichever is more. * Claim penalties. If a worker files a claim while you're uninsured, there's another penalty once the case is final: $2,000 per employee if the claim isn't compensable, $10,000 per employee if it is. * Criminal charges. Knowingly going without coverage is a misdemeanor. You can get up to a year in county jail, a fine of up to double the missing premium (at least $10,000), or both. A second conviction raises the minimum fine to $50,000. * Lawsuits. If you're uninsured, an injured employee can sue you for damages in court, "as if this division did not apply." * License discipline, if you're a contractor. A false exemption, or having workers without coverage, is grounds for discipline against a contractor's license. Minimum civil penalties are $10,000 per violation for a sole owner and $20,000 for a partnership, corporation, LLC or tribal business, under the law as amended effective January 1, 2026. ### The exemption ends the day you hire A CSLB exemption or an owner waiver doesn't cover anyone you add later. That includes a helper you pay cash for a weekend and a relative on the payroll. The law presumes that person is your employee, and the penalties above start the day they do. Bind coverage before their first shift. ## Frequently Asked Questions ### Who is exempt from workers' comp in California? No business is exempt just for being small. The exceptions are people the Labor Code doesn't count as employees, and owners who opt out. That means a sole proprietor with no employees, a sole shareholder officer of a private corporation, qualifying officers, directors, general partners and LLC managing members who sign a waiver, some household workers, and unpaid volunteers for public agencies and nonprofits. ### Does a workers' comp exemption need to be renewed? For contractors, yes. Every time you renew your license, you have to recertify the CSLB exemption or file a certificate of insurance. Owner waivers under the Labor Code are different. They stay in place until the owner sends the insurer a written withdrawal. ### Can you waive workers' comp in California? Only qualifying owners can, only for themselves, and only by signing the statutory waiver. The Labor Code's waivers are written for officers, directors, partners, LLC managing members and professional corporation owners. An ordinary employee can't waive it, and the employer still has to insure its employees. ### Where can I find the California exemption from workers' compensation form? Licensed contractors use the CSLB's Exemption from Workers' Compensation form. Download it from the CSLB's workers' comp requirements page, or order it as Form #32. Waivers for officers, partners and LLC members are separate documents, and they go to your workers' comp insurer, not the state. ### Is an independent contractor exempt from my workers' comp? Only if they really are one. Since July 1, 2020, anyone who's an employee under the Labor Code's ABC test is an employee for workers' comp in California. Anyone working for you is presumed to be your employee until shown otherwise. Get a certificate of insurance from each independent contractor, and expect your auditor to ask for it (see our [workers' comp audit guide](https://www.menloinsurance.com/library/guides/workers-comp-audit-guide)). *This guide is for educational purposes and summarizes the California Labor Code, the Business and Professions Code, CSLB guidance and WCIRB rating rules as published in September 2026. Statutes and CSLB rules change, and your insurer and the CSLB decide how they apply to you. Menlo Insurance Services is a licensed California insurance broker (license 6020106) and may earn a commission on policies it places. Talk to a licensed broker, and an attorney where needed, about your actual situation.* ## The Bottom Line [#the-bottom-line] California has no small-business exemption from workers' comp. Once anyone works for you, you have to cover them, and the law presumes they're your employee. The exemptions are narrow. A sole owner with no employees needs nothing. A sole shareholder is excluded automatically. Other owners have to sign a waiver. Contractors with no employees can file a CSLB exemption until January 1, 2028, unless their classification already requires coverage. Go without coverage and you risk a stop order, per-employee penalties and a lawsuit. [Get a workers' comp quote](https://www.menloinsurance.com/f/workers-compensation) before your first hire. ## References . [California Legislative Information. Labor Code section 3700]() (accessed 2026-09-23) . [California Legislative Information. Labor Code section 3300]() (accessed 2026-09-23) . [California Department of Industrial Relations, Division of Workers' Compensation. Employer information]() (accessed 2026-09-23) . [California Legislative Information. Labor Code section 3351]() (accessed 2026-09-23) . [California Legislative Information. Labor Code section 3357]() (accessed 2026-09-23) . [California Legislative Information. Labor Code section 3352]() (accessed 2026-09-23) . [WCIRB (filed with the California Department of Insurance). California Workers' Compensation Insurance Regulatory Filing Effective September 1, 2026, CDI File REG-2026-00001]() (accessed 2026-09-23) . [Contractors State License Board. Workers' Compensation Requirements]() (accessed 2026-09-23) . [Contractors State License Board. Board Meeting Packet, September 2–3, 2026 (Licensing Program Update: Workers' Compensation Recertification Statistics)]() (accessed 2026-09-23) . [California Legislative Information. SB 1455 (Ashby), Contractors: licensing, Chapter 485, Statutes of 2024]() (accessed 2026-09-23) . [California Legislative Information. Labor Code section 3710.1]() (accessed 2026-09-23) . [California Legislative Information. Labor Code section 3722]() (accessed 2026-09-23) . [California Legislative Information. Labor Code section 3700.5]() (accessed 2026-09-23) . [California Legislative Information. Labor Code section 3706]() (accessed 2026-09-23) . [California Legislative Information. Business and Professions Code section 7125.4]() (accessed 2026-09-23) # Workers Comp Ghost Policy: What It Is, What It Costs, and the Traps (https://www.menloinsurance.com/library/guides/workers-comp-ghost-policy) A workers comp ghost policy satisfies certificate requests while covering nobody. What it costs, when it backfires, and California's shifting deadline. Markdown version: https://www.menloinsurance.com/library/guides/workers-comp-ghost-policy.md A workers comp ghost policy is a workers compensation policy written for a business that has no employees, with the owner excluded from coverage. The whole point of it is the certificate of insurance it produces, usually because a general contractor will not let a subcontractor on the jobsite without one. There are no employees to cover, the owner has opted out, so the policy insures nobody. If you are that subcontractor, our page on [workers' comp for 1099 contractors](https://www.menloinsurance.com/workers-comp-1099-independent-contractors) covers the options. That sounds like something a regulator should shut down. In most states it is actually legal, and for a genuinely solo operator it is often the cheapest way to keep working for contractors who demand proof of coverage. Think of the arrangement as a chain. A contractor demands a certificate, a carrier issues a zero-payroll policy with the owner excluded, and the certificate satisfies the contractor's premium audit. Every trap in this guide comes down to one of two events breaking that chain. You get hurt, or you hire someone. ## Key takeaways * **Your own injury is never covered**: the owner exclusion puts a jobsite fall on you personally, and some health plans exclude work-related injuries on top of that. * **Hiring breaks it**: add a worker mid-term without telling the carrier and you are looking at an audit backcharge, cancellation, and a possible premium fraud allegation. * **States treat it differently**: Minnesota now forces zero-payroll policies to be disclosed in writing, and some carriers will not write one at all. * **California's deadline moved**: five contractor classifications already need coverage even with no employees, and SB 1455 pushed the everyone-else date out to January 1, 2028. ### Ghost Policy A ghost policy is a workers compensation policy issued with zero estimated payroll. The business owner is excluded from coverage and there are no employees to cover, so it generates a valid certificate of insurance while insuring no one. ## What is a workers comp ghost policy? [#what-is-a-workers-comp-ghost-policy] A ghost policy is a real [workers compensation policy](https://www.menloinsurance.com/library/guides/workers-compensation-insurance-guide) from a licensed carrier. Your business is the named insured, the application shows zero estimated payroll, and either you sign an exclusion form removing yourself from coverage or you lean on your state's default rule that sole proprietors are not covered unless they opt in. The carrier then issues a [certificate of insurance](https://www.menloinsurance.com/library/guides/certificate-of-insurance-guide) that looks identical to one backed by a full policy. That resemblance is the point. Why do general contractors demand certificates? Because of how their own [premium audit](https://www.menloinsurance.com/library/guides/workers-comp-audit-guide) works. When a subcontractor cannot produce proof of coverage, the auditor treats that sub's labor cost as the contractor's payroll and charges premium on it at the contractor's rates. Your certificate takes your invoices out of that math. Most owners assume the policy behind the certificate would pay something if a worker got hurt on their job. It would not. With zero payroll reported and the owner excluded, there is no covered person on the policy, so a claim has nothing to attach to. ## How much does a ghost policy cost? [#how-much-does-a-ghost-policy-cost] A ghost policy costs the carrier's minimum premium, meaning the smallest amount it will accept to issue any policy, plus a flat expense constant. The minimum varies by state, carrier and class code, so ask each carrier for its minimum premium and expense constant before you compare. Compare that to a standard policy, which is priced per $100 of actual payroll, so covering even one $50,000 employee in a construction class can cost several times more. A standard policy also starts the claims record that eventually feeds your [experience mod](https://www.menloinsurance.com/library/guides/experience-mod-guide), the multiplier that will discount or surcharge your premium once you grow. One detail from practice catches people off guard. A ghost policy still gets audited. At expiration the carrier will want your Schedule C, bank records, or 1099s to confirm the payroll really was zero. Here is the side by side: | | Ghost policy | Standard policy | | ------------------------ | ----------------------- | ------------------------------------------- | | Who is covered | **Nobody** | Every employee, plus owners who opt in | | Pricing basis | Carrier minimum premium | Rate per $100 of payroll by class code | | Certificate of insurance | Yes | Yes | | If the owner is hurt | No benefits | Benefits only if the owner elected coverage | | At audit | Must prove zero payroll | Premium adjusted to actual payroll | ## What are the risks of a ghost policy? [#what-are-the-risks-of-a-ghost-policy] The first risk is your own body. You are excluded, so a fall from a ladder brings no medical coverage, no wage replacement, and no death benefit from this policy. And some health plans exclude injuries arising out of self-employment work, which means an owner can be uninsured twice over at the exact moment of a jobsite injury. Carry a ghost policy and you generally need separate health and disability coverage to stand where workers comp would have stood. ### Hiring mid-term without telling the carrier An injured employee usually still collects statutory benefits, because most state laws make the carrier pay the worker first and fight with you later. The carrier then bills the full payroll at full rates on audit. It can cancel or refuse to renew, and it can treat a knowing zero-payroll attestation as premium fraud. Call the carrier before a helper's first day, not after. The trap runs the other way up the chain too. A ghost-policy sub brings two helpers, one gets hurt, and the claim tends to land on the hiring contractor as the statutory employer. That contractor's audit can still backcharge for the uninsured labor, which is why some general contractors refuse ghost certificates outright. Ask what the contractor accepts before you bid. ## When is a ghost policy the right tool? [#when-is-a-ghost-policy-the-right-tool] A ghost policy fits when three things are all true. You genuinely work alone, with no helpers of any kind, not even casual day labor. The contractors hiring you accept it. Your state and carrier allow a zero-payroll policy. For that narrow situation it does its one job cheaply, and it binds fast because there is no payroll to underwrite. When a job grows big enough to need a helper, the right move is to convert before the hire, never after. Carriers will endorse payroll onto the policy mid-term, and the added premium is small money next to an uncovered injury claim or a fraud referral. ## How do states treat ghost policies? [#how-do-states-treat-ghost-policies] States range from regulated acceptance to effective prohibition. Minnesota is the clearest example of the first camp. Its Department of Labor and Industry recognizes what it calls zero estimated exposure policies, but as of January 1, 2026 the holder must attest to having no employees or payroll, must disclose the policy in writing to anyone they directly contract with, and must hand over a copy, which the recipient must keep for three years. The state's public lookup tool now flags which employers carry zero-payroll policies, so a Minnesota contractor can no longer mistake a ghost certificate for real coverage. Other states lean the opposite way. Some rating systems assign a minimum payroll to any owner who stays on the policy, which quietly turns the ghost into a small standard policy, and some carriers simply decline zero-exposure business. Before counting on one, confirm with your state's insurance department or a broker licensed there that a zero-payroll policy is available, and that it satisfies whoever is asking for the certificate. ## When does California require workers comp with no employees? [#when-does-california-require-workers-comp-with-no-employees] California already requires five license classifications to carry workers compensation or approved self-insurance whether or not they have employees: C-8 Concrete, C-20 Warm-Air Heating, Ventilating and Air-Conditioning, C-22 Asbestos Abatement, C-39 Roofing, and C-61/D-49 Tree Service. Roofers have been under that rule for years. SB 216 added the other four, applying the rule to them on July 1, 2023. For a solo concrete or HVAC contractor, the policy that satisfies the Contractors State License Board is often exactly the minimum-premium, owner-excluded policy this guide describes, though CSLB, not any guide, decides what keeps your license in good standing. Every other classification can still file an exemption certificate while it truly has no employees. That exemption was scheduled to end on January 1, 2026, the date SB 216 would have extended the requirement to every licensed contractor. Then SB 1455, which became law in September 2024, moved the date to January 1, 2028 and directed CSLB to build procedures for verifying exemption claims by January 1, 2027. So the confusion circulating on contractor forums has a short answer. Hold one of the five listed classifications and you need coverage now. Hold any other classification with no employees and your deadline is January 1, 2028, with CSLB as the authority on your specific license. ## Frequently Asked Questions ### Does a ghost policy cover the owner of the business? No. The owner is excluded from coverage, and that exclusion is what makes the zero-payroll pricing possible. Get hurt on the job and the policy pays no medical bills and no lost wages, which is why owners who carry one generally need their own health and disability insurance to fill that hole. ### Is a workers comp ghost policy legal? In most states, yes. It is a legitimate product as long as the zero-payroll attestation is true and stays true. Deliberately reporting zero payroll while employing workers is premium fraud. Some states also restrict or effectively prohibit zero-payroll policies, so availability depends on where you operate. ### Is California's contractor deadline January 2026 or January 2028? January 1, 2028. SB 216 had originally set January 1, 2026 as the date every licensed California contractor must carry workers compensation regardless of employees, and SB 1455 moved it. The earlier requirement for C-8, C-20, C-22, C-39, and C-61/D-49 contractors is already in force and did not move. ### Will a general contractor accept a ghost policy certificate? Usually, because the certificate takes your labor cost out of the contractor's premium audit. Some contractors refuse them anyway, since a ghost-policy sub who quietly brings helpers can push an injury claim and an audit charge up to the hiring contractor. Ask what the contractor requires before you bid the job. *This guide is for educational purposes and summarizes standard NCCI policy language and state statutes. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## The Bottom Line [#the-bottom-line] A ghost policy is a zero-payroll workers compensation policy that produces a certificate while covering no one. For a true solo operator, that is often the cheapest way to stay on a contractor's approved list, and it fails the moment you hire or get hurt. California's five affected classifications already need coverage today. Every other contractor's deadline is January 1, 2028. Talk to your broker before your first hire, not after. ## References . [Minnesota Department of Labor and Industry. Zero Estimated Exposure and Wrap Policies]() . [Contractors State License Board. Workers' Compensation Insurance Requirements]() . [California Legislative Information. SB 216, Dodd. Contractors: workers' compensation insurance]() . [CalMatters Digital Democracy. SB 1455: Contractors: workers' compensation insurance]() # Workers' Comp Insurance Cost in California (2026) (https://www.menloinsurance.com/library/guides/workers-comp-insurance-cost-california) California employers paid an average $1.56 per $100 of payroll for workers' comp in 2025, and rates rose 6.6% in 2026. How your premium is figured. Markdown version: https://www.menloinsurance.com/library/guides/workers-comp-insurance-cost-california.md California workers' comp is priced per $100 of payroll, so the cost follows your payroll and the classification of each employee. Across the market, insurers collected an average of $1.56 per $100 of payroll in 2025, and the Insurance Commissioner's advisory pure premium rate for policies starting on or after September 1, 2026 is $1.65, up 6.6%. At the 2025 average, an employer with $300,000 of payroll would pay about $4,680 a year, but actual rates vary greatly with the work: a clerical office pays much less than the average and a roofer much more. This guide is for a California employer pricing a first policy, a renewal or a quote that looks too high. It explains how the premium is figured, what the 2026 numbers mean, the penalties for going without coverage, which insurers write small employers and how the audit settles your final cost. When you're ready, [request a workers' comp quote](https://www.menloinsurance.com/workers-compensation-insurance) and we'll price it with several insurers. ## Key takeaways * **The formula is payroll times rate.** Payroll divided by 100, times the class rate, adjusted by any experience mod and schedule credits. * **2026 advisory rate: $1.65 per $100.** A 6.6% increase for September 1, 2026. The WCIRB had asked for 10.4%. * **What employers actually paid: $1.56.** The 2025 average charged rate, about 37% below insurers' average filed manual rate of $2.48, because of schedule credits. * **Going without is expensive.** A stop order brings a $1,500 penalty per employee, and the crime carries a fine of at least $10,000. * **The audit sets the final premium.** The first bill is a deposit on estimated payroll. Pay-as-you-go plans bill on actual payroll instead. ## How is workers' comp premium calculated in California? [#how-is-workers-comp-premium-calculated-in-california] Every employee's payroll goes into a class code, and each class has a rate per $100 of payroll. The basic formula: **Premium = (payroll ÷ 100) × class rate × experience mod × schedule adjustments**, plus small state assessments. The class code does most of the work. The WCIRB publishes an advisory pure premium rate for each of about 500 classes, which includes both expected claims and the cost of handling them. Each insurer then adds its own expenses and profit and files its own rates, and those filed rates are what you're charged. "The adopted rate is advisory, meaning that insurance companies are not bound by it and are free to set their own rates." Two adjustments come after the rate. Larger employers get an experience modification that compares their claims with others in the same classes. Insurers also apply schedule credits or debits for safety programs, experience and management. Our guides to [California class codes](https://www.menloinsurance.com/library/guides/california-workers-comp-class-codes) and the [experience mod](https://www.menloinsurance.com/library/guides/experience-mod-guide) explain both. ## What do the 2026 numbers mean for my premium? [#what-do-the-2026-numbers-mean-for-my-premium] They show the direction of the market. For policies starting on or after September 1, 2026, the Commissioner adopted an average advisory pure premium rate of $1.65 per $100 of payroll, a 6.6% increase over 2025, while the WCIRB had proposed 10.4%. What employers actually pay has stayed lower. The Department of Insurance reports an average charged rate of $1.56 in 2025, down from $1.58 in 2024 and $1.60 in 2023. That was about 37.1% below the industry average filed manual rate of $2.48 as of January 1, 2026, which shows how much schedule rating and other credits discount the filed rates. Those credits may not be around forever. The Department reports accident-year combined ratios above 100% for six years, and 129% for accident year 2025, the highest since 2002. When insurers lose money on claims, credits shrink at renewal even if the advisory rate doesn't change much. Here is what each average would cost on $300,000 of payroll. These are statewide averages across all classes, not your rate: | Rate used | Per $100 of payroll | Annual premium on $300,000 | | -------------------------------------------------------- | ------------------- | -------------------------- | | 2025 average charged rate | $1.56 | $4,680 | | 2026 advisory pure premium rate | $1.65 | $4,950 | | Average filed manual rate, January 1, 2026 | $2.48 | $7,440 | A clerical class sits well below these averages and construction classes far above them. That's why one wrong class code can move your premium more than any credit. ## Do I need workers' comp if I have only one employee? [#do-i-need-workers-comp-if-i-have-only-one-employee] Yes. Labor Code section 3700 requires every employer except the state to secure workers' compensation, either through an authorized insurer or a certificate of consent to self-insure. The number of employees does not affect this obligation. There can be significant penalties. When the state issues a stop order, it also assesses $1,500 per employee, or twice the premium you should have paid if you were uninsured for more than one week in the past year, whichever is greater. Knowingly failing to insure is a misdemeanor punishable by a fine of at least $10,000 and up to double the premium that was due. Contractors are subject to additional requirements. A licensed contractor must keep a workers' comp certificate on file with the CSLB, and C-8, C-20, C-22, C-39 and D-49 licensees need one regardless of whether they have employees. From January 1, 2028, that requirement extends to almost every licensee. ## Which insurers write small employers in California? [#which-insurers-write-small-employers-in-california] Several admitted insurers in Menlo's market take small California employers online, which means quick quotes for common classes: | Insurer | What it publishes | | -------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | | AmTrust | More than 500 eligible classes, over 350 bindable online. New ventures eligible in most classes. Pay-As-You-Owe billing | | Chubb Small Business | Nearly 400 classes. Up to $1 million employer's liability limits. Owner/officer inclusion or exclusion, waiver of subrogation | | THREE (Berkshire Hathaway) | One policy "that includes all of the coverage a business needs," issued by Berkshire Hathaway Direct Insurance Company, for small businesses in its target industries | | Pie | Pay-as-you-go with no initial deposit, billed on actual payroll | Businesses that small-business insurers decline, and larger accounts, go to the full market, including the State Compensation Insurance Fund. ## How does the audit change my final cost? [#how-does-the-audit-change-my-final-cost] The premium you initially pay is calculated from your estimated payroll. Once the policy expires, the insurer audits your actual payroll by class and then sends you either a bill or a refund for the difference. If you hired or gave raises during the year, expect a bill. Our [workers' comp audit guide](https://www.menloinsurance.com/library/guides/workers-comp-audit-guide) walks through it. Pay-as-you-go billing avoids the surprise. According to Pie, it means no upfront deposit and premiums based on "your actual payroll, not an estimate," deducted automatically, so there's no additional bill after the audit if you grow. AmTrust offers a similar Pay-As-You-Owe plan. ## How can I lower my workers' comp cost? [#how-can-i-lower-my-workers-comp-cost] Get the classes right first. Clerical staff who never go to the field belong in the clerical class, not your main trade class, and the payroll split should be documented. Then: 1. Keep payroll records by class so the auditor can see the split. 2. Report owners correctly. Officers and owners may include or exclude themselves under the rules for their entity. 3. Start a written safety and return-to-work program. It supports schedule credits and fewer claims. 4. Report injuries quickly. Early care keeps claims small, and claims drive the experience mod. 5. Compare several insurers every renewal, because each files its own rates and credits. You can estimate a premium with our [workers' comp calculator](https://www.menloinsurance.com/library/workers-comp-calculator) before you ask for quotes. ## Frequently Asked Questions ### How much is workers' comp per employee in California? It depends on each employee's pay and class. At the 2025 average charged rate of $1.56 per $100, an employee earning $50,000 costs about $780 a year, but a clerical employee costs far less and a construction worker far more. ### Why did my California workers' comp rate go up in 2026? The advisory pure premium rate rose 6.6% for policies starting on or after September 1, 2026, and insurers' claims results have worsened, which can reduce the credits they give. ### Is the advisory pure premium rate what I pay? No. It covers expected losses and claims handling only, and insurers aren't bound by it. You pay the insurer's filed rate after its credits and any experience mod. ### What is the cheapest workers' comp in California? There is no single cheapest insurer, because each files its own class rates and credits. Accurate classes and payroll, a clean claims record and quotes from several insurers give the lowest price. *This guide is general information based on California law and Department of Insurance data published in 2026. Rates are set by each insurer's filings, and your policy's terms control. Menlo Insurance Services (CA license 6020106) is a licensed broker that may earn a commission on a placement.* ## References . [California Department of Insurance. Proposed Decision: September 1, 2026 Workers' Compensation Claims Cost Benchmark and Advisory Pure Premium Rates, REG-2026-00002]() (accessed 2026-09-27) . [California Department of Insurance. Commissioner Lara takes action to maintain stable workers' compensation market amid rising costs (July 10, 2026)]() (accessed 2026-09-27) . [California Legislative Information. Labor Code section 3722]() (accessed 2026-09-27) . [California Legislative Information. Labor Code section 3700.5]() (accessed 2026-09-27) . [Pie Insurance. Pay-as-you-go with Pie Insurance]() (2022) . [California Legislative Information. Labor Code section 3700]() (accessed 2026-09-27) . [California Legislative Information. Business and Professions Code section 7125 (current version and version operative January 1, 2028)]() (accessed 2026-09-27) . [AmTrust. Workers' Compensation sell sheet (MKT5403)]() (2024) . [Chubb. ChubbSmallBusiness.com: Workers' Compensation]() (2026) . [THREE by Berkshire Hathaway. Target Industries]() (accessed 2026-09-27) # Workers Compensation Insurance: A Guide for Employers (https://www.menloinsurance.com/library/guides/workers-compensation-insurance-guide) How workers comp works: Part One pays the benefits your state requires, Part Two covers employers liability suits, and how class codes and mods set premium. Markdown version: https://www.menloinsurance.com/library/guides/workers-compensation-insurance-guide.md Workers compensation insurance pays the benefits your state's law requires when an employee is hurt on the job or gets a work-related illness: medical care, disability payments, rehabilitation and death benefits, regardless of who was at fault. The same policy includes employers liability insurance, which defends and pays work-injury lawsuits against the employer that fall outside the workers compensation law. Menlo quotes [workers compensation insurance](https://www.menloinsurance.com/workers-compensation-insurance) for California employers. Most owners think of this as one coverage. It is really two, and the expensive surprises usually come from the second one, employers liability. ## Key takeaways * **Two coverages in one policy** (form WC 00 00 00 C): Part One pays statutory benefits, and Part Two covers lawsuits the statute doesn't reach. * **No fault**: the employee gets prompt, defined benefits and gives up the right to sue, the "exclusive remedy" trade-off. * **No limit on Part One**: the insurer pays whatever benefits state law requires. Part Two is limited to the amounts on the information page. * **What drives premium**: job classification, payroll and your experience modification factor. A mod below 1.00 earns a credit and above 1.00 a debit. ### Workers Compensation Insurance Workers compensation insurance pays the medical, disability, rehabilitation, and death benefits a state's law requires for a work-related injury or occupational disease, regardless of fault. The same policy adds employers liability coverage for work-injury claims outside that law. ## What is workers compensation insurance? [#what-is-workers-compensation-insurance] Workers compensation is a trade set by law: employees get prompt, no-fault benefits for work injuries, and in exchange they give up the right to sue their employer, which makes workers comp their "exclusive remedy." An injury or illness is compensable when it meets two tests: it arose out of the employment, meaning the job caused it, and it happened in the course of employment, at the right time and place. The National Council on Compensation Insurance (NCCI) writes the standard Workers Compensation and Employers Liability Insurance Policy (form WC 00 00 00 C). Its information page lists the covered states in Item 3.A and the employers liability limits in Item 3.B. ## What benefits does workers compensation pay? [#what-benefits-does-workers-compensation-pay] Workers compensation pays four kinds of benefits set by state law. Part One adopts your state's workers compensation law by reference, which is why it has no standard limit: * **Medical benefits** cover necessary care for a compensable injury, from surgery to physical therapy and prescriptions. The statute, not a policy limit, decides what is paid. * **Disability benefits** replace part of lost wages, subject to state maximums and a waiting period. California pays no temporary disability for the first three days off work unless the worker is hospitalized or the disability lasts more than 14 days. * **Rehabilitation benefits** pay to restore the employee's physical ability, plus vocational rehabilitation in some states. * **Death benefits** cover burial expenses and ongoing support for qualifying dependents. One caveat surprises owners: under Part One, you may have to repay the insurer for benefits it pays because of your serious and willful misconduct, an OSHA violation or an illegal firing. ## What is employers liability insurance (Part Two)? [#what-is-employers-liability-insurance-part-two] Employers liability, Part Two of the policy, covers work-injury lawsuits that the workers compensation law does not block. If workers comp is the exclusive remedy, why does the policy need a liability section? Because the statute doesn't reach every employment-related claim. [Employers liability insurance](https://www.menloinsurance.com/library/guides/employers-liability-insurance) covers lawsuits for work-related bodily injury outside that law, claims that are rare but expensive. Third-party action-over claims are the most common trigger. A worker hurt using your equipment collects workers compensation under Part One, then sues the equipment manufacturer, and the manufacturer sues you for poor maintenance. If the suit comes back to you through an indemnity clause in an insured contract, it goes to your [general liability policy](https://www.menloinsurance.com/library/guides/what-does-general-liability-insurance-cover). If there is no such indemnity, Part Two responds. Part Two is limited by Item 3.B, most often $1,000,000 each for bodily injury by accident, disease policy limit and disease each employee, and it has 12 exclusions, including contractual liability, punitive damages and employment-related claims such as wrongful termination. ## How is workers comp premium calculated? [#how-is-workers-comp-premium-calculated] Workers comp premium is your payroll in each job classification, multiplied by that class's rate per $100 of payroll, then adjusted by your [experience modification factor](https://www.menloinsurance.com/library/guides/experience-mod-guide). The mod gives a credit when your losses are better than expected for your classes and a debit when they are worse. The market also matters: workers compensation insurers ended calendar year 2025 with a combined ratio of 91%, according to NCCI's annual State of the Line report, which means they are making an underwriting profit and competing for accounts with clean histories. - 91% — Workers compensation combined ratio, calendar year 2025 — [NCCI State of the Line, 2026]() The premium is also provisional. An auditor reviews your actual payroll after the policy period, and the final bill can change at [audit](https://www.menloinsurance.com/library/guides/workers-comp-audit-guide). California does not use NCCI rating at all: its class codes and mods come from the WCIRB. The details that go wrong most often: * **Verify your classifications**: misclassified payroll is the most common audit surprise. * **Check the states in Item 3.A**: Part One applies only to the states listed there, and the four [monopolistic states](https://www.menloinsurance.com/library/guides/monopolistic-states-workers-comp) are excluded from the policy entirely. * **Match endorsements to contracts**: unlike the CGL, the policy allows no waiver of subrogation without the [WC 00 03 13](https://www.menloinsurance.com/library/forms/wc-00-03-13) endorsement, and the entity usually must be scheduled. * **Mind leased and contracted labor**: collect a [certificate of insurance](https://www.menloinsurance.com/library/guides/certificate-of-insurance-guide) from every subcontractor, since an uninsured sub or PEO gap can leave you the statutory employer of their injured worker. ## What to check on your workers comp policy [#what-to-check-on-your-workers-comp-policy] Get a copy of your information page from your broker and confirm that the class codes match the work your employees actually do. Workers compensation pays statutory, no-fault benefits to employees hurt on the job, and its employers liability section (Part Two) defends and pays the work-injury lawsuits workers comp doesn't reach. Your premium depends on two things: your class codes and payroll, which set the base premium, and your experience mod, which rewards few losses and penalizes many. ## Frequently Asked Questions ### Is workers compensation insurance required by law? In nearly every state, yes. Coverage is compulsory for most employers, though thresholds and exemptions (certain agricultural or domestic workers, sole proprietors, and partners) vary by state, and some exempt classes can be added voluntarily by endorsement. ### What is the difference between workers compensation and employers liability? Workers compensation (Part One) pays the statutory, no-fault benefits your state's law requires, with no policy limit. Employers liability (Part Two) protects the employer against lawsuits the statute does not cover, such as action-over, loss-of-services, consequential-injury, and dual-capacity claims, subject to the Information Page limits. ### Can I waive my insurer's subrogation rights in a contract? Not without an endorsement. Unlike the CGL, the workers comp policy does not allow a waiver of subrogation, before or after a loss, unless the Waiver of Our Right to Recover From Others endorsement (WC 00 03 13) is on the policy, and some states prohibit it entirely. Failing to schedule a required entity is a classic E\&O trap. *This guide is for educational purposes and summarizes standard NCCI policy language. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## References . [California Legislative Information. Labor Code Section 4652]() . [NCCI. 2026 State of the Line Guide]() . [WCIRB. Workers Compensation Insurance Rating Bureau of California]() # ACORD 101: Additional Remarks Schedule Explained (https://www.menloinsurance.com/library/forms/acord-101) Learn how ACORD 101 carries additional remarks tied to another ACORD form, why clear cross-references matter, and what this schedule does not change itself. Markdown version: https://www.menloinsurance.com/library/forms/acord-101.md ACORD 101 is the Additional Remarks Schedule, an attachment that carries information that does not fit on another ACORD form. It belongs with a base application, certificate, or loss notice and should identify the form and policy information it supplements. Standing alone, it lacks the context needed to interpret the remarks. The schedule solves a space problem. It does not create coverage, replace an answer on the base form without explanation, or prove that an insurer accepted the added information. ## Key takeaways * **Always keep the base form attached**: the form number, policy, named insured, and page sequence connect each remark to the right transaction. * **Label every continuation**: identify the original section or question so an underwriter, adjuster, or certificate recipient can place the answer correctly. * **Resolve conflicts directly**: if a remark corrects a checked box or prior answer, state what is being corrected and obtain a clean revised package when possible. * **Remarks are informational**: an insurer's binder, policy, endorsement, or written decision controls coverage. ## What is ACORD 101 used for? [#what-is-acord-101-used-for] ACORD 101 provides additional room when an ACORD document cannot hold the full answer. Vertafore documents many system-generated uses. Extra claim participants can overflow from a loss notice, longer certificate descriptions can continue onto ACORD 101, and equipment-floater remarks can populate the schedule. Current Vertafore release notes also show workers compensation questions and experience-modification details for additional states flowing onto ACORD 101. This range is why the schedule should not be read as a specific insurance application. Its meaning comes from the document it continues. ## How should additional remarks be organized? [#how-should-additional-remarks-be-organized] Start each continuation with a precise pointer to the base form, page, section, item, or question. Keep policy identifiers and the named insured consistent. If the package uses several ACORD 101 pages, number them and keep them in order. Plain labels beat narrative shorthand. For example, identify a continuation as a response to a specific numbered underwriting question rather than writing a free-floating paragraph. Vertafore's ACORD 131 mapping example shows ACORD 101 carrying the originating form number and title alongside additional underlying-policy information. That connection lets reviewers return to the question that prompted the detail. ## Can ACORD 101 change another form or policy? [#can-acord-101-change-another-form-or-policy] Not by itself. A remark can clarify or correct submitted information, but the recipient must read and act on it. If the schedule contradicts the base form, ask for a revised package or written acknowledgment instead of assuming the remark silently wins. Coverage follows the insurer's binding and policy documents. ACORD says it is not an insurer and does not provide insurance coverage. A schedule attached to an application may affect underwriting once reviewed, but it is not proof that the insurer accepted the risk or amended an issued policy. ### Name the answer you are continuing Use the base form number plus its section, item, or question number. A reviewer should be able to connect the remark without guessing which checkbox or schedule it explains. ## Where can you get the official ACORD 101 form? [#where-can-you-get-the-official-acord-101-form] Eligible users can search and download current forms through the logged-in ACORD Forms Portal. Agency systems also create ACORD 101 automatically when mapped data exceeds the base form's space. This page is an original explanation, not a blank schedule or reproduction of ACORD's layout. ## Frequently Asked Questions ### Can ACORD 101 be used by itself It should travel with the form it supplements. Without the base form and matching policy or claim identifiers, a reader may not know which question, location, person, or coverage the remarks describe. ### What belongs on an ACORD 101 Use it for a continuation, explanation, or overflow that the base ACORD document requests but cannot hold. Label the source form and exact section or question for every entry. ### Does an ACORD 101 endorsement change my policy No. ACORD 101 is a remarks schedule, not a policy endorsement. Ask the insurer for the issued endorsement or other written policy change if coverage must be amended. ## The Bottom Line [#the-bottom-line] ACORD 101 adds space, not authority. Tie every remark to its base form, organize multi-page continuations, and resolve contradictions in a revised package. The insurer's written policy action determines whether information changes coverage. *This guide is for educational purposes and describes ACORD 101 in original language. Form numbers and titles are cited for identification only, and Menlo Insurance Services is not affiliated with ACORD Corporation. The base form and insurer-issued documents control.* ## References . [Vertafore. AMS360 2017 R1 Release Notes]() (accessed September 2026) . [Vertafore. Sagitta 2026 R1.3.0 Release Notes]() (accessed September 2026) . [Vertafore. ACORD 131 Umbrella / Excess Section Mapping Guide]() (accessed September 2026) . [ACORD. Contact Us: Important Note About Insurance Claims]() (accessed September 2026) . [ACORD. Forms Portal]() (accessed September 2026) # ACORD 125: Commercial Insurance Application Explained (https://www.menloinsurance.com/library/forms/acord-125) What the ACORD 125 commercial insurance application collects, how underwriters use it, and why the answers on it legally bind the business that signs. Markdown version: https://www.menloinsurance.com/library/forms/acord-125.md **ACORD 125 is the master commercial insurance application, the standardized form that collects a business's identity, operations, ownership, prior insurance, and loss history so underwriters at any carrier can evaluate the account from a common starting point.** Nearly every commercial submission begins with it. Line-specific supplements, such as [ACORD 126](https://www.menloinsurance.com/library/forms/acord-126) for general liability, [ACORD 140](https://www.menloinsurance.com/library/forms/acord-140) for property, and [ACORD 130](https://www.menloinsurance.com/library/forms/acord-130) for workers compensation, attach behind it, but the 125 is the spine of the package. The form matters for a reason bigger than paperwork. The answers on it are representations to the insurer, and coverage bought with inaccurate answers can unravel exactly when the business needs it. This page walks through what the application collects, how underwriters read it, and why accuracy is a legal issue rather than a clerical one. ## Key takeaways * **The master application**: one form carries the applicant information every line of coverage needs, with line-specific ACORD sections attached behind it. * **Underwriters read it as the risk**: legal entity, operations descriptions, premises, and ownership tell the underwriter what they are being asked to insure. * **Prior carrier and loss history are verified**: underwriters compare the declared history against loss runs, so the application must match the record. * **Answers are representations**: material misstatements can support rescission or a denied claim, which makes accuracy the cheapest coverage protection there is. ## What does ACORD 125 collect? [#what-does-acord-125-collect] The application collects the facts that define the account before any line of coverage is discussed. The applicant information section records the legal name, mailing address, entity type, years in business, and identifiers such as FEIN, along with contact information for inspections and audits. Premises information lists each location with its occupancy and interest. A description of operations tells the underwriter what the business actually does, and this narrative carries more underwriting weight than any other free-text field in the package. The form then gathers prior carrier history, typically the past several years of carriers, policy numbers, premiums, and effective dates for each line, and a loss history section declaring claims over the same span with dates, descriptions, and amounts paid or reserved. General information questions round it out, covering things like past cancellations or nonrenewals, bankruptcies, and other facts carriers treat as red flags. Everything downstream keys off this form. ## How do underwriters use the application? [#how-do-underwriters-use-the-application] Underwriters use the 125 to decide three things in order: is this risk eligible for our appetite, what should it cost, and what should we verify before binding. Eligibility turns on the operations description and premises data, since a carrier that writes artisan contractors will decline a general contractor no matter the price, and misclassifying the operations wastes everyone's submission cycle. Pricing draws on the exposure data in the attached line sections, but the 125's history sections shape the judgment call. A clean five-year loss history supports scheduled credits, while frequency patterns invite debits or declination. Verification is where the account either holds up or falls apart. Underwriters order [loss runs](https://www.menloinsurance.com/library/glossary/loss-runs) from prior carriers and compare them against the declared loss history, and they check the prior carrier section for gaps in coverage, which suggest either lapses or self-insurance the applicant did not explain. A submission whose loss runs contradict its application starts the relationship with a credibility problem, and brokers who pre-pull loss runs before completing the form avoid it entirely. ### Match the application to the loss runs before submission Experienced brokers order loss runs first and transcribe from them, rather than completing the loss history from the client's memory. Memory omits the small claims, and the underwriter reading the loss runs will find them. ## Why do the answers legally matter? [#why-do-the-answers-legally-matter] Because an insurance application is not a questionnaire, it is a set of representations the insurer relies on to accept the risk and price it. When a material answer turns out to be false, most states let the carrier rescind the policy or deny the claim, depending on the jurisdiction's standards for materiality and intent, and the signature block reinforces this with fraud warning language that many states require verbatim. Material means the truth would have changed the underwriting decision. Understating prior losses, omitting a nonrenewal, or describing a roofing operation as "carpentry" are the classic examples. The consequences land asymmetrically. The business pays full premium either way, but discovers the defect only after a loss, when rescission means the claim, the defense, and sometimes the premium refund check arrive in place of coverage. Agents carry their own exposure here, since transcribing answers they know to be wrong invites both E\&O claims and carrier disputes. The operational fix is mundane and effective. Read the completed application before signing it, correct the prefilled fields your broker's management system carried over from last year, and treat the renewal application with the same care as the original, because operations change and stale answers are still representations: | Application section | What underwriters do with it | Common accuracy failure | | ------------------------- | --------------------------------------------------------- | ------------------------------------------------------ | | Applicant information | Confirm entity, ownership, and named insured structure | Missing DBAs or entities that should be named insureds | | Description of operations | Determine appetite and classification | Describing the safest slice of the operations | | Prior carrier history | Spot lapses, nonrenewals, and market history | Unexplained coverage gaps | | Loss history | Reconcile against loss runs, judge frequency and severity | Omitted small claims and open reserves | ## Where can you see the actual form? [#where-can-you-see-the-actual-form] Menlo does not reproduce ACORD forms because they are copyrighted by ACORD Corporation. Licensed agencies and carriers access current editions through [acord.org](https://www.acord.org/) and complete applications inside their agency management systems, which prefill client data and generate the full submission package. As an applicant you do not need form access. Your broker prepares the application from your information and provides you the completed copy to review and sign, and reviewing it line by line is the part that protects you. ## Frequently Asked Questions ### What is the difference between ACORD 125 and ACORD 126? ACORD 125 is the master application carrying the applicant's identity, operations, prior carriers, and loss history. ACORD 126 is the general liability section that attaches behind it with classifications, exposures, and liability-specific underwriting questions. A typical package pairs the 125 with one section form per line of coverage. ### Do I have to disclose old claims on the application? Disclose whatever the form asks for, which is typically several years of loss history. Underwriters verify the answers against carrier loss runs, so omissions are usually discovered, and a material omission can support rescission or claim denial later. When in doubt, disclose and explain. ### Who signs the ACORD 125? An owner or officer of the applicant business signs, along with the producer. The signature attests that the answers are true to the signer's knowledge, which is why the review before signing matters more than the signature itself. ### Does a renewal need a new application? Practice varies by carrier and account size, but renewal submissions commonly update the application, and management systems prefill last year's answers. Prefilled data is a known accuracy trap. Operations, locations, and ownership change, and an unreviewed prefill quietly re-represents last year's facts as current. *This guide is for educational purposes and describes standard commercial application practice in Menlo's own words. Form numbers and titles are cited for identification only, and Menlo Insurance Services is not affiliated with ACORD Corporation. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # ACORD 126: Commercial General Liability Section Explained (https://www.menloinsurance.com/library/forms/acord-126) What the ACORD 126 general liability application section asks, how classifications and exposures set CGL premium, and why the subcontractor answers matter. Markdown version: https://www.menloinsurance.com/library/forms/acord-126.md **ACORD 126 is the commercial general liability section of the ACORD application package, the supplemental form that collects the classifications, exposure amounts, and liability-specific underwriting answers a carrier needs to quote a CGL policy.** It attaches behind the [ACORD 125](https://www.menloinsurance.com/library/forms/acord-125) master application and translates "what the business does" into the class codes and exposure bases that drive general liability rating. The policy those answers produce is almost always written on [CG 00 01](https://www.menloinsurance.com/library/forms/cg-00-01), the standard ISO coverage form. Three parts of this form decide most of the underwriting outcome: the classification schedule, the subcontractor questions, and the products and completed operations answers. This page explains what each one does and where applicants get themselves into trouble. ## Key takeaways * **Classification drives premium**: each operation gets a class code and an exposure base, such as gross sales or payroll, and the rate attached to that code sets the price. * **Coverage requests live here**: requested occurrence and aggregate limits, deductibles, and optional coverages are declared on this section. * **Subcontractor answers are underwriting gold**: carriers price and even accept contracting risks based on how the applicant manages subs, certificates, and written contracts. * **Products exposure gets its own questions**: what the business makes, sells, or installs shapes the products-completed operations side of the quote. ## What does ACORD 126 collect? [#what-does-acord-126-collect] The form collects everything liability-specific that the master application leaves out. The schedule of hazards is its core, listing each classification of the business's operations with a class code, the premium basis for that code, and the exposure amount, for example gross sales for a retailer, payroll for a contractor trade, or area for a building owner. The form also records the limits being requested, occurrence and aggregate, plus deductibles and any claims-made particulars where that trigger applies. A long series of underwriting questions follows, probing the exposures general liability underwriters have been burned by before: work performed for others, subcontracted work, products manufactured or sold, athletic teams sponsored, watercraft or aircraft, hold harmless agreements given, and similar. Every yes typically requires an explanation in the remarks. None of this is busywork. Each answer either maps to a rating variable or flags an exposure the underwriter must price, exclude, or decline. ## How do classifications and exposures set the premium? [#how-do-classifications-and-exposures-set-the-premium] General liability rating multiplies a rate per class code against that code's exposure base, so the classification schedule is the premium calculation in embryo. A carpentry code rated per $1,000 of payroll and a retail code rated per $1,000 of gross sales produce very different premiums for the same dollar of exposure, and businesses with mixed operations carry several codes at once. Two accuracy problems dominate. The first is misclassification, describing operations under a cheaper code than the work justifies, which produces a quote the audit will destroy, since exposure-based policies are auditable and the carrier reclassifies and back-bills when the audit reveals the truth. The second is underestimating the exposure, projecting $2 million in sales for a business tracking toward $4 million, which converts into a painful additional premium bill at audit. Brokers who quote from the applicant's actual financials, rather than round-number guesses, save their clients from both. Estimate honestly and the audit is boring. That is the goal. ### The estimate is auditable Exposure figures on the 126 are estimates the carrier trues up after the policy period. Lowballing sales or payroll does not save premium, it defers the premium to an audit invoice, sometimes with a less favorable classification attached. ## Why do the subcontractor questions matter so much? [#why-do-the-subcontractor-questions-matter-so-much] For contracting risks, the subcontractor answers often decide whether the account gets quoted at all. The form asks what portion of the work is subcontracted, the annual cost of subcontracted work, and the risk transfer practices behind it, including whether the applicant obtains [certificates of insurance](https://www.menloinsurance.com/library/guides/certificate-of-insurance-guide) from subs, requires limits equal to its own, uses written contracts, and secures additional insured status and hold harmless agreements running in its favor. Underwriters read these answers as a proxy for how much subcontractor liability will climb upstream to the applicant's policy. A general contractor that collects certificates, requires each sub to carry equal limits, and gets additional insured status on every sub's policy has built a wall of first-line coverage in front of its own. One that answers no down the column is asking the carrier to insure every sub's mistakes at the GC's premium. Subcontractor cost also functions as an exposure base for some contracting classifications, which is why the dollar figure is asked rather than a percentage alone: | Underwriting question area | What the underwriter is measuring | | ----------------------------------------------------------------- | ------------------------------------------------------------------ | | Percentage and cost of subcontracted work | How much of the operations the applicant performs versus transfers | | Certificates and limits required from subs | Whether sub losses land on sub policies first | | Written contracts with hold harmless and additional insured terms | Quality of contractual risk transfer upstream | | Products manufactured, sold, or installed | Size and nature of the products-completed operations exposure | The products questions deserve the same respect. What the business makes, imports, sells under its own label, or installs defines the products-completed operations exposure, the part of the CGL that responds after work is finished or products leave the applicant's hands. Private labeling and importing are the classic surprises, since a business that puts its name on someone else's product often inherits liability as if it made the product itself. ## Where can you see the actual form? [#where-can-you-see-the-actual-form] Menlo does not reproduce ACORD forms because they are copyrighted by ACORD Corporation. Licensed agencies and carriers access current editions through [acord.org](https://www.acord.org/) and complete the 126 inside their agency management systems as part of the submission package. Applicants see the completed form when their broker sends it for review and signature, and the review is worth doing question by question, since the yes and no answers are representations like everything else in the application. ## Frequently Asked Questions ### Is ACORD 126 required for every general liability quote? For standard market submissions it is the default, since carriers expect the ACORD package, though some carriers substitute their own supplemental applications or online question sets. Excess and surplus lines placements frequently require both the 126 and carrier-specific supplements. ### What exposure base does general liability use? It depends on the classification. Common bases include gross sales, payroll, area, and total cost, and subcontractor cost feeds the rating of many contracting classes. Each class code on the schedule of hazards carries its own basis and its own rate. ### What policy do the ACORD 126 answers lead to? Most carriers quote the standard ISO coverage form, CG 00 01, with endorsements shaped by the application answers. Exposures the underwriter dislikes often come back as exclusions, which is why an accurate application also predicts the endorsement list on the quote. ### Why does the form ask about hold harmless agreements I have signed? Because contractual liability the applicant assumes flows into the CGL through the insured contract mechanism. An applicant that routinely signs broad hold harmless agreements is bringing other parties' liability onto the policy, and the underwriter prices or limits that. *This guide is for educational purposes and describes standard commercial application practice in Menlo's own words. Form numbers and titles are cited for identification only, and Menlo Insurance Services is not affiliated with ACORD Corporation or Insurance Services Office, Inc. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # ACORD 127: Business Auto Section Explained (https://www.menloinsurance.com/library/forms/acord-127) Learn what ACORD 127 collects for business auto insurance, how it works with vehicle and driver schedules, and why it is not proof of bound coverage today. Markdown version: https://www.menloinsurance.com/library/forms/acord-127.md ACORD 127 is the Business Auto Section of a commercial insurance application. It organizes information an insurer may use to evaluate a business auto account, including policy details, drivers, vehicles, operations, and requested coverage. It supports underwriting, but it is not a policy, binder, insurance card, or promise that an insurer will offer particular terms. ## Key takeaways * **It is one application section**: ACORD 127 commonly works with a commercial insurance application and other auto schedules. * **Schedules matter**: larger driver or vehicle lists may continue on separate ACORD forms or carrier supplements. * **Accuracy affects underwriting**: legal names, vehicle identifiers, driver details, use, radius, and garaging should match current records. * **The insurer's documents control**: only a binder, declarations, endorsement, or other insurer-issued evidence establishes coverage. ## What information does ACORD 127 collect? [#what-information-does-acord-127-collect] Vertafore maps business auto policy information to ACORD 127 and identifies driver information and general account questions among the data carried to the form. Its business auto map also explains that ACORD 127 and the state-specific ACORD 137 coverage section correspond to different parts of the same commercial auto workflow. Expect the producer to confirm the named insured, mailing and garaging information, business operations, policy dates, drivers, vehicles, and requested auto coverage. Do not rely only on last year's application. Compare the draft with motor vehicle records, vehicle registrations, lease or loan records, and the current fleet list. ## When are ACORD 129 and ACORD 163 used with it? [#when-are-acord-129-and-acord-163-used-with-it] A business with more entries than fit in the main section may need continuation schedules. Vertafore says its AMS360 workflow adds ACORD 129 when a business auto policy includes eight or more vehicles. The same vendor's ACORD 127 map says its system places the first ten drivers on ACORD 127 and sends additional drivers to ACORD 163. Those are documented software behaviors, not universal thresholds for every carrier or agency system. Ask which schedules the receiving insurer requires. A complete vehicle list without a complete driver list, or the reverse, can leave an underwriter unable to assess the account. ## Does ACORD 127 prove that business auto coverage is active? [#does-acord-127-prove-that-business-auto-coverage-is-active] No. ACORD 127 records application information. It does not show that the insurer accepted the risk, agreed to every requested symbol or limit, or bound coverage at a stated time. ACORD also explains that it does not provide insurance coverage or process claims. After approval, compare the binder or policy declarations with the request. Check named insureds, effective dates, covered auto symbols, limits, deductibles, vehicle descriptions, and endorsements. Resolve differences before putting a vehicle into service based on an assumption. ## Where can you get the official ACORD 127 form? [#where-can-you-get-the-official-acord-127-form] Eligible users can search for current forms through the ACORD Forms Portal after login. Agencies may also provide a licensed copy through approved management software. This page explains the form but does not reproduce or offer an unofficial blank ACORD form. ## Frequently Asked Questions ### Is ACORD 127 the same as a commercial auto policy No. It is an application section used to submit underwriting information. The insurer's binder, declarations, endorsements, and policy establish the actual coverage. ### Should hired and non-owned auto exposure be disclosed Yes, when it applies. Describe how the business uses vehicles it hires, rents, borrows, or does not own, and let the producer place the details on the required application or supplement. ## The Bottom Line [#the-bottom-line] ACORD 127 helps organize a business auto submission. Review every driver, vehicle, use, and requested coverage with current records, include any required schedules, and compare the insurer's issued documents with the application. A completed form starts underwriting. It does not finish it. *This guide is for educational purposes and describes ACORD 127 in original language. Form numbers and titles are cited for identification only, and Menlo Insurance Services is not affiliated with ACORD Corporation. Insurer requirements and issued policy documents control.* ## References . [Vertafore. Business Auto Section ACORD 127 Form Map]() (accessed September 2026) . [Vertafore. Business Auto Form Map]() (accessed September 2026) . [ACORD. Contact Us: Important Note About Insurance Claims]() (accessed September 2026) . [ACORD. Forms Portal]() (accessed September 2026) # ACORD 128: Garage and Dealers Section Explained (https://www.menloinsurance.com/library/forms/acord-128) Learn what ACORD 128 collects from auto dealers, repair shops, service stations, parking operations, and what garage business owners should verify carefully. Markdown version: https://www.menloinsurance.com/library/forms/acord-128.md ACORD 128 is the Garage and Dealers Section used to collect underwriting information for auto dealers, repair shops, service stations, parking operations, and related businesses. It describes the operation, vehicle storage, drivers, dealer inventory, customer autos, and requested coverages. It is an application section, not proof that garage coverage has been issued. ## Key takeaways * **Operations drive the application**: sales, repair, towing, storage, and parking create different exposures. * **Customer autos need separate attention**: vehicles left for service or safekeeping are not the same as dealer inventory. * **Driver data must be current**: include employees and others who may operate covered vehicles as requested. * **State forms matter**: coverage selections may require a state specific ACORD 138. ## Who uses ACORD 128? [#who-uses-acord-128] Vertafore's current commercial forms map identifies ACORD 128 as the Garage and Dealers Section and lists the 2015/12 edition. The section can support submissions for franchised or independent dealers, repair facilities, service stations, trailer dealers, storage garages, and parking businesses. The actual insurer may require supplemental questions for specialized operations. ## What information does it collect? [#what-information-does-it-collect] The section distinguishes the type of business, locations, vehicle storage, employee counts, remuneration, dealer inventory, and vehicles held for others. It also collects driver and loss information and requested coverage details. Vertafore notes that driver names on ACORD 128 use separate first and last name fields and that additional drivers can flow to ACORD 163. ## What should a garage business verify? [#what-should-a-garage-business-verify] Describe every revenue producing operation, including towing, body work, fuel sales, valet work, or overnight storage when applicable. Report how many customer vehicles may be in the business's care at one time and the highest realistic total value, not an average that ignores busy periods. Separate owned inventory from customer autos. Confirm where vehicles are kept, how keys are controlled, and whether lots are fenced, lit, or monitored. ## Does ACORD 128 select all coverage terms? [#does-acord-128-select-all-coverage-terms] No. It supplies underwriting and requested coverage information. State specific ACORD 138 forms can record local coverage and limit elections. The insurer's quote, binder, declarations, coverage forms, and endorsements establish the final contract. Review them for covered auto symbols, garagekeepers terms, deductibles, limits, and exclusions. ## Where can you get ACORD 128? [#where-can-you-get-acord-128] Eligible users can search the ACORD Forms Portal for the current form. Complete the copy supplied by the agency or authorized system and keep all attached schedules. ## Frequently Asked Questions ### Is ACORD 128 only for car dealerships No. It can also apply to repair shops, service stations, storage garages, parking operations, trailer dealers, and other garage businesses. ### Does ACORD 128 provide garagekeepers coverage No. It requests and records underwriting information. The issued policy determines whether garagekeepers coverage applies and on what terms. ## The Bottom Line [#the-bottom-line] ACORD 128 gives an underwriter a structured picture of a garage or dealer operation. Report all services, drivers, owned inventory, and customer autos accurately. Confirm actual protection in the insurer's issued documents. *This guide is educational and describes ACORD 128 in original language. Menlo Insurance Services is not affiliated with ACORD Corporation. The insurer's documents control.* ## References . [Vertafore. Commercial Lines ACORD Form Mapping]() (accessed September 2026) . [Vertafore. AMS360 2017 R1 Release Notes]() (accessed September 2026) . [ACORD. Forms Portal]() (accessed September 2026) # ACORD 129: Vehicle Schedule Explained (https://www.menloinsurance.com/library/forms/acord-129) Learn how ACORD 129 lists commercial vehicles, which identifiers and uses to verify, and why the schedule must be read with the application and policy. Markdown version: https://www.menloinsurance.com/library/forms/acord-129.md ACORD 129 is the Vehicle Schedule used with a commercial auto application when vehicle details continue beyond the main section or a separate fleet list is useful. It helps identify the autos being presented to underwriting. The schedule is not a policy, insurance card, or guarantee that every listed vehicle was accepted for every requested coverage. ## Key takeaways * **Match each vehicle exactly**: verify year, make, model, body type, VIN, license state, and garaging location. * **Describe actual use**: business use, radius, weight, cost new, and operating territory can affect classification and underwriting. * **Read it with other sections**: ACORD 129 complements the business auto section and state-specific coverage request. * **Check the issued fleet**: compare the policy's vehicle and coverage schedules with the submitted list. ## When is ACORD 129 used? [#when-is-acord-129-used] Vertafore's current commercial-lines catalog identifies ACORD 129 as the Vehicle Schedule. Its business auto map says AMS360 automatically adds the schedule when a policy includes eight or more vehicles because ACORD 127 accommodates the first seven in that workflow. That threshold describes one software system, not a universal rule. An agency or insurer may use ACORD 129 for a different fleet size, attach a spreadsheet, or require a carrier-specific schedule. Follow the receiving insurer's instructions. ## What vehicle information should be verified? [#what-vehicle-information-should-be-verified] Compare the schedule with registrations, titles, lease or finance agreements, and the business's fleet ledger. Confirm year, manufacturer, model, body type, VIN, license state, garaging address, gross vehicle weight or other classification data, cost new, radius, use, and applicable vehicle number. Small errors can connect coverage information to the wrong auto. Pay special attention to similar vehicles and recently bought, sold, leased, or replaced units. Tell the producer about temporary substitutes, newly acquired autos, trailers, hired autos, and non-owned auto exposure so the insurer can determine where each belongs in the submission. ## Does listing a vehicle on ACORD 129 prove coverage? [#does-listing-a-vehicle-on-acord-129-prove-coverage] No. The schedule shows information submitted for underwriting. Coverage also depends on the accepted policy terms, covered auto symbols, vehicle-specific coverages, deductibles, effective dates, and endorsements. ACORD does not provide insurance coverage or process claims. After binding, compare the declarations and policy vehicle schedule with ACORD 129. Confirm that each intended auto appears and that its liability and physical damage treatment matches the agreement. A vehicle can be listed while a particular coverage is absent, limited, or subject to a different deductible. ## Where can you get the official ACORD 129? [#where-can-you-get-the-official-acord-129] Eligible users can search current forms in the ACORD Forms Portal after login. Obtain the licensed schedule from the producer or insurer assembling the application. This explanation is not a blank ACORD form. ## Frequently Asked Questions ### Should sold vehicles stay on ACORD 129 No, not as current units. Tell the producer the disposal date and identify replacement vehicles so the submission and requested effective dates reflect the actual fleet. ### Does one listed deductible apply to every vehicle Not necessarily. Physical damage coverage and deductibles can vary by vehicle. Compare each unit with the quote, binder, declarations, and policy schedule. ## The Bottom Line [#the-bottom-line] ACORD 129 is a detailed fleet schedule that supports commercial auto underwriting. Reconcile it with current vehicle records, describe use and garaging accurately, and read it alongside the coverage request. Then verify the insurer-issued vehicle schedule. Listing an auto in the application does not by itself establish its coverage. *This guide is for educational purposes and describes ACORD 129 in original language. Form numbers and titles are cited for identification only, and Menlo Insurance Services is not affiliated with ACORD Corporation. The issued policy and endorsements control.* ## References . [Vertafore. Commercial Lines ACORD Forms]() (accessed September 2026) . [Vertafore. Business Auto Form Map]() (accessed September 2026) . [ACORD. Contact Us: Important Note About Insurance Claims]() (accessed September 2026) . [ACORD. Forms Portal]() (accessed September 2026) # ACORD 130: Workers Compensation Application Explained (https://www.menloinsurance.com/library/forms/acord-130) What the ACORD 130 workers compensation application asks, how class codes and payroll estimates set premium, and how officer elections and the mod work. Markdown version: https://www.menloinsurance.com/library/forms/acord-130.md **ACORD 130 is the standard workers compensation application, the form that collects an employer's class codes, payroll estimates by state and classification, officer coverage elections, and experience modification factor so carriers can quote a workers comp policy.** Workers compensation is the most formula-driven line in commercial insurance, and this form supplies every input in the formula. Rate times payroll per class, adjusted by the experience mod, is essentially the whole premium calculation, and all three variables come off this application. That mechanical quality makes accuracy unusually consequential here, because every figure on the form is verified later, either by the premium audit or by the rating bureau. This page covers the classification and payroll sections, the officer inclusion and exclusion elections, and the experience mod field. ## Key takeaways * **Class codes and payroll are the rating engine**: each classification carries a rate per $100 of payroll, and the application's payroll estimates produce the deposit premium. * **Estimates get audited**: workers comp payroll is always trued up after the policy period, so the application figure is a projection, not a final price. * **Officer elections are state-specific choices**: owners and officers can often elect in or out of coverage, and the election on the application must match state rules and the entity type. * **The mod multiplies everything**: the experience modification factor declared on the form scales the entire premium up or down based on the employer's own loss history. ## What does ACORD 130 collect? [#what-does-acord-130-collect] The application collects the employer's identity and locations, then gets to the rating information that distinguishes it from every other ACORD section. The state rating worksheet lists each state where employees work and, within each state, every applicable classification with its class code, the number of employees, the estimated annual payroll, the rate, and the resulting estimated premium. Below the rating detail come the coverage requests, [employers liability limits](https://www.menloinsurance.com/library/guides/employers-liability-insurance) and any endorsements needed, such as a [waiver of subrogation](https://www.menloinsurance.com/library/forms/wc-00-03-13) a contract requires. The individuals section records owners, partners, and officers with their titles, ownership percentages, duties, payroll, and their inclusion or exclusion elections. A prior carrier and loss history section covers past policies and claims, and a block of underwriting questions probes the exposures comp underwriters price carefully, including work above ground level, hazardous materials, employees traveling out of state, subcontractors used, and whether the employer provides group health benefits. The experience mod field carries the employer's current factor and its anniversary date. ## How do class codes and payroll estimates set the premium? [#how-do-class-codes-and-payroll-estimates-set-the-premium] Workers comp premium is rate times payroll, per $100 of remuneration, calculated separately for each classification and then adjusted. A clerical class might rate at a fraction of a dollar per $100 of payroll while a roofing class rates at double digits, so which code the payroll lands in matters as much as how much payroll there is. Classification follows the governing rules of the rating bureau, NCCI in most states, and the general principle is that the business's overall operation is classified, not each task, with standard exceptions for clerical and outside sales employees who split out into their own codes when payroll records support the division. The payroll figures on the application are estimates, and the policy is auditable, so after the term ends the carrier's [premium audit](https://www.menloinsurance.com/library/guides/workers-comp-audit-guide) examines the actual payroll records and produces a return premium or an additional bill. The operational discipline that separates clean accounts from problem accounts is payroll segregation, keeping records that break payroll out by classification and by state, because auditors assign undocumented payroll to the highest-rated applicable code. Estimate from real payroll data. The audit will find the truth regardless. ### Segregate payroll records by class code from day one Auditors can only split payroll between classifications when the employer's records support the split. Undocumented or mixed payroll defaults to the highest-rated code that applies, which turns sloppy bookkeeping into real premium. ## How do officer inclusion and exclusion elections work? [#how-do-officer-inclusion-and-exclusion-elections-work] Most states let certain owners, partners, LLC members, and corporate officers elect whether to be covered by the workers comp policy, and the application records the election for each named individual. The default and the available choices vary by state and by entity type, which is why the form asks for title, ownership percentage, and duties alongside the election. The tradeoff is real in both directions. [Excluding an owner](https://www.menloinsurance.com/library/guides/workers-comp-ghost-policy) saves premium, since included officer payroll is charged, subject to state minimum and maximum payroll amounts used for rating, but an excluded owner injured on the job has no comp benefits and health insurance policies commonly exclude work-related injuries, which can leave a working owner personally uninsured for the exact injuries most likely to occur. Brokers flag this hard for owners who work in the field. An excluded roofing company president who climbs ladders has made a serious bet. The election also interacts with contract work, because general contractors often require subcontractors' owners to carry coverage on themselves, precisely so an injured sole proprietor does not become the GC's comp claim: | Application section | What it feeds | | --------------------------------------------------- | ------------------------------------------------------------ | | State rating worksheet with class codes and payroll | Deposit premium calculation, later verified by audit | | Officer and owner elections | Who is covered and whose payroll is charged, per state rules | | Experience modification field | The multiplier applied to the entire manual premium | | Prior carrier and loss history | Underwriter verification against loss runs and bureau data | ## What does the experience mod field do? [#what-does-the-experience-mod-field-do] The application asks for the employer's current [experience modification rate](https://www.menloinsurance.com/library/glossary/experience-modification-rate) and its effective date, and this single number scales the whole premium. The mod compares the employer's actual losses to what the rating bureau expects for employers of the same size and classifications, with a factor above 1.00 raising premium and a factor below 1.00 lowering it. Underwriters do not take the declared figure on faith, since mods are promulgated by the rating bureau and verifiable, but the field matters for quoting accuracy and for spotting problems early. A mod that is missing when the employer's size should qualify it for experience rating, or a declared figure that does not match the bureau's worksheet, sends the submission back for clarification. The mod also explains why comp claims echo for years. Losses typically feed the mod calculation for three policy periods, so a bad year keeps charging premium long after the injured employee has recovered. ## Where can you see the actual form? [#where-can-you-see-the-actual-form] Menlo does not reproduce ACORD forms because they are copyrighted by ACORD Corporation. Licensed agencies and carriers access current editions through [acord.org](https://www.acord.org/) and complete the 130 inside their agency management systems, usually alongside the [ACORD 125](https://www.menloinsurance.com/library/forms/acord-125) master application. Employers see the completed form when their broker sends the package for review and signature, and reviewing the class codes, payroll figures, and officer elections before signing is the practical protection. ## Frequently Asked Questions ### What is the difference between ACORD 125 and ACORD 130? ACORD 125 is the master commercial application covering the applicant's identity, operations, and general history. ACORD 130 is the workers compensation application carrying the comp-specific rating data, class codes, payroll by state, officer elections, and the experience mod. Package submissions include both, though workers comp is sometimes submitted with the 130 alone. ### Can owners exclude themselves from workers comp? In many states yes, depending on entity type, title, and ownership percentage, and the election is recorded on the application. The premium saving is real, but an excluded owner injured at work generally has no comp benefits and may find health insurance excludes occupational injuries. Ask your broker how your state and entity type handle it. ### What if I do not know my experience mod? If your business is large enough to be experience rated, your current carrier or the rating bureau can provide the mod worksheet, and your broker can pull it. New or small businesses below the premium eligibility threshold simply are not experience rated yet, and the field reflects that. ### Why does the application ask about subcontractors on a workers comp form? Because uninsured subcontractors can become the hiring employer's employees for comp purposes. Auditors ask for certificates of insurance on every subcontractor, and payments to subs without their own comp coverage get charged as payroll on the hiring employer's policy. *This guide is for educational purposes and describes standard workers compensation application practice in Menlo's own words. Form numbers and titles are cited for identification only, and Menlo Insurance Services is not affiliated with ACORD Corporation or the National Council on Compensation Insurance. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # ACORD 131: Umbrella and Excess Section Explained (https://www.menloinsurance.com/library/forms/acord-131) Learn what ACORD 131 collects for a commercial umbrella or excess application, including underlying policies, limits, locations, vehicles, and exposures. Markdown version: https://www.menloinsurance.com/library/forms/acord-131.md ACORD 131 is the Umbrella / Excess Section used to organize information an insurer needs to evaluate an umbrella or excess liability application. It brings the layer together with underlying liability policies, locations, vehicles, and exposures that may affect underwriting. It is an application section, not a coverage grant, binder, certificate, or proof that an insurer accepted the risk. ## Key takeaways * **The underlying schedule is central**: list each liability policy that the proposed umbrella or excess policy is expected to sit above, using current limits and dates. * **Schedules explain the exposure**: locations, subsidiaries, vehicles, and special hazards provide context beyond a requested limit. * **Consistency prevents rework**: reconcile ACORD 131 with the related policies and the [ACORD 125](https://www.menloinsurance.com/library/forms/acord-125) rather than relying on last year's prefilled data. * **Application is not coverage**: only an insurer's binder, declarations, policy, and endorsements can show whether coverage was bound and on what terms. ## What is ACORD 131 used for? [#what-is-acord-131-used-for] ACORD 131 is the line-specific application section for a commercial umbrella or excess submission. Vertafore's current form map calls it the Umbrella / Excess Section and places it among the forms that make up a commercial umbrella application. A separate Vertafore release note identifies the 2017/11 edition as a version that attaches to ACORD 125 for documentation purposes. The form helps an underwriter compare the proposed layer with the policies beneath it. The final policy determines the contract design, exclusions, attachment terms, and defense provisions. ## What information does ACORD 131 collect? [#what-information-does-acord-131-collect] The section groups requested coverage information with the insured's underlying program and exposure schedules. Vertafore maps data into areas for umbrella limits and premiums, primary locations and subsidiaries, underlying liability policies, vehicles, underlying general liability information, and additional exposures. Its map uses business auto liability as an underlying-policy example. ## Why are the underlying policies important? [#why-are-the-underlying-policies-important] The underlying schedule tells the umbrella or excess underwriter what insurance is expected to respond before the proposed layer. Use current carrier names, policy numbers, effective dates, limits, and relevant coverage details from binders or declarations. Do not copy the schedule from an old application without checking renewals, replacements, reduced limits, or canceled policies. The schedule is still only application data. The issued policy may have its own underlying schedule and required limits. Compare it with the underlying policies after binding because the insurer's documents control how the layers interact. For broader product context, see [umbrella versus excess liability insurance](https://www.menloinsurance.com/library/guides/umbrella-vs-excess-liability). ## Does ACORD 131 prove umbrella or excess coverage is bound? [#does-acord-131-prove-umbrella-or-excess-coverage-is-bound] No. ACORD 131 records application information and a requested insurance structure. The California Department of Insurance defines a binder as a temporary or preliminary agreement that provides coverage until the policy is written or delivered. An application section is not that agreement unless an authorized insurer separately issues or adopts a binder under applicable rules. Look for written evidence from the insurer or its authorized representative. The binder or declarations should identify the insurer, named insured, effective dates, limits, and applicable forms or conditions. ACORD also states that it is not an insurance company and does not provide coverage, which is why the ACORD name on an application cannot establish that any insurer accepted it. ## Where can you get the official ACORD 131 form? [#where-can-you-get-the-official-acord-131-form] Eligible users can search and download current forms through the logged-in ACORD Forms Portal. Keep the signed application and every overflow schedule. This page does not reproduce ACORD's wording or layout. ## Frequently Asked Questions ### Is ACORD 131 an insurance policy No. It is an application section that collects umbrella or excess underwriting information. Coverage exists only when an authorized insurer binds or issues it, and the binder, declarations, policy forms, and endorsements establish the actual terms. ### What policies should appear as underlying insurance List the liability policies the proposed insurer asks to review, using current evidence. Commercial general liability, business auto liability, and employers liability are common, but the required schedule depends on the submission and proposed insurer. ## The Bottom Line [#the-bottom-line] ACORD 131 organizes an umbrella or excess application around the underlying policies and exposures. Reconcile each schedule with current records. Look to the insurer's binder and issued policy, not the application, for proof of coverage and controlling terms. *This guide is for educational purposes and describes ACORD 131 in original language. Form numbers and titles are cited for identification only, and Menlo Insurance Services is not affiliated with ACORD Corporation. The insurer's binder, policy, and endorsements control.* ## References . [Vertafore. Form Map: Commercial Umbrella, Umbrella / Excess Section (ACORD 131)]() (accessed September 2026) . [Vertafore. AMS360 2020 R1 Release Notes]() (accessed September 2026) . [California Department of Insurance. Glossary of Insurance Terms]() (accessed September 2026) . [ACORD. Contact Us: Important Note About Insurance Claims]() (accessed September 2026) . [ACORD. Forms Portal]() (accessed September 2026) # ACORD 133: Workers Compensation Assigned Risk Section Explained (https://www.menloinsurance.com/library/forms/acord-133) Learn when ACORD 133 accompanies a workers compensation assigned-risk application and what employers should verify before submission. Markdown version: https://www.menloinsurance.com/library/forms/acord-133.md ACORD 133 is the Workers Compensation Insurance Plan Assigned Risk Section. It supplies plan-specific information when an eligible employer seeks workers compensation through an assigned-risk market. NCCI's current state instructions direct users to complete ACORD 133 with the [ACORD 130 Workers Compensation Application](https://www.menloinsurance.com/library/forms/acord-130). It does not provide coverage by itself. ## Key takeaways * **Assigned risk only**: the form supports the plan market, not an ordinary voluntary-market submission. * **Attach ACORD 130**: the assigned-risk section is part of a larger application package. * **State instructions control**: eligibility, effective-date rules, and required attachments vary by plan. * **Application is not coverage**: wait for the assigned carrier's binder or policy confirmation. ## When is ACORD 133 used? [#when-is-acord-133-used] Assigned-risk plans provide a route for eligible employers that cannot obtain required workers compensation coverage in the voluntary market. ACORD 133 records information the plan administrator needs in addition to the standard ACORD 130 application. The ACORD Forms Index identifies the countrywide form as the Workers Compensation Insurance Plan Assigned Risk Section. ## What information needs special attention? [#what-information-needs-special-attention] A publicly archived earlier specimen illustrates fields for the applicant and requested effective date, ownership or related entities, voluntary-market offers or refusals, and additional trucking questions when applicable. Use the current edition and state instructions, and reconcile the legal name, payroll, class, location, and ownership information with ACORD 130 and supporting records. ## Why do state instructions matter? [#why-do-state-instructions-matter] Workers compensation plans operate under state rules. A state may use the countrywide section, a state-specific ACORD 133, or a different application. The plan administrator can require special evidence, signatures, premium handling, or effective-date steps. An old copy from another state is not a safe substitute. ## Does submitting ACORD 133 bind coverage? [#does-submitting-acord-133-bind-coverage] No. The application must be complete, eligible, and accepted under the applicable plan. The assigned carrier or plan administrator confirms the effective date. Employers should maintain existing coverage until replacement coverage is confirmed so a paperwork delay does not create an uninsured gap. ## Frequently Asked Questions ### Can ACORD 133 be submitted without ACORD 130? The countrywide assigned-risk section is designed to accompany the completed ACORD 130. State-specific instructions may require additional documents as well. ### Is ACORD 133 the same in every state? No. State-specific versions and separate plan applications exist. Verify the state suffix, edition, and plan instructions before completing the package. ## The Bottom Line [#the-bottom-line] ACORD 133 is the assigned-risk supplement to a workers compensation application. Use the correct state process, reconcile it with ACORD 130, and rely on the carrier's confirmation for coverage. *This guide is educational and describes ACORD 133 in original language. Menlo Insurance Services is not affiliated with ACORD Corporation or NCCI. The applicable plan and insurer documents control.* ## References . [National Council on Compensation Insurance. Workers Compensation Insurance Plan State Instructions]() (accessed September 5, 2026) . [ACORD form archive. Earlier ACORD 133 Workers Compensation Insurance Plan Assigned Risk Section specimen]() (accessed September 5, 2026) . [ACORD. ACORD Forms Index, revision 5/08/2024]() (accessed September 5, 2026) # ACORD 135: Why the State Suffix Matters (https://www.menloinsurance.com/library/forms/acord-135) ACORD 135 is not one countrywide form. Learn how ACORD 135 NC and ACORD 135 NJ serve different workers compensation plan purposes. Markdown version: https://www.menloinsurance.com/library/forms/acord-135.md There is no single countrywide ACORD 135 in the May 2024 ACORD Forms Index. ACORD 135 NC is a North Carolina Workers Compensation Insurance Plan application. ACORD 135 NJ is a New Jersey employee-leasing supplemental request. The state suffix is part of the form number and cannot be omitted when choosing or explaining the document. ## Key takeaways * **State code required**: ACORD 135 NC and ACORD 135 NJ are different forms. * **Different jobs**: North Carolina uses it as a plan application, while New Jersey uses it for employee-leasing information. * **Edition matters**: state plan administrators can revise their requirements independently. * **Never substitute by number alone**: obtain the form from the applicable plan or authorized ACORD system. ## What is ACORD 135 NC? [#what-is-acord-135-nc] The index identifies ACORD 135 NC as the North Carolina Workers Compensation Insurance Plan application and lists a 2024/04 edition. It also lists ACORD 136 NC as the instructions for completing that application. An employer and producer should use those current instructions for eligibility, supporting information, signatures, and submission. ## What is ACORD 135 NJ? [#what-is-acord-135-nj] New Jersey's Compensation Rating and Inspection Bureau identifies ACORD 135 NJ as the Workers Compensation Insurance Plan Employee Leasing Supplemental Request Form. It is not the same as the North Carolina plan application. The New Jersey page also lists separate plan forms for coverage requests, proprietors and partners, and truckers. ## How should you identify the right form? [#how-should-you-identify-the-right-form] Read the form number, state suffix, title, and edition together. Confirm the employer's state and the plan administrator handling the application. If a checklist says only “ACORD 135,” ask the requester which state form and edition it means before collecting or sending information. ## Does either form bind coverage? [#does-either-form-bind-coverage] No. These are application or supplemental request documents. Coverage depends on plan eligibility and acceptance and on the policy or binder issued by the assigned carrier. Submitting the wrong state form can delay the process. ## Frequently Asked Questions ### What does ACORD 135 mean without a state code? It is incomplete for practical use. Current indexed forms use a state suffix, so identify the state before selecting the document. ### Is ACORD 135 the standard assigned-risk supplement? The countrywide assigned-risk section is [ACORD 133](https://www.menloinsurance.com/library/forms/acord-133). ACORD 135 NC is a North Carolina plan application, while ACORD 135 NJ addresses employee leasing. ## The Bottom Line [#the-bottom-line] Treat “ACORD 135” as an incomplete reference. Resolve the state suffix and title first, then follow the current state plan instructions. *This guide is educational and describes indexed ACORD 135 state forms in original language. Menlo Insurance Services is not affiliated with ACORD Corporation. The plan and insurer documents control.* ## References . [ACORD. ACORD Forms Index, revision 5/08/2024]() (accessed September 2026) . [New Jersey Compensation Rating and Inspection Bureau. Forms and Endorsements]() (accessed September 2026) . [ACORD. Forms Portal]() (accessed September 2026) # ACORD 137: Commercial Auto Coverages and Limits Explained (https://www.menloinsurance.com/library/forms/acord-137) Learn how ACORD 137 records state-specific commercial auto coverage requests, symbols, limits, and deductibles without proving coverage is bound by itself. Markdown version: https://www.menloinsurance.com/library/forms/acord-137.md ACORD 137 is a state-specific Commercial Auto Coverages / Limits Section. It records requested commercial auto coverages, covered auto symbols, limits, and physical damage deductibles for the applicable state. It works with other business auto application sections, but it does not grant coverage or prove that an insurer accepted the request. ## Key takeaways * **Choose the correct state version**: ACORD 137 varies by state and edition because insurance requirements are not uniform. * **Symbols define the request**: a coverage name and limit are incomplete without the applicable covered auto symbol. * **Requested is not issued**: the insurer may quote, modify, decline, or condition any requested coverage. * **Compare final documents**: the binder, declarations, and endorsements should match the intended symbols, limits, and deductibles. ## Why is ACORD 137 state-specific? [#why-is-acord-137-state-specific] Vertafore describes ACORD 137 as a state-specific coverage and limits form whose availability depends on state regulation. Its commercial lines catalog lists separate ACORD 137 variants for many states and editions. A generic reference to “ACORD 137” is therefore not enough to identify the right document. Confirm the state in which the autos are principally garaged and the edition the insurer accepts. Multi-state fleets may require additional state information. Do not reuse an old state version simply because the account details look similar. ## What should be reviewed on ACORD 137? [#what-should-be-reviewed-on-acord-137] The main review points are each requested coverage, its covered auto symbol, the requested limit, and any deductible. Vertafore's map groups the form into coverage, symbol, limit, and physical damage areas and notes that additional coverages can flow to continuation space. Covered auto symbols are compact codes with significant consequences. A symbol intended for owned autos may not address hired or non-owned autos. Ask the producer to explain the symbol beside each coverage in plain language. Then review liability, uninsured or underinsured motorists coverage, medical payments or personal injury protection where applicable, comprehensive, collision, towing, and other requested options based on the actual state form. ## Does a completed ACORD 137 mean the coverage is active? [#does-a-completed-acord-137-mean-the-coverage-is-active] No. It communicates requested terms to underwriting. It is not a binder, policy, endorsement, or certificate. An insurer can accept different limits or symbols, require more information, or decline a portion of the request. ACORD itself does not provide insurance coverage. When coverage is bound, compare the issued documents line by line with the application. Check the state, named insured, policy dates, coverage symbols, limits, deductibles, and state endorsements. Report any mismatch promptly and obtain written confirmation of any correction. ## Where can you get the current ACORD 137 form? [#where-can-you-get-the-current-acord-137-form] The ACORD Forms Portal allows eligible users to search current forms after login. Because state and edition matter, request the licensed version through the producer or insurer preparing the submission. This guide is not a blank form or an ACORD-approved reproduction. ## Frequently Asked Questions ### Can one ACORD 137 be used for every state No. ACORD 137 has state-specific variants. The producer should select the version and edition accepted for the applicable state and insurer. ### What if the declarations show a different auto symbol Contact the producer immediately. The issued binder, declarations, and endorsements determine coverage, so a difference from the application must be resolved in writing. ## The Bottom Line [#the-bottom-line] ACORD 137 organizes state-specific commercial auto coverage requests. Review the exact state version, connect each coverage to the intended symbol, limit, and deductible, and compare the final insurer-issued documents with the request. The application section describes what was sought, not what was ultimately bound. *This guide is for educational purposes and describes ACORD 137 in original language. Form numbers and titles are cited for identification only, and Menlo Insurance Services is not affiliated with ACORD Corporation. The applicable form edition and issued policy documents control.* ## References . [Vertafore. Commercial Auto Coverages / Limits Section ACORD 137 Form Map]() (accessed September 2026) . [Vertafore. Commercial Lines ACORD Forms]() (accessed September 2026) . [ACORD. Contact Us: Important Note About Insurance Claims]() (accessed September 2026) . [ACORD. Forms Portal]() (accessed September 2026) # ACORD 138: State Garage and Dealers Section Explained (https://www.menloinsurance.com/library/forms/acord-138) Learn why ACORD 138 requires a state suffix, how it supplements garage and dealer applications, and what to verify before submission. Markdown version: https://www.menloinsurance.com/library/forms/acord-138.md ACORD 138 refers to state-specific Garage and Dealers sections. The complete identifier includes a state suffix, such as ACORD 138 CA, MN, NJ, or NY. These forms capture local coverage selections, disclosures, and application details for garage or dealer risks. They supplement the main application and do not prove that coverage was issued. ## Key takeaways * **The state suffix is essential**: ACORD 138 is a family of state forms, not one national form. * **Use it with the main garage application**: the state section complements ACORD 128 and other required application parts. * **Local choices vary**: coverage labels, limits, notices, and signatures can differ by jurisdiction. * **Issued documents control**: the application does not establish the final covered autos, limits, or garagekeepers terms. ## When is ACORD 138 used? [#when-is-acord-138-used] An agency system can generate the applicable ACORD 138 when a garage or dealer risk needs a state-specific section alongside the countrywide [ACORD 128 Garage and Dealers Section](https://www.menloinsurance.com/library/forms/acord-128). The 2024 forms index lists Garage and Dealers forms under many states and shows different editions for some jurisdictions. Vertafore also documents data flowing to the form, including dealer or repairer plate information. ## What should the applicant verify? [#what-should-the-applicant-verify] Confirm the complete form code and edition, the risk state, named insured, policy period, and all selected coverage or limit options. Compare the state form with the core garage application and vehicle, driver, location, and loss schedules. A mismatch between the forms can delay underwriting or produce an inaccurate request. ## Is ACORD 138 the garage policy? [#is-acord-138-the-garage-policy] No. It is an application section. The carrier's quote, binder, declarations, coverage forms, and endorsements establish the contract. In particular, verify covered-auto symbols, liability limits, physical-damage terms, and any garagekeepers coverage in the issued documents. ## Where can you obtain the correct form? [#where-can-you-obtain-the-correct-form] Use the version supplied by the agency, carrier, or authorized forms system for the risk state. Eligible users can search ACORD's Forms Portal. A blank form found by number alone may be the wrong state's document. ## Frequently Asked Questions ### Can I use ACORD 138 from another state? No. State-specific forms reflect local requirements. Use the suffix and edition required for the insured location and policy transaction. ### How is ACORD 138 different from ACORD 128? ACORD 128 is the countrywide Garage and Dealers Section. ACORD 138 adds state-specific information and selections where required. ## The Bottom Line [#the-bottom-line] Resolve the state before completing ACORD 138. Reconcile the state section with the full garage application, then verify the carrier's issued policy for actual coverage. *This guide is educational and describes the ACORD 138 form family in original language. Menlo Insurance Services is not affiliated with ACORD Corporation. The insurer's documents control.* ## References . [ACORD. ACORD Forms Index, revision 5/08/2024]() (accessed September 2026) . [Vertafore. AMS360 2017 R1 Release Notes]() (accessed September 2026) . [ACORD. Forms Portal]() (accessed September 2026) # ACORD 139: Statement of Values Explained (https://www.menloinsurance.com/library/forms/acord-139) Learn how ACORD 139 organizes property values for blanket or average rating, which valuation details matter, and why it does not replace the application. Markdown version: https://www.menloinsurance.com/library/forms/acord-139.md ACORD 139 is a Statement of Values used to organize property and income values across multiple locations for average or blanket-rated commercial property coverage. It gives the insurer a location-by-location basis for underwriting, rating, and applying the requested structure. It does not replace ACORD 140 or ACORD 160, and the values entered do not by themselves create policy limits. ## Key takeaways * **Every location must reconcile**: location and building numbers should match the property application and carrier schedule. * **Values are separated by interest**: building, business personal property, stock, machinery, income, and other interests should not be combined without support. * **Valuation basis matters**: replacement cost, actual cash value, or another basis changes what each reported value means. * **Blanket is not unlimited**: blanket coverage still has a limit, terms, and any margin or coinsurance provisions in the issued policy. ## What does ACORD 139 collect? [#what-does-acord-139-collect] For each location and building, the form records the property description and address, class code, values by property category, and rating information. It also identifies requested causes of loss, coinsurance percentage, and whether a specific average or blanket rate is requested. A 2024 Vertafore sample shows buildings, business personal property, stock, furniture and fixtures, property of others, machinery, business income, and rental income among the value categories. The completed total should reconcile to the property schedule and financial support. Duplicate buildings, outdated addresses, or values entered under the wrong category can distort both premium and claim expectations. ## When is this form used instead of a separate-limit schedule? [#when-is-this-form-used-instead-of-a-separate-limit-schedule] Third-party field guidance describes the 139 as a collection tool when multiple locations are included in average or blanket-rated property insurance. It says the form is not intended to replace the property or businessowners application and points to ACORD 159 when locations have separate limits rather than average or blanket rating. That distinction deserves attention. A blanket limit may allow value to move among scheduled locations under policy terms, while separate limits cap each location independently. A statement of values is evidence used to build the policy, not permission to move limits after a loss. ## How should values be reviewed? [#how-should-values-be-reviewed] Use current reconstruction estimates for buildings, replacement costs for business personal property, peak rather than average stock where appropriate, and a supported business income analysis. Market value and tax assessment are not substitutes for reconstruction cost. Confirm whether debris removal, foundations, tenant improvements, outdoor property, and ordinance or law exposure are inside the reported amount or handled separately. If the policy has a margin clause, coinsurance, or reporting condition, understated values can affect recovery even when the headline limit looks adequate. ## Frequently Asked Questions ### Does ACORD 139 set the final property limits? No. The insurer uses it as application and rating information. Only the issued policy and schedules establish coverage and limits. ### Is a blanket limit unlimited at each location? No. It remains subject to the blanket limit and every applicable policy condition, including any margin or coinsurance clause. ### Should building value equal market value? Usually not. Building insurance commonly uses reconstruction cost, excluding land, while market value reflects different economic factors. ## Where can you obtain ACORD 139? [#where-can-you-obtain-acord-139] Current licensed forms are available to eligible users through the ACORD Forms Portal. Applicants should use the edition supplied by their broker or authorized system rather than an unverified download. *This guide is for educational purposes and describes the application in original words. Menlo Insurance Services is not affiliated with ACORD Corporation. ACORD 139 does not bind or amend coverage. Your issued policy controls. Talk to a licensed broker about valuation and blanket structure.* ## The Bottom Line [#the-bottom-line] ACORD 139 is the property values map behind an average or blanket-rated placement. Make every location, category, valuation basis, and total reconcile with the application, financial support, and issued policy. ## References . [Vertafore. ACORD 139 Annotated Field Map]() . [FormsBoss. ACORD 139 Field Instructions]() . [ACORD. ACORD Forms Portal]() # ACORD 140: Property Section Explained (https://www.menloinsurance.com/library/forms/acord-140) What the ACORD 140 property section of the commercial application collects, how COPE data drives property underwriting, and how valuation elections work. Markdown version: https://www.menloinsurance.com/library/forms/acord-140.md **ACORD 140 is the property section of the commercial insurance application, the supplemental form that describes each building and its contents so a carrier can underwrite and rate commercial property coverage.** It attaches behind the [ACORD 125](https://www.menloinsurance.com/library/forms/acord-125) master application, one premises and building at a time, and carries the values, the coverage elections, and the physical detail underwriters summarize as COPE, construction, occupancy, protection, and exposure. The policy those answers produce is typically built on [CP 00 10](https://www.menloinsurance.com/library/forms/cp-00-10), the standard ISO building and personal property coverage form. Property underwriting is physical. The underwriter is pricing a specific building at a specific address against fire, wind, water, and theft, and the 140 is where that building becomes legible. This page explains the building description and COPE data, then the values and valuation elections that decide what a claim actually pays. ## Key takeaways * **One building at a time**: the form describes each premises and building separately, with its own limits, construction detail, and coverage elections. * **COPE is the underwriting lens**: construction, occupancy, protection, and exposure data determine eligibility and rate before any judgment call is made. * **Values are declarations with consequences**: the building and personal property limits declared here interact with coinsurance, so underinsurance gets penalized at claim time. * **Valuation is an election**: replacement cost versus actual cash value is chosen on the application, and the choice changes what a loss settlement pays. ## What does ACORD 140 collect? [#what-does-acord-140-collect] The form collects a premises-by-premises inventory of what is being insured and for how much. For each building it records the address and occupancy, the limits requested for building, business personal property, and personal property of others, the causes of loss form requested, deductibles, and the coverage elections, including valuation basis, coinsurance percentage, and options like agreed value and inflation guard. Then comes the physical description: construction type, year built, number of stories, total area, roof type, and the updating years for roofing, wiring, plumbing, and heating, which older buildings live or die by at underwriting. Protection detail covers the fire protection class, distance to hydrant and fire station, sprinkler coverage, and burglar and fire alarm particulars, including who the alarm reports to. Exposure questions describe what operates next door and any unusual hazards. Business income and extra expense coverage, when requested, gets its own entries. Every field feeds either eligibility, rate, or claim settlement. ## What is COPE and why do underwriters organize around it? [#what-is-cope-and-why-do-underwriters-organize-around-it] COPE is the property underwriter's four-part summary of a building's risk quality, and the 140 is structured to answer it. Construction asks what the building is made of, from frame at the combustible end through joisted masonry and noncombustible up to fire resistive, because construction class is a primary rating variable and a frame building simply burns differently than a concrete one. Occupancy asks what happens inside, since the same building rates differently as an office than as a woodworking shop, and tenant occupancies the insured does not control still burn the insured's building. Protection asks what fights the fire, splitting into public protection, the ISO protection class of the responding fire service and water supply, and private protection, sprinklers and alarms, with sprinklered buildings earning meaningful credits. Exposure asks what the neighbors can do to you, because a fireproof building attached to a fireworks stand inherits the fireworks stand's problems. Underwriters read the four together: | COPE element | What the 140 asks | Why it moves the rate | | ------------ | ------------------------------------------------------------------- | ---------------------------------------------------- | | Construction | Construction class, year built, stories, area, roof, system updates | Determines how the building resists and feeds a fire | | Occupancy | What the insured and other tenants do in the building | Sets the ignition sources and fuel load inside | | Protection | Protection class, hydrant and station distance, sprinklers, alarms | Determines whether a fire stays small | | Exposure | Adjacent occupancies and external hazards | Prices the losses that start next door | The updating years deserve a practitioner's note. On buildings more than a few decades old, underwriters read the wiring, roofing, plumbing, and heating update fields before almost anything else, and "unknown" reads as "never." A 1948 building with documented full electrical and roof updates is quotable in markets that would decline the same building with blank update fields. ## How do the values and valuation elections work? [#how-do-the-values-and-valuation-elections-work] The limits declared on the 140 are the insured's statement of what the property is worth, and two elections on the same form decide how those numbers behave at claim time. The [valuation election](https://www.menloinsurance.com/library/guides/actual-cash-value-vs-replacement-cost) chooses between [replacement cost](https://www.menloinsurance.com/library/glossary/replacement-cost), which pays the cost to rebuild or replace with new materials of like kind and quality, and [actual cash value](https://www.menloinsurance.com/library/glossary/actual-cash-value), which deducts depreciation from that figure. Replacement cost is the default choice for most operating businesses, but it only works if the limit reflects real reconstruction cost, which is not the market price or the tax assessment, and construction cost inflation quietly erodes limits that nobody revisits. The [coinsurance](https://www.menloinsurance.com/library/glossary/coinsurance) election then enforces adequacy, because a building insured below the required percentage of its value suffers a proportional penalty on every partial loss, not just total ones. The escape hatch worth asking about is the agreed value option, which suspends the coinsurance penalty when the insured submits a statement of values the carrier accepts. Declare values you can defend. Underwriters increasingly check declared values against reconstruction cost estimators, and a submission whose $60 per square foot warehouse valuation contradicts the estimator gets repriced or requoted at the carrier's number. ## Where can you see the actual form? [#where-can-you-see-the-actual-form] Menlo does not reproduce ACORD forms because they are copyrighted by ACORD Corporation. Licensed agencies and carriers access current editions through [acord.org](https://www.acord.org/) and complete the 140 inside their agency management systems as part of the submission package. As an applicant, you review the completed section when your broker sends it for signature, and the fields worth your personal attention are the declared values, the valuation and coinsurance elections, and the building update years, because those are the answers that come back at claim time. ## Frequently Asked Questions ### What is the difference between ACORD 125 and ACORD 140? ACORD 125 is the master commercial application with the applicant's identity, operations, and history. ACORD 140 is the property section that attaches behind it, describing each building, its COPE characteristics, its values, and the property coverage elections. A property submission needs both. ### What does COPE stand for in insurance? Construction, occupancy, protection, and exposure. It is the framework property underwriters use to evaluate a building: what it is made of, what happens inside it, what defends it from fire, and what hazards surround it. The ACORD 140's building description fields exist to answer those four questions. ### Should I insure my building for market value? No. The relevant number for replacement cost coverage is the cost to rebuild the structure, which can sit far above or below market value depending on land values and construction costs in your area. Insuring to market value is how buildings end up coinsurance-penalized or overinsured. ### Does the ACORD 140 cover business income? The form includes entries for business income and extra expense when that coverage is requested with the property placement, including the limit or coinsurance approach. The exposure detail behind those figures often comes from a separate business income worksheet your broker prepares with you. *This guide is for educational purposes and describes standard commercial application practice in Menlo's own words. Form numbers and titles are cited for identification only, and Menlo Insurance Services is not affiliated with ACORD Corporation or Insurance Services Office, Inc. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # ACORD 141: Crime Section Explained (https://www.menloinsurance.com/library/forms/acord-141) Learn how ACORD 141 presents requested crime coverage, employee and asset exposures, financial controls, premises security, limits, and deductibles clearly. Markdown version: https://www.menloinsurance.com/library/forms/acord-141.md ACORD 141 is the Crime Section of a commercial insurance application. It organizes requested crime coverages and limits with information about employees, assets, financial procedures, money and securities, premises protection, and prior losses. It supports underwriting, but it does not guarantee that every requested crime exposure will be covered. ## Key takeaways * **Name the coverage being requested**: employee theft, forgery, computer fraud, and robbery are different exposures. * **Controls need factual answers**: describe who handles money, reconciles accounts, approves payments, and audits records. * **Complete a section for each relevant location**: premises protection and values can differ. * **The policy wording controls**: a checked box or stated limit on the application does not create coverage. ## What is ACORD 141 used for? [#what-is-acord-141-used-for] Vertafore's current commercial lines map identifies ACORD 141 as the Crime Section and lists the 2016/03 edition. Its September 2026 release notes describe new Crime Coverages and Crime Underwriting pages mapped to that edition. The form is completed for each applicable location and accompanies the commercial applicant information. ## What information does the Crime Section collect? [#what-information-does-the-crime-section-collect] The section records the requested coverage basis, limits, and deductibles for listed crime exposures. It also gathers employee counts, total assets, employee benefit plan information when applicable, money and securities exposures, accounting practices, audit procedures, check controls, computer safeguards, messenger protection, safes, vaults, alarms, and other premises security. Do not treat similar labels as interchangeable. Employee theft, forgery or alteration, computer fraud, funds transfer fraud, and robbery or burglary address different events and policy requirements. Ask the agency or insurer to explain the proposed forms rather than inferring coverage from the application label. ## What should a business verify? [#what-should-a-business-verify] Describe actual procedures, including exceptions. Identify who can initiate and approve payments, who reconciles bank accounts, how often audits occur, and whether duties are divided. If one person performs several functions, state that rather than describing an ideal process. Confirm employee and volunteer counts, asset values, peak amounts at risk, and how money or securities move between locations. Complete location details separately when protection differs. Verify alarm service, safe or vault details, guards, messengers, and other safeguards against current records. Explain prior crime losses or known incidents as requested. ## Does ACORD 141 provide crime coverage? [#does-acord-141-provide-crime-coverage] No. It is an application section. An insurer may request more information, quote selected coverages, change limits or deductibles, add conditions, or decline the risk. The binder, declarations, crime coverage forms, and endorsements show what was issued. Review definitions and exclusions because everyday uses of words such as “fraud” or “theft” may not match policy terms. ## Where can you obtain the form? [#where-can-you-obtain-the-form] Eligible users can get current forms through ACORD's Forms Portal. Use the edition supplied by the agency or authorized system, and keep each location section and supplement with the signed application. ## Frequently Asked Questions ### Is ACORD 141 a claim form No. It is an application section used to submit crime coverage and underwriting information. Follow the insurer's instructions to report a suspected loss. ### Does one ACORD 141 cover every business location The form directs users to complete it for each location. Confirm which locations and attachments the insurer requires for the submission. ## The Bottom Line [#the-bottom-line] ACORD 141 connects requested crime coverages with the people, assets, controls, and physical safeguards an insurer evaluates. Report current practices accurately. Use the issued crime forms and endorsements to determine coverage. *This guide is educational and describes ACORD 141 in original language. Menlo Insurance Services is not affiliated with ACORD Corporation. The insurer's documents control.* ## References . [Vertafore. Commercial Lines ACORD Form Mapping]() (accessed September 2026) . [Vertafore. Sagitta 2026 R1.3.0 Release Notes]() (accessed September 2026) . [ACORD. Forms Portal]() (accessed September 2026) # ACORD 143: Transportation Section Explained (https://www.menloinsurance.com/library/forms/acord-143) Learn what ACORD 143 collects about cargo, routes, vehicles, drivers, and motor truck cargo liability, and how to review a transport submission for accuracy. Markdown version: https://www.menloinsurance.com/library/forms/acord-143.md ACORD 143 is the Transportation Section attached to an ACORD 125 commercial application. It gathers underwriting information for property in transit and motor truck cargo legal liability, including commodities, routes, shipment values, vehicles, drivers, security, and loss controls. It is not a bill of lading, certificate, motor-carrier filing, or policy. ## Key takeaways * **The applicant's role matters**: a shipper insuring owned property and a carrier insuring liability for customers' cargo have different exposures. * **Peak shipment values matter**: annual values or receipts do not replace the maximum carried on one vehicle or in one loss. * **Cargo and territory must be specific**: commodities, origins, destinations, radius, and storage patterns affect underwriting. * **Contracts shape liability**: bills of lading, tariffs, released values, and written contracts can affect the carrier's legal responsibility. ## What does ACORD 143 collect? [#what-does-acord-143-collect] The first part identifies whether the applicant is a common carrier, contract carrier, private carrier, or shipper of owned property. It records the property shipped, operating territory, origins and destinations, annual gross sales or shipment values, average and maximum shipment, limits, conveyances, and bill-of-lading or freight-term information. The motor truck cargo legal liability section asks about commodities carried for others, terminals, vehicles, drivers, theft controls, maintenance, subcontracting, and related operations. A published 2013/09 specimen also directs users to attach ACORD 129 when more vehicle schedule space is needed. ## Why must cargo values be reported in several ways? [#why-must-cargo-values-be-reported-in-several-ways] An underwriter needs both volume and accumulation. Annual freight receipts or shipped values indicate the scale of the operation, while the maximum value on one vehicle indicates the severity of one loss. Average values can hide occasional high-value loads. Separate refrigerated, hazardous, theft-attractive, fragile, temperature-sensitive, or oversize cargo. Explain seasonal peaks and whether loaded vehicles are left overnight. The limit requested should reflect the largest realistic accumulation, contract requirements, and any sublimits. ## Shipper's interest or motor truck cargo liability? [#shippers-interest-or-motor-truck-cargo-liability] A shipper may insure its own property while in transit. A motor carrier usually seeks coverage for legal liability for property of others in its care under transportation contracts. Those are not the same insured interest, even if the same goods appear in both submissions. Review bills of lading, limitation-of-liability provisions, brokerage activity, owner-operators, interchange arrangements, and warehouse exposure. Completing the form does not guarantee coverage for every commodity or cause of loss, and a certificate cannot fix an undisclosed cargo restriction. ## Frequently Asked Questions ### Does ACORD 143 provide cargo coverage? No. It collects application data. The issued policy, schedule, and endorsements determine coverage. ### Is annual revenue enough to choose a cargo limit? No. Review the highest value on one vehicle or in one location, including seasonal and unusual loads. ### Where are additional vehicles listed? The form can use ACORD 129 as an attached vehicle schedule when more space is needed. ## Where can you obtain ACORD 143? [#where-can-you-obtain-acord-143] Eligible users can search for current licensed forms through the ACORD Forms Portal. Use the edition supplied by the broker or authorized system, and keep the completed copy with the submission. *This guide is for educational purposes and describes the application in original words. Menlo Insurance Services is not affiliated with ACORD Corporation. ACORD 143 does not bind or amend coverage. Your issued policy controls. Talk to a licensed broker about your transportation operation.* ## The Bottom Line [#the-bottom-line] ACORD 143 explains what moves, where it moves, whose property it is, how valuable one load can be, and how the applicant controls the exposure. Those details determine whether a cargo submission is usable. ## References . [ACORD Form Library. ACORD 143 2013/09 Transportation Section Specimen]() . [ACORD. ACORD Forms Portal]() # ACORD 146: Equipment Floater Section Explained (https://www.menloinsurance.com/library/forms/acord-146) Learn what ACORD 146 collects for an equipment floater application, including equipment values, locations, storage, operations, and additional interests. Markdown version: https://www.menloinsurance.com/library/forms/acord-146.md ACORD 146 is the Equipment Floater Section used to collect underwriting information for equipment that may move between storage locations and jobsites. It organizes equipment schedules, values, locations, storage details, operations, and additional interests for a commercial inland marine submission. It is an application section, not a policy or proof that listed equipment is covered. The schedule deserves a line-by-line review. A missing serial number, stale value, or omitted item can change the insurer's understanding of the risk before a quote and can create a difficult coverage question after a loss. ## Key takeaways * **Inventory drives the submission**: reconcile scheduled items with ownership, lease, purchase, and disposal records. * **Location and use matter**: storage, jobsites, territory, and operations help the insurer evaluate theft, transit, and work hazards. * **Scheduled and unscheduled are different requests**: do not assume a blanket or unscheduled amount automatically protects every item. * **The issued policy controls**: compare the final policy schedule, limits, valuation terms, deductibles, and endorsements with the application. ## What information does ACORD 146 collect? [#what-information-does-acord-146-collect] Vertafore identifies ACORD 146 as the Equipment Floater Section within a commercial inland marine application. Its form map connects the section to named-insured and policy information, equipment storage, coverage entries, scheduled equipment, unscheduled equipment, additional interests, general information, and remarks. The form may also need overflow pages. Vertafore documents a scheduled-equipment overflow when item-level information is present and an ACORD 45 overflow when additional interests exceed the main form's capacity. Review every attached page, not only the first section. ## How should the equipment schedule be prepared? [#how-should-the-equipment-schedule-be-prepared] Build the schedule from current records. For individually listed equipment, use a stable item description and available manufacturer, model, serial number, ownership, location, and value information. Remove disposed items only after confirming the requested effective date, and add newly purchased or leased equipment rather than assuming the insurer learns about it automatically. Then reconcile the requested values with the insurer's valuation basis. Cost new, current market value, replacement cost, and actual cash value are not interchangeable. The application communicates facts and requested terms, while the issued policy determines how a covered loss would be valued. | Review area | Record to compare | Common problem | | --------------------- | -------------------------------------- | -------------------------------------- | | Scheduled equipment | Fixed-asset and lease lists | Missing or duplicate items | | Values | Invoices and current valuation support | Old purchase cost used without context | | Locations and storage | Job and yard records | Equipment kept somewhere not listed | | Additional interests | Loan and lease agreements | Wrong lender or paid-off lien retained | ## Does ACORD 146 provide equipment coverage? [#does-acord-146-provide-equipment-coverage] No. It supplies information for underwriting or policy administration. ACORD states that it is not an insurance company and does not provide coverage. The insurer's binder, declarations, equipment schedule, coverage forms, and endorsements determine whether an item is insured and subject to what limit or deductible. Form availability also varies by agency system. Current AMS360 documentation still maps equipment-floater data to ACORD 146, while a Sagitta release note says ACORD 152 replaced ACORD 146 in that product's workflow. Use the current form requested by the insurer or licensed system rather than choosing an old edition from an unaffiliated download site. ## Where can you get the official ACORD 146 form? [#where-can-you-get-the-official-acord-146-form] Eligible users can search for current forms through the logged-in ACORD Forms Portal. Businesses usually complete the section with an agent or broker who can confirm the insurer's required application and attach the right overflow schedules. This page does not reproduce ACORD's form or offer an unofficial blank copy. ## Frequently Asked Questions ### Is ACORD 146 proof my equipment is insured No. It is an application section. Check the insurer's binder and issued policy schedule for the listed items, effective dates, limits, valuation terms, deductibles, and applicable endorsements. ### Should every item be listed separately Follow the proposed insurer's schedule requirements. Some equipment may be individually scheduled and some may be requested under an unscheduled or blanket amount, but the final policy determines which structure was accepted. ### Why are lenders and lessors listed They may have a financial interest in particular equipment under a loan or lease. Listing an interest on the application does not itself create policy rights, so confirm the issued policy treatment. ## The Bottom Line [#the-bottom-line] ACORD 146 organizes the inventory and operating facts behind an equipment floater submission. Reconcile every item, value, location, and additional interest, then compare the insurer's final policy schedule with the application before relying on coverage. *This guide is for educational purposes and describes ACORD 146 in original language. Form numbers and titles are cited for identification only, and Menlo Insurance Services is not affiliated with ACORD Corporation. The insurer's binder, policy, schedules, and endorsements control.* ## References . [Vertafore. Form Field Map: Inland Marine]() (accessed September 2026) . [Vertafore. Form Map: Equipment Floater Section (ACORD 146)]() (accessed September 2026) . [ACORD. Contact Us: Important Note About Insurance Claims]() (accessed September 2026) . [Vertafore. Sagitta 2017 R2.3.0 Release Notes]() (accessed September 2026) . [ACORD. Forms Portal]() (accessed September 2026) # ACORD 147: Installation and Builders Risk Section Explained (https://www.menloinsurance.com/library/forms/acord-147) Learn what ACORD 147 collects for installation and builders risk submissions, including values, transit, temporary storage, rigging, and jobsite details. Markdown version: https://www.menloinsurance.com/library/forms/acord-147.md ACORD 147 is the Installation / Builders Risk Section of a commercial insurance submission. It collects project, value, transit, storage, rigging, and site information an insurer needs to evaluate property while it is being installed, built, or renovated. The form is an application section. It does not insure the project, certify coverage, or replace the issued builders risk or installation floater policy. ## Key takeaways * **Choose the exposure correctly**: installation coverage follows the installer's materials and work, while builders risk generally addresses a construction project. * **Peak values matter**: report the greatest value at one site, in temporary storage, and in transit, not only annual receipts. * **Project details drive underwriting**: construction type, occupancy, duration, percentage complete, and protection affect eligibility and pricing. * **Interests must be identified**: owners, contractors, lenders, and other parties may need specific policy treatment beyond being listed on an application. ## What does ACORD 147 collect? [#what-does-acord-147-collect] For installation coverage, the form asks about operating territory, receipts, number and duration of jobs, values, transit, temporary locations, rigging, and jobsite security. For a specific builders risk project, it asks about the location, parties, construction, occupancy, dates, completed value, existing structures, renovations, protection, and catastrophe exposures. A published specimen shows separate entries for the maximum at one location, per-disaster amount, temporary-location limit, and transit limit. These numbers answer different accumulation questions and should not be replaced by one average project value. ## Installation floater or builders risk? [#installation-floater-or-builders-risk] An installation floater commonly follows property an installer owns or is responsible for from transit through temporary storage and installation. Builders risk commonly covers the building or structure under construction and specified property that will become part of it. Policy wording varies, so the business role and contract should drive the submission. An HVAC contractor with many short jobs may have an annual installation exposure. An owner building one warehouse may need a specific builders risk placement. A contractor can need both when its annual operations and a particular project create different accumulations. ## What should be checked before signing? [#what-should-be-checked-before-signing] Reconcile the completed value with the construction budget and update it for change orders. Identify values in existing structures, temporary works, scaffolding, materials awaiting installation, and offsite storage. Explain testing, hot work, cranes, unusual rigging, flood, earthquake, wind, and water exposures. Also review when coverage begins and ends, who must be named or scheduled, whether soft costs and delay are requested, and how deductibles apply. Listing a lender or owner on ACORD 147 does not itself grant loss-payee, mortgageholder, or additional insured rights. ## Frequently Asked Questions ### Is ACORD 147 itself a builders risk policy? No. It supplies underwriting information. Coverage exists only under the policy and endorsements the insurer issues. ### Should the value be the contractor's annual receipts? Not for every field. The form distinguishes receipts from project values and peak accumulations at a location, in storage, and in transit. ### Does listing a lender protect its interest? No. The insurer must issue the appropriate policy provision or endorsement for the lender's actual role. ## Where can you obtain ACORD 147? [#where-can-you-obtain-acord-147] ACORD provides current licensed forms through its Forms Portal for eligible users. Use the copy supplied by the agency or authorized system, because editions and insurer supplements can change. *This guide is for educational purposes and describes the application in original words. Menlo Insurance Services is not affiliated with ACORD Corporation. ACORD 147 does not bind or amend coverage. Your issued policy controls. Talk to a licensed broker about the project.* ## The Bottom Line [#the-bottom-line] ACORD 147 gives the underwriter a map of property from transit and storage through installation or construction. Accurate peak values, project details, parties, and site protections are more useful than rough averages. ## References . [NIF Group. ACORD 147 Installation / Builders Risk Section Specimen]() . [ACORD. ACORD Forms Portal]() # ACORD 152: Commercial Inland Marine Section Explained (https://www.menloinsurance.com/library/forms/acord-152) Learn what ACORD 152 collects for commercial inland marine insurance, how schedules and valuations matter, and why the form does not bind coverage by itself. Markdown version: https://www.menloinsurance.com/library/forms/acord-152.md ACORD 152 is the Commercial Inland Marine Section. It organizes underwriting information for movable, transported, specialized, or scheduled business property that may not fit ordinary building and contents coverage. The exact property class and carrier supplement determine what details are required. The form is an application section, not a binder or policy. ## Key takeaways * **Define the property class**: equipment, property in transit, property of others, and other inland marine exposures can require different coverage forms. * **Schedules need usable detail**: descriptions, serial numbers, values, ages, locations, and ownership should be current. * **Valuation affects the request**: replacement cost, actual cash value, agreed value, and other methods are not interchangeable. * **Coverage remains an insurer decision**: the binder, declarations, forms, and endorsements show what was issued. ## What is commercial inland marine insurance? [#what-is-commercial-inland-marine-insurance] The NAIC describes inland marine as coverage that can apply to property in transit, property held by another party, movable goods at different locations, certain fixed property, and scheduled items. The category is broad. A contractor's equipment exposure differs from installation property, fine arts, electronic equipment, or a customer's property in the insured's custody. Vertafore's current commercial-lines catalog identifies ACORD 152 as the Commercial Inland Marine Section. Its release notes say ACORD 152 replaced ACORD 146 Equipment Floater Section in that system and can use overflow schedules for unscheduled equipment. An insurer may still require its own supplemental application. ## What information should be prepared for ACORD 152? [#what-information-should-be-prepared-for-acord-152] Start with a current inventory. For scheduled property, record a specific description, manufacturer, model, serial number, year, value, ownership or lease status, and normal location. For unscheduled property, explain the types of items, maximum values at one place or in transit, storage, security, and geographic range. Describe how property moves, who transports it, where it is stored, whether it is rented or loaned, and who owns property in the business's care. Include relevant prior losses and protective measures. Do not assume a building-and-contents policy follows equipment away from the premises. ## How should limits and valuation be reviewed? [#how-should-limits-and-valuation-be-reviewed] Compare schedules with invoices, equipment ledgers, leases, and appraisals. Ask how the proposed policy values a partial or total loss and whether coinsurance, catastrophe limits, sublimits, deductibles, or reporting provisions apply. A schedule amount does not guarantee that the same amount will be paid after a loss. ACORD does not provide insurance coverage or process claims. After binding, compare the issued forms with the application and schedules, including territory and property exclusions. ## Where can you get the official ACORD 152? [#where-can-you-get-the-official-acord-152] Eligible users can search current forms through the ACORD Forms Portal after login. Obtain the licensed application from the producer or insurer handling the submission. This page does not reproduce the form. ## Frequently Asked Questions ### Is inland marine insurance only for property in transit No. It can include property in transit, movable equipment, property held by others, scheduled property, and other specialized classes. The policy form defines the actual scope. ### Can an old equipment schedule be reused Use it only as a starting point. Remove disposed items, add acquisitions, update values and locations, and confirm serial numbers and ownership before submission. ## The Bottom Line [#the-bottom-line] ACORD 152 helps describe commercial inland marine exposures for underwriting. Identify the right property class, prepare accurate schedules, explain transit and storage, and review valuation and limits. Then compare the insurer's issued documents with the submission. The application does not itself create coverage. *This guide is for educational purposes and describes ACORD 152 in original language. Form numbers and titles are cited for identification only, and Menlo Insurance Services is not affiliated with ACORD Corporation. Insurer requirements and policy documents control.* ## References . [National Association of Insurance Commissioners. Glossary of Insurance Terms]() (accessed September 2026) . [Vertafore. Commercial Lines ACORD Forms]() (accessed September 2026) . [Vertafore. Sagitta 2017 R2.3.0 Release Notes]() (accessed September 2026) . [ACORD. Contact Us: Important Note About Insurance Claims]() (accessed September 2026) . [ACORD. Forms Portal]() (accessed September 2026) # ACORD 160: Business Owners Section Explained (https://www.menloinsurance.com/library/forms/acord-160) Learn what ACORD 160 collects for a business owners policy, including locations, property, liability exposures, and requested options before submission. Markdown version: https://www.menloinsurance.com/library/forms/acord-160.md ACORD 160 is the Business Owners Section used to collect property, liability, and operational information for a business owners policy submission. It connects requested limits and options with locations, building interests, operations, equipment, and underwriting questions. The form helps an insurer evaluate the application, but it is not a binder or policy. ## Key takeaways * **One form covers two sides of the risk**: property details and liability operations must agree. * **Each location deserves its own review**: occupancy, ownership, values, and activities can differ. * **General questions need explanations**: a yes answer often requires dates, amounts, or a short narrative. * **Eligibility is insurer specific**: completing the form does not guarantee a business owners policy is available. ## What is ACORD 160 used for? [#what-is-acord-160-used-for] Vertafore lists ACORD 160 as the Business Owners Section in its current commercial forms map. Its AMS360 release notes identify a 2016/09 Business Owners application with updated mapping. The section is commonly paired with applicant information so the insurer can review the business entity and the coverage specific exposure together. ## What information does ACORD 160 collect? [#what-information-does-acord-160-collect] The form organizes proposed policy dates, locations, building interests, business activities, property values, liability limits, optional coverages, and general underwriting questions. Vertafore documents that client level answers can flow into both ACORD 125 and ACORD 160, including questions about subsidiaries, safety programs, hazardous materials, catastrophe exposures, and foreign operations. The insurer may ask for additional schedules or its own supplement. ## What should you verify before signing? [#what-should-you-verify-before-signing] Match legal names and addresses to the applicant information. At each location, confirm who owns the building, what the business does there, and whether other occupants share the premises. Review building and business personal property values against current replacement needs rather than an old application. Describe subcontracting, late hours, hazardous materials, cooking, delivery, or other operations when they apply. ## Does ACORD 160 guarantee BOP eligibility? [#does-acord-160-guarantee-bop-eligibility] No. A business owners policy packages common property and liability coverages, but insurers set their own eligible classes, size limits, and underwriting rules. An insurer may quote different options, request a commercial package instead, or decline the submission. Only the binder and issued policy show what was accepted. ## Where can you obtain the form? [#where-can-you-obtain-the-form] Eligible users can obtain current forms through ACORD's Forms Portal. Use the edition supplied by the agency or authorized software and retain attachments with the signed application. ## Frequently Asked Questions ### Is ACORD 160 the same as ACORD 125 No. ACORD 125 contains common commercial applicant information. ACORD 160 adds details specific to a business owners policy submission. ### Does every small business qualify for a BOP No. Eligibility depends on the insurer's rules, the type and size of operation, property characteristics, and other exposures. ## The Bottom Line [#the-bottom-line] ACORD 160 brings a proposed business owners policy's property and liability information into one application section. Check every location, value, activity, and explanation. Use the insurer's binder and policy to confirm coverage. *This guide is educational and describes ACORD 160 in original language. Menlo Insurance Services is not affiliated with ACORD Corporation. The insurer's documents control.* ## References . [Vertafore. Commercial Lines ACORD Form Mapping]() (accessed September 2026) . [Vertafore. AMS360 2020 R1 Release Notes]() (accessed September 2026) . [Vertafore. Client Questions Page]() (accessed September 2026) . [ACORD. Forms Portal]() (accessed September 2026) # ACORD 163: Commercial Auto Driver Schedule Explained (https://www.menloinsurance.com/library/forms/acord-163) Learn when ACORD 163 is used, what driver information it organizes, and how to review a commercial auto driver schedule accurately. Markdown version: https://www.menloinsurance.com/library/forms/acord-163.md ACORD 163 is the Commercial Auto Driver Information Schedule. It organizes additional driver details that support a commercial auto application. It is a schedule, not a policy, motor vehicle report, or statement that a driver has been approved. ## Key takeaways * **It extends the driver record**: agency systems use it for additional or overflow driver information. * **Identity must be exact**: names, license numbers, states, and dates should match source records. * **History needs context**: accidents and violations may require separate reports or explanations. * **Underwriting decides**: listing a driver does not guarantee acceptance or coverage. ## When is ACORD 163 used? [#when-is-acord-163-used] The schedule accompanies a commercial auto submission when the main [ACORD 127 Business Auto Section](https://www.menloinsurance.com/library/forms/acord-127) does not conveniently hold every driver entry. System behavior varies: one platform may place a set of drivers on ACORD 127 and continue the list on ACORD 163, while another may paginate differently. Treat the form as an additional driver schedule rather than relying on a universal row limit. ## What information should be reviewed? [#what-information-should-be-reviewed] Review each driver's full legal name, date of birth, license number and state, years of driving experience, and relationship to the business. Confirm any fields describing vehicle assignment, use, accidents, or violations against the agency's source records. Do not guess at an abbreviated license number or substitute one driver's history for another. The schedule may be only one part of the underwriting file. The insurer can request motor vehicle reports, loss information, training records, or explanations for particular incidents. Privacy and permissible-use rules apply to driver data and reports. ## Does ACORD 163 add a driver to coverage? [#does-acord-163-add-a-driver-to-coverage] No. It communicates application information. Whether a person is a covered, acceptable, excluded, or restricted driver depends on the insurer's underwriting decision and the issued policy. Compare the final quote and policy documents with the submitted driver list, especially after hiring a new driver or changing vehicle assignments. ## Where can you obtain the form? [#where-can-you-obtain-the-form] Use the current version supplied by the agency, carrier, or authorized forms system. ACORD's Forms Portal is the official search point for eligible users. Menlo does not reproduce the copyrighted blank form. ## Frequently Asked Questions ### Is ACORD 163 the same as a motor vehicle report? No. It records driver information for the application. An MVR is a separate driving-record report obtained under applicable authorization and privacy rules. ### Should former drivers remain on the schedule? Tell the agency who no longer drives for the business and the effective date of the change. The insurer determines the documentation and policy action required. ## The Bottom Line [#the-bottom-line] Use ACORD 163 to keep a commercial auto submission's driver roster complete and traceable. Verify every driver against reliable records, then confirm the insurer's issued documents reflect the intended result. *This guide is educational and describes ACORD 163 in original language. Menlo Insurance Services is not affiliated with ACORD Corporation. The insurer's documents control.* ## References . [Vertafore. Commercial Auto Driver Information Schedule — ACORD 163]() (accessed September 2026) . [ACORD. Forms Portal]() (accessed September 2026) # ACORD 175: Commercial Policy Change Request Explained (https://www.menloinsurance.com/library/forms/acord-175) Learn how ACORD 175 requests a commercial policy change, which effective details to verify, and why the request is not proof of an issued endorsement. Markdown version: https://www.menloinsurance.com/library/forms/acord-175.md ACORD 175 is the Commercial Policy Change Request. It gives an insured and producer a structured way to ask an insurer to add, change, or delete commercial policy information. The form records a request. It does not prove that the insurer approved the change, made it effective on the requested date, or issued the related endorsement. ## Key takeaways * **Identify the policy precisely**: carrier, named insured, policy number, line, and term should match current documents. * **State what changes and when**: describe the requested addition, revision, or deletion and the intended effective date. * **Approval is separate**: retain the insurer's endorsement or written confirmation before relying on the change. * **Premium can move either way**: the insurer may calculate additional or return premium, fees, taxes, or audit adjustments. ## What kinds of changes can ACORD 175 request? [#what-kinds-of-changes-can-acord-175-request] Vertafore identifies ACORD 175 as the Commercial Policy Change Request and supports it across commercial lines in an endorsement workflow. A request may involve the insured name or address, operations, premises, property, vehicles, drivers, interests, classifications, limits, deductibles, or other policy information. The exact change must be described clearly enough for the insurer to evaluate it. Some changes need supporting documents or a carrier supplement. Adding a vehicle may require its VIN, use, garaging, ownership, value, and driver information. Adding a location can require construction, occupancy, protection, area, and exposure details. Do not assume a short description supplies everything underwriting needs. ## When does a requested change take effect? [#when-does-a-requested-change-take-effect] The requested effective date tells the insurer what the customer wants. It is not confirmation of acceptance. Vertafore's procedure starts from an endorsement transaction and preserves revisions to the request. That workflow separates creating the request from the insurer's ultimate policy action. Ask for the issued endorsement or other written confirmation showing the effective date and exact terms. Backdated requests may require special approval and supporting facts. Until acceptance is confirmed, avoid representing the requested coverage or deletion as completed. ## How can a change affect premium and coverage? [#how-can-a-change-affect-premium-and-coverage] An added exposure or broader term can increase premium. Removing property, vehicles, or coverage may create return premium, but the amount can depend on timing, minimum premiums, audits, fees, taxes, or financing. The change can also affect deductibles, classifications, schedules, or other endorsements. ACORD does not provide insurance coverage or process claims. Compare the endorsement and revised declarations with the request, including the transaction effective date. If the insurer approved only part of the request, document the difference. ## Where can you get the official ACORD 175? [#where-can-you-get-the-official-acord-175] Eligible users can search current forms through the ACORD Forms Portal after login. The producer or insurer servicing the policy should provide the licensed form. This page is an explanation, not a change request. ## Frequently Asked Questions ### Does an emailed ACORD 175 change coverage immediately No. It communicates a request. Obtain the insurer's endorsement or written acceptance showing the terms and effective date before relying on the change. ### Can ACORD 175 be used to cancel the whole policy Use the process required by the insurer for the intended transaction. A full cancellation may use a separate cancellation request and involves distinct timing and refund considerations. ## The Bottom Line [#the-bottom-line] ACORD 175 organizes a commercial policy change request. Identify the policy, describe the change and date precisely, provide supporting facts, and retain the insurer's response. Compare the endorsement and premium adjustment with the request. Submission starts the transaction, but insurer approval completes it. *This guide is for educational purposes and describes ACORD 175 in original language. Form numbers and titles are cited for identification only, and Menlo Insurance Services is not affiliated with ACORD Corporation. The insurer's endorsement and policy control.* ## References . [Vertafore. ACORD 175 Commercial Policy Change Request]() (accessed September 2026) . [ACORD. Contact Us: Important Note About Insurance Claims]() (accessed September 2026) . [ACORD. Forms Portal]() (accessed September 2026) # ACORD 211: Schedule of Hazards Explained (https://www.menloinsurance.com/library/forms/acord-211) Learn how ACORD 211 extends a liability hazard schedule with class codes, exposure bases, locations, rates, premiums, and what an owner should verify. Markdown version: https://www.menloinsurance.com/library/forms/acord-211.md ACORD 211 is the Schedule of Hazards used to continue the classification and exposure schedule from a general liability or business owners application. Each row connects an operation or premises exposure with its location, class code, premium basis, and reported amount. It is rating information, not a coverage grant. ## Key takeaways * **Every operation needs a home**: separate materially different work by location and classification. * **The exposure basis controls the unit**: sales, payroll, area, admissions, cost, and units are not interchangeable. * **Descriptions matter**: a class code without a plain description can hide a mistaken classification. * **The policy still controls**: the schedule helps underwriting but does not create coverage. ## Why is ACORD 211 attached? [#why-is-acord-211-attached] The standard application may not have enough rows for every location and operation. Oklahoma's insurance regulator described ACORD 211 as a Schedule of Hazards that may be used with ACORD 126 or ACORD 160 when it reviewed the new 2016/09 form. The attachment keeps the overflow tied to the same applicant and effective date. ## What information appears on the schedule? [#what-information-appears-on-the-schedule] The schedule records location and hazard identifiers, class code, classification description, premium basis, exposure, territory, rate, and premium. The current Vertafore sample of [ACORD 126](https://www.menloinsurance.com/library/forms/acord-126) points to ACORD 211 when more hazard space is required and shows bases such as sales, payroll, area, total cost, admissions, and units. A restaurant with delivery, a building owner with parking, or a contractor with several kinds of work may need more than one row. ## What should a business owner verify? [#what-should-a-business-owner-verify] Match each location to the operations actually performed there. Then verify the exposure period and unit. Annual sales should not be entered as payroll, and square footage should not be entered as a raw building value. Compare the schedule with the business description, contracts, payroll reports, and projected revenue used elsewhere in the submission. Ask about abbreviations you do not recognize before signing. ## Does the schedule determine premium or coverage? [#does-the-schedule-determine-premium-or-coverage] It supplies inputs used in rating, but it does not guarantee the final classification, rate, or premium. An underwriter may request more detail, revise a class, or audit an exposure after the policy period. The issued declarations and policy forms determine coverage. Keep the completed schedule so you can compare it with the quote and later audit records. ## Where can you obtain ACORD 211? [#where-can-you-obtain-acord-211] Eligible users can search ACORD's Forms Portal for current forms. Use the edition supplied by the agency or authorized system rather than a downloaded copy from an unknown site. ## Frequently Asked Questions ### Is ACORD 211 a general liability policy form No. It is an application schedule that carries classification and exposure information. The insurer's policy forms and endorsements establish coverage. ### Why can one business have several hazard rows Different locations or operations can use different classifications and exposure bases. Separate rows make those distinctions visible to the underwriter. ## The Bottom Line [#the-bottom-line] ACORD 211 extends the hazard schedule when an application needs more classification rows. Confirm each location, operation, class description, and exposure basis. Save the final schedule, but rely on the issued policy for coverage. *This guide is educational and describes ACORD 211 in original language. Menlo Insurance Services is not affiliated with ACORD Corporation. The insurer's documents control.* ## References . [Oklahoma Insurance Department. March 2016 Filing Activity Report]() (accessed September 2026) . [Vertafore. Commercial General Liability Section Mapping Sample]() (accessed September 2026) . [ACORD. Forms Portal]() (accessed September 2026) # ACORD 23: Vehicle or Equipment Certificate Explained (https://www.menloinsurance.com/library/forms/acord-23) Learn what ACORD 23 reports about vehicle or equipment insurance, what certificate holders should verify, and why it does not change the policy in any way. Markdown version: https://www.menloinsurance.com/library/forms/acord-23.md ACORD 23 is the Vehicle or Equipment Certificate of Insurance. It reports insurance information about identified vehicles or equipment to a certificate holder as of the issue date. Like other certificates, it does not create coverage, change policy terms, or guarantee that insurance will remain in force for a contract's full duration. ## Key takeaways * **Identify the correct property**: vehicle or equipment descriptions should match serial numbers, VINs, schedules, leases, or finance records. * **A certificate reports policy information**: it does not replace the declarations, coverage form, or endorsement. * **Holder status is limited**: being listed as certificate holder does not by itself make a party a loss payee or additional insured. * **Changes require policy action**: requested interests or coverage must be accepted and documented by the insurer. ## When is ACORD 23 used? [#when-is-acord-23-used] Vertafore identifies ACORD 23 as the Vehicle or Equipment Certificate of Insurance and provides it as a selection within its property-certificate workflow. Its release documentation also lists the same title and an integrated form edition. A lender, lessor, rental company, project owner, or other party may request it when a business must show insurance associated with a vehicle or piece of equipment. The certificate should reflect actual policy data, not simply copy every phrase in a contract. ## What should be checked on ACORD 23? [#what-should-be-checked-on-acord-23] Confirm the named insured, insurer, policy number, effective and expiration dates, covered property description, coverage and limits, certificate holder, and any stated interest. Match identifiers exactly. A transposed VIN or equipment serial number can make the evidence ambiguous even when the policy is otherwise correct. Then distinguish the certificate holder from any policy-recognized interest. A lender or owner may require loss-payee or lender's-loss-payable treatment. That status must come from the policy or an endorsement. It is not created merely by typing the party's name in a certificate field. ## Does ACORD 23 guarantee payment after a loss? [#does-acord-23-guarantee-payment-after-a-loss] No. Claim payment depends on the policy, covered cause of loss, covered property, valuation, deductible, exclusions, conditions, and the party's insured or loss-payee status. ACORD itself does not provide coverage or process claims. If the certificate conflicts with the policy, the policy controls. Ask the producer to correct inaccurate evidence and obtain the applicable endorsement when a contract requires a particular interest. Do not alter a certificate after issuance. ## Where can you get the official ACORD 23? [#where-can-you-get-the-official-acord-23] Eligible users can search for current licensed forms in the ACORD Forms Portal after login. The producer responsible for the policy should issue the certificate from verified insurer records. This guide is not an official certificate or blank form. ## Frequently Asked Questions ### Is ACORD 23 proof that every listed item is covered It reports information from the cited policy. Verify each vehicle or equipment identifier and review the policy schedule and endorsements because the policy determines coverage. ### Does a certificate holder receive cancellation notice Not automatically in every case. Notice rights depend on the policy, endorsement, applicable law, and the party's recognized interest. Ask for the actual provision that supports the requirement. ## The Bottom Line [#the-bottom-line] ACORD 23 communicates vehicle or equipment insurance information. Match the property identifiers and policy details carefully, distinguish certificate-holder status from an endorsed interest, and resolve discrepancies through the insurer or producer. The certificate is useful evidence, but it cannot rewrite the policy. *This guide is for educational purposes and describes ACORD 23 in original language. Form numbers and titles are cited for identification only, and Menlo Insurance Services is not affiliated with ACORD Corporation. The policy and endorsements control.* ## References . [Vertafore. Certificate of Property Insurance]() (accessed September 2026) . [Vertafore. ACORD Forms Updated in AMS360 2017 R1]() (accessed September 2026) . [ACORD. Contact Us: Important Note About Insurance Claims]() (accessed September 2026) . [ACORD. Forms Portal]() (accessed September 2026) # ACORD 24: Certificate of Property Insurance Explained (https://www.menloinsurance.com/library/forms/acord-24) Learn what an ACORD 24 certificate of property insurance shows, who uses it, how it differs from evidence forms, and why the policy still controls coverage. Markdown version: https://www.menloinsurance.com/library/forms/acord-24.md ACORD 24 is the Certificate of Property Insurance, a standardized summary used to show a third party that a property policy exists. It identifies the policy and selected property coverage information for the certificate holder. The certificate does not replace the policy, add an interest to it, or guarantee that coverage will remain unchanged after the certificate date. The practical question is who needs the document. Vertafore says ACORD 24 is most commonly issued for commercial accounts when a recipient wants to verify property coverage but has no direct interest in the policy. A party with a mortgage, lien, or other direct financial interest may instead request evidence that addresses that interest. ## Key takeaways * **A certificate summarizes**: use it to check the insured, insurer, policy term, property information, and selected limits shown on the document. * **The policy controls**: the declarations, forms, and endorsements determine coverage and any rights of a mortgagee, loss payee, or other interested party. * **Use the requested form**: [ACORD 27](https://www.menloinsurance.com/library/forms/acord-27) and [ACORD 28](https://www.menloinsurance.com/library/forms/acord-28) serve different property-evidence needs, so confirm the recipient's requirement. * **Recheck renewals**: an old certificate may describe an expired or replaced policy. ## What does ACORD 24 show? [#what-does-acord-24-show] ACORD 24 carries a snapshot of selected policy information for property insurance. Agency software draws certificate data from client and policy records, then lets the producer select policies, holders, supplemental names, and other interests before previewing the certificate. Because those records can be outdated or selected incorrectly, compare the finished certificate with the current declarations before sending it. The recipient should verify names, addresses, policy numbers, effective dates, and property limits relevant to the request. A complete-looking certificate can still be wrong if the underlying policy changed or the wrong location was selected. ## How is ACORD 24 different from ACORD 27 and ACORD 28? [#how-is-acord-24-different-from-acord-27-and-acord-28] ACORD 24 is a certificate used to verify property coverage for a holder without a direct policy interest in the common workflow Vertafore describes. ACORD 27 is Evidence of Property Insurance, while ACORD 28 is Evidence of Commercial Property Insurance. Lenders and other secured parties often specify an evidence form because they need information about their interest in the insured property, not only a coverage snapshot. Do not substitute one form merely because each concerns property insurance. Ask the requesting party which form and interest wording its agreement requires, then have the producer confirm that the underlying policy supports the request. ## Does ACORD 24 create or change coverage? [#does-acord-24-create-or-change-coverage] No. ACORD states that it is not an insurance company and does not provide coverage. The California Department of Insurance describes the policy as the written contract between the insured and insurer, and its consumer guidance directs readers to the actual policy to determine coverage. A certificate therefore cannot fix an incorrect named insured, add a lender's rights, or extend an expired term by itself. If a contract requires a mortgagee, loss payee, or other policy status, request the appropriate policy endorsement and confirm it on the issued policy. ## Where can you get the official ACORD 24 form? [#where-can-you-get-the-official-acord-24-form] The ACORD Forms Portal provides current forms to eligible users after login. Businesses usually receive ACORD 24 from the agent or broker that issued the certificate through licensed agency software. This page is an original explanation and does not offer an unofficial blank form or reproduce ACORD's wording and layout. ## Frequently Asked Questions ### Is ACORD 24 proof that property coverage exists It is evidence of the selected policy information as of issuance, but the policy and insurer records control. Verify the policy number, dates, insured property, and limits, especially after a renewal, cancellation, or policy replacement. ### Can an ACORD 24 make a lender a mortgagee No. A certificate cannot create policy rights. The insurer must add any mortgagee, loss payee, or other interest through the policy process, and the issued policy wording controls. ### Who issues an ACORD 24 An authorized agent, broker, or insurer commonly issues it from policy records. The business requesting the certificate should not alter the completed document itself. ## The Bottom Line [#the-bottom-line] ACORD 24 is a property insurance certificate for sharing selected policy information with a third party. Match it to current declarations, use the form the recipient actually requests, and look to the policy for coverage and legal interests. *This guide is for educational purposes and describes ACORD 24 in original language. Form numbers and titles are cited for identification only, and Menlo Insurance Services is not affiliated with ACORD Corporation. The policy and endorsements control.* ## References . [Vertafore. Working with Certificates: Overview]() (accessed September 2026) . [Vertafore. Certificate Wizard: Overview]() (accessed September 2026) . [ACORD. Contact Us: Important Note About Insurance Claims]() (accessed September 2026) . [California Department of Insurance. Glossary of Insurance Terms]() (accessed September 2026) . [ACORD. Forms Portal]() (accessed September 2026) # ACORD 25: Certificate of Liability Insurance Explained (https://www.menloinsurance.com/library/forms/acord-25) What the ACORD 25 certificate of liability insurance shows, why it confers no rights on the holder, and how to read the operations and certificate holder boxes. Markdown version: https://www.menloinsurance.com/library/forms/acord-25.md **ACORD 25 is the standard certificate of liability insurance, a one-page snapshot issued by an agent or broker that summarizes a business's liability policies, limits, and effective dates for a third party who asked for proof of coverage.** It is the most widely used document in commercial insurance, and also the most misunderstood, because the certificate is issued for information only and confers no rights on the person holding it. The coverage lives in the policy, not on the certificate. If a landlord, general contractor, or customer asks for "a COI" or "an ACORD," this is almost always the form they mean. This page explains what the certificate actually proves, what it deliberately does not do, and how the certificate holder and description of operations boxes work in practice. ## Key takeaways * **Information only**: the certificate summarizes coverage as of its issue date, it does not amend the policy or give the holder any rights under it. * **No cancellation notice promise**: modern editions removed the insurer's obligation to notify certificate holders, so notice rights exist only if an endorsement on the policy grants them. * **Holder is not insured**: being named in the certificate holder box gives you a mailing address on a piece of paper, not additional insured status. * **The policy controls**: if the certificate says one thing and the policy says another, the policy wins every time. ## What does ACORD 25 do? [#what-does-acord-25-do] ACORD 25 exists so a business can prove it carries liability insurance without handing over its entire policy. The [agent or broker](https://www.menloinsurance.com/library/guides/insurance-agent-vs-broker) fills in the insured's name, the carriers, the policy numbers, the effective and expiration dates, and the limits for general liability, auto liability, umbrella, and workers compensation. The party requesting proof, typically a landlord, project owner, or contracting counterparty, receives the certificate and files it as evidence that coverage existed on the day it was issued. That is the whole function. The form's own preprinted language states that it is issued as a matter of information only, that it confers no rights upon the certificate holder, and that it does not amend, extend, or alter the coverage described. A [certificate of insurance](https://www.menloinsurance.com/library/guides/certificate-of-insurance-guide) is a snapshot, and like any snapshot it can be outdated a day later if the policy cancels or changes. ## What does each box on the ACORD 25 show? [#what-does-each-box-on-the-acord-25-show] The certificate reads top to bottom in six zones. The producer box at the top left identifies the issuing agency and its contact person, which matters because questions about the certificate go to the agency, not the carrier. Below it, the insured box shows the named insured as it appears on the policy, and a mismatch between that name and the entity you contracted with is worth a phone call. To the right, the insurers affording coverage appear on lettered lines, A through F, each with its NAIC number, the code that identifies the carrier so a holder can verify licensing and financial ratings independently. The middle of the page is the coverage grid, one row per policy: general liability, auto liability, umbrella or excess, workers compensation, and a blank row for anything else. Each row ties back to an insurer letter and shows the policy number, effective and expiration dates, and the limits for that line. Reading a certificate well means checking a few specific things in that grid: * **Insurer letters and NAIC numbers**: match each coverage row to its lettered carrier, then check the carrier itself, since a certificate can accurately report a policy from an insurer you would never accept. * **The addl insd and subr wvd columns**: these checkboxes claim additional insured status or a waiver of subrogation applies, and the claim is only as good as the endorsement behind it, so ask for the endorsement copy. * **Effective and expiration dates**: an expired date, or a policy period that ends before your project does, is the single most common defect on certificates sitting in compliance files. * **Limits against the contract**: compare each occurrence, aggregate, and umbrella figure to the minimums the contract names, line by line rather than in total. ## Why does the certificate confer no rights? [#why-does-the-certificate-confer-no-rights] The certificate confers no rights because it is not a contract. The insurance contract is between the insurer and the named insured, and the certificate holder is not a party to it. The [certificate holder](https://www.menloinsurance.com/library/glossary/certificate-holder) box at the bottom of the form identifies who asked for proof, nothing more. Rights under the policy, such as defense and indemnity as an additional insured or the right to receive notice of cancellation, exist only when an endorsement attached to the policy grants them. This is why sophisticated contract administrators ask for a copy of the additional insured endorsement, such as [CG 20 10](https://www.menloinsurance.com/library/forms/cg-20-10), alongside the certificate rather than accepting the certificate alone. The distinction between [certificate holder and additional insured](https://www.menloinsurance.com/library/guides/certificate-holder-vs-additional-insured) status is one of the most consequential in commercial insurance, and the certificate itself tells you which one you are only indirectly, through checkboxes and remarks that must match real endorsements on the policy. ### A certificate cannot fix a coverage gap Typing "certificate holder is an additional insured" in the remarks does not make it true. If the endorsement is not attached to the policy, the words on the certificate grant nothing, and after a loss the policy language decides. ## What happened to the 30 day notice of cancellation? [#what-happened-to-the-30-day-notice-of-cancellation] Many contracts still require a certificate providing "30 days notice of cancellation to the holder," and modern ACORD 25 editions cannot deliver that. Older editions of the form said the insurer would endeavor to mail notice to the certificate holder if the policy was cancelled before expiration. Even that wording was soft, since "endeavor to" promised effort rather than results. Current editions dropped the notification language entirely and instead state that notice will be delivered in accordance with the policy provisions. The practical effect is simple. A certificate holder gets cancellation notice only if the policy itself, through a notice of cancellation endorsement naming that holder, requires the carrier to send it. When a contract demands notice rights, the compliant answer is to ask the broker whether the carrier offers such an endorsement, not to retype the old wording onto the certificate. Agents who alter the preprinted certificate language expose themselves to E\&O claims and, in some states, to regulatory penalties under statutes that prohibit issuing misleading certificates. ## How should the description of operations box be used? [#how-should-the-description-of-operations-box-be-used] The description of operations box exists to identify the job, contract, or location the certificate relates to, and to reference endorsements that actually exist on the policy. Good practice looks like this: name the project, then state that additional insured status applies per the attached endorsement form number, with the endorsement copy stapled behind the certificate. Bad practice is using the box as a free-text field for coverage promises the policy does not contain. Carriers instruct their agents not to type coverage-expanding language there, because a certificate that misdescribes coverage creates liability for the agency without creating coverage for anyone. Requesters can protect themselves with one habit. Compare every statement in the box against an actual policy document, and treat any claim that cannot be matched to a form number as unverified: | Document | What it is | Does it change coverage? | | ---------------------------------- | ----------------------------------------------------------------- | ------------------------ | | ACORD 25 certificate | Informational snapshot of policies in force | **No** | | Additional insured endorsement | Policy amendment granting insured status to a third party | **Yes** | | Notice of cancellation endorsement | Policy amendment requiring notice to a named party | **Yes** | | Insurance binder | Temporary evidence that coverage is bound pending policy issuance | **Yes, temporarily** | ## Where can you see the actual form? [#where-can-you-see-the-actual-form] Menlo does not reproduce ACORD forms because they are copyrighted by ACORD Corporation. Licensed users, meaning agencies and carriers that hold an ACORD license, access the current editions through [acord.org](https://www.acord.org/) and generate completed certificates through their agency management systems. If you are the party requesting proof of coverage, you do not need form access at all. You receive completed certificates directly from the insured's agent or broker, and you can ask that same representative for copies of the endorsements the certificate references. ## Frequently Asked Questions ### Is an ACORD 25 proof of insurance? It is evidence that the policies listed were in force on the date the certificate was issued, according to the agent who issued it. It is not a guarantee that coverage remains in force afterward, and it is not a policy document. For anything contractual, verify the endorsements behind it. ### Does being a certificate holder make me an additional insured? No. The certificate holder box only records who received the certificate. Additional insured status requires an endorsement attached to the policy, and careful requesters ask for a copy of that endorsement along with the certificate. ### Who issues an ACORD 25, the insurance company or the agent? Nearly always the agent or broker of record, using their agency management system. Carriers authorize their producers to issue certificates that accurately reflect the policy. That is also why the certificate lists the producer's contact information at the top, since questions and renewal certificates go through the agency. ### How long is an ACORD 25 valid? The certificate has no validity period of its own. It reflects coverage as of its issue date, and the policies it lists carry their own expiration dates. Most businesses that collect certificates from vendors request a fresh one at each policy renewal, which is why agencies batch-issue renewal certificates every year. *This guide is for educational purposes and describes standard certificate practice in Menlo's own words. Form numbers and titles are cited for identification only, and Menlo Insurance Services is not affiliated with ACORD Corporation. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # ACORD 26: Policy Certification Log Explained (https://www.menloinsurance.com/library/forms/acord-26) Learn how the ACORD 26 Policy Certification Log tracks certificates and evidence issued for one insured, and why the log is not proof of coverage. Markdown version: https://www.menloinsurance.com/library/forms/acord-26.md ACORD 26 is the Policy Certification Log. An agency can use it to track certificates and evidence issued for one insured, including who received each document, the line of business, the insurer, and the certification expiration month. It is an internal recordkeeping sheet. It is not a certificate, evidence of insurance, or part of the policy. ## Key takeaways * **A log, not proof**: ACORD 26 records documents that were issued but does not prove coverage to a certificate holder. * **One insured per log**: the heading ties the entries to an agency, insured, insurers, and policy periods. * **Entries need reconciliation**: renewal, cancellation, or endorsement changes can make an old entry stale. * **The underlying document controls the request**: use the actual ACORD 24, 25, 27, 28, or other evidence document when proof is needed. ## What information does ACORD 26 track? [#what-information-does-acord-26-track] The 2002/01 form has space for the agency and insured, insurers affording coverage, and their policy periods. Its certification table records the issue date, log identifier, certificate or evidence holder, insurer reference, line of business, and selected tracking indicators. Those fields help an agency answer a practical question: which evidence documents have already been produced for this account, and when should they be reviewed again? ## Is ACORD 26 a certificate of insurance? [#is-acord-26-a-certificate-of-insurance] No. A recipient who needs proof should receive the appropriate certificate or evidence form. [ACORD 25](https://www.menloinsurance.com/library/forms/acord-25) is commonly used for liability insurance, while [ACORD 27](https://www.menloinsurance.com/library/forms/acord-27) or [ACORD 28](https://www.menloinsurance.com/library/forms/acord-28) may be used for property evidence. ACORD 26 stays behind as the agency's tracking record. A row on the log cannot add an insured, change a limit, or promise cancellation notice. ## What should an agency verify? [#what-should-an-agency-verify] Match each log entry to the issued document and current policy record. Check the holder's legal name, the covered line, the insurer, the policy period, and any expiration or renewal date. If the policy changes, update the operational record according to the agency's process and issue a corrected document when appropriate. Never treat the log as the source for policy terms. ## Where can you obtain ACORD 26? [#where-can-you-obtain-acord-26] The ACORD Forms Index identifies ACORD 26 as the Policy Certification Log and lists the 2002/01 edition. Eligible organizations can obtain licensed forms through ACORD's Forms Portal. ## Frequently Asked Questions ### Who normally uses ACORD 26? Insurance agencies and other organizations that manage certificates may use it as an account-level tracking sheet. It is generally not the document sent to a landlord, lender, or project owner as proof. ### Does an ACORD 26 entry confirm additional insured status? No. Additional insured status depends on the issued policy or endorsement. The log can record that a related document was produced, but it cannot create policy rights. ## The Bottom Line [#the-bottom-line] ACORD 26 is an administrative index of certificate activity. Reconcile it with the current policy and retain the actual issued evidence documents. Use the policy and endorsements to decide what coverage exists. *This guide is educational and describes ACORD 26 in original language. Menlo Insurance Services is not affiliated with ACORD Corporation. The insurer's documents control.* ## References . [ACORD form archive. ACORD 26 (2002/01) Policy Certification Log]() (accessed September 2026) . [ACORD. ACORD Forms Index, revision 5/08/2024]() (accessed September 2026) . [ACORD. Forms Portal]() (accessed September 2026) # ACORD 27: Evidence of Property Insurance Explained (https://www.menloinsurance.com/library/forms/acord-27) What the ACORD 27 evidence of property insurance form does, how evidence differs from a certificate, and when lenders and lessors request this evidence form. Markdown version: https://www.menloinsurance.com/library/forms/acord-27.md **ACORD 27 is the standard evidence of property insurance form, issued by an agent or broker to document property coverage for a party that holds a financial interest in the insured property, most often a mortgagee, loss payee, or lessor.** It is the property-side counterpart to the liability certificate, built for personal lines and smaller commercial property risks such as a home with a mortgage, a condo unit, or a leased storefront's contents. Where a certificate merely reports information, an evidence form is addressed to a specific interest holder about a specific insured location. Lenders on larger commercial schedules typically require [ACORD 28](https://www.menloinsurance.com/library/forms/acord-28) instead, which this page distinguishes below. Here you will find what ACORD 27 documents, why the evidence versus certificate distinction matters, and how the additional interest section works. ## Key takeaways * **Built for property interests**: the form documents coverage on identified property for a party with a stake in it, not general proof of a business's insurance program. * **Personal lines and small commercial**: homeowners, dwelling fire, condo, and small commercial property placements are its natural territory. * **The interest holder is named**: the additional interest section records whether the requesting party is a mortgagee, loss payee, or lender's loss payable, which maps to real policy provisions. * **The policy still controls**: like every ACORD form, the evidence describes coverage, and the mortgage clause or loss payable provision in the policy is what actually grants rights. ## What does ACORD 27 do? [#what-does-acord-27-do] ACORD 27 tells a party with a financial interest in property that insurance covering that property is in force. The agent completes it with the named insured, the carrier, the policy number and term, the location and description of the covered property, the coverage amounts and deductibles, and the identity and interest of the party requesting it. A mortgage lender closing a home loan wants evidence that the dwelling is insured for enough to protect the loan. A landlord wants evidence that a tenant insured its contents and improvements. An equipment lessor wants evidence that the leased property is covered. In each case the requester's real protection comes from a policy provision, usually the mortgage clause or a loss payable clause, and the ACORD 27 documents that the provision exists and names them. The form is the deliverable at closing, the policy provision is the substance. ## How is evidence of insurance different from a certificate? [#how-is-evidence-of-insurance-different-from-a-certificate] The difference is who the document is for and what it speaks to. A certificate such as [ACORD 25](https://www.menloinsurance.com/library/forms/acord-25) is a broad informational summary of a liability program, issued to anyone who asks, expressly conferring no rights. An evidence form is narrower and more pointed. It addresses one property, one policy, and one interest holder, and it corresponds to policy provisions that give that interest holder genuine rights, such as the mortgageholder's right to be paid on covered building losses. That is why lenders will not accept a liability certificate for a property interest. The certificate does not identify their collateral, does not state property limits or deductibles on that collateral, and does not reflect any policy provision in their favor. Evidence forms exist precisely because property interests are specific. The distinction shows up operationally too, since evidence forms are typically issued at loan closing or lease inception and reissued at each renewal so the interest holder's file stays current. ### Evidence follows the policy provision An ACORD 27 naming a mortgagee is only as good as the mortgage clause in the policy. Agents confirm the interest is actually endorsed onto the policy before issuing the evidence, because a form documenting an interest the policy does not recognize protects no one. ## What does the additional interest section record? [#what-does-the-additional-interest-section-record] The additional interest section identifies the requesting party and the nature of its stake, and each choice maps to different policy mechanics. The main interests look like this: | Interest | Who it fits | What the policy provision does | | --------------------- | ------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------ | | Mortgagee | Lender secured by real property | Pays the lender on covered building losses and preserves its rights even if the insured voids coverage | | Loss payee | Party with an interest in personal property, such as an equipment lessor | Adds the party to loss payments on the described property | | Lender's loss payable | Lender secured by personal property | Gives the secured lender protections closer to a mortgagee's on the scheduled property | | Additional insured | Party needing insured status on property coverage, such as some lessors | Extends insured status rather than just payment rights | Getting the interest type right matters more than it looks. A lender listed as a plain loss payee generally loses coverage if the insured's own coverage fails, while a mortgagee or lender's loss payable interest survives many insured-side defenses. Brokers check the loan documents, which usually dictate the exact clause the lender requires. The one-line lesson: the checkbox on the evidence must match the clause on the policy. ### Example A bakery owner buys her building with an SBA-backed loan. The lender's closing checklist requires evidence of property insurance naming the bank as mortgagee, with a building limit at least equal to the loan balance and a deductible no higher than the loan covenants allow. Her broker adds the bank to the policy's mortgageholders provision, then issues an ACORD 27 showing the building limit, the deductible, and the bank's mortgagee interest at its loan servicing address. The closing funds on the strength of the evidence, and the bank's actual protection sits in the policy's mortgage clause. ## Where can you see the actual form? [#where-can-you-see-the-actual-form] Menlo does not reproduce ACORD forms because they are copyrighted by ACORD Corporation. Licensed agencies and carriers access current editions through [acord.org](https://www.acord.org/) and generate completed evidence forms from their agency management systems. If you are a lender, lessor, or landlord requesting evidence, you receive the completed form from the [insured's agent or broker](https://www.menloinsurance.com/library/guides/insurance-agent-vs-broker), and you can ask that representative to confirm your interest is endorsed onto the policy itself. ## Frequently Asked Questions ### What is the difference between ACORD 27 and ACORD 28? Both are evidence of property insurance, but ACORD 27 serves personal lines and smaller commercial placements while ACORD 28 is the fuller form built for commercial property, with room for the coverage detail commercial lenders require. If the collateral is a commercial building financed by an institutional lender, expect to be asked for the 28. ### Is an ACORD 27 the same as a certificate of insurance? No. A certificate is a general informational summary that confers no rights on the holder. An evidence form is addressed to a specific interest holder about specific property and corresponds to policy provisions, like the mortgage clause, that give the holder real rights. ### Who requests an ACORD 27? Mortgage lenders at loan closing, landlords at lease inception, equipment lessors, and loan servicers at each renewal. Anyone whose money is tied up in property someone else insures has a reason to hold current evidence. ### Does an ACORD 27 guarantee the lender gets paid after a loss? The evidence itself guarantees nothing, it documents coverage as of its date. Payment rights come from the policy's mortgageholders or loss payable provisions naming the lender. That is why lenders verify the interest appears on the policy, not just on the evidence form. *This guide is for educational purposes and describes standard evidence of insurance practice in Menlo's own words. Form numbers and titles are cited for identification only, and Menlo Insurance Services is not affiliated with ACORD Corporation. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # ACORD 28: Evidence of Commercial Property Insurance Explained (https://www.menloinsurance.com/library/forms/acord-28) What the ACORD 28 evidence of commercial property insurance form covers, why commercial lenders demand it over ACORD 25, and how mortgagee interests work. Markdown version: https://www.menloinsurance.com/library/forms/acord-28.md **ACORD 28 is the evidence of commercial property insurance form, issued by an agent or broker to document property coverage on commercial real estate or business personal property for a lender or other party with a financial interest in it.** It exists because commercial lenders need detail a liability certificate cannot supply, including the building limit on their specific collateral, the valuation basis, the deductible, and their own status as mortgagee or lender's loss payable. When a commercial mortgage closes or a loan servicer runs its annual insurance review, this is the form their checklist names. If you have been asked for "an ACORD 28" and sent back "an ACORD 25," you have discovered the difference the hard way. For personal lines and smaller commercial placements, the shorter [ACORD 27](https://www.menloinsurance.com/library/forms/acord-27) plays the same role. This page explains what the form documents, why lenders insist on it, and how the mortgagee and loss payee interests behind it actually work. ## Key takeaways * **Lender-driven form**: ACORD 28 was built around what commercial mortgage and loan documents require agents to evidence, property detail first. * **Collateral-specific**: it speaks to a described location and the coverage on it, not to a business's insurance program in general. * **Interest types matter**: mortgagee, loss payee, and lender's loss payable are different policy provisions with different survival rights after an insured's mistake. * **Evidence, not coverage**: the lender's actual rights come from the mortgageholders provision in the policy, the form documents that those rights exist. ## What does ACORD 28 do? [#what-does-acord-28-do] ACORD 28 documents, for one commercial property interest holder, the property insurance in force on described real or personal property. The agent completes it with the named insured, carrier, policy number and term, the location of the collateral, the coverage amount, the perils basis, the deductible, and coverage features the loan documents care about, such as whether business income coverage applies. It then records the requesting party's interest, most often mortgagee for a lender secured by the building or lender's loss payable for a lender secured by business personal property. Loan servicers keep the current evidence in the loan file and request a fresh one at each policy renewal, a process large servicers automate through insurance tracking vendors. The form is the standardized answer to a standardized demand, which is exactly why lenders specify it by number in their closing instructions. ## Why do lenders demand ACORD 28 instead of ACORD 25? [#why-do-lenders-demand-acord-28-instead-of-acord-25] Because [ACORD 25](https://www.menloinsurance.com/library/forms/acord-25) answers a different question. The 25 is a certificate of liability insurance, it summarizes casualty coverages and states on its face that it is informational only and confers no rights on the holder. A construction lender vetting a contractor cares about that liability summary. A mortgage lender does not, because its exposure is the building burning down, not the borrower being sued. The lender needs to see property coverage on its specific collateral, in an amount that protects the loan, with itself named in a policy provision that pays it directly after a loss. The comparison is stark when set side by side: | Question the lender asks | ACORD 25 | ACORD 28 | | ----------------------------------------------------------- | -------------------- | --------------------- | | Is my collateral property insured, and for how much? | Not addressed | **Core content** | | Am I named as mortgagee or lender's loss payable? | No interest detail | **Interest section** | | What is the deductible and valuation basis on the building? | Not shown | **Shown** | | Does the document relate to a described location? | Program-wide summary | **Location-specific** | There is also a rights dimension. Certificates disclaim everything. An evidence form corresponds to the mortgageholders provision in the commercial property policy, a provision that pays the lender on covered building losses and preserves the lender's recovery even when the named insured's own claim fails for reasons like concealment or a vacancy breach. The lender's lawyers wrote the loan covenants around that provision. The ACORD 28 is how the agent evidences compliance with those covenants. ## What is the difference between a mortgagee and a loss payee? [#what-is-the-difference-between-a-mortgagee-and-a-loss-payee] The labels describe different policy mechanics, and lenders are particular about which one appears. A mortgagee is a lender secured by real property, and the standard commercial property policy's mortgageholders provision gives it strong independent rights, including payment on covered building losses, notice before the insurer cancels, and continued protection despite certain acts of the named insured. A loss payee is simply added to loss payments on described personal property, and in the plain version its recovery rises and falls with the insured's. Lender's loss payable is the middle path for lenders secured by business personal property, granting the secured creditor protections closer to a mortgagee's. Brokers pull the exact required wording from the loan agreement rather than guessing, because a servicer that finds "loss payee" where its covenant says "lender's loss payable" will kick the evidence back. The form also carries the lender's precise name and address, down to the "its successors and assigns" tail loan documents specify, since claim checks and cancellation notices follow that exact wording. ## Where can you see the actual form? [#where-can-you-see-the-actual-form] Menlo does not reproduce ACORD forms because they are copyrighted by ACORD Corporation. Licensed agencies and carriers access current editions through [acord.org](https://www.acord.org/) and issue completed evidence forms from their agency management systems. Lenders and servicers receive completed forms from the [borrower's agent or broker](https://www.menloinsurance.com/library/guides/insurance-agent-vs-broker), and the underlying mortgageholders or loss payable wording can be verified by requesting the relevant policy provisions through that same representative. ## Frequently Asked Questions ### What is the difference between ACORD 27 and ACORD 28? Both evidence property insurance for an interest holder. ACORD 27 is the shorter form used for personal lines and small commercial placements, while ACORD 28 is built for commercial property and carries the coverage detail institutional lenders require. Commercial loan documents almost always name the 28. ### Can a lender rely on an ACORD 28 as proof of coverage? It is reliable evidence that the described coverage was in force when issued, but it is not the source of the lender's rights. Careful servicers confirm the mortgageholders or lender's loss payable provision actually names them on the policy and request updated evidence at every renewal. ### Why did my lender reject an ACORD 25 certificate? Because the 25 covers liability insurance and confers no rights on the holder. It says nothing about the building limit, the deductible, or the lender's mortgagee interest, which are the things a property-secured lender must verify. Ask your broker for an ACORD 28 naming the lender exactly as the loan documents require. ### Who fills out the ACORD 28? The insured's agent or broker completes and signs it, using policy data from the agency management system. Borrowers do not prepare their own evidence forms, and lenders will not accept one that lacks a producer's authorization. *This guide is for educational purposes and describes standard evidence of insurance practice in Menlo's own words. Form numbers and titles are cited for identification only, and Menlo Insurance Services is not affiliated with ACORD Corporation. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # ACORD 29: Evidence of Flood Insurance Explained (https://www.menloinsurance.com/library/forms/acord-29) Learn what ACORD 29 shows about flood insurance, how to review primary and excess policies, and why the evidence form does not change coverage. Markdown version: https://www.menloinsurance.com/library/forms/acord-29.md ACORD 29 is Evidence of Flood Insurance. It summarizes flood policies associated with a property for an additional interest such as a lender. The form can show primary and excess flood layers, building and contents amounts, deductibles, policy dates, and key property details. It does not amend the policy or guarantee that coverage will remain in force. ## Key takeaways * **Evidence only**: ACORD 29 reports policy information but does not create a contract with the additional interest. * **Read every layer**: primary and excess policies can have different insurers, dates, deductibles, and limits. * **Match the property**: verify the location, occupancy, flood zone information, and insured interest. * **The policy controls**: exclusions, conditions, valuation rules, and claim payments come from the issued policy. ## What does ACORD 29 show? [#what-does-acord-29-show] The 2016/03 edition includes property information and separate sections for a primary flood policy and excess policies. It identifies whether coverage applies to building, contents, or both. It also provides space for deductibles, total insurance amounts, market and policy-form information, and certain time-element coverages. ## Is ACORD 29 the flood insurance policy? [#is-acord-29-the-flood-insurance-policy] No. Like [ACORD 27 property evidence](https://www.menloinsurance.com/library/forms/acord-27), the form is issued for information only and does not amend, extend, or alter the policies. A lender may use it to review evidence, but the insured still needs the declarations and policy forms to understand coverage. If the evidence conflicts with the policy, the policy governs. ## What should a lender or owner verify? [#what-should-a-lender-or-owner-verify] Confirm that the named insured and property address match the loan or ownership records. Compare the effective and expiration dates with the required period. Review building and contents amounts separately, since one does not substitute for the other. If excess coverage is required, check that each layer begins where the underlying layer ends and that no date gap appears. Flood-zone and occupancy information can affect underwriting, but the entry on an evidence form is not a flood-zone determination. FEMA directs users to its Flood Map Service Center for official flood hazard information. ## Where can you get ACORD 29? [#where-can-you-get-acord-29] New York's Department of Financial Services publishes the approved 2016/03 certificate for public inspection. Licensed users can obtain current forms through ACORD's Forms Portal. ## Frequently Asked Questions ### Does ACORD 29 prove a property is fully insured for flood? It reports the coverage shown by the listed policies on the issue date. Whether the amounts and terms satisfy a loan, contract, or actual rebuilding need requires a separate review. ### Is private flood insurance shown on ACORD 29? The form can identify NFIP or private-market coverage. Review the market and policy form shown for each layer rather than assuming every flood policy is an NFIP policy. ## The Bottom Line [#the-bottom-line] Use ACORD 29 to organize and review evidence of flood coverage. Match the property, policy dates, deductibles, and primary and excess layers. Read the policies themselves for the coverage contract. *This guide is educational and describes ACORD 29 in original language. Menlo Insurance Services is not affiliated with ACORD Corporation. The insurer's documents control.* ## References . [New York Department of Financial Services. ACORD 29 (2016/03) Evidence of Flood Insurance]() (accessed September 2026) . [Federal Emergency Management Agency. Flood Map Service Center]() (accessed September 2026) . [ACORD. Forms Portal]() (accessed September 2026) # ACORD 30: Certificate of Garage Insurance Explained (https://www.menloinsurance.com/library/forms/acord-30) Learn what ACORD 30 reports for garage operations, how garage liability differs from garagekeepers coverage, and why the policy still controls in all cases. Markdown version: https://www.menloinsurance.com/library/forms/acord-30.md ACORD 30 is the Certificate of Garage Insurance. It reports policy information for businesses with garage operations, such as dealers, repair shops, service facilities, or towing operations. The certificate can display several coverage types, but it does not amend the policies, create additional insured status, or guarantee that a customer's vehicle is covered after a loss. ## Key takeaways * **Garage liability and garagekeepers are different**: one does not substitute automatically for the other. * **Read every policy row**: insurer, policy number, dates, limits, and indicated coverage should match current records. * **Certificate status is limited**: a holder receives information, not automatic policy rights. * **The policy decides claims**: coverage forms, endorsements, exclusions, deductibles, and facts of loss control. ## What insurance can appear on ACORD 30? [#what-insurance-can-appear-on-acord-30] Vertafore identifies ACORD 30 as the Certificate of Garage Insurance and documents its integration with garage policy information. The form can report garage-related auto liability, general liability, garagekeepers, umbrella or excess liability, workers compensation, and other listed policies when applicable. Not every garage business buys every coverage, and a checked row does not explain all conditions. Verify each insurer, policy number, effective and expiration date, limit, deductible, and remarks against the issued policy. ## What is the difference between garage liability and garagekeepers coverage? [#what-is-the-difference-between-garage-liability-and-garagekeepers-coverage] Garage operations can create liability from business activities and use of autos. Garagekeepers coverage addresses a different problem: damage to a customer's auto left in the business's care, custody, or control, subject to the selected coverage basis and policy terms. A business may need both, but their limits and deductibles can differ. Do not treat an auto liability limit as the amount available for physical damage to a customer's vehicle. Review the actual garagekeepers form, basis, covered causes of loss, exclusions, and any per-location or per-auto amounts. ## Does ACORD 30 change the policy or add rights? [#does-acord-30-change-the-policy-or-add-rights] No. A Texas Department of Insurance filing for ACORD 30 identifies it as a certificate and states that it does not amend or extend the listed policies. Additional insured status or waiver of subrogation must be supported by policy provisions or endorsements, not only certificate remarks. ACORD also does not provide coverage or process claims. If the certificate conflicts with the policy, ask the producer for corrected evidence and the applicable endorsement. The insurer-issued policy controls. ## Where can you get the official ACORD 30? [#where-can-you-get-the-official-acord-30] Eligible users can search current licensed forms through the ACORD Forms Portal after login. The producer should issue the certificate from verified policy information. This guide is not an ACORD 30 certificate or blank reproduction. ## Frequently Asked Questions ### Does garagekeepers coverage insure the customer's belongings inside a vehicle Not necessarily. Covered property, exclusions, and limits depend on the policy. Review whether personal property inside a customer's auto is included, limited, or excluded. ### Does ACORD 30 make the certificate holder an additional insured No. The applicable policy or endorsement must provide that status. A certificate entry cannot create rights absent from the insurance contract. ## The Bottom Line [#the-bottom-line] ACORD 30 summarizes insurance information for garage operations. Read garage liability and garagekeepers entries as different coverages, verify all policy details, and require endorsements for requested rights. The certificate supports communication. It does not replace the policies or determine whether a specific loss is covered. *This guide is for educational purposes and describes ACORD 30 in original language. Form numbers and titles are cited for identification only, and Menlo Insurance Services is not affiliated with ACORD Corporation. Policy terms and endorsements control.* ## References . [Vertafore. AMS360 2017 R1 Release Notes]() (accessed September 2026) . [Texas Department of Insurance. ACORD 30 Certificate of Garage Insurance Filing]() (accessed September 2026) . [ACORD. Contact Us: Important Note About Insurance Claims]() (accessed September 2026) . [ACORD. Forms Portal]() (accessed September 2026) # ACORD 31: Certificate of Marine and Energy Insurance Explained (https://www.menloinsurance.com/library/forms/acord-31) Learn what ACORD 31 summarizes for marine and energy insurance, how its coverage schedule works, and why the certificate does not amend the policy. Markdown version: https://www.menloinsurance.com/library/forms/acord-31.md ACORD 31 is the Certificate of Marine / Energy Insurance. It gives a third party a structured summary of policies and limits associated with marine, offshore, or energy operations. The certificate can include liability, auto, workers compensation, hull, cargo, pollution, and other specialized coverage. It is informational and does not change the policies it lists. ## Key takeaways * **Broad certificate format**: the schedule can summarize several conventional and marine-specific coverage lines. * **Descriptions matter**: vessel, project, contract, and operations details help connect the certificate to the request. * **A checkbox is not an endorsement**: additional insured and waiver claims must match issued policy documents. * **Policy wording controls**: the certificate cannot expand a territory, limit, vessel schedule, or covered operation. ## What appears on ACORD 31? [#what-appears-on-acord-31] The 2016/03 certificate identifies the producer, insured, insurers, certificate holder, and policy periods. Its coverage schedule includes common liability and workers compensation rows as well as marine and energy categories. The second page provides space for specialized coverages, limits, deductibles, and descriptions. ## How should you review the coverage schedule? [#how-should-you-review-the-coverage-schedule] Start with the named insured and the operation or project described. Match each coverage row to its insurer letter, policy number, and dates. Then compare the stated limit and deductible with the contract requirement. For scheduled vessels, equipment, locations, or operations, ask for the underlying schedule when the certificate cannot show enough detail. ## Does ACORD 31 grant rights to the certificate holder? [#does-acord-31-grant-rights-to-the-certificate-holder] No. Like the [ACORD 25 liability certificate](https://www.menloinsurance.com/library/forms/acord-25), it reports issued coverage and confers no rights by itself. A certificate holder becomes an additional insured only if the policy or an endorsement grants that status. The same rule applies to waiver of subrogation, primary wording, or cancellation notice. ## Where can you obtain ACORD 31? [#where-can-you-obtain-acord-31] New York's Department of Financial Services publishes the approved 2016/03 form for inspection. ACORD's Forms Portal is the source for licensed current editions. Request a completed certificate from the insured's agent or broker rather than editing a blank copy yourself. ## Frequently Asked Questions ### Is ACORD 31 only for vessel insurance? No. It can summarize vessel and cargo coverage, but it also accommodates liability, workers compensation, pollution, energy, and other coverage relevant to the operation. ### What if the contract requires wording that is not on the certificate? Ask for the endorsement or policy provision that supplies the required wording. Free-text certificate remarks cannot create coverage that the policy does not contain. ## The Bottom Line [#the-bottom-line] ACORD 31 is a flexible evidence document for complex marine and energy accounts. Review every insurer, policy period, limit, deductible, and description against the contract and issued policy. *This guide is educational and describes ACORD 31 in original language. Menlo Insurance Services is not affiliated with ACORD Corporation. The insurer's documents control.* ## References . [New York Department of Financial Services. ACORD 31 (2016/03) Certificate of Marine / Energy Insurance]() (accessed September 2026) . [ACORD. Forms Portal]() (accessed September 2026) # ACORD 35: Cancellation Request and Policy Release Explained (https://www.menloinsurance.com/library/forms/acord-35) Learn what ACORD 35 requests, why a signed cancellation request does not end coverage by itself, and how timing, refunds, and replacement insurance work. Markdown version: https://www.menloinsurance.com/library/forms/acord-35.md ACORD 35 is the Cancellation Request / Policy Release used to ask that an insurance policy end before its scheduled expiration. It records the request, but signing the form does not prove that coverage ended on the requested date. Legal effect depends on the policy, applicable law, and facts. Obtain written confirmation before relying on that date. ## Key takeaways * **A request is not confirmation**: keep treating the existing policy as unresolved until the insurer or authorized representative confirms the effective cancellation date. * **Timing protects continuity**: verify that replacement insurance is bound before asking to cancel the old policy, including the exact date and time when each policy changes. * **Refunds require a calculation**: return premium depends on the policy, applicable law, elapsed coverage, possible short rate or minimum premium, audits, and premium financing. * **Use the licensed form**: ACORD controls access to its current forms, so obtain the original through an authorized agency, insurer, software provider, or the ACORD Forms Portal. ## What is ACORD 35 used for? [#what-is-acord-35-used-for] ACORD 35 gives the insured and producer a standard way to identify the policy and communicate a midterm cancellation request. Vertafore identifies ACORD 35 as the Cancellation Request / Policy Release and documents an agency system workflow that opens the form with policy information already filled in for review. Its 2024 release notes also distinguish the form's Cancellation Request and Policy Release selections, which users choose rather than the software assuming one. Those selections do not turn ACORD into the insurer. ACORD itself says it does not provide coverage or process claims, and a request sent on an ACORD form remains a communication about a policy issued by an insurance company. The insurer's written confirmation, cancellation endorsement, or updated policy record is the evidence to retain with the form. ## Does signing ACORD 35 cancel a policy immediately? [#does-signing-acord-35-cancel-a-policy-immediately] No. A signature shows that an authorized person made or approved the request. It does not establish that the insurer received it, accepted the proposed date, or completed the transaction. A backdated date may also require insurer approval, and cancellation rules differ by policy type and state. The California Department of Insurance notes that separate statutes govern different commercial lines. Ask the producer for confirmation that names the policy number and the effective cancellation date and time. Then compare that timestamp with the replacement policy's binder or declarations. A quote, payment receipt, or application for the new policy is not the same as evidence that the insurer bound it. ## How does cancellation affect the premium refund? [#how-does-cancellation-affect-the-premium-refund] Cancellation usually triggers a return-premium calculation rather than an automatic refund of every unused dollar. The California Department of Insurance defines unearned premium as the portion assigned to the unused policy period. Its commercial guide distinguishes pro rata cancellation from short rate cancellation, where a policyholder-requested cancellation can include an administrative penalty. Other adjustments can change the final amount. An auditable policy may require a final exposure audit, and a minimum premium or permitted fee may remain due. When premium is financed, return premium may go to the finance company first for the loan balance. Ask for the cancellation statement instead of estimating a refund from calendar days alone. ## Where can you get the official ACORD 35 form? [#where-can-you-get-the-official-acord-35-form] The ACORD Forms Portal lets eligible users search for and download current ACORD forms after login. This page is an original explanation, not a blank ACORD 35 or an ACORD-approved reproduction. ## Frequently Asked Questions ### Is a signed ACORD 35 proof that my policy was canceled No. It proves that a cancellation or release request was signed, not that the insurer processed it on the requested date. Keep the insurer's written confirmation or cancellation endorsement and compare its effective date and time with any replacement coverage. ### When will I receive my return premium Timing and amount depend on the policy, state law, audit status, and whether premium was financed. The insurer or finance company should provide an accounting that shows earned premium, fees or adjustments, credits applied to a loan, and any balance payable to you. ## The Bottom Line [#the-bottom-line] ACORD 35 communicates a request to cancel or release a policy, but the request is not the insurer's confirmation. Bind replacement coverage first, verify both effective timestamps, and retain the insurer's response. Treat any return premium as a separate accounting question governed by the policy, applicable law, audits, and financing. *This guide is for educational purposes and describes ACORD 35 in original language. Form numbers and titles are cited for identification only, and Menlo Insurance Services is not affiliated with ACORD Corporation. The policy, insurer confirmation, and applicable law control.* ## References . [Vertafore. Cancellation Request / Policy Release]() (accessed September 2026) . [Vertafore. Sagitta 2024 R2 Release Notes]() (accessed September 2026) . [ACORD. Contact Us: Important Note About Insurance Claims]() (accessed September 2026) . [California Department of Insurance. Commercial Insurance Guide]() (accessed September 2026) . [ACORD. Forms Portal]() (accessed September 2026) # ACORD 36: Agent or Broker of Record Change Explained (https://www.menloinsurance.com/library/forms/acord-36) Learn how ACORD 36 requests an agent or broker of record change, what stays unchanged, and why carrier acceptance and effective timing still matter in writing. Markdown version: https://www.menloinsurance.com/library/forms/acord-36.md ACORD 36 is the Agent/Broker of Record Change form. A policyholder can use it to ask an insurer to recognize a different producer for specified policies or submissions. It changes representation, subject to the insurer's procedures. It does not automatically replace the insurer, rewrite the policy, change coverage, or prove that the carrier processed the request. ## Key takeaways * **List the intended policies**: verify each carrier, policy number, line of business, and policy period before signing. * **Carrier procedure controls timing**: insurers may require review, notice, a waiting period, or additional documents. * **Coverage does not transfer**: changing the producer is different from replacing or endorsing an insurance policy. * **Keep written confirmation**: the carrier's acknowledgment and effective date show whether the record change was completed. ## What does ACORD 36 change? [#what-does-acord-36-change] The form identifies the policyholder, insurer, current policy or submission, and producer the customer wants recognized as agent or broker of record. The request should be limited to the policies and lines the customer actually intends to place under the new producer's service. A carrier may accept ACORD 36, require its own form, or accept a signed letter. One published carrier procedure accepts ACORD 36 or a signed agent-of-record letter and requires additional applications in some circumstances. That is an example of one insurer's rules, not a universal process. ## Does signing ACORD 36 make the change effective immediately? [#does-signing-acord-36-make-the-change-effective-immediately] Not necessarily. The signed form authorizes a request, but the insurer must receive and process it. The same carrier procedure describes a rescinding period and notices to the incoming and incumbent agencies. Other insurers may use different timeframes or documentation. Ask the new producer when the request was submitted and obtain carrier confirmation that identifies the accepted effective date. Avoid assuming that access, service responsibility, or authority changed merely because the form was emailed. ## Does a broker-of-record change alter the insurance policy? [#does-a-broker-of-record-change-alter-the-insurance-policy] Normally, the purpose is to change the recognized representative, not the underlying insurer or contract. Still, do not infer that every servicing, underwriting, or commission consequence is identical across carriers. A request for policy changes, added coverage, or cancellation must follow the insurer's separate process. ACORD states that it does not provide insurance coverage. A completed ACORD 36 therefore is not evidence of a coverage amendment. Continue to use the binder, declarations, endorsements, and insurer correspondence to determine the policy's terms and status. ## Where can you get the official ACORD 36 form? [#where-can-you-get-the-official-acord-36-form] Eligible users can search for current ACORD forms through the ACORD Forms Portal after login. The incoming producer or insurer can provide the licensed document and carrier-specific instructions. This page is an explanation, not an unofficial blank form. ## Frequently Asked Questions ### Can ACORD 36 move only some of a business's policies The request can identify specified policies and lines. Review the complete list carefully so the carrier does not receive a broader or narrower instruction than intended. ### Should the old broker be asked to cancel the policies No, not merely to change representation. Cancellation is a separate action that could create a coverage gap. Confirm the intended record change with the carrier and both producers. ## The Bottom Line [#the-bottom-line] ACORD 36 asks an insurer to recognize a new agent or broker of record for identified business. Review the scope, sign only an accurate request, and retain the carrier's acknowledgment and effective date. The form changes representation when accepted. It does not itself rewrite or replace insurance coverage. *This guide is for educational purposes and describes ACORD 36 in original language. Form numbers and titles are cited for identification only, and Menlo Insurance Services is not affiliated with ACORD Corporation. Carrier procedures and policy documents control.* ## References . [Encova Insurance. Agent-Broker of Record Change]() (accessed September 2026) . [ACORD. Contact Us: Important Note About Insurance Claims]() (accessed September 2026) . [ACORD. Forms Portal]() (accessed September 2026) # ACORD 37: Statement of No Loss Explained (https://www.menloinsurance.com/library/forms/acord-37) Learn what ACORD 37 asks you to certify after a coverage lapse, why accuracy matters, and why the form is not proof that insurance was reinstated in writing. Markdown version: https://www.menloinsurance.com/library/forms/acord-37.md ACORD 37 is the Statement of No Loss. An insurer or producer may request it when a policy has canceled or lapsed and the customer seeks reinstatement. The signer makes a factual statement about losses or circumstances during a specified period. The form is not a binder, and signing it does not prove that coverage was reinstated. ## Key takeaways * **Read the stated period carefully**: the start and end date and time define what the certification covers. * **Disclose potential claims**: an incident can matter even if no formal claim has been filed or the cost is still unknown. * **Do not guess**: ask the producer or insurer how to report anything uncertain before signing. * **Wait for insurer confirmation**: only the insurer's reinstatement notice, binder, or policy record establishes the resulting coverage status. ## Why might an insurer request ACORD 37? [#why-might-an-insurer-request-acord-37] A no-loss statement is commonly associated with a request to reinstate a policy after cancellation or lapse. The insurer wants current information about whether a loss or circumstance arose while the policy was not active. A carrier may use ACORD 37, its own statement, or another underwriting process. ACORD 37 is titled Statement of No Loss in a specialty insurance provider's application catalog. Publicly available form instructions also identify it as a reinstatement-related statement and expressly say it is not an insurance binder. Requirements still vary by insurer and policy. ## What should you check before signing? [#what-should-you-check-before-signing] Confirm the named insured, policy number, cancellation date, requested reinstatement date, and the exact period covered by the statement. Then ask the people responsible for vehicles, locations, equipment, operations, and incident reporting whether anything occurred that could lead to a claim. Do not limit the review to claims already reported. Property damage, an accident, an injury allegation, a demand letter, missing property, or another known circumstance may need to be disclosed even if no claim number exists. If the statement is not accurate, stop and explain the event to the producer or insurer. Do not change dates or omit an event to make the request easier to approve. ## Does ACORD 37 reinstate insurance? [#does-acord-37-reinstate-insurance] No. It supplies information the insurer may consider. The carrier can approve reinstatement, impose conditions, use a different effective date, or decline the request. ACORD itself does not provide insurance coverage or process claims. Until written confirmation arrives, treat coverage during the lapse and afterward as unresolved. A premium receipt also does not necessarily establish retroactive coverage. Ask for documentation that states the reinstatement effective date and whether any lapse remains. If replacement coverage is needed, confirm it is bound before relying on it. ## Where can you get the official ACORD 37 form? [#where-can-you-get-the-official-acord-37-form] Eligible users can search the ACORD Forms Portal after login. The insurer or producer requesting the statement should provide the current licensed form and define the period to review. This page does not offer a blank reproduction. ## Frequently Asked Questions ### What if an incident occurred but no claim was filed Tell the producer or insurer before signing. The question can extend to circumstances that might lead to a claim, not only claims already assigned a number. ### Does paying the overdue premium restore coverage automatically Not necessarily. Obtain written insurer confirmation showing whether reinstatement was approved, the effective date and time, and whether any uncovered period remains. ## The Bottom Line [#the-bottom-line] ACORD 37 is a serious factual certification used in a reinstatement workflow. Verify the insured, policy, time period, and known events before signing. Submit complete information and retain the insurer's response. The statement helps underwriting decide what to do, but it is not insurance and does not erase a lapse on its own. *This guide is for educational purposes and describes ACORD 37 in original language. Form numbers and titles are cited for identification only, and Menlo Insurance Services is not affiliated with ACORD Corporation. Insurer decisions and policy documents control.* ## References . [Cox Specialty Markets. ACORD Applications]() (accessed September 2026) . [FormsBoss. ACORD 37 Statement of No Loss Instructions]() (accessed September 2026) . [ACORD. Contact Us: Important Note About Insurance Claims]() (accessed September 2026) . [ACORD. Forms Portal]() (accessed September 2026) # ACORD 45: Additional Interest Explained (https://www.menloinsurance.com/library/forms/acord-45) Learn how ACORD 45 lists additional interests on commercial insurance applications, why the schedule grants no policy rights, and when an endorsement matters. Markdown version: https://www.menloinsurance.com/library/forms/acord-45.md ACORD 45 is an Additional Interest schedule used when an insurance application needs more room to identify parties connected to a policy, location, vehicle, or scheduled item. It records names, addresses, interest types, and references used in underwriting and policy preparation. Listing a party on ACORD 45 does not by itself make that party an additional insured, loss payee, or mortgagee under the issued policy. ## Key takeaways * **Role labels are different**: additional insured, mortgagee, lender, and loss payee do not mean the same thing. * **The covered item must match**: connect the interest to the correct location, vehicle, equipment item, or policy level. * **Legal names prevent confusion**: use the party's requested legal name and current address. * **An endorsement may still be required**: the application schedule cannot create policy rights. ## When is ACORD 45 used? [#when-is-acord-45-used] The form commonly works as an overflow schedule. Vertafore explains that its commercial property workflow creates ACORD 45 when a location and building combination has more additional interests than ACORD 140 can accommodate. Its workers compensation workflow also creates ACORD 45 when policy data includes additional interests. Other commercial lines can use the schedule in similar circumstances. ## What should you review on the form? [#what-should-you-review-on-the-form] Check the interested party's exact legal name, mailing address, role, and any loan, lease, contract, location, or item reference. A lender attached to the wrong building or a lessor attached to the wrong equipment schedule can cause avoidable corrections. Reconcile the entry with the contract or lender instructions, but do not assume every requested label is available or appropriate under the policy. ## Does ACORD 45 grant additional insured status? [#does-acord-45-grant-additional-insured-status] No. The form records an application request or policy data. It does not amend the insurance contract. Additional insured status normally must appear in the policy wording or an endorsement. A mortgagee or loss payee interest also depends on the applicable policy provision or endorsement. After binding, compare the declarations and endorsements with the request instead of treating the application schedule as proof. ## Is ACORD 45 the same as a certificate? [#is-acord-45-the-same-as-a-certificate] No. It is part of an application or policy servicing workflow, while a certificate summarizes issued policies for a certificate holder. Neither document creates coverage on its own. If another party needs evidence, ask which certificate and endorsements the contract requires. ## Where can you obtain the form? [#where-can-you-obtain-the-form] Eligible users can obtain current versions through ACORD's Forms Portal. The agency or insurer should provide the edition suited to the line and transaction. ## Frequently Asked Questions ### Who is an additional interest It is a broad application label for a party with a financial or contractual connection to insured property or operations. The specific role must be stated accurately. ### Should I list every customer on ACORD 45 No. List only parties requested for the submission or policy and confirm the correct role and covered item with the agency or insurer. ## The Bottom Line [#the-bottom-line] ACORD 45 organizes additional interest details that do not fit on the main application. Verify the legal name, role, and connected property or operation. Use the issued policy and endorsements, not this schedule, to confirm rights. *This guide is educational and describes ACORD 45 in original language. Menlo Insurance Services is not affiliated with ACORD Corporation. The insurer's documents control.* ## References . [Vertafore. Commercial Property Additional Interest Form Map]() (accessed September 2026) . [Vertafore. Workers Compensation Additional Interest Form Map]() (accessed September 2026) . [ACORD. Forms Portal]() (accessed September 2026) # ACORD 50: Insurance Identification Card Explained (https://www.menloinsurance.com/library/forms/acord-50) Learn what ACORD 50 shows as auto insurance identification, why state-specific versions matter, and what to check carefully before keeping it with a vehicle. Markdown version: https://www.menloinsurance.com/library/forms/acord-50.md ACORD 50 is an Insurance Identification Card used for personal or commercial auto insurance in jurisdictions that accept the applicable version. It typically identifies the insured, insurer, policy period, and vehicle. State requirements vary, so a generic ACORD 50 is not the correct card everywhere. The insurer or authorized producer must issue the card from an active policy record. ## Key takeaways * **State rules matter**: use the form and edition required for the vehicle's state, not an arbitrary generic copy. * **Match the vehicle**: compare year, make, model, and VIN with the registration and the actual vehicle. * **Check the policy period**: an expired card does not show the current term even if the policy later renewed. * **Get it from an authorized source**: a downloaded blank card or edited image is not valid proof of insurance. ## What information appears on ACORD 50? [#what-information-appears-on-acord-50] The card generally identifies the state, insurer and company number, personal or commercial designation, policy number, effective and expiration dates, insured, vehicle year, make or model, VIN, and issuing agency or company. Exact content and permitted formats can vary by jurisdiction. Vertafore's current catalog lists a generic ACORD 50 for a defined group of jurisdictions and many separate state-specific ACORD 50 versions. It also lists some state auto identification forms under other ACORD numbers. This makes the insured vehicle's license state an essential input. ## What should you verify before using the card? [#what-should-you-verify-before-using-the-card] Compare the insured name, policy number, dates, insurer, and vehicle identifiers with the declarations and registration. The VIN deserves character-by-character review. For a fleet card, confirm that its wording is permitted and that the vehicle falls within the described group. If anything is wrong, request a corrected card from the insurer or producer. Do not edit the PDF or image yourself. Keep the version required by the state, whether paper or electronic, and replace it at renewal. ## Does ACORD 50 guarantee coverage for an accident? [#does-acord-50-guarantee-coverage-for-an-accident] The card is evidence tied to the listed policy and period. Actual coverage for an accident depends on whether the policy was in force, the covered auto and driver provisions, exclusions, limits, endorsements, and the facts. ACORD does not provide insurance or process claims. An ID card also is not the same as a full policy or certificate prepared for a contract. If a lender, customer, or project owner asks for additional insured or loss-payee status, a card cannot create it. ## Where can you get the correct ACORD 50? [#where-can-you-get-the-correct-acord-50] Eligible users can find licensed forms through the ACORD Forms Portal after login. Policyholders should request the issued card from their insurer or producer, who can select the jurisdiction-specific form. This page does not offer a blank or editable card. ## Frequently Asked Questions ### Is the same ACORD 50 accepted in every state No. Current catalogs show generic and state-specific variants, and some jurisdictions use another form number. Ask the insurer for the card required for the vehicle's license state. ### What should I do if the VIN is wrong Contact the insurer or producer and request a corrected card. Also compare the VIN on the policy, registration, and vehicle so the underlying record can be corrected if needed. ## The Bottom Line [#the-bottom-line] ACORD 50 can serve as auto insurance identification when the correct jurisdiction-specific version is issued by an authorized source. Verify the insured, insurer, policy period, vehicle, and VIN, and replace an expired or inaccurate card. The card provides evidence, but the active policy determines coverage. *This guide is for educational purposes and describes ACORD 50 in original language. Form numbers and titles are cited for identification only, and Menlo Insurance Services is not affiliated with ACORD Corporation. State requirements and the issued policy control.* ## References . [Vertafore. Auto ID Cards by State]() (accessed September 2026) . [ACORD. Contact Us: Important Note About Insurance Claims]() (accessed September 2026) . [ACORD. Forms Portal]() (accessed September 2026) # ACORD 611: Loss Run Request Explained (https://www.menloinsurance.com/library/forms/acord-611) Learn what ACORD 611 authorizes, which policies and years to identify, and how to follow up on a claims history or loss run request. Markdown version: https://www.menloinsurance.com/library/forms/acord-611.md ACORD 611 is the Claims History / Loss Run Request. It gives an insurer or other record holder a structured request for specified policy loss information and documents the insured's authorization to release it. The request is not itself a loss run and does not guarantee when records will arrive. ## Key takeaways * **Identify the records precisely**: include the carrier, policy numbers, lines, and requested periods. * **Authorization matters**: the authorized party should sign as required by the record holder. * **Ask for current valuation**: loss runs can change as reserves and claims develop. * **Reconcile the response**: confirm every requested policy period was returned. ## What is ACORD 611 used for? [#what-is-acord-611-used-for] Businesses commonly need loss runs when marketing insurance, reviewing claim trends, or changing brokers. The companion guide on [how to read loss runs](https://www.menloinsurance.com/library/guides/how-to-read-loss-runs) explains how paid amounts and reserves fit together. ACORD 611 standardizes the request rather than the carrier's response. The forms index identifies it as the Claims History / Loss Run Request. ## What should the request identify? [#what-should-the-request-identify] List the named insured accurately, the agency and receiving contact, each insurer, the relevant policy number, and the lines and years requested. If the business changed names or entities, explain which records belong in scope. State whether the recipient needs valued loss runs as of a particular date and whether open and closed claims, reserves, paid amounts, and claim descriptions are required. A vague request for “all losses” can produce an incomplete response. Compare the returned periods with old declarations, audit records, or a policy schedule so that a missing carrier or year is visible. ## Who can authorize release? [#who-can-authorize-release] The insurer or administrator may require a signature from the named insured or another properly authorized person. Its identity-verification and privacy procedures still apply. An ACORD form does not override those requirements, and a broker cannot promise release when the record holder needs additional authority. ## Is a loss run the same as a loss history statement? [#is-a-loss-run-the-same-as-a-loss-history-statement] Terminology varies. Focus on the contents and valuation date rather than the label. For underwriting, the recipient may need enough detail to distinguish no-loss periods from missing records and to understand open claims or material reserves. ## Frequently Asked Questions ### How many years of loss runs should I request? Request the periods required by the insurer, contract, or transaction. Multi-year histories are common, but the correct span depends on the line and purpose. ### What if a carrier reports no records? Verify the insured name and policy identifiers, then ask whether the response means no losses, no matching policy, or unavailable records. Those outcomes are different. ## The Bottom Line [#the-bottom-line] ACORD 611 makes a loss-run request specific and auditable. Define the policies and valuation date, obtain proper authorization, and check the response for every requested period. *This guide is educational and describes ACORD 611 in original language. Menlo Insurance Services is not affiliated with ACORD Corporation. Record-holder requirements control.* ## References . [ACORD. ACORD Forms Index, revision 5/08/2024]() (accessed September 2026) . [ACORD. Forms Portal]() (accessed September 2026) # ACORD 63: General Fraud Statement Explained (https://www.menloinsurance.com/library/forms/acord-63) Learn what the ACORD 63 General Fraud Statement does, why the notice varies by state, and what a signature does and does not prove before you sign it. Markdown version: https://www.menloinsurance.com/library/forms/acord-63.md ACORD 63 is the General Fraud Statement used with insurance paperwork when a separate fraud warning is needed. It identifies the applicant, policy, insurer, and signature, then presents the applicable warning. It does not prove that fraud occurred, create coverage, or replace the application or claim document it accompanies. ## Key takeaways * **Purpose**: ACORD 63 supplies a fraud notice when the main document does not carry the needed warning. * **State differences matter**: the correct wording depends on the state and transaction, so an old saved copy may be wrong. * **A signature is serious**: review every answer and correction before signing the statement. * **No coverage is granted**: a fraud statement is neither a binder nor an insurance policy. ## What is ACORD 63 used for? [#what-is-acord-63-used-for] ACORD 63 gives an applicant or insured a separate insurance fraud warning. Vertafore identifies the 2016/10 edition as the General Fraud Statement in its ACORD update list. Agencies may attach it to an application section or other insurance document when the required notice is not already included. The surrounding document still determines what information the person is confirming. ## Why does the state matter? [#why-does-the-state-matter] Fraud warnings are shaped by state law, and their consequences and required language are not uniform. The form edition and state context therefore matter as much as the form number. Do not pull ACORD 63 from an old account and assume it fits a new transaction. Ask the agency or insurer which current version belongs with the application or statement being signed. ## What should you check before signing? [#what-should-you-check-before-signing] Read the connected application or statement, not only the warning page. Confirm the named insured, insurer, policy number, dates, and every answer supplied elsewhere. Correct estimates that have changed and explain answers that need context. Never sign a blank form. Keep the completed copy with the rest of the submission because the signature may be reviewed alongside the information it supports. ## Does ACORD 63 bind insurance? [#does-acord-63-bind-insurance] No. ACORD states that it is not an insurance company and does not provide coverage. ACORD 63 is a notice and signature record. Evidence that coverage exists comes from an authorized insurer or representative through a binder, declarations, policy, and endorsements. The form also is not a finding that someone committed fraud. ## Where can you get the official form? [#where-can-you-get-the-official-form] Eligible users can obtain current forms through ACORD's Forms Portal. Use the copy provided through an authorized agency, insurer, or licensed software system. This page explains the form without reproducing its protected wording or layout. ## Frequently Asked Questions ### Is ACORD 63 an application for insurance No. It is a separate fraud statement used with another insurance document. The related application or claim record contains the substantive information. ### Can I reuse a previously signed ACORD 63 Do not assume so. The state, transaction, edition, and underlying information may differ. Obtain the current form requested for the present submission. ## The Bottom Line [#the-bottom-line] ACORD 63 records a general insurance fraud warning and a signature. Check the applicable state and current edition, review the document it accompanies, and correct errors before signing. Look to the insurer's binder and policy for coverage. *This guide is educational and describes ACORD 63 in original language. Form numbers and titles are cited only for identification, and Menlo Insurance Services is not affiliated with ACORD Corporation. The insurer's documents control.* ## References . [Vertafore. ACORD Forms Added or Updated in AMS360 2017 R1]() (accessed September 2026) . [ACORD. Contact Us: Important Note About Insurance Claims]() (accessed September 2026) . [ACORD. Forms Portal]() (accessed September 2026) # ACORD 68: Electronic Delivery Supplement Explained (https://www.menloinsurance.com/library/forms/acord-68) Learn how the countrywide ACORD 68 records electronic-delivery choices and why a state suffix can identify a completely different form. Markdown version: https://www.menloinsurance.com/library/forms/acord-68.md ACORD 68, without a state suffix, is the Electronic Delivery Supplement. It records whether an applicant selects electronic delivery, selects electronic and paper delivery, rejects electronic delivery, or withdraws earlier consent. An ACORD 68 followed by a state abbreviation may be a completely different document. ## Key takeaways * **Read the full identifier**: ACORD 68 and ACORD 68 NJ, NY, TX, or another state code are not interchangeable. * **A delivery preference is not coverage**: the form concerns how policy documents and notices are delivered. * **Withdrawal matters**: the countrywide form provides a way to change an earlier electronic-delivery choice. * **Keep contact details current**: an obsolete email address can prevent timely access to policy documents. ## What choice does the countrywide ACORD 68 record? [#what-choice-does-the-countrywide-acord-68-record] The Electronic Delivery Supplement presents separate choices for electronic delivery, electronic plus paper delivery, rejection of electronic delivery, and withdrawal of consent. It identifies the producer, carrier, applicant or named insured, policy number, effective date, and delivery contacts. The 2019/06 specimen shows those choices and fields directly. ## Why does the state suffix matter? [#why-does-the-state-suffix-matter] ACORD reuses the base number for state-specific forms. For example, the same index identifies ACORD 68 NJ as a New Jersey commercial fire application and ACORD 68 NY as a New York claims-made liability supplement. ACORD 68 TX is a Spanish homeowners and personal-property rights document. Search for the full code printed on the page, including its state and edition. ## Does choosing electronic delivery change the policy? [#does-choosing-electronic-delivery-change-the-policy] No. It changes the delivery method for the documents identified by the insurer and applicable law. It does not select limits, add coverage, waive exclusions, or replace the policy. Save downloaded policy documents in a durable location and notify the insurer or agency promptly when the delivery address changes. ## Where can you get the correct form? [#where-can-you-get-the-correct-form] Use the copy supplied by the insurer or authorized agency system. Eligible users can obtain current editions through ACORD's Forms Portal. Do not download a form based only on the number because a state variant may serve a different purpose. For a homeowners application, compare the delivery supplement with the underlying [ACORD 80](https://www.menloinsurance.com/library/forms/acord-80) rather than treating it as application content. ## Frequently Asked Questions ### Is ACORD 68 always an electronic consent form? Only the countrywide form is the Electronic Delivery Supplement. A state suffix can identify an unrelated disclosure, application, or coverage supplement. ### Can electronic delivery consent be withdrawn? The countrywide supplement includes a withdrawal choice. Follow the insurer's current instructions so future documents are sent through the selected channel. ## The Bottom Line [#the-bottom-line] Verify the complete ACORD 68 identifier before using or explaining it. The unsuffixed form records electronic-delivery preferences. State versions must be read according to their own title and instructions. *This guide is educational and describes ACORD 68 in original language. Menlo Insurance Services is not affiliated with ACORD Corporation. The insurer's documents and applicable law control.* ## References . [Independent Insurance Agents of Nebraska. ACORD 68 (2019/06) Electronic Delivery Supplement]() (accessed September 5, 2026) . [ACORD. ACORD Forms Index, revision 5/08/2024]() (accessed September 5, 2026) . [ACORD. Forms Portal]() (accessed September 5, 2026) # ACORD 70: Personal Policy Change Request Explained (https://www.menloinsurance.com/library/forms/acord-70) Learn how ACORD 70 requests changes to personal insurance other than auto, what information to include, and when a request becomes effective. Markdown version: https://www.menloinsurance.com/library/forms/acord-70.md ACORD 70 is the Personal Policy Change Request for policies other than auto. An agency can use it to ask an insurer to add, remove, or correct information on a homeowners, dwelling, personal inland marine, watercraft, or other eligible personal policy. Sending the request does not make the change effective. ## Key takeaways * **A request, not an endorsement**: the insurer must process and confirm the change. * **Auto uses a different form**: ACORD 71 is the Personal Auto Policy Change Request. * **Effective dates need confirmation**: do not assume a requested date was accepted. * **Keep the response**: the revised declarations or endorsement proves what changed. ## What is ACORD 70 used to change? [#what-is-acord-70-used-to-change] The form supports servicing changes to non-auto personal policies, including coverage initially described through a [homeowners application such as ACORD 80](https://www.menloinsurance.com/library/forms/acord-80). Common requests include correcting names or mailing details, changing a location or interest, updating property information, or requesting a coverage adjustment. The exact request depends on the policy and insurer. Vertafore identifies ACORD 70 separately from ACORD 71 and the commercial ACORD 175 change request. ## What should you include? [#what-should-you-include] Identify the named insured, carrier, policy number, requested effective date, and the information to add, delete, or revise. Describe the change precisely. If a lender, additional interest, item, or location is involved, include the legal name and identifying details the agency requests. Attach supporting documents when the insurer requires them. ## When does the change take effect? [#when-does-the-change-take-effect] Only when the insurer accepts and issues the change, or otherwise confirms it under its process. A submitted ACORD 70 is not a binder and does not rewrite the policy. Review the resulting endorsement or declarations for the effective date, coverage, limits, premium effect, and any unresolved request. ## Does the form work for auto insurance? [#does-the-form-work-for-auto-insurance] No. The countrywide ACORD 70 title expressly excludes auto. Personal auto changes use ACORD 71 or an insurer's approved process. State-specific forms that share the number 70 may also serve a different purpose, so read the full identifier and title. ## Frequently Asked Questions ### Can ACORD 70 cancel a personal policy? Use the insurer's required cancellation process. ACORD 70 is a general change request, but a cancellation may require a separate signed request and carrier-specific handling. ### Is an email from the agent enough to prove the change? An email can document the request or confirmation, but the revised policy documents show the contractual result. Keep both when timing matters. ## The Bottom Line [#the-bottom-line] Use ACORD 70 to communicate a precise non-auto personal policy change. Then verify the insurer's issued endorsement or declarations before relying on the change. *This guide is educational and describes ACORD 70 in original language. Menlo Insurance Services is not affiliated with ACORD Corporation. The insurer's documents control.* ## References . [Vertafore. Policy Change Request]() (accessed September 2026) . [ACORD. ACORD Forms Index, revision 5/08/2024]() (accessed September 2026) . [ACORD. Forms Portal]() (accessed September 2026) # ACORD 75: Insurance Binder Explained (https://www.menloinsurance.com/library/forms/acord-75) Learn what an ACORD 75 insurance binder documents, how temporary coverage differs from a policy, and which dates, limits, and authority to verify in detail. Markdown version: https://www.menloinsurance.com/library/forms/acord-75.md ACORD 75 is the Insurance Binder. A binder is a temporary agreement that can provide coverage while the insurer prepares or delivers a policy. Because a binder can have legal effect, the issuing insurer or authorized producer, effective time, expiration, terms, and conditions all matter. A blank or self-completed ACORD 75 does not create insurance. ## Key takeaways * **Authority matters**: confirm that the insurer or producer had authority to bind the stated coverage. * **Temporary means time-limited**: note the exact effective and expiration date and time, plus any replacement or extension. * **Read the stated terms**: insured name, property or operations, coverage, limits, deductibles, insurer, and conditions should match the agreement. * **Obtain the policy**: compare the issued declarations and endorsements with the binder and resolve differences promptly. ## What does ACORD 75 document? [#what-does-acord-75-document] Vertafore identifies ACORD 75 as the Insurance Binder in its current release notes and agency-system documentation. It provides a standard place to record temporary insurance terms for one or more lines while policy documents are pending. The California Department of Insurance defines a binder as a temporary or preliminary agreement that provides coverage until a policy can be written or delivered. That definition distinguishes a real binder from a quote, proposal, premium indication, or blank template. Coverage depends on an authorized issuance and the stated terms, not the presence of an ACORD logo alone. ## What should you verify on an insurance binder? [#what-should-you-verify-on-an-insurance-binder] Check the named insured and mailing address, insurer name, binder number if assigned, description of property, vehicles, or operations, each coverage and limit, deductibles, additional interests, special conditions, and the issuing producer. Pay close attention to both the date and time coverage begins and ends. If a lender, landlord, project owner, or customer requested evidence, confirm that the binder addresses the correct interest without overstating the policy. Listing a party does not automatically give it every status or right it requested. Those rights must be supported by the binder terms and later policy. ## What happens when ACORD 75 expires? [#what-happens-when-acord-75-expires] Do not assume temporary coverage continues indefinitely. Before expiration, obtain the policy, a valid extension, or other written confirmation from the insurer or authorized producer. If the policy arrives, compare it with the binder. Check whether underwriting changed a limit, deductible, form, exclusion, effective date, or condition. If the policy has not arrived, ask for the current status before relying on coverage after the binder's end time. Preserve the original binder and all later confirmations. ## Where can you get an official ACORD 75? [#where-can-you-get-an-official-acord-75] Eligible users can search current forms in the ACORD Forms Portal after login. A binder should come from the insurer or a producer acting with appropriate authority. This page is not a binder and does not provide a blank reproduction. ## Frequently Asked Questions ### Is an ACORD 75 the same as a certificate of insurance No. A properly issued binder can document a temporary insurance agreement. A certificate generally reports information about existing policies and does not amend coverage. ### Can I fill out an ACORD 75 myself to create coverage No. Entering information on a blank form does not bind an insurer. Coverage requires action by the insurer or a producer with authority, on the terms and dates actually agreed. ## The Bottom Line [#the-bottom-line] ACORD 75 can document temporary coverage when an insurer or authorized producer issues it. Verify authority, parties, risk details, coverages, limits, conditions, and exact start and end times. Then obtain and compare the policy before the binder expires. The facts of issuance control, not an unofficial form copy. *This guide is for educational purposes and describes ACORD 75 in original language. Form numbers and titles are cited for identification only, and Menlo Insurance Services is not affiliated with ACORD Corporation. The binder, insurer authority, policy, and applicable law control.* ## References . [Vertafore. ACORD Form Additions]() (accessed September 2026) . [Vertafore. Policy Information Control File Overview]() (accessed September 2026) . [California Department of Insurance. Glossary of Insurance Terms]() (accessed September 2026) . [ACORD. Forms Portal]() (accessed September 2026) # ACORD 80: Homeowner Application Explained (https://www.menloinsurance.com/library/forms/acord-80) Learn what ACORD 80 collects for a homeowners insurance application, how to review property details and limits, and why it is not proof of coverage today. Markdown version: https://www.menloinsurance.com/library/forms/acord-80.md ACORD 80 is the Homeowner Application. It gathers information an insurer may use to evaluate a residence, household, requested coverage, prior insurance, and loss history. Completing the application does not bind insurance. The insurer may ask follow-up questions, inspect the property, revise a quote, or decline the risk. ## Key takeaways * **Describe the property as it is today**: construction, occupancy, roof, systems, protective devices, and renovations should reflect current facts. * **Separate rebuilding cost from market price**: the dwelling limit concerns the cost to rebuild, not the land value or sale price. * **Report history accurately**: answer prior coverage and loss questions completely, including known incidents requested by the insurer. * **An application is not proof**: rely on an insurer-issued binder, declarations, or policy for coverage status. ## What information does ACORD 80 collect? [#what-information-does-acord-80-collect] Vertafore's current personal-lines catalog identifies ACORD 80 as the Homeowner Application. Its release notes also show both a generic form and state-specific versions, so the producer must select an edition accepted for the location and insurer. The application commonly covers the applicant, residence address, occupancy, construction, square footage, year built, roof and utility updates, heating, protective devices, additional structures, household details, desired limits and deductibles, prior insurance, and losses. Carrier supplements can ask for more. Review entries against property records, purchase documents, inspection reports, renovation invoices, and prior declarations. If an answer is unknown, mark it for confirmation. Do not turn an estimate into a fact simply to finish the form. ## How should the dwelling limit be reviewed? [#how-should-the-dwelling-limit-be-reviewed] The dwelling limit is not automatically the purchase price, mortgage balance, or real estate estimate. The California Department of Insurance explains that a replacement-cost estimate focuses on labor and materials needed to rebuild and generally excludes land value. Different insurers can produce different estimates because their methods differ. Ask for the replacement-cost estimate and review its inputs. Construction type, living area, finishes, number of stories, attached structures, and local labor costs can materially change the result. The policy still controls how losses are valued and whether extended or guaranteed replacement provisions apply. ## Does submitting ACORD 80 mean the home is insured? [#does-submitting-acord-80-mean-the-home-is-insured] No. It is a written request for insurance and a source of underwriting information. ACORD does not provide insurance coverage or process claims. A quote also is not a binder unless an authorized insurer or producer clearly confirms coverage and its effective date. When coverage is issued, compare the named insured, property address, effective date, limits, deductibles, valuation, forms, and endorsements with the application. Correct any discrepancy promptly in writing. ## Where can you get the official ACORD 80? [#where-can-you-get-the-official-acord-80] Eligible users can find current licensed versions through the ACORD Forms Portal after login. The producer preparing the submission can provide the proper generic or state-specific version. This guide does not reproduce the form. ## Frequently Asked Questions ### Should an inspection issue be disclosed on ACORD 80 Answer the form and insurer's questions truthfully. If an inspection identifies a condition relevant to a question, share it with the producer and ask how the insurer wants it documented. ### Is the home's market value the right dwelling limit Not necessarily. Market value includes factors such as land and location. A rebuilding estimate focuses on the cost to reconstruct the insured dwelling using the policy's valuation approach. ## The Bottom Line [#the-bottom-line] ACORD 80 organizes a homeowners submission. Verify the people, property, condition, history, limits, and requested coverage with current records. Then compare any binder and issued policy with the application. Accurate information supports underwriting, but only insurer-issued documents establish coverage. *This guide is for educational purposes and describes ACORD 80 in original language. Form numbers and titles are cited for identification only, and Menlo Insurance Services is not affiliated with ACORD Corporation. Insurer requirements and policy documents control.* ## References . [Vertafore. Personal Lines ACORD Forms]() (accessed September 2026) . [Vertafore. ACORD Updates for 23R3]() (accessed September 2026) . [California Department of Insurance. Residential Insurance: Homeowners and Renters]() (accessed September 2026) . [ACORD. Contact Us: Important Note About Insurance Claims]() (accessed September 2026) . [ACORD. Forms Portal]() (accessed September 2026) # ACORD 81: Personal Inland Marine Application Explained (https://www.menloinsurance.com/library/forms/acord-81) Learn how ACORD 81 schedules jewelry, fine art, collectibles, equipment, and other valuable property, and what applicants should verify before signing. Markdown version: https://www.menloinsurance.com/library/forms/acord-81.md ACORD 81 is the Personal Inland Marine Application used to describe valuable personal property submitted for scheduled or blanket coverage. It can organize jewelry, fine art, cameras, musical instruments, collections, computers, sporting equipment, and other eligible items. The insurer decides what property and causes of loss it will cover. ## Key takeaways * **Descriptions should identify the item**: include the details the insurer requests, not only a broad category. * **Values need support**: purchase records, appraisals, or other valuation evidence may be required. * **Use changes the exposure**: professional use, exhibitions, travel, storage, and security can affect underwriting. * **A schedule request is not acceptance**: verify every accepted item and limit in the issued policy. ## What is ACORD 81 used for? [#what-is-acord-81-used-for] Vertafore's current personal lines map identifies ACORD 81 as the Personal Inland Marine Application. The Oklahoma Insurance Department recorded ACORD's 2012 filing of the revised 2012/02 application. It provides a structured way to submit property classes, item descriptions, amounts of insurance, and underwriting information. ## What property can appear on the application? [#what-property-can-appear-on-the-application] The form accommodates categories such as jewelry, furs, fine arts, cameras, musical instruments, silverware, stamps, coins, computers, electronic equipment, and sporting or other valuable property. Eligibility and coverage terms vary by insurer. A category appearing on the application does not mean every item in that category will be accepted. Scheduled property is generally identified item by item with a requested amount. Blanket coverage may group eligible property subject to its own limits and conditions. Ask which approach is being proposed and how an unscheduled item would be treated after a loss. ## What should you prepare? [#what-should-you-prepare] Use a clear description that distinguishes each scheduled item. Depending on the property, that may include maker, model, material, identifying number, dimensions, purchase date, or provenance. Provide the current appraisal, bill of sale, receipt, or other evidence the insurer requests. Do not increase an old value without support or assume sentimental value is insurable. Answer questions about professional or commercial use, exhibitions, unattended vehicles, safes, alarms, and storage accurately. Report losses and existing insurance as requested. If property moves between residences, vaults, exhibitions, or other locations, explain the pattern rather than listing only where it sits today. ## Does ACORD 81 insure the listed items? [#does-acord-81-insure-the-listed-items] No. It is an application. An insurer can accept, decline, limit, or separately schedule an item. Review the declarations or property schedule for the exact description and limit. Then read the policy and endorsements for deductibles, valuation, territory, exclusions, and special conditions. ## Where can you obtain the form? [#where-can-you-obtain-the-form] Eligible users can access current forms through ACORD's Forms Portal. Use the agency's or insurer's authorized copy and keep supporting valuation documents with your records. ## Frequently Asked Questions ### Does every item on ACORD 81 need an appraisal Not always. Requirements depend on the property, requested amount, and insurer. Provide the evidence requested and confirm its acceptable date and format. ### Is ACORD 81 proof that an item is scheduled No. Confirm the item description and accepted amount on the declarations, schedule, or endorsement issued by the insurer. ## The Bottom Line [#the-bottom-line] ACORD 81 presents valuable personal property for underwriting. Give each item a useful description, support the requested value, and explain how it is used and protected. Rely on the issued schedule and policy to confirm coverage. *This guide is educational and describes ACORD 81 in original language. Menlo Insurance Services is not affiliated with ACORD Corporation. The insurer's documents control.* ## References . [Vertafore. Personal Lines ACORD Form Mapping]() (accessed September 2026) . [Oklahoma Insurance Department. February 2012 Filing Activity Report]() (accessed September 2026) . [ACORD. Forms Portal]() (accessed September 2026) # ACORD 810: Business Income and Extra Expense Explained (https://www.menloinsurance.com/library/forms/acord-810) Learn what ACORD 810 collects for business income, extra expense, and rental value coverage, including payroll, dependent properties, and restoration periods. Markdown version: https://www.menloinsurance.com/library/forms/acord-810.md ACORD 810 supplements the ACORD 140 Property Section when an applicant requests business income, extra expense, or rental value coverage. It organizes the exposure by premises and building so the insurer can understand how a physical loss could interrupt revenue or create added operating costs. It is application information, not a binder, policy, coverage grant, or claim calculation. ## Key takeaways * **Coverage option matters**: business income with or without extra expense, rental value, and combinations are different requests. * **Time assumptions drive need**: the likely restoration period and any extended period after reopening affect the exposure. * **Payroll needs a decision**: ordinary payroll may be included, excluded, or limited for a stated number of days. * **Outside dependencies belong on the form**: utility services and dependent properties can cause interruption without damage at the insured premises. ## What information appears on ACORD 810? [#what-information-appears-on-acord-810] The form identifies the premises, building, type of business, and requested business income, extra expense, or rental value approach. It records options for coinsurance, maximum period, monthly limitation, extended period, ordinary payroll, civil authority, utility services, and dependent properties. A published specimen also provides entries for manufacturing risks, tuition fees, continuing locations, and other coverage details. These selections must match the main property application. If ACORD 140 requests business income but the 810 identifies a different premises or coverage option, the underwriter cannot reliably price the exposure. ## What numbers should a business owner prepare? [#what-numbers-should-a-business-owner-prepare] Start with recent financial statements and a defensible projection for the policy year. Separate continuing expenses from costs that stop during a shutdown. Identify payroll that must continue to retain key staff, the longest realistic repair or rebuild period, and added costs required to operate temporarily elsewhere. Rental-property owners should distinguish rental value from the operating business's income. Manufacturers should account for production bottlenecks, long-lead machinery, inventory timing, and utilities. Schools and service firms may have different seasonal or tuition patterns. ## Why do dependent properties and utilities matter? [#why-do-dependent-properties-and-utilities-matter] A key supplier, customer, manufacturer, or service provider can halt the business even when its own building is undamaged. The 810 asks for names and addresses of relevant off-premises power or dependent properties. Listing a dependency on the application does not guarantee the policy includes the corresponding endorsement or limit, so confirm the issued forms. The period of restoration is also not simply the time until doors reopen. Revenue may recover gradually, which is why an extended period option can matter. ## Frequently Asked Questions ### Is ACORD 810 a business income worksheet? It collects detailed business income and extra expense selections, but an insurer may also require a separate financial worksheet to calculate the limit. ### Does completing ACORD 810 create coverage? No. Coverage exists only under the issued policy, declarations, and endorsements. ### Should ordinary payroll be excluded automatically? No. Decide how long the business needs to retain employees after a loss and compare that need with the available option. ## Where can you obtain ACORD 810? [#where-can-you-obtain-acord-810] Eligible users can obtain current licensed editions through the ACORD Forms Portal, which allows forms to be searched by number or keyword. Applicants should use the copy supplied by their broker or authorized system and retain the completed submission. *This guide is for educational purposes and describes the application in original words. Menlo Insurance Services is not affiliated with ACORD Corporation. The form does not bind or amend coverage. Your issued policy controls. Talk to a licensed broker about your financial exposure.* ## The Bottom Line [#the-bottom-line] ACORD 810 translates interruption exposure into coverage selections and underwriting facts. Verify the location, financial basis, payroll treatment, dependencies, extra expenses, and restoration period before signing. ## References . [ACORD Form Library. ACORD 810 2011/10 Specimen]() . [ACORD. ACORD Forms Portal]() # ACORD 815: International Liability Exposure Supplement Explained (https://www.menloinsurance.com/library/forms/acord-815) Learn when ACORD 815 supports a commercial liability application and how to organize foreign operations, payroll, and loss information. Markdown version: https://www.menloinsurance.com/library/forms/acord-815.md ACORD 815 is the International Liability Exposure Supplement. It adds structured information about operations outside the applicant's home country to a commercial general liability submission. Completing it does not create worldwide coverage or replace the insurer's international policy terms. ## Key takeaways * **It is a supplement**: ACORD 815 supports the commercial general liability application, commonly ACORD 126. * **Organize exposure by country**: operations, sales, payroll, and personnel should be traceable to the relevant locations. * **Describe entities and activities**: foreign subsidiaries, products, projects, and travel can create different exposures. * **Coverage remains policy-specific**: territory, jurisdiction, sanctions, taxes, and local-policy requirements need insurer review. ## When is ACORD 815 used? [#when-is-acord-815-used] The form is used when a business has international liability exposure that the main [ACORD 126 General Liability Section](https://www.menloinsurance.com/library/forms/acord-126) does not describe fully. A filing record identifies ACORD 815 as an International Liability Exposure Supplement used with ACORD 126. Observable form guidance covers countries, foreign operations or subsidiaries, exposure details, and foreign loss history. ## What information should be organized first? [#what-information-should-be-organized-first] Build a country-by-country inventory of legal entities, locations, projects, products, sales, payroll, employee counts, and travel. Distinguish exports from physical operations and temporary travel from resident employees. Identify local partners, manufacturers, distributors, contractors, or subsidiaries and explain what each does. Provide foreign loss information consistently with the requested periods and explain material open claims. Currency and valuation dates should be clear so an underwriter does not compare unlike figures. ## Does the supplement prove worldwide coverage? [#does-the-supplement-prove-worldwide-coverage] No. It helps an insurer evaluate the exposure. The issued policy determines coverage territory, suits or claims jurisdiction, exclusions, limits, retentions, and any conditions involving locally admitted insurance. Sanctions and local law may also restrict what an insurer can offer. Review the quote and policy instead of treating the application as a coverage grant. ## Where can you get the current form? [#where-can-you-get-the-current-form] Use the version provided by the carrier, agency, or authorized forms platform. Eligible users can verify current editions through ACORD's Forms Portal. ## Frequently Asked Questions ### Does exporting one product require ACORD 815? It may. The insurer decides what international details it needs based on destination, product, volume, contracts, and policy structure. ### Should amounts be converted to U.S. dollars? Follow the carrier's instructions. Identify the original currency, conversion basis, and valuation date whenever converted figures could affect underwriting. ## The Bottom Line [#the-bottom-line] Use ACORD 815 to give the underwriter a country-specific view of international liability exposures. Reconcile the supplement with the main application, then rely on the issued policy for actual coverage. *This guide is educational and describes ACORD 815 in original language. Menlo Insurance Services is not affiliated with ACORD Corporation. The insurer's documents control.* ## References . [Oklahoma Insurance Department. April 2017 Property and Casualty Filing Activity Report]() (accessed September 2026) . [Forms Boss. ACORD 815 International Liability Exposure Supplement]() (accessed September 2026) . [ACORD. Forms Portal]() (accessed September 2026) # ACORD 823: Additional Premises Information Explained (https://www.menloinsurance.com/library/forms/acord-823) Learn how ACORD 823 continues commercial premises details from ACORD 125, what to verify for each location, and why every site needs separate review now. Markdown version: https://www.menloinsurance.com/library/forms/acord-823.md ACORD 823 is the Additional Premises Information Schedule. It continues location and building information when a commercial insurance application has more premises than fit in the main applicant section. It supports ACORD 125 and other applicable submissions. It is not a standalone policy schedule and does not prove that every listed location is insured. ## Key takeaways * **Treat it as a continuation**: connect each entry to the correct applicant, policy, and ACORD 125 submission. * **Keep location numbers stable**: inconsistent location or building numbers can disconnect premises from coverage details elsewhere. * **Review each site separately**: address, occupancy, operations, ownership, area, staffing, and revenue can differ by premises. * **Verify the issued policy**: only the insurer's location schedule, declarations, forms, and endorsements establish covered premises. ## When is ACORD 823 used? [#when-is-acord-823-used] Vertafore identifies ACORD 823 as the Additional Premises Information section generated with ACORD 125 when its AMS360 workflow contains more than four unique locations or buildings. That threshold is a software behavior, not a universal insurance rule. Another system or insurer may attach the schedule under different conditions. The form's purpose is continuation. It should retain the same named insured, carrier, effective date, and identifying information as the related application. If pages are separated, page numbering and location references should still let underwriting reconnect them. ## What should be verified for each premises? [#what-should-be-verified-for-each-premises] Use a current location list, leases, property records, inspection reports, payroll or staffing records, and revenue reports. Confirm the street address, city, county, state, postal code, location and building number, owner or tenant interest, description of operations, occupied and public area, total building area, employee counts, and revenue when requested. Do not copy one site's answer across all rows without checking it. A warehouse, office, storefront, and vacant building can present different property and liability exposures. Note shared buildings, subleased areas, seasonal operations, newly opened or closed sites, and any premises under renovation. ## Does listing a location on ACORD 823 add coverage? [#does-listing-a-location-on-acord-823-add-coverage] No. The schedule gives underwriting information. It does not amend an existing policy or establish that an insurer accepted a location, building, coverage, or limit. ACORD also states that it does not provide insurance coverage or process claims. After binding, compare every submitted location and building number with the policy's premises schedule. Check applicable property limits, general liability classifications, deductibles, protective safeguards, vacancy provisions, and other location-specific endorsements. Resolve missing or mismatched sites in writing. ## Where can you get the official ACORD 823? [#where-can-you-get-the-official-acord-823] Eligible users can search current licensed forms in the ACORD Forms Portal after login. Obtain the schedule through the producer or insurer assembling the commercial application. This guide does not reproduce the form. ## Frequently Asked Questions ### Is ACORD 823 required whenever a business has multiple locations Not automatically. The need depends on available space, the agency system, and insurer instructions. Vertafore's four-location trigger describes its AMS360 workflow only. ### Can ACORD 823 replace ACORD 125 No. It is additional premises information that continues a commercial applicant submission. Read it with ACORD 125 and the applicable coverage sections. ## The Bottom Line [#the-bottom-line] ACORD 823 keeps a multi-location commercial application organized. Reconcile location and building numbers, verify the distinct facts for every premises, and connect the schedule to ACORD 125. Then compare the submitted sites with the issued policy. An overflow page supplies information, but it does not add coverage. *This guide is for educational purposes and describes ACORD 823 in original language. Form numbers and titles are cited for identification only, and Menlo Insurance Services is not affiliated with ACORD Corporation. Insurer requirements and policy documents control.* ## References . [Vertafore. Commercial Insurance Application Form Map]() (accessed September 2026) . [ACORD. Contact Us: Important Note About Insurance Claims]() (accessed September 2026) . [ACORD. Forms Portal]() (accessed September 2026) # ACORD 83: Personal Umbrella Application Explained (https://www.menloinsurance.com/library/forms/acord-83) Learn how ACORD 83 organizes umbrella limits, underlying home and auto policies, drivers, properties, watercraft, and other personal liability exposures. Markdown version: https://www.menloinsurance.com/library/forms/acord-83.md ACORD 83 is the Personal Umbrella Application. It brings a requested umbrella limit together with the household's drivers, residences, vehicles, watercraft, recreational vehicles, underlying policies, and liability history. It helps an insurer evaluate the submission, but it is not a promise that a particular exposure or underlying policy will be accepted. ## Key takeaways * **List the whole household exposure**: drivers, homes, autos, watercraft, and other regularly used property can affect underwriting. * **Use current underlying policy records**: company names, policy dates, and limits should come from current binders or declarations. * **Explain gaps and unusual use**: business use, an uninsured item, a reduced limit, or a recent loss needs context. * **The application is not coverage**: only the insurer's binder and policy establish the umbrella terms. ## What does ACORD 83 collect? [#what-does-acord-83-collect] Vertafore's current personal lines map identifies ACORD 83 as the Personal Umbrella Application. An Oklahoma Insurance Department filing report identifies the revised 2012/02 edition and classifies it under personal umbrella and excess insurance. The application records the requested umbrella amount and retention, primary policy information, operators, loss and violation history, and general liability questions. ## Why do underlying policies matter? [#why-do-underlying-policies-matter] An umbrella submission is reviewed in relation to primary insurance. ACORD 83 provides sections for policies such as personal auto, homeowners or dwelling fire, watercraft, recreational vehicle, and employers liability. Use the actual insurer name, policy number, dates, and limits from current evidence. Do not assume an expired declarations page represents the upcoming term. The umbrella insurer may require certain underlying limits or decline to sit over a particular policy or exposure. The issued umbrella policy, not the application, explains its required underlying insurance and how a loss is handled if that insurance is unavailable. ## What should an applicant verify? [#what-should-an-applicant-verify] Include every requested operator and match vehicles or watercraft to the people who use them. Disclose properties, vehicles, boats, aircraft, and other exposures that are owned, hired, leased, or regularly used when the question applies. Explain business or commercial use, noncompensated positions, farming, pending litigation, losses, and gaps in primary insurance accurately. If a question is unclear, ask before signing instead of guessing. ## Does ACORD 83 bind umbrella coverage? [#does-acord-83-bind-umbrella-coverage] No. It is an application. An underwriter may request supporting schedules, change a proposed limit, exclude an exposure, or decline the risk. Coverage begins only when an authorized insurer or representative issues a binder or policy on stated terms. ACORD also says it is not an insurance company and does not provide coverage. ## Where can you obtain the form? [#where-can-you-obtain-the-form] Eligible users can access current forms through ACORD's Forms Portal. Complete the edition provided by the agency or authorized software, and keep attachments with the signed application. ## Frequently Asked Questions ### Is ACORD 83 a personal umbrella policy No. It is an application used in underwriting. The binder, declarations, policy forms, and endorsements show the coverage that was issued. ### Should an applicant list a vehicle covered by another insurer Yes, when the application asks for it. The umbrella insurer needs a complete view of relevant exposures and the primary policies intended to sit underneath the umbrella. ## The Bottom Line [#the-bottom-line] ACORD 83 organizes a personal umbrella submission around the household's liability exposures and primary insurance. Reconcile every driver, item, policy, and limit with current records. Use the issued insurer documents to confirm coverage. *This guide is educational and describes ACORD 83 in original language. Menlo Insurance Services is not affiliated with ACORD Corporation. The insurer's documents control.* ## References . [Vertafore. Personal Lines ACORD Form Mapping]() (accessed September 2026) . [Oklahoma Insurance Department. January 2012 Filing Activity Report]() (accessed September 2026) . [ACORD. Contact Us: Important Note About Insurance Claims]() (accessed September 2026) . [ACORD. Forms Portal]() (accessed September 2026) # ACORD 84: Dwelling Fire Application Explained (https://www.menloinsurance.com/library/forms/acord-84) Learn what ACORD 84 collects about a dwelling's use, construction, condition, values, requested limits, deductibles, optional coverage, and loss history. Markdown version: https://www.menloinsurance.com/library/forms/acord-84.md ACORD 84 is the Dwelling Fire Application used to collect applicant, property, coverage, and underwriting information for a dwelling policy submission. Despite the form's name, it can request more than fire coverage. The insurer's quote and policy determine the covered causes of loss, limits, deductibles, conditions, and exclusions. ## Key takeaways * **Occupancy and use matter**: owner occupied, tenant occupied, seasonal, vacant, and renovation risks are not interchangeable. * **Describe the building as it stands now**: construction, roof, systems, heating, and protective devices should be current. * **Values are not market price**: review the requested insurance amount using the valuation basis the insurer asks for. * **The form does not bind coverage**: requested options remain subject to underwriting and the issued policy. ## What is ACORD 84 used for? [#what-is-acord-84-used-for] Vertafore's current forms map identifies ACORD 84 as the Dwelling Fire Application. An Oklahoma Insurance Department report records ACORD's filing of the revised 2013/09 edition for a dwelling fire program. The application may be used for a tenant occupied rental, seasonal residence, vacant dwelling, owner occupied property, or another dwelling risk, depending on the insurer's program. ## What information does the form collect? [#what-information-does-the-form-collect] ACORD 84 organizes applicant and location information, requested limits, deductibles, optional coverages, and property underwriting details. Vertafore maps dwelling, other structures, personal property, rental value, loss of use, personal liability, medical payments, and several optional endorsements to the form. The application also asks about occupancy, construction, year built, renovations, utilities, heating, roof, protection, prior insurance, and losses. ## What should a property owner verify? [#what-should-a-property-owner-verify] State who occupies the dwelling and how it is used. Report vacancy, renovations, short or seasonal occupancy, and rental activity when requested. Confirm the construction type, living area, number of units, year built, and dates of major roof, wiring, plumbing, and heating updates. Describe supplemental heat, fuel tanks, pools, and other features accurately. Review the requested building amount separately from market value. Land value and local sale prices do not necessarily equal the cost basis an insurer uses to rebuild. Ask how the proposed limit was calculated and whether replacement cost or another loss settlement basis is being quoted. ## Does “dwelling fire” mean fire is the only coverage? [#does-dwelling-fire-mean-fire-is-the-only-coverage] Not necessarily. The form can request different coverage forms and endorsements, but a checked box does not guarantee acceptance. The quote, binder, declarations, policy, and endorsements identify covered causes of loss and exclusions. Review wind, water, theft, liability, and vacancy terms instead of relying on the product name. ## Where can you obtain ACORD 84? [#where-can-you-obtain-acord-84] Eligible users can obtain current forms through ACORD's Forms Portal. Use the edition supplied by the agency or authorized system and attach any requested valuation or supplemental material. ## Frequently Asked Questions ### Is ACORD 84 only for rental homes No. It can support several dwelling uses, subject to an insurer's program. The stated occupancy and use must match the actual property. ### Does the requested dwelling limit equal the home's sale price Not automatically. Ask which valuation and loss settlement method the insurer is using. The issued policy controls how a covered loss is valued. ## The Bottom Line [#the-bottom-line] ACORD 84 gives the insurer a structured description of a dwelling and the coverage being requested. Verify occupancy, condition, building details, values, and loss history. Confirm protection in the insurer's issued documents. *This guide is educational and describes ACORD 84 in original language. Menlo Insurance Services is not affiliated with ACORD Corporation. The insurer's documents control.* ## References . [Vertafore. Personal Lines ACORD Form Mapping]() (accessed September 2026) . [Oklahoma Insurance Department. April 2013 Filing Activity Report]() (accessed September 2026) . [Vertafore. Form Map: Dwelling Fire Application (ACORD 84)]() (accessed September 2026) . [ACORD. Forms Portal]() (accessed September 2026) # ACORD 855 NY: Construction Certificate Addendum Explained (https://www.menloinsurance.com/library/forms/acord-855) Learn when ACORD 855 NY accompanies a construction liability certificate, what it records, and why the addendum does not create or expand coverage on its own. Markdown version: https://www.menloinsurance.com/library/forms/acord-855.md ACORD 855 NY is the New York Construction Certificate of Liability Insurance Addendum. It is used with an ACORD 25 certificate when additional New York construction liability information is requested. The addendum communicates policy information to the certificate holder. It does not amend the policy, create coverage, or make the holder an additional insured by itself. ## Key takeaways * **It is a New York construction addendum**: ACORD 855 NY is not a general certificate for every state or industry. * **It accompanies ACORD 25**: the addendum supplements, rather than replaces, the liability certificate. * **Policy records must support it**: additional insured status and completed operations protection depend on the actual endorsements and policy. * **It cannot expand coverage**: a certificate or addendum is evidence of information, not a contract that changes the insurer's obligations. ## When is ACORD 855 NY used? [#when-is-acord-855-ny-used] Vertafore documents ACORD 855 NY as a New York Construction Certificate of Liability Insurance Addendum that is attached to ACORD 25. Its workflow connects the addendum to general liability underwriting information and an additional interest selected for the certificate. A project owner, general contractor, lender, or other certificate holder may request the addendum for New York construction work. That request does not mean every listed protection exists. The producer must use current policy records and endorsements rather than repeat contract language that the insurer did not issue. ## What should a business verify before issuance? [#what-should-a-business-verify-before-issuance] Confirm the named insured, policy and project details, insurer, certificate holder, and the relevant general liability terms. Review whether any additional insured endorsement applies, to whom it applies, and whether its scope includes ongoing operations, completed operations, or both. Also verify any policy restrictions or endorsements relevant to the questions on the current licensed form. Vertafore notes that an addendum created from a policy-level additional interest can prefill information differently from one created only for a client-level certificate holder. Prefill is an efficiency feature, not a factual guarantee. The producer still needs to review every answer against the policy. ## Does ACORD 855 NY provide additional insured coverage? [#does-acord-855-ny-provide-additional-insured-coverage] No. An additional insured endorsement, blanket provision that applies to the particular agreement, or other policy language must provide that status. ACORD 855 NY and ACORD 25 cannot create a right that is absent from the policy. ACORD also states that it does not provide insurance coverage or process claims. If a construction contract requires specific wording, limits, primary and noncontributory treatment, waiver of subrogation, or completed operations coverage, compare each requirement with the policy and endorsements. The certificate package is not a substitute for that review. ## Where can you get the official ACORD 855 NY? [#where-can-you-get-the-official-acord-855-ny] Eligible users can search for current licensed forms in the ACORD Forms Portal after login. Obtain the version accepted by the insurer and requesting party through an authorized agency or software provider. This page does not reproduce the copyrighted form. ## Frequently Asked Questions ### Can ACORD 855 NY be issued without ACORD 25 Vertafore documents it as an attachment to ACORD 25. Confirm the complete certificate package and the current requirements with the producer and requesting party. ### Does listing a certificate holder make it an additional insured No. Certificate-holder status and additional-insured status are different. The policy or an applicable endorsement must establish additional-insured coverage. ## The Bottom Line [#the-bottom-line] ACORD 855 NY supplements an ACORD 25 for New York construction liability information. Its statements must match the policy and endorsements, and the addendum cannot add protection the insurer did not issue. Review the certificate package against both the construction contract and the actual insurance documents. *This guide is for educational purposes and describes ACORD 855 NY in original language. Form numbers and titles are cited for identification only, and Menlo Insurance Services is not affiliated with ACORD Corporation. Policy terms and endorsements control.* ## References . [Vertafore. ACORD 855 NY Construction Certificate of Liability Insurance Addendum]() (accessed September 2026) . [ACORD. Contact Us: Important Note About Insurance Claims]() (accessed September 2026) . [ACORD. Forms Portal]() (accessed September 2026) # ACORD 90: State Personal Auto Applications Explained (https://www.menloinsurance.com/library/forms/acord-90) Learn why ACORD 90 personal auto applications are state specific, what driver, vehicle, use, loss, and coverage details applicants should verify carefully. Markdown version: https://www.menloinsurance.com/library/forms/acord-90.md ACORD 90 refers to a family of state-specific Personal Auto Applications, not one interchangeable national form. A state suffix, such as ACORD 90 AK, identifies the applicable version. The application organizes driver, vehicle, garaging, use, loss, and requested coverage information for underwriting. It does not bind auto insurance. ## Key takeaways * **The state suffix is essential**: “ACORD 90” alone does not identify the correct application or edition. * **List drivers and vehicles accurately**: household access, regular use, and garaging can matter even when ownership differs. * **Requested coverage is not issued coverage**: selections remain subject to underwriting and state rules. * **Use current facts**: reconcile licenses, vehicle identification numbers, addresses, prior insurance, and loss history. ## Why is ACORD 90 state specific? [#why-is-acord-90-state-specific] Personal auto requirements differ by jurisdiction. Vertafore's current personal lines map, for example, identifies ACORD 90 AK as the Alaska Personal Auto Application rather than listing a generic national application. The associated mapping sample is also labeled for Alaska. Other states use their own suffixes, disclosures, questions, and coverage selections. That means an edition date without a state is incomplete. Use the form supplied for the state where the risk is being submitted. Do not replace it with a similarly numbered version found online. ## What information does a state ACORD 90 collect? [#what-information-does-a-state-acord-90-collect] The details vary, but a personal auto application commonly identifies the applicant, residence and garaging addresses, drivers, vehicles, vehicle use, requested limits and deductibles, prior insurance, accidents, violations, and other underwriting facts. State-required choices or notices may add sections that do not appear elsewhere. The form is an application record. It does not independently verify a motor vehicle record, determine fault for an accident, or guarantee that a requested driver or vehicle is acceptable. ## What should an applicant verify? [#what-should-an-applicant-verify] Match every driver's legal name and license information to current records. Check each vehicle identification number, registration state, ownership or lease status, garaging address, annual mileage, and use. Explain commuting, business use, rideshare or delivery activity, youthful operators, out-of-household regular drivers, and custom equipment when the application asks. Review accident, violation, suspension, prior insurance, and cancellation questions for the period stated on that state form. Do not copy dates from an old application without confirming them. ## Does signing ACORD 90 create auto coverage? [#does-signing-acord-90-create-auto-coverage] No. The insurer may verify information, revise the quote, request documents, or decline the risk. A binder or issued policy from an authorized insurer or representative establishes coverage. Compare its named insureds, drivers, vehicles, dates, limits, deductibles, endorsements, and exclusions with the application. ## Where can you obtain the correct version? [#where-can-you-obtain-the-correct-version] Eligible users can search ACORD's Forms Portal. The safest source for an applicant is the agency or authorized system handling the submission. Confirm both the state suffix and edition before signing. ## Frequently Asked Questions ### Can I use ACORD 90 from another state Do not assume so. State applications can contain different questions, disclosures, and coverage choices. Use the version requested for the actual risk. ### Is ACORD 90 proof of auto insurance No. Look to the insurer's binder, declarations, policy, endorsements, and any required insurance identification card for evidence and terms. ## The Bottom Line [#the-bottom-line] ACORD 90 identifies a state family of personal auto applications. Start with the correct suffix and edition, then verify every driver, vehicle, address, use, loss, and coverage request. The insurer's issued documents control. *This guide is educational and describes the ACORD 90 form family in original language. Menlo Insurance Services is not affiliated with ACORD Corporation. The insurer's documents control.* ## References . [Vertafore. Personal Lines ACORD Form Mapping]() (accessed September 2026) . [Vertafore. ACORD 90 AK Alaska Personal Automobile Application Mapping]() (accessed September 2026) . [ACORD. Forms Portal]() (accessed September 2026) # CA 00 01: Business Auto Coverage Form Explained (https://www.menloinsurance.com/library/forms/ca-00-01) What the CA 00 01 Business Auto Coverage Form covers, how covered auto symbols 1 through 9 and 19 work, and why symbol choice decides your protection. Markdown version: https://www.menloinsurance.com/library/forms/ca-00-01.md **CA 00 01 is the ISO Business Auto Coverage Form, the base form of the standard commercial auto policy that covers a business for liability and physical damage arising from its vehicles.** Unlike a personal auto policy, it does not automatically cover every vehicle for every coverage. Instead, numeric covered auto designation symbols entered on the declarations decide which autos each coverage applies to, which makes the symbols the single most important thing on the policy. If your business owns, leases, hires, or borrows vehicles, or your employees drive their own cars on company errands, this is the form that responds. This page explains how the form is built, what each symbol does, and the traps that catch businesses at claim time. ## Key takeaways * **Symbols control everything**: each coverage on the declarations carries one or more symbols from 1 through 9 and 19, and a vehicle is only covered for a coverage if it fits a symbol shown next to it. * **Symbol 1 is liability only**: the broadest symbol covers any auto for liability, but it cannot be used for physical damage or any other coverage. * **Symbol 7 is the narrowest**: coverage applies only to specifically described autos, and newly acquired vehicles must be reported within 30 days or they have no coverage. * **Hired and nonowned autos need symbols 8 and 9**: rented vehicles and employee-owned cars used for business are not covered autos unless those symbols appear. ## What does CA 00 01 do? [#what-does-ca-00-01-do] The Business Auto Coverage Form is the engine of the commercial auto policy. It provides covered autos liability coverage, which pays bodily injury and property damage the insured becomes legally obligated to pay because of an accident involving a covered auto, and it provides physical damage coverage for the vehicles themselves through comprehensive, specified causes of loss, and collision. The declarations, form CA DS 03, list each coverage in Item Two alongside a limit, a premium, and the symbols that define which autos that coverage applies to. A vehicle that does not match a symbol shown next to a coverage simply is not a covered auto for that coverage, no matter what the business assumed. The form defines an auto as a land motor vehicle, trailer, or semitrailer designed for travel on public roads, or any other land vehicle subject to a compulsory or financial responsibility law where it is licensed or garaged. Mobile equipment such as forklifts and loaders generally falls outside that definition and looks to the general liability policy instead, though endorsements can move over-the-road exposure onto the auto policy. Our guide to [contractors equipment insurance](https://www.menloinsurance.com/library/guides/contractors-equipment-insurance) covers where that gear belongs when it is not on the road. ## How do the covered auto symbols work? [#how-do-the-covered-auto-symbols-work] Section I of the form defines the symbols, and Item Two of the declarations applies them coverage by coverage. More than one symbol can appear in a single box, and the common designs mix them deliberately, such as symbol 1 for liability with symbol 7 for physical damage, or the 2, 8, 9 combination that covers owned, hired, and nonowned autos for liability. The key symbols work like this: | Symbol | Which autos | Coverages it can trigger | | ------ | ----------------------------------------------------------------------------------- | ------------------------------------------ | | 1 | Any auto, regardless of ownership | **Liability only** | | 2 | Autos the named insured owns, including later acquisitions | All coverages | | 7 | Only autos specifically described in the declarations | All coverages, per the Item Three schedule | | 8 | Autos leased, hired, rented, or borrowed, except from employees or their households | Liability and physical damage | | 9 | Nonowned autos, including employee-owned vehicles used in the business | **Liability only** | | 19 | Mobile equipment subject to a compulsory or financial responsibility law | Liability only | Symbols 3 through 6 subdivide owned autos for private passenger classes, no-fault benefits, and compulsory [uninsured motorist](https://www.menloinsurance.com/library/guides/uninsured-motorist-coverage) laws, so they appear where state law or rating strategy calls for them. Our post on [commercial auto insurance symbols](https://www.menloinsurance.com/library/guides/commercial-auto-insurance-symbols) walks through every symbol with examples if you want the full tour. ## Why is symbol 7 the one to watch? [#why-is-symbol-7-the-one-to-watch] Symbols 1 through 6 and 19 automatically extend to autos of the described type that you acquire after the policy starts, which is why insurers audit these policies at term end. Symbol 7 does not work that way. A newly acquired vehicle is covered only if the insurer already covers all your owned autos for that coverage or the new vehicle replaces one that had it, and only if you notify the insurer within 30 days of acquisition. Miss the 30-day window on a symbol 7 policy and the new truck has no coverage at all, which is an expensive way to learn how the schedule works. Symbol 9 hides a different trap. It gives the named insured liability protection when an employee drives their own car on company business, but the employee gets no insured status from it. The employee's personal auto policy pays first, the business auto policy sits excess for the business, and the employee relies entirely on their own limits unless an endorsement adds them as an insured. Businesses with regular employee driving should ask their broker about that endorsement before a loss forces the question. ## What should you check on your declarations? [#what-should-you-check-on-your-declarations] Because the symbols do the deciding, the review happens on paper before renewal rather than at claim time. Run these checks with your broker: * **Read the symbol next to every coverage**: confirm each coverage in Item Two carries the symbols you expect, because liability under symbol 1 does nothing for physical damage shown under symbol 7. * **Confirm hired and nonowned coverage exists**: if your business ever rents vehicles or sends employees out in their own cars, symbols 8 and 9 should appear next to liability at minimum. * **Audit the symbol 7 schedule**: compare Item Three against your actual fleet, and calendar the 30-day reporting rule for every purchase so newly acquired autos stay covered. * **Match physical damage to vehicle values**: check that comprehensive and collision deductibles and any loss payees reflect what each scheduled vehicle is worth today. ## Where can you see the actual form? [#where-can-you-see-the-actual-form] Menlo does not host ISO forms because they are copyrighted by Insurance Services Office, Inc. You can read the real text through your own policy, which attaches the coverage form and every endorsement issued on it, or by asking your broker for the specimen your carrier files. Regulator-approved filings are also publicly viewable through [SERFF Filing Access](https://filingaccess.serff.com/), the state filing system, though the forms there remain copyrighted and are for reading, not copying. ## Frequently Asked Questions ### What is the difference between symbol 1 and symbol 2? Symbol 1 covers any auto for liability regardless of who owns it, including hired and nonowned vehicles, but it can only be used for liability. Symbol 2 covers only autos the named insured owns, and it can be used for every coverage on the form, including physical damage and medical payments. ### Does CA 00 01 cover employees driving their own cars? Only partly. Symbol 9 protects the business when an employee drives a personal vehicle on company business, but the employee is not an insured under it. The employee's personal auto policy responds first, and the business needs a separate endorsement to extend insured status to the driver. ### Are rental cars covered under a business auto policy? Only if symbol 8 or symbol 1 appears next to the relevant coverage. Symbol 8 picks up autos the business leases, hires, rents, or borrows, and it is commonly added to comprehensive and collision so a damaged rental does not become an out-of-pocket loss. ### Does the business auto policy cover forklifts and other mobile equipment? Generally no, because the form's definition of auto excludes mobile equipment, which looks to the general liability policy. Exceptions exist where a compulsory insurance law applies, which symbol 19 addresses, and endorsements such as CA 20 15 can schedule mobile equipment onto the auto policy for road exposure. *This guide is for educational purposes and summarizes standard ISO policy language in Menlo's own words. Form numbers and titles are cited for identification only, and Menlo Insurance Services is not affiliated with Insurance Services Office, Inc. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # CA 20 01: Lessor Additional Insured and Loss Payee Explained (https://www.menloinsurance.com/library/forms/ca-20-01) Learn how CA 20 01 protects a scheduled vehicle lessor for liability and physical damage, when it applies, and what a business should verify before a lease. Markdown version: https://www.menloinsurance.com/library/forms/ca-20-01.md CA 20 01 addresses two interests a vehicle lessor commonly has in a commercial auto policy. It can make the scheduled lessor an insured for qualifying liability involving a designated leased auto and a loss payee for covered physical damage to that auto. Those roles are different. Liability status concerns third-party claims. Loss-payee status recognizes the lessor's financial interest in the vehicle. ## Key takeaways * **The lessor and autos are scheduled**: verify legal names, addresses, and vehicle descriptions. * **Liability status is limited**: it follows qualifying acts or omissions involving permitted operation of the leased auto. * **Physical damage is separate**: loss-payee protection matters only when the policy covers physical damage for that auto. * **The lease triggers the use case**: the form is designed for a lease requiring the lessee to provide direct primary insurance. ## How does CA 20 01 protect a lessor? [#how-does-ca-20-01-protect-a-lessor] For liability, the endorsement treats the scheduled lessor as an insured for qualifying bodily injury or property damage arising from acts or omissions of the named insured, its employees or agents, or other permitted users of the leased auto. The lessor and people connected with it are not turned into insured drivers for their own operation merely because the form is attached. For physical damage, the endorsement provides loss-payee treatment for the lessor's interest in the scheduled auto. Payment remains subject to the policy's actual comprehensive, specified causes of loss, or collision coverage, deductibles, exclusions, and valuation terms. The 10 13 form states that it modifies the Auto Dealers, Business Auto, and Motor Carrier coverage forms. A 2026 FC\&S analysis identifies 11 20 as a later edition and explains its use when a lease requires direct primary insurance for the lessor. ## Does the endorsement make every leased auto covered? [#does-the-endorsement-make-every-leased-auto-covered] No. The designated leased auto must be accurately described and must have the relevant coverage under the policy. The endorsement does not create physical damage coverage where none is selected, and it does not erase policy exclusions. The form also treats the scheduled leased auto as an owned covered auto for the coverage addressed by the endorsement. That classification can affect which coverage is primary, so the vehicle schedule and covered-auto symbols deserve careful review. ## What should a business verify? [#what-should-a-business-verify] Compare the issued endorsement with the lease. Confirm the lessor's legal entity, each vehicle identification number or description, policy dates, required liability limits, physical damage deductibles, and any notice provisions. If the vehicle owner is an employee rather than a commercial leasing company, ask whether an employee-as-lessor endorsement is more appropriate. If a rental company needs contingent protection when its customer fails to maintain insurance, that is a different exposure. CA 20 01 is aimed at the lessee's direct coverage for the scheduled lessor and autos. ## Frequently Asked Questions ### Is the lessor both an additional insured and a loss payee under CA 20 01? The scheduled lessor receives limited insured status for liability and loss-payee treatment for covered physical damage. Each part has its own conditions. ### Does CA 20 01 automatically add physical damage coverage? No. Loss-payee treatment applies to covered physical damage. The policy must actually provide the relevant coverage for the scheduled auto. ### Does the endorsement cover the lessor while it drives the vehicle? Do not assume so. The liability grant focuses on acts or omissions of the named insured, its employees or agents, and qualifying permitted users other than the lessor and its related people. ### Which editions are common? CA 20 01 10 13 appears in many lease requirements and issued policies. CA 20 01 11 20 is a later edition. Confirm the contract and the actual form attached. *This guide is for educational purposes and summarizes standard ISO policy concepts in original language. Form numbers and titles are used only for identification. Menlo Insurance Services is not affiliated with or approved by Insurance Services Office, Inc. Your policy, lease, and attached endorsements control. Talk to a licensed broker about your actual vehicles.* ## References . [City of Santa Barbara, California. Commercial Auto Policy Endorsement CA 20 01 10 13]() . [FC&S Expert Coverage Interpretation. Auto Endorsements for Leasing or Rental Concerns]() # CA 20 20: Emergency Services Injury Exclusion Explained (https://www.menloinsurance.com/library/forms/ca-20-20) Learn what the CA 20 20 commercial auto endorsement addresses and why emergency-services organizations must verify its edition and policy context. Markdown version: https://www.menloinsurance.com/library/forms/ca-20-20.md CA 20 20 is an ISO commercial auto endorsement used in the emergency-services program. Its title identifies an exclusion involving injuries to volunteer firefighters and workers. It changes a policy only when the endorsement and applicable edition are actually attached. ## Key takeaways * **It is an exclusion endorsement**: it narrows coverage in the circumstances defined by its wording. * **Emergency-services context matters**: do not confuse the code with an unrelated product or document. * **Edition and attachments matter**: read the endorsement with the declarations and the rest of the commercial auto policy. * **Coordinate injury protection**: workers compensation, volunteer accident, employers liability, and other arrangements may interact but are not interchangeable. ## What does CA 20 20 address? [#what-does-ca-20-20-address] An insurer bulletin describing the ISO emergency-services update lists CA 20 20 as “Emergency Services — Volunteer Firefighters' And Workers' Injuries — Exclusion.” The endorsement addresses injury coverage for specified people and circumstances defined in the attached text. Because exclusion wording is exact, a summary cannot establish whether a particular injury is covered. ## How is it different from CA 20 07? [#how-is-it-different-from-ca-20-07] The same program materials list CA 20 07 as a limited exclusion and CA 20 20 as a separate exclusion form. Do not treat the two codes as substitutes. Verify the complete form number, edition date, and schedule or policy references before comparing their effects. ## What should an organization review? [#what-should-an-organization-review] Confirm which paid employees, volunteers, members, or other workers use covered autos and in what roles. The [commercial auto symbols guide](https://www.menloinsurance.com/library/guides/commercial-auto-insurance-symbols) can help identify which vehicles the policy treats as covered autos. Review how the organization handles occupational injuries, volunteer injuries, mutual-aid operations, and travel outside its ordinary territory. Then compare the proposed auto endorsement with workers compensation, employers liability, volunteer accident, and any other relevant coverage. The absence of coverage under one policy does not prove another policy responds. Coverage depends on each contract, applicable law, and the facts of the event. ## Where can you see the actual wording? [#where-can-you-see-the-actual-wording] Ask the agent or insurer for the exact endorsement included in the quote or policy. ISO forms are copyrighted, so Menlo does not reproduce the blank form. Read the attached edition rather than relying on a form-number summary. ## Frequently Asked Questions ### Does CA 20 20 exclude every injury to a volunteer firefighter? Do not assume that from the title alone. The attached endorsement defines the people, injury, and circumstances within its scope, and the entire policy must be read together. ### Can another policy fill the gap? Possibly, but only if that policy's terms apply. Coordinate the commercial auto program with occupational and volunteer injury coverages before a loss. ## The Bottom Line [#the-bottom-line] CA 20 20 is a consequential emergency-services exclusion, not a routine administrative form. Obtain the attached edition, identify who drives and works, and review the complete insurance program with a licensed professional. *This guide is educational and identifies CA 20 20 in original language. ISO forms are copyrighted by Insurance Services Office, Inc. Menlo is not affiliated with ISO. The issued policy controls.* ## References . [The Andover Companies. Changes to Commercial Auto Policy Rates, Rules and Forms]() (accessed September 2026) # CA 20 48: Designated Insured for Covered Autos Explained (https://www.menloinsurance.com/library/forms/ca-20-48) Learn what CA 20 48 confirms for a designated person or organization under auto liability and why it neither broadens insured status nor changes limits. Markdown version: https://www.menloinsurance.com/library/forms/ca-20-48.md CA 20 48 identifies a scheduled person or organization as an insured for covered autos liability, but only to the extent that party already qualifies under the coverage form's Who Is An Insured provision. The 10 13 endorsement expressly says it does not alter the coverage provided by the form. That limiting language is crucial. CA 20 48 is often requested as an automobile additional insured endorsement, but it is not an unlimited grant of coverage for every act of the scheduled party. The 02 99 edition is titled Designated Insured. The 10 13 edition uses the longer title Designated Insured for Covered Autos Liability Coverage. ## Key takeaways * **Schedule identifies the party**: the person or organization must appear in the schedule or referenced declarations. * **Existing status controls**: protection extends only as far as the party qualifies under Who Is An Insured. * **Liability coverage only**: the endorsement does not make an otherwise uncovered auto covered or add physical damage coverage. * **No automatic extra terms**: it does not itself add primary and noncontributory treatment or waive recovery rights. ## What does CA 20 48 do? [#what-does-ca-20-48-do] The endorsement provides a clear scheduled identification of persons or organizations that qualify as insureds for covered autos liability. A public City of Placentia contract record includes the 10 13 form and its qualification language. The relevant coverage forms can include the Business Auto, Motor Carrier, and Auto Dealers forms, depending on edition. The designated party remains subject to the same limits, covered-auto symbols, exclusions, and conditions. Adding a name does not make an uncovered auto covered or increase the liability limit. ## Why is it not a broad additional insured grant? [#why-is-it-not-a-broad-additional-insured-grant] CA 20 48 points back to Who Is An Insured instead of supplying a new independent basis for insured status. Whether the designated party qualifies can depend on its relationship to the named insured and liability for conduct involving a covered auto. This also means the endorsement does not cover the designated organization's unrelated negligence or its own automobile operations merely because it is scheduled. The current facts and the underlying coverage form must support insured status. ## What else might a contract require? [#what-else-might-a-contract-require] A contract may separately demand primary and noncontributory coverage, waiver of subrogation, a specific combined single limit, and coverage for owned, hired, and non-owned autos. Those requirements are not satisfied by CA 20 48 alone. New York procurement guidance lists CA 20 48 as a designated-insured form, while treating other insurance requirements separately. Government contracts frequently request the endorsement in addition to a certificate. Grain Valley, Missouri, requires CA 20 48 or equivalent language for automobile liability. Review the issued endorsement, not just the additional insured box on an ACORD certificate. ## Frequently Asked Questions ### Does CA 20 48 make the scheduled party an insured for every auto claim? No. The party is an insured only to the extent it qualifies under the applicable Who Is An Insured provision. ### Does CA 20 48 cover damage to the designated party's vehicle? No. It identifies insured status for covered autos liability and does not add physical damage coverage. ### Does the endorsement make the policy primary and noncontributory? Not by itself. Confirm separate policy wording or an applicable endorsement for that requirement. *This guide is for educational purposes and summarizes standard ISO policy language in original words. Menlo Insurance Services is not affiliated with Insurance Services Office, Inc. Your coverage form, schedule, covered-auto symbols, and endorsements control. Talk to a licensed broker about your contract.* ## The Bottom Line [#the-bottom-line] CA 20 48 schedules a party for covered autos liability only to the extent the underlying policy already treats it as an insured. Check qualification, covered-auto symbols, limits, and separate contract requirements. ## References . [City of Placentia, California. Amendment No. 3 and CA 20 48 10 13]() . [New York State Office of General Services. Guidelines for Insurance Requirements in Contracts]() . [City of Grain Valley, Missouri. City Council Agenda and Contract Insurance Requirements]() # CA 99 48: Broadened Pollution Coverage for Covered Autos (https://www.menloinsurance.com/library/forms/ca-99-48) Learn how CA 99 48 broadens commercial auto pollution liability after a covered vehicle accident, which cleanup costs may apply, and what remains excluded. Markdown version: https://www.menloinsurance.com/library/forms/ca-99-48.md CA 99 48 broadens pollution protection in a Business Auto or Motor Carrier policy for certain accidents involving pollutants transported, towed, loaded, or unloaded by a covered auto. It changes the auto pollution exclusion and can include covered pollution cleanup cost or expense when its conditions are met. It is not blanket environmental insurance, and it is not the same as the federal MCS-90 endorsement. ## Key takeaways * **Covered auto accident required**: the pollutant container or property must be upset, overturned, or damaged because of maintenance or use of a covered auto. * **Direct release required**: the discharge must be caused directly by that upset, overturn, or damage. * **Premises limitation remains**: the cleanup-cost exception applies to qualifying accidents away from premises owned by or rented to an insured. * **Assumed liability restricted**: the broadened bodily injury and property damage treatment does not restore liability assumed only by contract. ## How does CA 99 48 change the pollution exclusion? [#how-does-ca-99-48-change-the-pollution-exclusion] The 10 13 form limits one part of the auto pollution exclusion to liability assumed under a contract or agreement. It also creates a conditional exception for covered pollution cost or expense after an accident away from an insured's premises. A public City of Santa Ana policy record contains the endorsement and its two-part test. Consider a covered truck hauling a container of material that qualifies as a pollutant. If a covered-auto accident overturns or damages the container and directly causes a release, the endorsement may respond to covered liability and cleanup expense. A leak unrelated to an upset, overturn, or damage does not satisfy that trigger merely because the pollutant was on the truck. ## What remains outside the endorsement? [#what-remains-outside-the-endorsement] CA 99 48 does not cover every stage or consequence of environmental work. Coverage while material is stored at a facility, pollution unrelated to maintenance or use of a covered auto, contractual liability that exists only because the insured assumed it, and exposures beyond the covered pollution cost or expense definition require separate review. Businesses hauling fuel, chemicals, waste, contaminated soil, or other regulated materials may need transportation pollution liability or contractors pollution liability in addition to the auto endorsement. The City of Santa Clara describes CA 99 48 as amending the standard auto pollution exclusion for pollutants transported, towed, loaded, or unloaded by a covered auto. ## Is CA 99 48 the same as MCS-90? [#is-ca-99-48-the-same-as-mcs-90] No. MCS-90 is a federally prescribed endorsement used to satisfy motor-carrier financial responsibility requirements. FMCSA explains that it attaches to the motor carrier's liability policy and applies to vehicles subject to those requirements. CA 99 48 changes the insurance coverage, while MCS-90 contains a public-protection obligation and reimbursement provisions that can operate differently from policy coverage. Contracts may require both. Confirm the exact forms rather than treating one as a substitute for the other. ## Frequently Asked Questions ### Does CA 99 48 cover any spill from a covered truck? No. The standard form requires a qualifying accident and a direct causal link between the upset, overturn, or damage and the pollutant release. ### Does CA 99 48 cover cleanup costs? It can cover costs that meet the policy's covered pollution cost or expense definition and the endorsement's conditions. Limits and all other terms still apply. ### Do hazardous-material haulers still need MCS-90? When federal or contract requirements apply, yes. CA 99 48 and MCS-90 serve different purposes and may both be required. *This guide is for educational purposes and summarizes standard ISO policy language in original words. Menlo Insurance Services is not affiliated with Insurance Services Office, Inc. Your policy, auto symbols, limits, terms, and endorsements control. Talk to a licensed broker about your materials and routes.* ## The Bottom Line [#the-bottom-line] CA 99 48 can broaden auto coverage for a pollutant release directly caused by a qualifying covered-auto accident. It does not erase every pollution exclusion or replace MCS-90 and broader environmental insurance. ## References . [City of Santa Ana, California. Commercial Auto Policy, CA 99 48 10 13]() . [City of Santa Clara, California. Insurance Coverage Requirements]() . [Federal Motor Carrier Safety Administration. Form MCS-90]() # CG 00 01: The Commercial General Liability Coverage Form Explained (https://www.menloinsurance.com/library/forms/cg-00-01) What the CG 00 01 Commercial General Liability Coverage Form covers, how its three coverage parts work, and who automatically counts as an insured under it. Markdown version: https://www.menloinsurance.com/library/forms/cg-00-01.md **CG 00 01 is the ISO Commercial General Liability Coverage Form, the base document at the heart of most general liability policies sold in the United States.** It promises to pay sums the insured becomes legally obligated to pay because of bodily injury, property damage, or personal and advertising injury, and it obligates the insurer to defend the insured against covered suits. If your business carries general liability insurance, this form or a close carrier variation of it is almost certainly what you bought. Every endorsement a contract asks for, from [CG 20 10](https://www.menloinsurance.com/library/forms/cg-20-10) to [CG 20 01](https://www.menloinsurance.com/library/forms/cg-20-01), works by amending this base form, so understanding its structure is the starting point for understanding any GL requirement. ## Key takeaways * **Five sections**: the form is organized into Coverages, Who Is An Insured, Limits Of Insurance, Conditions, and Definitions, and each one changes what a claim is worth. * **Three coverage parts**: Coverage A pays for bodily injury and property damage, Coverage B pays for personal and advertising injury, and Coverage C pays medical payments without regard to fault. * **Occurrence trigger**: CG 00 01 is the occurrence version, so it responds to injury or damage that happens during the policy period no matter when the claim is filed. * **No consent to settle**: the insurer can investigate and settle a claim as it sees fit within the limits, without asking the insured's permission first. ## What does CG 00 01 cover? [#what-does-cg-00-01-cover] Section I of the form contains three separate coverage parts, and each responds to a different kind of loss. Coverage A handles the classic liability claims, the customer who trips over a loose floor tile or the water line your crew ruptures at a neighbor's property. Coverage B handles a set of specifically listed offenses like libel, slander, wrongful eviction, and advertising injury, which are intentional acts rather than accidents. Coverage C pays medical expenses for people injured on your premises or by your operations regardless of fault, which lets insurers resolve small injuries quickly before they become lawsuits. Here is how the three parts divide the work: | Coverage part | What it pays for | Trigger | | ------------- | -------------------------------------------------------------------------------------------------- | --------------------------------------------- | | Coverage A | Bodily injury and property damage the insured is legally obligated to pay | An occurrence during the policy period | | Coverage B | Personal and advertising injury from listed offenses such as libel, slander, and wrongful eviction | An offense committed during the policy period | | Coverage C | Medical expenses for injuries on your premises or from your operations | Injury without regard to fault | An occurrence is defined in the form as an accident, including continuous or repeated exposure to substantially the same general harmful conditions. That definition matters because Coverage A only responds when an occurrence happens, and disputes over when damage occurred can decide which policy year pays. For a deeper look at what falls inside and outside these coverage parts, see [what general liability insurance covers](https://www.menloinsurance.com/library/guides/what-does-general-liability-insurance-cover), and for a section-by-section walkthrough of the form's architecture, see [how the CG 00 01 coverage form works](https://www.menloinsurance.com/library/guides/cgl-policy-coverages-explained). ## Who is an insured under CG 00 01? [#who-is-an-insured-under-cg-00-01] Section II grants [insured status](https://www.menloinsurance.com/library/guides/named-insured-vs-additional-insured) automatically, and who gets it depends on the named insured's entity type. A sole proprietor's spouse is covered for conduct of the business, partners and their spouses are covered in a partnership, members and managers are covered in an LLC, and directors, executive officers, and stockholders are covered in a corporation within their roles. Employees and volunteer workers are automatic insureds for acts within the scope of their duties, though the form carves out injuries they cause to co-workers, which is a workers compensation exposure rather than a GL one. The form also extends named insured status to organizations you newly acquire or form, other than partnerships, joint ventures, and LLCs, but only until the ninetieth day after acquisition or the end of the policy period, whichever comes first. No person or organization is insured for the conduct of any current or past partnership, joint venture, or LLC that is not shown as a named insured in the declarations, and that gap catches businesses that restructure without telling their agent. ### Restructuring can erase completed operations coverage When a partnership incorporates and the policy is simply renamed to the new corporation, work performed by the former partnership can lose its completed operations protection. Keep the prior entity as a named insured or ask your broker about a discontinued operations policy before making the change. ## How is CG 00 01 different from a claims-made policy? [#how-is-cg-00-01-different-from-a-claims-made-policy] CG 00 01 is the occurrence version of the CGL form, which means coverage attaches to injury or damage that happens during the policy period even if the claim arrives years later. Its sibling form, CG 00 02, is the claims-made version, which responds based on when the claim is first made against the insured. Most businesses buy the occurrence form, while claims-made appears in harder-to-place classes and professional lines. The distinction changes how long you stay protected after a policy ends, which is worth understanding before you switch carriers, and our guide to [occurrence versus claims-made policies](https://www.menloinsurance.com/library/guides/occurrence-vs-claims-made-policies) walks through it. The insuring agreement in either version gives the insurer the right to investigate and settle any claim or suit as it sees fit within the limits. There is no consent-to-settle provision, so the insurer does not need your permission to resolve a claim, which surprises insureds who want to fight a suit on principle. ## How do endorsements change the form? [#how-do-endorsements-change-the-form] The unendorsed coverage form protects the named insured and the automatic insureds, and everything a contract asks for beyond that arrives by endorsement. Additional insured endorsements like [CG 20 10](https://www.menloinsurance.com/library/forms/cg-20-10) and [CG 20 37](https://www.menloinsurance.com/library/forms/cg-20-37) amend Section II to protect upstream parties for your ongoing and completed operations. [CG 20 01](https://www.menloinsurance.com/library/forms/cg-20-01) amends the Other Insurance condition in Section IV so your coverage applies first when a written contract requires it. Exclusion endorsements work in the other direction and remove coverage the base form would otherwise grant, so reading the endorsement schedule is as important as reading the form itself. Our overview of [additional insured endorsements](https://www.menloinsurance.com/library/guides/additional-insured-endorsements-explained) covers the most commonly requested ones. ## Where can you see the actual form? [#where-can-you-see-the-actual-form] Menlo does not host ISO forms because they are copyrighted by Insurance Services Office, Inc. You can read the real text through your own policy, which attaches the coverage form and every endorsement issued on it, or by asking your broker for the specimen your carrier files. Regulator-approved filings are also publicly viewable through [SERFF Filing Access](https://filingaccess.serff.com/), the state filing system, though the forms there remain copyrighted and are for reading, not copying. ## Frequently Asked Questions ### Is CG 00 01 the same thing as general liability insurance? Effectively yes for most buyers. CG 00 01 is the standardized ISO coverage form that most carriers use as the foundation of a commercial general liability policy. Some insurers file their own proprietary versions, but those track the ISO structure closely, and contract requirements are written with the ISO form in mind. ### What is the difference between CG 00 01 and CG 00 02? CG 00 01 is the occurrence form and CG 00 02 is the claims-made form. The occurrence version covers injury or damage that happens during the policy period regardless of when the claim is made, while the claims-made version responds based on when the claim is first brought against the insured. ### Does CG 00 01 cover my employees? Employees and volunteer workers are automatic insureds for acts within the scope of their employment or duties. They are not insured for injuries they cause to co-workers or to the named insured, because that exposure belongs to workers compensation rather than general liability. ### Can my insurer settle a claim without my approval? Yes. The insuring agreement lets the insurer investigate and settle any claim or suit as it sees fit up to the available limits. The occurrence form contains no consent-to-settle provision, so the insurer has full authority to negotiate on your behalf. *This guide is for educational purposes and summarizes standard ISO policy language in Menlo's own words. Form numbers and titles are cited for identification only, and Menlo Insurance Services is not affiliated with Insurance Services Office, Inc. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # CG 04 37: Electronic Data Liability Coverage Explained (https://www.menloinsurance.com/library/forms/cg-04-37) Learn when CG 04 37 can cover electronic data loss caused by physical injury to tangible property, which limit applies, and why it is not cyber insurance. Markdown version: https://www.menloinsurance.com/library/forms/cg-04-37.md CG 04 37 provides a limited way to cover liability for electronic data loss caused by physical damage to tangible property. It is an endorsement to [commercial general liability](https://www.menloinsurance.com/library/forms/cg-00-01), not a replacement for cyber insurance. ## Key takeaways * The physical damage must cause the data loss. * The scheduled data-loss limit is subject to the CGL each-occurrence limit. * The 12 23 edition expressly excludes injury or damage arising from a cyber incident. ## What does the 12 23 edition change? [#what-does-the-12-23-edition-change] The endorsement adjusts the electronic-data exclusion and the definition of property damage. Its limited data coverage requires physical injury to tangible property; electronic data does not become tangible property itself. The actual two-page 12 23 specimen appears in Conifer's linked form library. For example, consider a contractor who accidentally damages a customer's computer hardware, causing loss of data. That is the kind of physical-loss connection to examine. It is not a coverage determination: the claim must still satisfy the insuring agreement, exclusions and remaining policy conditions. ## Why does the cyber exclusion matter? [#why-does-the-cyber-exclusion-matter] The 12 23 form excludes bodily injury or property damage arising from a defined cyber incident. Its definition addresses unauthorized system access or use, harmful code and denial-of-service attacks. Do not assume that physically damaged equipment makes a cyber-originating loss covered. A cyber policy is a separate review. Determine whether it addresses the business's own restoration costs, lost income, notification duties and liability to others. Those different costs should not be treated as one interchangeable coverage. ## What should a contractor check? [#what-should-a-contractor-check] Read the endorsement number and edition on the issued policy, not just a proposal's phrase “electronic data liability.” Confirm the scheduled data limit and its relationship to the each-occurrence and aggregate limits. Earlier wording may differ; this page explains the inspected 12 23 edition only. For a contract requiring protection for customer data, ask three separate questions: what physical equipment could be damaged, whose data could be lost, and which policy responds to the resulting legal liability? Keep the written answer with the actual endorsements, rather than relying on a certificate description. ## Frequently Asked Questions ### Does CG 04 37 cover accidental deletion without damaged hardware? Not under its physical-damage-to-data-loss provision. That provision requires the stated connection to physical injury to tangible property. ### Does the scheduled data limit increase the CGL occurrence limit? No. The 12 23 form makes its scheduled data-loss limit subject to the each-occurrence limit. ### Is this insurance for restoring my own data? It is liability coverage within the CGL. Do not treat it as a general first-party data-restoration policy. *Educational explanation in original language, not policy wording or a coverage determination. ISO identifiers are used for reference; Menlo Insurance Services is not affiliated with ISO. The issued policy and endorsements control.* ## References . [Conifer Insurance. CG 04 37 12 23 specimen, Michigan Hospitality Liability Forms, PDF pages 27-28]() (accessed September 5, 2026) # CG 20 01: Primary and Noncontributory Endorsement Explained (https://www.menloinsurance.com/library/forms/cg-20-01) What the CG 20 01 primary and noncontributory endorsement does, how it changes the other insurance condition, and when construction contracts demand it. Markdown version: https://www.menloinsurance.com/library/forms/cg-20-01.md **CG 20 01 is the ISO endorsement that makes your general liability coverage primary and noncontributory for an additional insured when a written contract or agreement requires it.** It modifies the Other Insurance condition of the CGL policy so your insurer pays a covered loss first and does not ask the additional insured's own insurer to chip in. Nearly every construction contract that requires additional insured status also contains the phrase primary and noncontributory, and this endorsement is the standard ISO way to honor that promise. This page explains what the words mean, what the endorsement actually changes, and why the phrase on a certificate is worthless without the form behind it. ## Key takeaways * **Changes payment order, not who is covered**: CG 20 01 does not create additional insured status, it only controls whose policy pays first once that status exists through a form like CG 20 10 or CG 20 37. * **Written contract required**: the endorsement applies only when a written contract or agreement obligates your insurance to be primary and noncontributory. * **Primary**: your policy pays the additional insured's covered loss before that party's own insurance is touched. * **Noncontributory**: your insurer will not seek contribution from the additional insured's other available insurance, so the loss stays on your policy alone. ## What does CG 20 01 do? [#what-does-cg-20-01-do] The unendorsed CGL policy contains an Other Insurance condition in Section IV that decides what happens when more than one policy covers the same loss. When an additional insured is added to your policy, that condition already makes your coverage primary for the additional insured, but the additional insured's own policy may also respond, and two primary policies covering the same loss share it under the methods the condition describes. An upstream party that negotiated for your insurance does not want its own limits eroded or its loss history touched, so it demands that your coverage be primary and noncontributory. CG 20 01 delivers that by amending the condition so your insurance is primary to, and will not seek contribution from, other insurance available to the additional insured, provided a written contract or agreement requires it. ISO introduced the endorsement in the 04 13 revision cycle to give the market a standard form answer to a demand that contracts had been making for years. The endorsement only works on top of existing additional insured status. If the contract requires [CG 20 10](https://www.menloinsurance.com/library/forms/cg-20-10) and [CG 20 37](https://www.menloinsurance.com/library/forms/cg-20-37), CG 20 01 is the third piece that controls how the three policies interact after a loss, and our guide to [additional insured endorsements](https://www.menloinsurance.com/library/guides/additional-insured-endorsements-explained) shows how the pieces fit together. ## What does primary and noncontributory actually mean? [#what-does-primary-and-noncontributory-actually-mean] The two words solve two different problems. Primary answers the order-of-payment question, meaning your policy responds to the additional insured's covered loss before its own insurance does. Noncontributory answers the sharing question, meaning your insurer will not later demand that the additional insured's insurer contribute a share of what was paid. Without the second word, your carrier could pay the claim and then pursue the additional insured's carrier for contribution, which drags the upstream party's policy into the loss anyway. Sharing is not a theoretical concern, because the CGL Other Insurance condition spells out exactly how two primary policies split a loss. If the other insurance permits contribution by equal shares, each insurer pays equal amounts until its limit is exhausted or the loss is paid. If it does not, the policies share pro rata by limits. Here is what a $300,000 covered loss looks like under each method when two primary policies apply: | Sharing method | Policy A ($500,000 limit) | Policy B ($1,000,000 limit) | | ------------------ | ------------------------- | --------------------------- | | Equal shares | $150,000 | $150,000 | | Pro rata by limits | $100,000 | $200,000 | CG 20 01 exists to take the additional insured's policy out of that math entirely. With the endorsement attached and a qualifying written contract in place, your policy absorbs the covered loss up to its limits and the additional insured's insurer pays nothing. ## Why do contracts require it? [#why-do-contracts-require-it] An owner or general contractor requiring additional insured status is transferring risk downstream to the party performing the work, and the transfer is incomplete if its own policy still shares the loss. Every claim that touches the upstream party's policy affects its loss history and future premiums, which is exactly what the additional insured bargained to avoid. Requiring primary and noncontributory wording closes the loop, so the subcontractor's insurance stands alone in front of the claim. The requirement appears almost universally alongside additional insured clauses in construction subcontracts, leases, and service agreements, and carriers see it often enough that many build equivalent wording into their blanket additional insured endorsements rather than attaching CG 20 01 separately. ## What should you check before agreeing to provide it? [#what-should-you-check-before-agreeing-to-provide-it] Contract insurance requirements are commitments your policy either can or cannot keep, and the time to find out is before signature. Run through these checks with your broker: * **Confirm the endorsement or its equivalent is on the policy**: ask whether your carrier attaches CG 20 01 itself or builds primary and noncontributory wording into its blanket additional insured endorsement, and get the answer in writing. * **Get the written contract signed first**: the endorsement applies only when a written contract or agreement requires primary and noncontributory coverage, so an unsigned or after-the-fact agreement leaves the requirement unmet. * **Verify the additional insured forms are in place**: cG 20 01 changes payment order for parties who are already insureds. Confirm the contract's CG 20 10 and CG 20 37 requirements are satisfied on the same policy, or the wording has nothing to act on. * **Never rely on certificate language alone**: typing primary and noncontributory on a certificate confers nothing. The condition changes only if the endorsement or equivalent policy wording is actually attached, so request the form when you are the party being protected. ## Where can you see the actual form? [#where-can-you-see-the-actual-form] Menlo does not host ISO forms because they are copyrighted by Insurance Services Office, Inc. You can read the real text through your own policy, which attaches every endorsement issued on it, or by asking your broker for the specimen your carrier files. Regulator-approved filings are also publicly viewable through [SERFF Filing Access](https://filingaccess.serff.com/), the state filing system, though the forms there remain copyrighted and are for reading, not copying. ## Frequently Asked Questions ### Does CG 20 01 make someone an additional insured? No. It only modifies the Other Insurance condition so coverage already granted to an additional insured applies on a primary and noncontributory basis. The additional insured status itself has to come from a separate endorsement such as CG 20 10 or CG 20 37. ### Is certificate wording enough to make coverage primary and noncontributory? No. A certificate of insurance is an information snapshot and changes no policy terms. The Other Insurance condition is modified only by an attached endorsement like CG 20 01 or equivalent carrier wording, so careful upstream parties request a copy of the endorsement along with the certificate. ### What happens without CG 20 01 when two policies cover the same loss? The CGL Other Insurance condition governs, and two primary policies share the loss by equal shares or pro rata by limits depending on what the other policy permits. That sharing is exactly what additional insureds want to avoid, which is why contracts demand the endorsement. ### Does CG 20 01 apply without a written contract? No. The endorsement operates only when a written contract or agreement requires your insurance to be primary and noncontributory. A verbal understanding or a contract signed after the loss does not trigger it. *This guide is for educational purposes and summarizes standard ISO policy language in Menlo's own words. Form numbers and titles are cited for identification only, and Menlo Insurance Services is not affiliated with Insurance Services Office, Inc. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # CG 20 10: Additional Insured: Owners, Lessees or Contractors Explained (https://www.menloinsurance.com/library/forms/cg-20-10) What the CG 20 10 additional insured endorsement does, why upstream parties demand it on construction contracts, and how its editions differ. Markdown version: https://www.menloinsurance.com/library/forms/cg-20-10.md **CG 20 10 is the ISO endorsement that adds a person or organization you name in its schedule, typically a project owner or general contractor, as an additional insured on your general liability policy for liability arising out of your ongoing operations.** It is the single most requested endorsement in construction contracting, and most contracts that require it pair it with [CG 20 37](https://www.menloinsurance.com/library/forms/cg-20-37) so the upstream party stays covered after the work is finished. If a contract or certificate request names this form, the other party wants direct rights under your policy while your crews are still working. This page explains what the endorsement does, what it deliberately leaves out, and how the edition date printed after the form number changes the answer. ## Key takeaways * **Ongoing operations only**: CG 20 10 covers the additional insured for your work in progress, not for claims that surface after the job is done. * **Scheduled form**: coverage applies to the person or organization named in the schedule, or to any party a written contract requires when the blanket wording applies. * **Edition dates matter**: the 11 85 edition included completed operations, while every edition since 1993 excludes it, which is why contracts pair this form with CG 20 37. * **No broader than the contract**: since the 04 13 edition, coverage extends only as far as the law allows and no further than your written agreement requires. ## What does CG 20 10 do? [#what-does-cg-20-10-do] Your general liability policy protects the named insured, which is your business. A project owner or general contractor hiring you wants protection under that same policy, because if your work injures someone, the injured party usually sues everyone on the project. CG 20 10 grants that protection by making the upstream party an additional insured for liability caused in whole or in part by your acts or omissions in the performance of your ongoing operations for them. The additional insured gets defense and indemnity from your insurer for those claims, which keeps the loss on the policy of the party that did the work. The endorsement is written around a schedule. The classic version lists the additional insured by name and often the specific project location. Many insurers attach blanket wording instead, which extends the status automatically to any party you agree in a written contract to add. Blanket wording is convenient, but the written contract requirement is strict, so a handshake agreement or a contract signed after the loss leaves the upstream party with nothing. ## What does ongoing operations mean? [#what-does-ongoing-operations-mean] Ongoing operations means your work in progress. While your crew is on the jobsite framing, wiring, or paving, CG 20 10 responds to claims arising from that activity. Once your work is complete and put to its intended use, claims arising from it fall into the products-completed operations hazard, and CG 20 10 explicitly does not cover the additional insured for that exposure. A ladder dropped on a visitor during construction is an ongoing operations claim. A deck that collapses two years after you built it is a completed operations claim, and the additional insured needs [CG 20 37](https://www.menloinsurance.com/library/forms/cg-20-37) to be covered for it. ### The standard construction pairing Contracts that know what they are asking for require CG 20 10 and CG 20 37 together, often by form number and edition date. Quoting both numbers back to your broker is the fastest way to confirm your policy can comply. ## Why do the edition dates matter? [#why-do-the-edition-dates-matter] The two-digit pairs after the form number are the edition date, so CG 20 10 04 13 is the April 2013 edition. Owners and their attorneys care because the coverage changed materially over the years. Some contracts still demand the long-retired 1985 edition precisely because it was the broadest, and most insurers will not provide it: | Edition | What changed | Verdict | | ------------------- | --------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------- | | 11 85 | Covered the additional insured for both ongoing and completed operations with no separate form needed | **Broadest, rarely available** | | 10 93 through 10 01 | Removed completed operations and progressively narrowed coverage toward the named insured's own work | **Transitional** | | 07 04 | Required the injury to be caused in whole or in part by the named insured, ending coverage for the additional insured's sole negligence | **Modern baseline** | | 04 13 | Capped coverage at what the written contract requires and at what state anti-indemnity law permits | **Current standard with 12 19** | If a contract demands CG 20 10 11 85 or "an equivalent," flag it before signing. Your insurer probably cannot issue that edition, and an equivalence argument after a loss is a bad place to be. The practical fix is to negotiate the requirement down to the current editions of the CG 20 10 and CG 20 37 pair, which together deliver what most owners actually want. ## What should you check before agreeing to provide it? [#what-should-you-check-before-agreeing-to-provide-it] Contract insurance requirements are commitments your policy either can or cannot keep, and the time to find out is before signature. Run through these checks with your broker: * **Match the form and edition to your policy**: confirm your policy can issue the exact form number and edition the contract names, or that its blanket additional insured wording satisfies the requirement in writing. * **Confirm the written contract exists first**: blanket endorsements require an executed written agreement before the work and before any loss. Get the contract signed before crews mobilize. * **Check for completed operations language**: if the contract requires additional insured status for completed operations, CG 20 10 alone does not comply. You also need CG 20 37 or equivalent wording. * **Read the primary and noncontributory clause**: most contracts also require your coverage to apply first and without contribution from the additional insured's own policy, which is a separate endorsement your broker must confirm. ## Where can you see the actual form? [#where-can-you-see-the-actual-form] Menlo does not host ISO forms because they are copyrighted by Insurance Services Office, Inc. You can read the real text through your own policy, which attaches every endorsement issued on it, or by asking your broker for the specimen your carrier files. Regulator-approved filings are also publicly viewable through [SERFF Filing Access](https://filingaccess.serff.com/), the state filing system, though the forms there remain copyrighted and are for reading, not copying. ## Frequently Asked Questions ### What is the difference between CG 20 10 and CG 20 37? CG 20 10 covers the additional insured for liability arising from your ongoing operations, meaning work in progress. CG 20 37 covers the same party for the products-completed operations hazard, meaning claims that arise after the work is finished. Construction contracts typically require both so coverage continues after project completion. ### Does CG 20 10 cover the additional insured for its own negligence? Not under any edition since 07 04. Coverage applies only when the injury or damage is caused in whole or in part by you or someone working on your behalf. The additional insured's sole negligence is excluded, and the 04 13 and later editions also cap coverage at what state law permits. ### Is a certificate of insurance enough to prove CG 20 10 status? No. A certificate is an information snapshot, it confers no coverage by itself. Additional insured status exists only if the endorsement is actually attached to the policy, so careful upstream parties request a copy of the endorsement or the policy's blanket wording along with the certificate. ### What does the schedule on CG 20 10 require? The schedule identifies who is covered and often the location of the covered operations. If the schedule says the information is shown in the declarations or requires a written contract, blanket wording applies and the executed contract itself becomes the trigger for coverage. *This guide is for educational purposes and summarizes standard ISO policy language in Menlo's own words. Form numbers and titles are cited for identification only, and Menlo Insurance Services is not affiliated with Insurance Services Office, Inc. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # CG 20 11: Additional Insured for Managers or Lessors of Premises Explained (https://www.menloinsurance.com/library/forms/cg-20-11) Learn how CG 20 11 adds a landlord or property manager to a tenant's CGL policy, what premises claims it covers, and why the edition matters for lease reviews. Markdown version: https://www.menloinsurance.com/library/forms/cg-20-11.md CG 20 11 adds the landlord or property manager listed in its schedule as an additional insured on a tenant's commercial general liability policy. Its protection is tied to the tenant's leased space, and the edition date changes how closely a claim must connect to the tenant's conduct. It does not replace the landlord's own property or liability insurance. The practical chain is simple: a lease requires additional insured status, the policy receives CG 20 11, a premises claim names the landlord or manager, and the endorsement determines whether that party can seek coverage under the tenant's CGL policy. ## Key takeaways * **Scheduled parties and premises**: the endorsement identifies both the additional insured and the part of the premises leased to the tenant. * **Lease-related liability only**: coverage does not follow the landlord to unrelated buildings, spaces, or business activities. * **Two clear cutoffs**: protection does not extend to occurrences after the tenant leaves or to specified construction work performed by the landlord or manager. * **Edition dates change causation**: the 12 19 edition requires the tenant or someone acting for it to have caused the injury in whole or in part. ## What does CG 20 11 cover? [#what-does-cg-20-11-cover] CG 20 11 modifies the CGL policy's insured provisions for a specific landlord, property manager, or both. Earlier editions frame the grant around liability arising from the ownership, maintenance, or use of the scheduled portion of the premises leased to the named insured. A New York court applying the 01 96 edition treated the identity of the landlord and the location of the accident as central coverage questions. The form can address a familiar premises claim. If a customer is injured inside a tenant's shop and sues both the tenant and building owner, the owner may tender the suit under the tenant's policy. Coverage still depends on the attached edition, the schedule, the allegations, and the rest of the policy. [Additional insured](https://www.menloinsurance.com/library/glossary/additional-insured) status gives the scheduled party policy rights for covered claims, but it does not make that party the named insured or create a separate limit. ## What does CG 20 11 leave out? [#what-does-cg-20-11-leave-out] CG 20 11 has firm boundaries. The scheduled party's status concerns only the leased part of the premises shown in the endorsement. The form excludes occurrences after the named insured stops being a tenant there. It also excludes structural alterations, new construction, or demolition performed by or for the additional insured, which means a landlord's separate renovation project does not become the tenant's insured operation. The endorsement is liability coverage, not building insurance. It does not insure the landlord's structure against fire, water, or other physical damage, and it does not satisfy a tenant's obligation to insure improvements or business personal property. Those issues belong in the lease's property insurance section and the applicable commercial property forms. ## Why does the edition date matter? [#why-does-the-edition-date-matter] The edition date can change the result. The 01 96 edition uses the broad premises connection described in the New York court decision. The 04 13 edition added limits tied to applicable law and, when a contract requires coverage, to the breadth and amount the contract requires. The 12 19 edition added a causation condition: the tenant or someone acting on the tenant's behalf must cause the injury or damage in whole or in part. A 2023 insurer filing identifies CG 20 11 12 19 by its official title and ISO filing reference. That distinction matters when a claim alleges only the landlord's independent negligence. Do not assume an older lease form number and a current endorsement produce identical protection. Compare the exact edition required by the lease with the endorsement the carrier can issue, then read any carrier-specific changes. ## What should a tenant check before sending proof? [#what-should-a-tenant-check-before-sending-proof] A tenant should compare three documents: the lease, the endorsement, and the certificate. The endorsement schedule should identify the correct legal entities and the exact leased premises. The lease may also require primary and noncontributory treatment, which is a separate insurance-order issue often handled through [CG 20 01](https://www.menloinsurance.com/library/forms/cg-20-01). The City of Arcata's insurance page illustrates the difference between evidence and coverage. It asks users to follow the signed contract or permit and lists CG 20 11 01 96 as a sample managers or lessors endorsement. A certificate can report that an endorsement exists, but the certificate cannot add a missing landlord, repair the wrong address, or broaden the edition. ## Frequently Asked Questions ### Does CG 20 11 insure the landlord's building? No. CG 20 11 concerns the landlord's or manager's liability as an additional insured under the tenant's CGL policy. Property insurance for the building, tenant improvements, and business personal property is handled separately. ### Does CG 20 11 cover the landlord after the tenant moves out? The standard form excludes occurrences that happen after the named insured stops being a tenant at the scheduled premises. A claim reported later may still require analysis of when the occurrence happened and which edition was attached. ### What changed in CG 20 11 12 19? The 12 19 edition requires the injury or damage to be caused in whole or in part by the tenant or someone acting on the tenant's behalf. That is narrower than treating any liability connected with the leased premises as sufficient. ### Is a certificate showing the landlord as additional insured enough? No. The attached endorsement and its schedule control. Ask for the endorsement when proof matters, then confirm the legal name, premises, edition, and any separate primary and noncontributory requirement. *This guide is for educational purposes and summarizes standard ISO policy concepts in original language. Form numbers and titles are used only for identification. Menlo Insurance Services is not affiliated with or approved by Insurance Services Office, Inc. Your policy, lease, and attached endorsements control. Talk to a licensed broker about your actual exposures.* ## References . [New York State Unified Court System. Tower Mineola Ltd. Partnership v. Potomac Insurance Company of Illinois]() . [Wisconsin Office of the Commissioner of Insurance filing record. SERFF Filing PENN-133630403]() . [City of Arcata. Insurance Forms]() . [Risk & Insurance Education Alliance. CG 20 11 12 19 specimen, physical PDF page 71]() # CG 20 12: Additional Insured for Government Permits Explained (https://www.menloinsurance.com/library/forms/cg-20-12) Learn how CG 20 12 covers a government entity that issues your permit, which operations qualify, what the form excludes, and what proof to send correctly. Markdown version: https://www.menloinsurance.com/library/forms/cg-20-12.md CG 20 12 adds a state, local government, agency, or political subdivision as an additional insured for operations that entity permits or authorizes. It is designed for the permit relationship, not for work your business performs under a government contract. The standard form also leaves completed operations outside its grant. The sequence runs from permit to policy: a government entity authorizes an activity, requires additional insured status, appears in the endorsement schedule, and receives limited CGL protection for claims connected with that permitted activity. ## Key takeaways * **Permit-specific protection**: coverage follows the operations for which the scheduled government entity issued a permit or authorization. * **Not a public contract form**: the endorsement excludes operations performed for a federal, state, or municipal body. * **No completed operations grant**: bodily injury or property damage in the products-completed operations hazard is excluded. * **The endorsement is the proof**: a certificate alone cannot make a government entity an additional insured. ## What does CG 20 12 cover? [#what-does-cg-20-12-cover] CG 20 12 amends the insured provisions of a CGL policy to include the government body shown in its schedule. The grant applies only to the named insured's operations, or operations performed on its behalf, for which that body issued a permit or authorization. Typical uses include a street closure, sidewalk dining area, sewer access, block party, or temporary use of public space. Portland's transportation bureau accepts CG 20 12 for public right-of-way permits and explains why relationship matching matters. It rejects endorsements limited to work performed for the city because the permit holder is requesting permission from the city, not working for it. That is the core distinction. The government is exposed because it authorized the activity, while your business remains the party conducting it. ## What does the permit endorsement exclude? [#what-does-the-permit-endorsement-exclude] The standard endorsement does not cover operations your business performs for a federal, state, or municipal body. A contractor hired to renovate city hall has a construction contract rather than a permit-only relationship, so construction additional insured forms may be more appropriate. The form also excludes bodily injury or property damage within the products-completed operations hazard. Alliant's current contract insurance manual flags both limitations when discussing the 12 19 edition. Coverage is also subject to the rest of the CGL policy. The 04 13 and 12 19 editions state that protection applies only as far as the law permits. If a contract or agreement requires the additional insured coverage, it cannot be broader than that agreement requires, and the available amount is limited by both the agreement and the policy. ## How do the editions differ? [#how-do-the-editions-differ] The 07 98 edition carries a shorter title referring to state or political subdivisions and permits. The 04 13 edition expanded the governmental wording, added authorizations, and added the law, contract-breadth, and contract-limit restrictions used across that ISO revision. The 12 19 edition keeps the operational grant and exclusions but refers more generally to applicable limits of insurance rather than only limits shown in the declarations. Some public agencies still name an older edition while others accept the current form or an equivalent. The City of Portland, for example, accepts CG 20 12 or an equivalent for several kinds of right-of-way permits. New York City's film office accepts coverage at least as broad as CG 20 12 or [CG 20 26](https://www.menloinsurance.com/library/forms/cg-20-26). Read the agency's current requirement instead of assuming every permit office uses the same edition. ## What should you submit with a permit application? [#what-should-you-submit-with-a-permit-application] Submit what the issuing agency requests, usually a certificate plus the actual additional insured endorsement. The legal name in the endorsement schedule should match the agency's instructions, and the endorsement policy number should match the certificate. Describe the permitted activity accurately enough for the agency to connect the evidence to the authorization. Check for separate requirements too. Primary and noncontributory language, a waiver of subrogation, cancellation notice, and minimum limits do not appear automatically just because CG 20 12 is attached. If the requirement includes primary and noncontributory status, [CG 20 01](https://www.menloinsurance.com/library/forms/cg-20-01) or carrier wording may address that separate condition. ## Frequently Asked Questions ### Who can be an additional insured under CG 20 12? The schedule can identify a state, governmental agency or subdivision, or political subdivision that issued the relevant permit or authorization. The exact scheduled name and attached edition control. ### Does CG 20 12 cover work performed for a city? No. The standard form excludes operations performed for a federal, state, or municipal body. It is built for the exposure created when the government issues your business a permit or authorization. ### Does CG 20 12 cover completed operations? The standard form excludes bodily injury or property damage within the products-completed operations hazard. If a government contract requires post-completion protection, the broker must evaluate a different endorsement structure. ### Can I send only a certificate of insurance? Not when the agency requires the endorsement. A certificate reports policy information but does not amend coverage. Send the attached endorsement and verify its schedule, policy number, edition, and permitted operation. *This guide is for educational purposes and summarizes standard ISO policy concepts in original language. Form numbers and titles are used only for identification. Menlo Insurance Services is not affiliated with or approved by Insurance Services Office, Inc. Your policy, permit, and attached endorsements control. Talk to a licensed broker about your actual exposures.* ## References . [City of Portland Bureau of Transportation. Insurance and Bond Requirements for Permits in the Public Right-of-Way]() . [Alliant. Insurance Requirements in Contracts 2026.1]() . [New York City Mayor's Office of Media and Entertainment. Insurance Requirements for Film Permits and Premiere Permits]() # CG 20 15: Additional Insured Vendors Endorsement Explained (https://www.menloinsurance.com/library/forms/cg-20-15) Learn how CG 20 15 protects a scheduled vendor for claims tied to the named insured's products, which vendor activities are excluded, and what to verify. Markdown version: https://www.menloinsurance.com/library/forms/cg-20-15.md CG 20 15 adds a scheduled vendor as an insured for certain bodily injury or property damage claims arising from the named insured's scheduled products. It is designed for a manufacturer or supplier whose retailer or distributor wants protection from product-related liability as the goods move through the sales chain. ## Key takeaways * **Vendor and products must match the schedule**: broad labels can create uncertainty when product lines change. * **Coverage follows product distribution or sale**: it does not insure the vendor's unrelated premises or operations. * **Vendor conduct can remove coverage**: unauthorized warranties, intentional product changes, and certain repackaging or service activities are among the restrictions. * **It is not product recall insurance**: recall and withdrawal costs require separate analysis. ## What does CG 20 15 cover? [#what-does-cg-20-15-cover] The form extends insured status to the listed vendor for liability tied to the named insured's listed products that the vendor distributes or sells in its regular business. A township policy packet reproduces CG 20 15 04 13 and shows the vendor-and-product schedule that controls the grant. Consider a retailer sued because a customer alleges that a packaged product made by the named insured caused injury. The endorsement may respond for the retailer, subject to causation, exclusions, contract terms, law, and policy limits. It does not cover a slip and fall unrelated to the product. ## Which vendor activities are restricted? [#which-vendor-activities-are-restricted] The standard endorsement contains several vendor-specific exclusions. They address liability assumed only by contract, warranties the manufacturer did not authorize, intentional physical or chemical changes to the product, certain repackaging, failure to make agreed inspections or adjustments, and demonstrations, installation, servicing, or repair performed by or for the vendor. The exact language includes exceptions and qualifications, so a checklist cannot replace the issued form. Relabeling a product or using it as a component of another product can also affect status. A vendor that modifies, installs, or private-labels goods should tell the broker exactly what it does. ## What should a supplier and vendor verify? [#what-should-a-supplier-and-vendor-verify] Compare the supply agreement with the endorsement schedule. Confirm legal entity names, covered products, edition, limits, and whether the contract requires broader wording than the policy provides. The 12 19 edition appears in current certificate evidence for product suppliers, showing that later editions are in active use. Obtain the endorsement, not only a certificate. Then review products-completed operations coverage, any self-insured retention, recall coverage, and the vendor's own CGL policy separately. ## Frequently Asked Questions ### Who is the additional insured under CG 20 15? The vendor identified in the schedule, but only for qualifying liability arising from the named insured's scheduled products sold or distributed in the vendor's regular business. ### Does CG 20 15 cover the vendor's own product modifications? Do not assume so. Intentional product changes, relabeling, repackaging, installation, servicing, and related activities can trigger specific restrictions. ### Is CG 20 15 product recall coverage? No. It addresses liability insured status. Costs to withdraw, replace, or recall a product are a separate coverage question. ### Is a certificate naming the vendor enough? No. The issued endorsement and its product schedule determine status. A certificate does not amend the policy. *This guide is for educational purposes and summarizes standard ISO policy concepts in original language. Form numbers and titles are used only for identification. Menlo Insurance Services is not affiliated with or approved by Insurance Services Office, Inc. Your policy, supply agreement, and attached endorsements control. Talk to a licensed broker about your actual products.* ## References . [Superior Charter Township, Michigan. Board Packet Containing CG 20 15 04 13]() . [Aon. 2025-2026 Liability Evidence of Coverage]() # CG 20 18: Additional Insured for a Mortgagee, Assignee or Receiver (https://www.menloinsurance.com/library/forms/cg-20-18) Learn how CG 20 18 gives a scheduled mortgagee, assignee or receiver limited premises-related status, its construction exclusion, and the key items to check. Markdown version: https://www.menloinsurance.com/library/forms/cg-20-18.md CG 20 18 adds a scheduled mortgagee, assignee, or receiver as an additional insured under a commercial general liability policy. The status is limited to that party's liability in the stated capacity and arising from the named insured's ownership, maintenance, or use of the scheduled premises. It is liability coverage, not mortgage-property coverage and not a promise to pay a loan balance. ## Key takeaways * **The party and premises are scheduled**: names, legal capacity, and location details must be accurate. * **Status is role-specific**: the party is insured only with respect to liability as mortgagee, assignee, or receiver. * **The named insured's premises activity is central**: the connection is ownership, maintenance, or use by the named insured. * **Construction work is carved out**: structural alterations, new construction, and demolition performed by or for the added party are excluded. ## What does CG 20 18 do? [#what-does-cg-20-18-do] A lender or other party with a legal interest in premises can face a liability claim because of that role. CG 20 18 provides limited additional insured status when that party and the premises appear in the endorsement schedule. The 12 19 form ties status to the scheduled party's liability as mortgagee, assignee, or receiver and to the named insured's ownership, maintenance, or use of the listed premises. A Risk Education Alliance guide reproduces the current form and its two-part limitation. For example, a bank listed only as mortgagee does not become an insured for all of its operations. The claim must fit the scheduled role and premises connection, and all policy exclusions and limits remain applicable. ## What does the endorsement exclude? [#what-does-the-endorsement-exclude] CG 20 18 excludes structural alterations, new construction, and demolition operations performed by or for the scheduled additional insured. If a lender takes control of a property and commissions major construction, this endorsement should not be assumed to cover that project exposure. The form also should not be confused with a mortgageholder clause on a commercial property policy. CG 20 18 sits in the CGL policy and addresses third-party liability. Property insurance addresses direct physical loss and the mortgageholder's interest under different terms. ## What should be checked on the issued form? [#what-should-be-checked-on-the-issued-form] Confirm the exact legal name and capacity of the additional insured, the premises address, and the edition. If the schedule uses broad language such as parties required by written contract, compare it with the underlying agreement and the carrier's issued wording. Review whether the lender also asks for property mortgageholder status, loss-payee treatment, notice rights, or evidence of limits. Those are separate requirements. A public airport policy schedule demonstrates that CG 20 18 12 19 can be issued with contract-based schedule language, but each actual policy must be read on its own. ## Frequently Asked Questions ### Who can be added by CG 20 18? The schedule can identify a mortgagee, assignee, or receiver. Coverage is limited to that party's liability in the stated capacity and the scheduled premises relationship. ### Does CG 20 18 insure the mortgage debt? No. It is a CGL additional insured endorsement, not credit insurance or a guarantee of the loan balance. ### Does the form cover construction performed for the mortgagee? The standard form excludes structural alterations, new construction, and demolition operations performed by or for the added party. ### Is a certificate enough to add the lender? No. The certificate does not amend the policy. Obtain the issued endorsement and verify its schedule, edition, and effective date. *This guide is for educational purposes and summarizes standard ISO policy concepts in original language. Form numbers and titles are used only for identification. Menlo Insurance Services is not affiliated with or approved by Insurance Services Office, Inc. Your policy, agreement, and attached endorsements control. Talk to a licensed broker about your actual exposures.* ## References . [Risk & Insurance Education Alliance. Certificates of Insurance and Additional Insureds]() . [Greater Asheville Regional Airport Authority. Commercial General Liability Policy Schedule]() # CG 20 24: Additional Insured for an Owner of Leased Land (https://www.menloinsurance.com/library/forms/cg-20-24) Learn how CG 20 24 protects a scheduled owner or other interest that leased land to the named insured, when coverage ends, and which work is excluded. Markdown version: https://www.menloinsurance.com/library/forms/cg-20-24.md CG 20 24 adds a scheduled owner or other interest from whom the named insured leased land. Its liability grant is tied to the named insured's ownership, maintenance, or use of the scheduled portion of land. It is a land-lease endorsement, not the standard form for a building landlord. ## Key takeaways * **The land and lessor are scheduled**: the legal description and entity name must identify the actual lease. * **The relationship is land-specific**: do not assume it is interchangeable with CG 20 11 for leased premises. * **Status ends when the lease ends**: later occurrences fall outside the standard endorsement. * **Certain work by the lessor is excluded**: structural alterations, new construction, and demolition require separate review. ## What does CG 20 24 cover? [#what-does-cg-20-24-cover] The endorsement gives the listed landowner or other interest limited additional insured status for qualifying liability connected with the named insured's ownership, maintenance, or use of the part of land leased to it. A City of Jacksonville policy copy shows CG 20 24 04 13 completed with both the city and the leased location. This can apply to a ground lease, right-of-way, yard, or another specifically described land interest. The form is not a general liability grant for all of the landowner's activities or properties. The 12 19 edition uses a caused-in-whole-or-in-part test tied to the named insured or people acting on its behalf. An insurance education guide identifies that change and reproduces the current lease-ending and construction exclusions. Older 11 85 and 04 13 editions use different connection wording, so edition review matters. ## When does coverage stop? [#when-does-coverage-stop] The standard endorsement excludes an occurrence after the named insured ceases to lease the land. If a lease is renewed, assigned, terminated early, or continues month to month, update the documentation and confirm the policy treatment. It also excludes structural alterations, new construction, or demolition performed by or for the scheduled landowner or interest. A project on the land may need construction-specific additional insured coverage rather than reliance on CG 20 24 alone. ## What should the parties verify? [#what-should-the-parties-verify] Compare the lease's exact parties and land description with the endorsement schedule. Distinguish land from a building or premises lease, confirm dates and edition, and review any contract-required limits. Since 04 13, standard editions limit required coverage and payment to the contract and applicable policy terms. Obtain the actual endorsement. A certificate cannot correct the wrong lessor name, missing parcel, or mismatched form. ## Frequently Asked Questions ### Who can be added by CG 20 24? An owner or other interest shown in the schedule from whom the named insured leased the described land. ### Is CG 20 24 the same as landlord coverage under CG 20 11? No. CG 20 24 is specific to leased land. CG 20 11 addresses managers or lessors of premises. ### Does coverage continue after the land lease ends? The standard endorsement excludes occurrences after the named insured ceases to lease the land. ### Does it cover construction performed for the landowner? The form excludes structural alterations, new construction, and demolition performed by or for the scheduled party. Construction requirements need separate review. *This guide is for educational purposes and summarizes standard ISO policy concepts in original language. Form numbers and titles are used only for identification. Menlo Insurance Services is not affiliated with or approved by Insurance Services Office, Inc. Your policy, land lease, and attached endorsements control. Talk to a licensed broker about your actual property.* ## References . [City of Jacksonville, Florida. Agreement and Policy Endorsement CG 20 24 04 13]() . [Independent Insurance Agents & Brokers of Maine. Certificates of Insurance and Additional Insureds]() # CG 20 26: Additional Insured: Designated Person or Organization Explained (https://www.menloinsurance.com/library/forms/cg-20-26) What the CG 20 26 additional insured endorsement does, when it fits better than CG 20 10, and why municipalities, venues, and event sponsors request it. Markdown version: https://www.menloinsurance.com/library/forms/cg-20-26.md **CG 20 26 is the ISO endorsement that adds a person or organization named in its schedule as an additional insured on your general liability policy for liability caused in whole or in part by your acts or omissions, whether in the performance of your ongoing operations or in connection with premises you own or rent.** It is the general purpose member of the additional insured family, written without the owner and contractor framing of [CG 20 10](https://www.menloinsurance.com/library/forms/cg-20-10), which makes it the form of choice when the party demanding insured status does not fit the construction mold. Municipalities issuing permits, event venues hosting your booth, sponsors of a race your company organizes, and community associations approving your use of common areas all routinely require additional insured status without hiring you to perform operations for them. CG 20 26 is how those requests get honored. This page explains what the endorsement covers, how it differs from CG 20 10, and how its schedule works. ## Key takeaways * **The general purpose form**: CG 20 26 grants additional insured status to any designated person or organization, with no requirement that they be an owner or contractor you work for. * **Two coverage paths**: the injury or damage must arise from your ongoing operations or from premises you own or rent, and it must be caused in whole or in part by you or by someone acting on your behalf. * **No written contract trigger**: unlike the blanket construction forms, the scheduled version of CG 20 26 does not condition coverage on a written agreement, the schedule entry itself controls. * **Use the specific form when one fits**: ISO publishes purpose built endorsements for lessors, vendors, managers of premises, and construction parties, and underwriters expect those to be used when the relationship matches. ## What does CG 20 26 do? [#what-does-cg-20-26-do] The endorsement amends the Who Is An Insured provisions of your commercial general liability coverage part to include the person or organization shown in its schedule. The scheduled party becomes an insured for bodily injury, property damage, and personal and advertising injury, but only when the injury or damage is caused in whole or in part by your acts or omissions or by the acts or omissions of those acting on your behalf. That causation requirement mirrors the modern construction forms, so the additional insured gets no protection for its own sole negligence. The grant then runs along two paths. The first covers liability arising in the performance of your ongoing operations. The second covers liability arising in connection with premises you own or rent. That premises path is something CG 20 10 does not offer, and it is why CG 20 26 works for parties whose exposure to you is locational rather than contractual, such as a landlord's lender or a municipality concerned about your storefront's sidewalk. Like the rest of the additional insured series since the 04 13 revisions, the endorsement caps itself three ways. Coverage applies only to the extent permitted by law. If a contract requires you to provide the coverage, it will not be broader than that contract requires. And the most the insurer pays on the additional insured's behalf is the lesser of the amount the contract requires and the limits actually available on the policy. ## How does CG 20 26 compare to CG 20 10? [#how-does-cg-20-26-compare-to-cg-20-10] Both endorsements are scheduled additional insured forms with the same in whole or in part causation standard, and both stop short of the products completed operations hazard. The difference is the relationship each one assumes: | Feature | CG 20 26 | CG 20 10 | | ---------------------------- | ---------------------------------------------- | ----------------------------------------------------- | | Assumed relationship | None, any designated person or organization | You perform operations for the additional insured | | Ongoing operations coverage | Yes | Yes, for operations performed for the scheduled party | | Premises based coverage | Yes, premises you own or rent | No | | Written contract requirement | No | No in the scheduled version, yes in blanket wording | | Completed operations | No | No, pair with CG 20 37 | | Typical requester | Municipality, venue, sponsor, permit authority | Project owner, general contractor | The practical rule brokers follow is to match the form to the relationship. A general contractor upstream of your subcontract should get [CG 20 10](https://www.menloinsurance.com/library/forms/cg-20-10), usually paired with CG 20 37 for completed operations. A party with no operational relationship to you, or one whose concern is your premises, gets CG 20 26. Using CG 20 26 for a construction upstream party technically works for ongoing operations but invites disputes, because the contract almost certainly asked for the construction pair by number. ### The catch all that should not catch everything ISO publishes specific endorsements for lessors of leased equipment, vendors, managers or lessors of premises, and construction relationships. Underwriters treat CG 20 26 as the residual option for parties no specific form addresses, so quote the actual relationship to your broker and let the form follow from it. ## How does the schedule work? [#how-does-the-schedule-work] The schedule is a simple name field. Whoever is entered there holds additional insured status for the duration of the policy period, with no requirement that a written contract exist between you and the scheduled party. That makes the endorsement more forgiving than blanket construction wording, where a missing signature can void the status entirely. It also makes precision matter, because the named entity is the insured entity. A schedule reading City of Oakhurst does not cover the Oakhurst Redevelopment Authority, and an event sponsor's parent company is not covered by an entry naming only the subsidiary. Many carriers also file blanket variants that extend CG 20 26 style status automatically to any party a written contract requires you to add. Those variants reintroduce the written contract condition, so the certificate request and the underlying agreement need to line up before the loss. When a certificate holder asks for additional insured wording with no contract in place, the scheduled CG 20 26 is usually the cleaner instrument. Keep the limits math in mind as well. The endorsement adds insureds without adding limits, so every additional insured shares your occurrence and aggregate limits with you. A busy schedule of municipalities and venues quietly multiplies the claimants who can draw down the same aggregate. ## Where can you see the actual form? [#where-can-you-see-the-actual-form] Menlo does not host ISO forms because they are copyrighted by Insurance Services Office, Inc. You can read the real text through your own policy, which attaches every endorsement issued on it, or by asking your broker for the specimen your carrier files. Regulator approved filings are also publicly viewable through [SERFF Filing Access](https://filingaccess.serff.com/), the state filing system, though the forms there remain copyrighted and are for reading, not copying. ## Frequently Asked Questions ### What is the difference between CG 20 26 and CG 20 10? CG 20 10 assumes the additional insured is a party you perform operations for, typically a project owner or general contractor, and covers only those ongoing operations. CG 20 26 drops that relationship requirement and adds a premises path, covering liability arising from your ongoing operations or in connection with premises you own or rent. Neither form covers the completed operations hazard. ### Does CG 20 26 require a written contract? The standard scheduled edition does not. Whoever is named in the schedule holds the status regardless of any underlying agreement. Carrier filed blanket variants that extend the same status automatically usually do require an executed written contract, so read the wording actually attached to the policy before promising anything on a certificate. ### Does CG 20 26 cover completed operations? No. The operations path of the grant applies to your ongoing operations, so claims arising after your work is finished and put to use fall outside it. A party that needs protection for the completed operations hazard needs CG 20 37 or equivalent wording on your policy. ### Who typically asks to be added by CG 20 26? Parties outside the construction chain. Common examples are municipalities issuing permits or licenses, event venues and festivals, sponsors, community associations, and lenders or other stakeholders concerned with premises you own or rent. When the requester is an equipment lessor, a vendor relationship, or your landlord, ISO publishes specific endorsements that fit those relationships better. *This guide is for educational purposes and summarizes standard ISO policy language in Menlo's own words. Form numbers and titles are cited for identification only, and Menlo Insurance Services is not affiliated with Insurance Services Office, Inc. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # CG 20 28: Additional Insured for a Lessor of Leased Equipment (https://www.menloinsurance.com/library/forms/cg-20-28) Learn how CG 20 28 gives a scheduled equipment lessor limited additional insured status, when that status ends, and why property coverage is separate. Markdown version: https://www.menloinsurance.com/library/forms/cg-20-28.md CG 20 28 adds a scheduled equipment lessor as an insured for limited liability arising from the named insured's maintenance, operation, or use of the leased equipment. It is commonly requested when a business rents or leases machinery and the equipment owner wants protection under the lessee's CGL policy. ## Key takeaways * **Lessor and equipment are scheduled**: the legal entity and equipment description should match the lease. * **Causation is tied to the lessee**: qualifying injury or damage must be caused at least in part by the named insured's maintenance, operation, or use. * **Status ends with the lease**: occurrences after the equipment lease expires are outside the standard grant. * **The equipment itself is not insured**: property or inland marine coverage is a separate requirement. ## What does CG 20 28 do? [#what-does-cg-20-28-do] The endorsement modifies who is an insured under the CGL policy. It protects the scheduled lessor only for qualifying bodily injury, property damage, or personal and advertising injury connected to the named insured's maintenance, operation, or use of the scheduled equipment. An insurance education guide identifies CG 20 28 12 19 for this purpose and explains the causation, law, contract-breadth, lease-expiration, and limit restrictions. For example, if rented lifting equipment allegedly injures a visitor while the lessee is operating it, the lessor may be named in the lawsuit. CG 20 28 can provide limited status. It does not cover liability caused solely by the lessor and unrelated to the lessee's conduct. ## What does it not cover? [#what-does-it-not-cover] CG 20 28 does not pay for physical damage to the rented machine simply because the owner is an additional insured. Additional insured status concerns liability to third parties. The lease may separately require equipment coverage, inland marine insurance, a loss-payee provision, or a damage waiver. The standard endorsement also excludes occurrences after the equipment lease expires. Review extensions, renewals, holdover use, and the actual return date instead of assuming the original schedule remains accurate. ## How does CG 20 28 differ from CG 20 34? [#how-does-cg-20-28-differ-from-cg-20-34] CG 20 28 schedules the lessor and leased equipment. CG 20 34 provides automatic status when a written lease agreement with the named insured requires it. A Risk & Insurance Education Alliance guide lists both forms and their separate scheduled and automatic functions. Before accepting either, compare the lease requirement, form trigger, edition, lessor name, equipment identifiers, and dates. If the contract requires primary and noncontributory wording or a waiver of subrogation, those are separate policy questions. ## Frequently Asked Questions ### Who is covered by CG 20 28? The equipment lessor shown in the schedule, but only for qualifying liability tied to the named insured's maintenance, operation, or use of the scheduled equipment. ### Does CG 20 28 cover damage to rented equipment? No. It grants liability insured status. Coverage for the equipment itself must be arranged separately. ### What happens when the lease ends? The standard form excludes occurrences after the equipment lease expires. Confirm extensions and return dates with the broker. ### Is CG 20 28 automatic? It is a scheduled endorsement. CG 20 34 is the standard automatic-status form triggered by a qualifying written lease requirement. *This guide is for educational purposes and summarizes standard ISO policy concepts in original language. Form numbers and titles are used only for identification. Menlo Insurance Services is not affiliated with or approved by Insurance Services Office, Inc. Your policy, equipment lease, and attached endorsements control. Talk to a licensed broker about your actual equipment.* ## References . [Independent Insurance Agents & Brokers of Maine. Commercial Casualty Learning Guide]() . [Risk & Insurance Education Alliance. Certificates of Insurance and Additional Insureds]() # CG 20 32: Additional Insured Design Professionals Not Hired by You (https://www.menloinsurance.com/library/forms/cg-20-32) Learn how CG 20 32 covers scheduled architects, engineers or surveyors not engaged by the named insured, and why professional services remain excluded. Markdown version: https://www.menloinsurance.com/library/forms/cg-20-32.md CG 20 32 adds scheduled architects, engineers, or surveyors who were not engaged by the named insured. It addresses a construction relationship in which a contractor is required to insure a design professional hired by someone else, such as the project owner. ## Key takeaways * **The professional is not your hire**: that distinction separates CG 20 32 from forms for professionals you engage. * **A contractual requirement is part of the form**: the scheduled professional must be required as an additional insured. * **Only ongoing operations are addressed**: the grant follows your work or work performed on your behalf. * **Professional services remain excluded**: the form is not architects and engineers errors-and-omissions coverage. ## When is CG 20 32 useful? [#when-is-cg-20-32-useful] A project owner may hire the architect, while the construction contract requires the general contractor to add that architect to the contractor's CGL policy. The architect is exposed to claims alleging that the contractor's work caused injury or damage, even though the architect did not hire the contractor directly. CG 20 32 is designed for that gap. A municipal policy copy of the 12 19 edition schedules design professionals not engaged by the named insured and ties their status to the named insured's ongoing operations. Coverage applies only to qualifying injury or damage caused, at least in part, by the named insured's acts or omissions or those of people acting on its behalf. It is not a blanket grant for every claim against the design professional. ## What does the professional-services exclusion mean? [#what-does-the-professional-services-exclusion-mean] The endorsement excludes claims arising from rendering or failing to render professional services. The examples include design documents, opinions, surveys, change orders, specifications, supervisory work, inspection, and engineering services. The current wording also addresses claims framed as negligent supervision, hiring, training, or monitoring when the underlying occurrence involved professional services. The architect or engineer still needs appropriate professional liability insurance. CG 20 32 concerns the contractor's CGL exposure, not the professional's design errors. ## What should the parties verify? [#what-should-the-parties-verify] Confirm the professional's exact legal name, the signed contract clause requiring status, edition, project, and policy period. Make sure the requirement concerns ongoing operations and determine whether separate completed-operations status is expected. Do not substitute a direct-party automatic endorsement without reading its trigger. Industry analysis highlights CG 20 32 specifically because the contractor may not have contractual privity with the owner-hired architect or engineer. Obtain the actual endorsement with the certificate. ## Frequently Asked Questions ### Who is added by CG 20 32? Scheduled architects, engineers, or surveyors not engaged by the named insured, when they are contractually required to be additional insureds. ### Does CG 20 32 cover the architect's design error? No. The standard form contains a professional-services exclusion. Professional liability insurance addresses that separate exposure. ### Does the form cover completed operations? The standard grant concerns ongoing operations. If post-completion coverage is required, the parties must evaluate separate wording. ### Why not use CG 20 31? CG 20 31 addresses architects, engineers, or surveyors engaged by the named insured. CG 20 32 is designed for those not engaged by it. *This guide is for educational purposes and summarizes standard ISO policy concepts in original language. Form numbers and titles are used only for identification. Menlo Insurance Services is not affiliated with or approved by Insurance Services Office, Inc. Your policy, contract, and attached endorsements control. Talk to a licensed broker about your project.* ## References . [City of Crest Hill, Illinois. Commercial General Liability Policy Containing CG 20 32 12 19]() . [Professional Underwriters Agency. Insured Status Under the Contractor's CGL Policy]() # CG 20 33: Automatic Additional Insured Status Explained (https://www.menloinsurance.com/library/forms/cg-20-33) Learn how CG 20 33 grants automatic additional insured status under a written construction agreement, when coverage ends, and what gaps remain in practice. Markdown version: https://www.menloinsurance.com/library/forms/cg-20-33.md CG 20 33 automatically adds a person or organization as an additional insured when your business and that party have a written construction agreement requiring the status. It avoids scheduling each direct contracting party by name, but it is limited to ongoing operations and does not satisfy a completed operations requirement by itself. The trigger requires your operations, a written agreement with that party, and a requirement to add it as an insured. ## Key takeaways * **Direct agreement required**: the automatic grant is built around a written construction agreement between your business and the party receiving status. * **Ongoing operations only**: coverage ends when your operations for that party are completed. * **No new limits**: additional insureds share the limits already available under the policy. * **Completed operations need another form**: contracts that demand post-completion status usually require CG 20 37 or equivalent wording too. ## How does CG 20 33 grant automatic status? [#how-does-cg-20-33-grant-automatic-status] CG 20 33 replaces the need to list every qualifying project owner or general contractor in a schedule. The endorsement looks to the written construction agreement instead. If your company is performing operations for a party and your agreement with that party requires you to add it as an insured, the party can qualify automatically, subject to the policy's terms. That convenience makes contract administration the coverage trigger. A missing signature, a contract that never requires additional insured status, or an agreement with a different entity can defeat the intended result. New York's procurement guidance lists CG 20 33 12 19 among the additional insured forms used in construction contracts. ## How is CG 20 33 different from a scheduled endorsement? [#how-is-cg-20-33-different-from-a-scheduled-endorsement] The main difference is how the party becomes insured. [CG 20 10](https://www.menloinsurance.com/library/forms/cg-20-10) lists the person or organization in a schedule. CG 20 33 uses the qualifying written agreement to identify direct contracting parties automatically. Both modern forms focus on liability caused in whole or in part by your acts or omissions, or those of people acting for you, during your ongoing operations for the additional insured. Automatic status does not make every party named in the project documents an insured. The current 12 19 title refers to a written construction agreement with you, and industry training materials emphasize that the named insured must perform operations for the additional insured. ## What coverage gaps remain? [#what-coverage-gaps-remain] CG 20 33 stops when your operations for the additional insured are complete. It also contains a professional services exclusion directed at architectural, engineering, and surveying work. A claim involving finished work or a design error therefore needs a different analysis from a bodily injury claim that happens while your crew is working. Construction contracts often ask for ongoing and completed operations protection. [CG 20 37](https://www.menloinsurance.com/library/forms/cg-20-37) is the scheduled ISO form commonly paired with ongoing operations coverage. The 04 13 and later editions also restrict coverage to what the law and agreement permit. Additional insured status does not create extra limits. ## What should you verify in the construction agreement? [#what-should-you-verify-in-the-construction-agreement] Read the insurance exhibit before work starts. Confirm the legal parties signed it, it requires additional insured status, and it describes your operations. Compare its ongoing operations, completed operations, primary and noncontributory, and waiver requirements with the endorsements. Do not treat a certificate checkbox as the coverage grant. A certificate can report automatic status, but the written agreement and endorsement decide whether the status exists. California State University, San Bernardino's risk management page illustrates edition-specific review by listing CG 20 33 07 04 among forms that require review. ## Frequently Asked Questions ### Does CG 20 33 require the additional insured to be named on the endorsement? No. It is an automatic-status form, so a qualifying written construction agreement identifies the party. The agreement must still satisfy the endorsement's conditions. ### Does an unsigned construction contract trigger CG 20 33? Do not assume it does. The endorsement depends on an agreement in writing, and the actual execution and timing facts matter. Get the agreement signed before operations begin and keep the final copy. ### Does CG 20 33 cover completed operations? No. Status under the standard form ends when your operations for the additional insured are completed. A completed operations requirement needs separate wording, often CG 20 37 for a scheduled party. ### Does CG 20 33 cover every upstream party on a project? Not necessarily. CG 20 33 centers on the party with whom you made the written agreement. CG 20 38 addresses certain other parties that the same agreement requires you to add. *This guide is for educational purposes and summarizes standard ISO policy concepts in original language. Form numbers and titles are used only for identification. Menlo Insurance Services is not affiliated with or approved by Insurance Services Office, Inc. Your policy, contract, and attached endorsements control. Talk to a licensed broker about your actual exposures.* ## References . [New York State Office of General Services. Guidelines for Insurance Requirements in Contracts]() . [Risk and Insurance Education Alliance. Certificates of Insurance and Additional Insureds: Navigating the Maze]() . [California State University, San Bernardino. Additional Insured Endorsements]() # CG 20 37: Additional Insured for Completed Operations Explained (https://www.menloinsurance.com/library/forms/cg-20-37) What the CG 20 37 completed operations additional insured endorsement covers, why contracts pair it with CG 20 10, and how long you must keep it in force. Markdown version: https://www.menloinsurance.com/library/forms/cg-20-37.md **CG 20 37 is the ISO endorsement that adds a person or organization named in its schedule, typically a project owner or general contractor, as an additional insured on your general liability policy for the products-completed operations hazard.** It is the after-the-work-is-finished counterpart to [CG 20 10](https://www.menloinsurance.com/library/forms/cg-20-10), and construction contracts that know what they are asking for require the two forms together. If a contract names this form, the other party wants protection under your policy for claims that surface after your crews have packed up and the work is in use. This page explains what the endorsement does, how it differs from its ongoing operations sibling, and why contracts often require you to keep it in force for years after the project closes out. ## Key takeaways * **Completed operations only**: CG 20 37 covers the additional insured for claims arising from your finished work, not for anything that happens while the work is still in progress. * **Scheduled form**: coverage applies to the person or organization named in the schedule for your work at the location the schedule designates. * **Always paired with CG 20 10**: one form covers work in progress and the other covers finished work, and most contracts require both by number. * **Long tail**: contracts commonly require the endorsement to stay in force for two or three years after completion, or for the period a statute of repose allows claims. ## What does CG 20 37 do? [#what-does-cg-20-37-do] The endorsement modifies the Who Is An Insured section of your CGL policy to include the person or organization shown in its schedule. That party becomes an additional insured for bodily injury or property damage caused, in whole or in part, by your work at the location designated in the schedule and performed for that party, when the injury or damage falls within the products-completed operations hazard. In plain terms, if the deck you built collapses two years later or the wiring you installed starts a fire after the certificate of occupancy, the owner or general contractor who hired you can tender that claim to your insurer instead of paying from its own policy. The scheduled version of the form does not itself demand a written contract, since naming a party in the schedule is a deliberate act. Many carriers issue blanket completed operations wording instead, and blanket versions do hinge on an executed written agreement, so the paperwork has to exist before the loss. Our overview of [additional insured endorsements](https://www.menloinsurance.com/library/guides/additional-insured-endorsements-explained) explains how scheduled and blanket approaches differ across the whole endorsement family. ## What is the products-completed operations hazard? [#what-is-the-products-completed-operations-hazard] The products-completed operations hazard is the slice of your liability exposure that begins when your work is finished and put to its intended use. During construction, a claim from a dropped ladder or a trench collapse belongs to your ongoing operations, which is [CG 20 10](https://www.menloinsurance.com/library/forms/cg-20-10) territory for the additional insured. Once you have completed your scope and the owner occupies the space, claims arising from that work shift into the completed operations hazard, and only CG 20 37 extends the additional insured's protection there. Construction defect claims are the classic example, because water intrusion, settlement, and component failures typically reveal themselves months or years after final payment. This timing is exactly why the two endorsements travel together. A contract that requires only ongoing operations coverage leaves the owner unprotected for the riskiest years of a project's life, so sophisticated contracts specify both forms and often the edition dates too: | Question | CG 20 10 | CG 20 37 | | -------------------------------------------- | ------------------------------------ | ---------------------------------------------- | | When does it protect the additional insured? | While your work is in progress | After your work is complete and in use | | Typical claim | A jobsite injury during construction | A component failure discovered after occupancy | | Who asks for it? | Owners and GCs on active projects | The same parties, for the years after closeout | | Contract pairing | Required alongside CG 20 37 | **Required alongside CG 20 10** | ## How long do you have to maintain it? [#how-long-do-you-have-to-maintain-it] Additional insured status under CG 20 37 exists only while the endorsement is attached to a live policy, and completed operations claims arrive late by nature. Contracts therefore commonly obligate you to keep the endorsement in force for two or three years after project completion, and some tie the obligation to the state's statute of repose, which is the outer legal deadline for construction defect suits. That means the contract you signed in one policy year quietly constrains your insurance purchasing for several renewal cycles. The coverage the endorsement grants is also capped in the modern editions. Protection extends only to the extent permitted by law, goes no broader than the written contract requires, and pays the lesser of the amount the contract demands or your available limits of insurance. Providing a certificate at project close does not end the obligation either, since the promise runs with the contract rather than the paper, and our [certificate of insurance guide](https://www.menloinsurance.com/library/guides/certificate-of-insurance-guide) covers why certificates confer no coverage on their own. ### Dropping the endorsement early is a breach If your contract requires completed operations coverage for three years after completion and you switch carriers or drop the endorsement in year two, you are out of compliance even though the project is long finished. Tell your broker about every open maintenance obligation at each renewal. ## What should you check before agreeing to provide it? [#what-should-you-check-before-agreeing-to-provide-it] Contract insurance requirements are commitments your policy either can or cannot keep, and the time to find out is before signature. Confirm with your broker that your carrier will issue CG 20 37 or blanket wording that matches it, since some insurers exclude or surcharge completed operations additional insured status in defect-prone classes. Read the maintenance clause and price the obligation, because two or three years of continued endorsements is a real cost that belongs in your bid. Check the edition date the contract demands, as the 10 01, 07 04, 04 13, and 12 19 editions parallel the CG 20 10 series and the 04 13 and later versions cap coverage at what the contract requires and state law permits. Finally, make sure the paired [CG 20 10](https://www.menloinsurance.com/library/forms/cg-20-10) requirement is satisfied on the same policy, and that any primary and noncontributory clause is backed by [CG 20 01](https://www.menloinsurance.com/library/forms/cg-20-01) or equivalent wording. ## Where can you see the actual form? [#where-can-you-see-the-actual-form] Menlo does not host ISO forms because they are copyrighted by Insurance Services Office, Inc. You can read the real text through your own policy, which attaches every endorsement issued on it, or by asking your broker for the specimen your carrier files. Regulator-approved filings are also publicly viewable through [SERFF Filing Access](https://filingaccess.serff.com/), the state filing system, though the forms there remain copyrighted and are for reading, not copying. ## Frequently Asked Questions ### What is the difference between CG 20 37 and CG 20 10? CG 20 10 covers the additional insured for liability arising from your ongoing operations, meaning work in progress. CG 20 37 covers the same party for the products-completed operations hazard, meaning claims that arise after the work is finished and in use. Construction contracts typically require both so protection continues past completion. ### How long does CG 20 37 coverage last after a project ends? Only as long as the endorsement stays attached to an active policy. Because completed operations claims surface late, contracts commonly require you to maintain the endorsement for two or three years after completion, or for the period the state statute of repose allows construction defect suits. ### Does CG 20 37 require a written contract? The scheduled version does not, since the carrier deliberately names the additional insured in the schedule. Blanket versions of the coverage do require an executed written agreement, so if your policy uses blanket wording, sign the contract before the work and before any loss. ### Does CG 20 37 cover the additional insured's own negligence? No. Coverage applies to injury or damage caused in whole or in part by your work performed for the additional insured. The modern editions also limit protection to what the law permits and what the written contract requires, and they pay no more than the lesser of the contract amount or your limits. *This guide is for educational purposes and summarizes standard ISO policy language in Menlo's own words. Form numbers and titles are cited for identification only, and Menlo Insurance Services is not affiliated with Insurance Services Office, Inc. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # CG 20 38: Automatic Additional Insured Status for Other Parties Explained (https://www.menloinsurance.com/library/forms/cg-20-38) Learn how CG 20 38 reaches direct and upstream parties required by a written construction agreement, when status ends, and which gaps remain in practice. Markdown version: https://www.menloinsurance.com/library/forms/cg-20-38.md CG 20 38 automatically adds both your direct contracting party and certain other organizations that the same written construction agreement requires you to insure. It is designed for a tiered project where a subcontract may require coverage for the general contractor, owner, or another upstream party even though your company did not sign a separate agreement with each one. Its chain runs through one contract: you agree in writing to insure the party you work for, that agreement also requires other parties to be insured, and CG 20 38 can extend ongoing operations status to both groups. ## Key takeaways * **Reaches beyond the direct party**: the form can include other organizations named by the qualifying written agreement. * **One agreement carries both duties**: the contract with the party you work for must also require you to add the upstream party. * **Ongoing operations only**: status ends when your work for the direct contracting party is complete. * **The contract cannot broaden the policy**: exclusions, applicable law, and policy limits still control. ## How does CG 20 38 work? [#how-does-cg-20-38-work] CG 20 38 begins with the party for whom you perform operations. You and that party must have a written contract or agreement requiring additional insured status. The endorsement then reaches any other person or organization that the same agreement requires you to add. California's Joint Powers Insurance Authority explains this two-part structure in its contractual risk transfer manual. If an electrical subcontract requires the electrician to insure the general contractor and project owner, CG 20 38 can address both even without a separate owner agreement. Coverage still applies only to liability tied to the electrician's ongoing operations and meeting the form's causation requirement. ## How does CG 20 38 differ from CG 20 33? [#how-does-cg-20-38-differ-from-cg-20-33] The difference is the second group of parties. [CG 20 33](https://www.menloinsurance.com/library/forms/cg-20-33) automatically covers the organization with whom you made the written construction agreement and for whom you perform operations. CG 20 38 starts with that same direct party, then adds other organizations the agreement requires you to insure. A lower-tier subcontractor may promise its direct contractor that the owner and construction manager will also be additional insureds without signing agreements with them. CG 20 38 was introduced in the 04 13 edition for that structure. New York procurement guidance identifies the 12 19 edition by its full other-parties title. ## What does CG 20 38 exclude? [#what-does-cg-20-38-exclude] CG 20 38 is an ongoing operations endorsement. Additional insured status ends when your operations for the direct contracting party are complete, and the form excludes specified post-completion bodily injury and property damage. It also excludes claims arising from designated architectural, engineering, and surveying professional services. The endorsement does not create completed operations protection for any tier. A contract requiring post-completion coverage needs separate wording, such as [CG 20 37](https://www.menloinsurance.com/library/forms/cg-20-37) or an applicable automatic form. CG 20 38 also cannot exceed what the law or written agreement permits, and it shares the policy's limits. ## What should you verify before work starts? [#what-should-you-verify-before-work-starts] Map every requested party to the contract clause that requires its status. Legal names matter when the owner, developer, parent company, and construction manager are separate entities. Confirm the signed agreement requires both direct and upstream parties, then compare editions. Collect the actual endorsement with the certificate. A certificate description may list several entities, but it cannot create a missing contractual requirement or change the policy. ## Frequently Asked Questions ### Who does CG 20 38 add as an additional insured? It can add the party for whom you perform operations under a qualifying written agreement and other persons or organizations that the same agreement requires you to insure. ### Do I need a separate contract with every upstream party? The form is designed to reach certain other parties without a separate contract with each one. Your written agreement with the direct party must expressly require you to add those other parties. ### Does CG 20 38 provide completed operations coverage? No. The standard form concerns ongoing operations and ends status when your operations for the direct contracting party are complete. Post-completion requirements need separate coverage wording. ### Are CG 20 33 and CG 20 38 interchangeable? No. Both use a written construction agreement, but CG 20 38 can reach other upstream parties required by that agreement. CG 20 33 centers on the party with whom you contracted directly. *This guide is for educational purposes and summarizes standard ISO policy concepts in original language. Form numbers and titles are used only for identification. Menlo Insurance Services is not affiliated with or approved by Insurance Services Office, Inc. Your policy, contract, and attached endorsements control. Talk to a licensed broker about your actual exposures.* ## References . [California Joint Powers Insurance Authority. Contractual Risk Transfer Manual]() . [New York State Office of General Services. Guidelines for Insurance Requirements in Contracts]() # CG 20 39: Automatic Completed Operations Additional Insured Status (https://www.menloinsurance.com/library/forms/cg-20-39) Learn how CG 20 39 automatically grants completed operations status to a direct contracting party, its written-agreement trigger, limits, and key gaps. Markdown version: https://www.menloinsurance.com/library/forms/cg-20-39.md CG 20 39 automatically grants completed-operations additional insured status to a person or organization for whom you performed operations when your written construction agreement with that party requires it. The explanation below concerns the 12 19 edition and its direct-party completed-work trigger. ## Key takeaways * **A written agreement with the added party is required**: direct contractual privity is central to the trigger. * **It addresses completed work**: injury or damage must fall within the products-completed operations hazard. * **Your work must cause the loss at least in part**: the endorsement does not insure the added party for unrelated liability. * **Contract and policy limits apply**: the form pays no more than the lower applicable amount. ## How does CG 20 39 work? [#how-does-cg-20-39-work] The additional insured is the party for whom you completed operations and with whom you agreed in writing to provide status. The grant applies to qualifying bodily injury or property damage caused, at least in part, by your work for that party and included in the products-completed operations hazard. Montana's public Insurance Requirements in Contracts manual reproduces CG 20 39 12 19 and identifies the written agreement, completed-work causation, legality, coverage-breadth, professional-services, and limit provisions. For example, a subcontractor's signed agreement with a general contractor may require completed-operations status for the general contractor. CG 20 39 can respond automatically to that direct requirement without scheduling the general contractor by name, subject to the exact wording. ## How does it differ from CG 20 33 and CG 20 40? [#how-does-it-differ-from-cg-20-33-and-cg-20-40] [CG 20 33](https://www.menloinsurance.com/library/forms/cg-20-33) uses the same direct-contract concept for ongoing operations. CG 20 39 addresses completed operations, so a contract requiring both phases may need both forms. [CG 20 40](https://www.menloinsurance.com/library/forms/cg-20-40) can reach other upstream parties required by the same written construction agreement even when your business did not sign directly with them. CG 20 39 does not provide that other-parties mechanism. The Alliant manual expressly pairs CG 20 39 with CG 20 33 and CG 20 40 with CG 20 38. ## What limitations should you check? [#what-limitations-should-you-check] Coverage applies only to the extent permitted by law and cannot be broader than the written agreement requires. The maximum payable for the additional insured is the lesser of the contract-required amount and the applicable policy limit. The endorsement does not increase limits. It also excludes specified architectural, engineering, and surveying professional services. Confirm the agreement date, legal name of the direct party, required duration after completion, policy term, and any upstream parties. Obtain the actual endorsement rather than relying on a certificate description. ## Frequently Asked Questions ### Does CG 20 39 require a direct written contract? Yes. The automatic grant is built around a written construction agreement between the named insured and the party for whom it performed operations. ### Does CG 20 39 cover ongoing operations? No. It addresses qualifying completed operations. CG 20 33 is the corresponding direct-party ongoing-operations form. ### Can CG 20 39 cover an owner with no contract with the subcontractor? Not through its direct-party trigger. CG 20 40 is designed for certain other upstream parties required by the subcontract. ### Does the form add separate limits? No. Coverage is capped by the lower contract-required amount or applicable policy limit and does not increase the policy limits. *This guide is for educational purposes and summarizes standard ISO policy concepts in original language. Form numbers and titles are used only for identification. Menlo Insurance Services is not affiliated with or approved by Insurance Services Office, Inc. Your policy, contract, and attached endorsements control. Talk to a licensed broker about your project.* ## References . [Montana Risk Management & Tort Defense Division. Insurance Requirements in Contracts]() (accessed September 5, 2026) . [Independent Insurance Agents of Texas. CG 20 39 12 19 specimen]() (accessed September 5, 2026) # CG 20 40: Automatic Completed Operations Status for Other Parties (https://www.menloinsurance.com/library/forms/cg-20-40) Learn how CG 20 40 automatically covers direct and upstream parties for completed operations, what triggers status, and which important limitations remain. Markdown version: https://www.menloinsurance.com/library/forms/cg-20-40.md CG 20 40 provides automatic additional insured status for completed operations when a written construction agreement requires your business to cover both its direct contracting party and certain other parties. It is designed for tiered projects where an owner or another upstream organization may not have signed a contract directly with your company. ## Key takeaways * **It reaches other required parties**: the written agreement can carry the duty beyond your direct contractor. * **It is for completed operations**: the injury or damage must fall within the products-completed operations hazard. * **Causation still matters**: coverage is tied to your completed work performed for the qualifying direct party. * **The agreement sets a ceiling**: coverage cannot be broader than required, and the policy's applicable limit still controls. ## How does CG 20 40 work? [#how-does-cg-20-40-work] The trigger begins with a written construction contract or agreement in which you agree to add the party for whom you perform operations. If that same agreement requires you to add other people or organizations, CG 20 40 can extend completed-operations status to them too. Imagine a subcontract requiring a trade contractor to cover the general contractor and project owner for completed operations. The trade contractor has a direct agreement with the general contractor, but not the owner. CG 20 40 is designed to reach both when the endorsement's conditions are satisfied. An Insurance Requirements in Contracts manual describes CG 20 40 12 19 as the completed-operations counterpart to CG 20 38 and explains that it can reach parties outside direct contractual privity. ## How is CG 20 40 different from CG 20 38 and CG 20 39? [#how-is-cg-20-40-different-from-cg-20-38-and-cg-20-39] [CG 20 38](https://www.menloinsurance.com/library/forms/cg-20-38) addresses ongoing operations for a direct party and other parties required by the same written construction agreement. CG 20 40 follows that other-parties structure but applies to completed operations. CG 20 39 also provides automatic completed-operations status, but it centers on the person or organization with whom the named insured has the written construction agreement. CG 20 40 is broader in who it can reach, not broader in every coverage term. Industry construction-risk materials describe the owner without a direct subcontract as the core example. ## What limits should you verify? [#what-limits-should-you-verify] The standard form ties coverage to bodily injury or property damage caused, at least in part, by your completed work for the direct contracting party. It does not grant ongoing-operations coverage and excludes designated professional services. Coverage is limited to the extent permitted by law and cannot exceed what the written agreement requires. The most paid is also capped by the lesser of the contractually required amount and the policy's applicable limit. Because all insureds share policy limits, automatic status does not create a separate limit for each upstream party. Before work starts, map each requested entity to the signed contract clause. Before closeout, obtain the actual endorsement and confirm that completed-operations coverage remains in place for the required period. ## Frequently Asked Questions ### Who can qualify under CG 20 40? It can include the party for whom you performed work under a qualifying written agreement and other persons or organizations that the same agreement requires you to cover. ### Does CG 20 40 cover ongoing operations? No. It applies to qualifying injury or damage within the products-completed operations hazard. Ongoing work requires separate coverage. ### Do I need a direct contract with every upstream party? The form is designed to reach certain other required parties without a separate direct contract. The signed agreement with your direct party must require their status. ### Does each additional insured receive separate limits? No. The endorsement does not increase the policy limits, and it caps coverage by the amount required in the agreement when that amount is lower. *This guide is for educational purposes and summarizes standard ISO policy concepts in original language. Form numbers and titles are used only for identification. Menlo Insurance Services is not affiliated with or approved by Insurance Services Office, Inc. Your policy, contract, and attached endorsements control. Talk to a licensed broker about your actual exposures.* ## References . [Alliant Insurance Services. Insurance Requirements in Contracts Manual]() . [Independent Insurance Agents & Brokers of South Carolina. Contractual Risk Transfer in Construction]() # CG 21 39: Contractual Liability Limitation Explained (https://www.menloinsurance.com/library/forms/cg-21-39) Learn how CG 21 39 narrows contractual liability coverage, which insured contracts remain, and why contractors should review indemnity obligations now. Markdown version: https://www.menloinsurance.com/library/forms/cg-21-39.md CG 21 39 is a commercial general liability endorsement that sharply narrows coverage for liability a business assumes in a contract. It does this by removing the broad business-contract category from the policy's definition of an insured contract. It is a limitation, not an absolute exclusion of every claim connected to a contract. That distinction matters when a subcontract, lease, or service agreement contains an indemnity clause. The business may still owe the promised indemnity even when its CGL policy no longer treats that promise as an insured contract. ## Key takeaways * **Narrow definition**: CG 21 39 removes the category that normally addresses another party's tort liability assumed in many business agreements. * **Five categories remain**: leases of premises, sidetrack agreements, certain easements or licenses, some municipal indemnity obligations, and elevator maintenance agreements remain in the definition. * **No blanket contract exclusion**: liability that would exist without the contract may still fit the standard exception to the contractual liability exclusion. * **Contract review matters**: compare every indemnity promise with the endorsement before signing, because the contract and policy can impose different obligations. ## What does CG 21 39 change? [#what-does-cg-21-39-change] CG 21 39 replaces the normal insured contract definition with a shorter list. A 2025 federal court decision reproduced that shortened definition and identified the five remaining categories, but it did not include the broad sixth category used for tort liability assumed in ordinary business contracts. That missing category is often the one a contractor relies on when agreeing to indemnify an owner or general contractor for bodily injury or property damage. The endorsement changes a defined term used by the policy's contractual liability exclusion. It does not erase all Coverage A protection. If the insured would have been liable for the injury or damage without the agreement, that independent liability can still fall outside the exclusion, subject to every other policy term. ## Why is it different from an absolute contractual liability exclusion? [#why-is-it-different-from-an-absolute-contractual-liability-exclusion] An absolute exclusion attempts to bar a broader class of contract-related liability. CG 21 39 works more narrowly by changing which agreements qualify as insured contracts. That technical route can still produce a serious uninsured indemnity obligation, but calling it an absolute exclusion overstates the form. Public construction contracts treat the difference as material. Tampa International Airport's Airside D contract prohibits CG 21 39 while separately requiring additional insured and completed operations coverage. Those requirements are separate because contractual liability coverage does not make another party an additional insured, and additional insured status does not insure every indemnity promise. ## What should a business owner check? [#what-should-a-business-owner-check] Start with the policy's forms schedule. If CG 21 39 appears, ask the broker to compare it against the indemnity and hold harmless sections of every major contract. A certificate of insurance will not show how the insured contract definition changed unless the attached endorsement is reviewed. Then separate two questions. First, could the business face liability under tort law even without the contract? Second, did it promise to assume someone else's tort liability? Tarrant County contract documents prohibit CG 21 39 while describing the form as a restriction to liability that would exist without a contract. The answer depends on the actual contract, policy, facts, and governing law. ## Frequently Asked Questions ### Does CG 21 39 eliminate all contractual liability coverage? No. It narrows the definition of insured contract, but five specified contract categories remain. Liability the insured would have without a contract may also remain outside the policy's contractual liability exclusion. ### Does CG 21 39 remove additional insured coverage? No. Additional insured status comes from separate endorsements. CG 21 39 changes contractual liability coverage for the named insured's assumed obligations, so the two issues must be reviewed separately. ### What is the main risk for a contractor? The contractor may sign an enforceable indemnity promise that the policy does not treat as an insured contract. The obligation can remain with the contractor even when the insurer does not cover that assumed liability. *This guide is for educational purposes and summarizes standard ISO policy language in original words. Menlo Insurance Services is not affiliated with Insurance Services Office, Inc. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker and legal counsel about your actual contracts and exposures.* ## The Bottom Line [#the-bottom-line] CG 21 39 removes the broad insured contract category used by many indemnity agreements, but it is not a total ban on every contract-related claim. If it appears on a CGL policy, match the policy definition to the contract before the business accepts the indemnity obligation. ## References . [United States District Court for the Southern District of New York. CVR Pinewood Vintage Vines, LLC v. Evanston Insurance Company]() . [Hillsborough County Aviation Authority. Airside D Development Program Contract]() . [Tarrant County, Texas. Construction Contract Insurance Requirements]() # CG 21 44: Designated Premises, Project or Operation Limitation (https://www.menloinsurance.com/library/forms/cg-21-44) Learn how CG 21 44 limits liability coverage to scheduled premises, projects, or operations and why the edition and completed schedule both matter today. Markdown version: https://www.menloinsurance.com/library/forms/cg-21-44.md CG 21 44 limits a commercial general liability policy to the premises, project, or operation described in its schedule. An injury or offense can fall outside the policy when it lacks the required connection to that description. The endorsement restricts Coverages A, B, and C. It does not simply delete Coverage B. The edition matters. The older 07 98 edition uses the title Limitation of Coverage to Designated Premises or Project, while the 04 17 edition adds operation to both the title and schedule. ## Key takeaways * **Scheduled scope**: the premises, project, or operation description becomes part of the coverage trigger. * **Three coverages affected**: the form restricts bodily injury and property damage, personal and advertising injury, and medical payments. * **Edition-sensitive wording**: the 04 17 edition revised the location and operations language after disputes over the older form. * **Blank space is dangerous**: a narrow, incomplete, or outdated schedule can leave ordinary business activity outside the policy. ## What does CG 21 44 limit? [#what-does-cg-21-44-limit] CG 21 44 changes when the CGL insuring agreements apply. Under the older 07 98 form, covered injury, damage, offenses, and medical expenses had to arise from the scheduled premises and operations necessary or incidental to them, or from the scheduled project. An Independent Insurance Agents and Brokers of Louisiana technical advisory confirms that the restriction reaches Coverage A, Coverage B, and Coverage C. The form therefore does more than identify an address. A business may operate from the listed premises yet create an off-premises exposure that the schedule does not capture. Coverage still depends on the exact edition, schedule, and all other exclusions. ## How did the 04 17 edition change the form? [#how-did-the-04-17-edition-change-the-form] The 04 17 edition is titled Limitation of Coverage to Designated Premises, Project or Operation. It was revised to address disagreement over how far operations necessary or incidental to a scheduled premises could extend. The newer form states separate location or connection tests for Coverages A, B, and C rather than relying on the older phrase. That revision does not turn Coverage B off. It limits Coverage B through tests tied to the scheduled premises or the scheduled project or operation, with detailed treatment of location-based offenses. Describing CG 21 44 as a Coverage B deletion is inaccurate. ## Why do contracts often prohibit it? [#why-do-contracts-often-prohibit-it] Project owners often prohibit CG 21 44 because they expect a contractor's liability policy to follow the work described in the agreement. Tampa International Airport's Airside D contract bars the endorsement unless the design-builder uses an approved wrap-up program. An Oregon state grant agreement likewise requires liability insurance with no limitation to designated premises, project, or operation. Before signing, compare the contract's required scope with the completed schedule. Ask the broker for the actual endorsement, not only a certificate. Confirm every relevant address, project name, and operation, then repeat that check at renewal because copied schedules can preserve an obsolete description. ## Frequently Asked Questions ### Does CG 21 44 eliminate Coverage B? No. The endorsement limits when personal and advertising injury coverage applies. It also limits Coverage A and Coverage C, but the exact tests depend on the edition attached to the policy. ### What is the difference between the 07 98 and 04 17 editions? The 07 98 edition refers to designated premises or a project. The 04 17 edition adds a designated operation and rewrites the coverage tests to clarify how location and scheduled activity affect each coverage. ### Can a certificate prove the schedule is broad enough? No. A certificate may identify the policy and limits, but the endorsement schedule controls the described premises, project, or operation. Review the endorsement itself. *This guide is for educational purposes and summarizes standard ISO policy language in original words. Menlo Insurance Services is not affiliated with Insurance Services Office, Inc. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## The Bottom Line [#the-bottom-line] CG 21 44 confines liability coverage to the description in its schedule. Check the edition and every scheduled detail before relying on the policy for off-premises work or an additional project. ## References . [Independent Insurance Agents and Brokers of Louisiana. New ISO Filing on CG 21 44 Designated Premises Limitation]() . [Hillsborough County Aviation Authority. Airside D Development Program Contract]() . [Business Oregon. ARPA Capital Projects Fund Grant Agreement]() # CG 21 53: Designated Ongoing Operations Exclusion Explained (https://www.menloinsurance.com/library/forms/cg-21-53) Learn how CG 21 53 excludes injury or damage from scheduled ongoing operations, how location wording changes its reach, and what owners should review. Markdown version: https://www.menloinsurance.com/library/forms/cg-21-53.md CG 21 53 excludes Coverage A bodily injury and property damage arising from ongoing operations described in its schedule. It applies whether the insured performs those operations or someone performs them on the insured's behalf, and whether the work is for the insured or for others. The schedule is central. It identifies the excluded operations and may identify a location. Without a scheduled location, the exclusion follows those operations wherever they are performed. ## Key takeaways * **Operations must be described**: the schedule defines the work or activity placed outside Coverage A. * **Work on the insured's behalf counts**: using a subcontractor does not avoid the exclusion. * **Location changes the boundary**: a specified location confines the exclusion to the described operations there. Without one, it applies wherever those operations occur. * **Not a blanket completed operations exclusion**: CG 21 53 is directed at ongoing operations, though other endorsements may restrict completed work. ## How does CG 21 53 work? [#how-does-cg-21-53-work] The 01 96 form adds an exclusion to Coverage A for injury or damage arising from the scheduled ongoing operations. A publicly available Hiscox specimen shows the schedule and explains that the exclusion applies to work conducted by the insured or on its behalf. Insurers can use the schedule narrowly, such as one type of work at one project, or broadly, such as all construction operations. A New York court enforced the endorsement where the scheduled description reached construction and demolition operations, illustrating why the actual entry cannot be replaced by a generic form summary. ## What does a specified location change? [#what-does-a-specified-location-change] If the schedule names a location, the exclusion applies only to the described ongoing operations at that location. If no location appears, it applies to the described operations regardless of where the insured or someone acting on its behalf performs them. For this form, location generally joins premises on the same or connecting lots, even when separated by a street, roadway, waterway, or railroad right-of-way. Contractors should compare the scheduled description and site boundary with every contract and job list. ## Is this the same as a wrap-up exclusion? [#is-this-the-same-as-a-wrap-up-exclusion] No. CG 21 54 addresses designated operations covered by a consolidated or wrap-up insurance program and may reach ongoing and completed operations as specified by that form. CG 21 53 is the designated ongoing operations exclusion. The two should not be treated as interchangeable. Public insurance requirements sometimes prohibit CG 21 53 alongside other restrictive construction endorsements because it can conflict with required premises and operations coverage. If a project is insured under a wrap-up, confirm which policy covers the work while it is underway and after completion, for how long, and with what limits. ## Frequently Asked Questions ### Does CG 21 53 apply to subcontracted operations? Yes. The standard endorsement reaches scheduled operations performed by the insured or on the insured's behalf. ### Does CG 21 53 exclude Coverage B personal and advertising injury? The standard 01 96 form adds its exclusion to Coverage A, not Coverage B. Other policy provisions may apply separately. ### How can I tell which work is excluded? Read the schedule or declarations referenced by the endorsement. The form number alone does not reveal the designated operation or any specified location. *This guide is for educational purposes and summarizes standard ISO policy language in original words. Menlo Insurance Services is not affiliated with Insurance Services Office, Inc. Your policy's terms, schedules, and endorsements control. Talk to a licensed broker about your actual operations and projects.* ## The Bottom Line [#the-bottom-line] CG 21 53 can remove Coverage A for a scheduled activity while it is underway. The description of operations, any specified location, work performed on the insured's behalf, and separate completed-operations arrangements all require review. ## References . [Hiscox Insurance Company Inc.. CG 21 53 01 96 Exclusion - Designated Ongoing Operations]() . [New York State Unified Court System. Sea Breeze Holdings, LLC v. Endurance American Specialty Insurance Company]() . [Santa Clara Valley Water District. Wildlife Habitat Restoration Grant Request for Proposals]() # CG 21 65: Total Pollution Exclusion With Exceptions Explained (https://www.menloinsurance.com/library/forms/cg-21-65) Learn how CG 21 65 broadly excludes pollution liability while retaining narrow exceptions for building equipment emissions and certain hostile fires now. Markdown version: https://www.menloinsurance.com/library/forms/cg-21-65.md CG 21 65 replaces the commercial general liability policy's pollution exclusion with a broad total pollution exclusion. It retains two narrow exceptions involving emissions from certain building equipment and heat, smoke, or fumes from some hostile fires. The exceptions are not general pollution coverage. A business should not infer that cleanup costs, spills, waste handling, mold, fuel releases, or contracting pollution exposures are covered merely because CG 21 65 is less restrictive than a total pollution exclusion without exceptions. ## Key takeaways * **Broad causal wording**: the exclusion applies when covered injury or damage would not have occurred in whole or part but for a pollutant release. * **Building exception is narrow**: it addresses bodily injury inside a qualifying building from smoke, fumes, vapor, or soot produced by specified equipment. * **Hostile fire exception has limits**: it can preserve bodily injury and property damage coverage for heat, smoke, or fumes, but not at specified waste or pollution-response sites. * **Cleanup costs remain excluded**: government-required response costs and similar testing, monitoring, removal, containment, treatment, or assessment expenses are outside the exception. ## What does CG 21 65 exclude? [#what-does-cg-21-65-exclude] The 12 04 endorsement excludes bodily injury or property damage that would not have occurred in whole or part without the actual, alleged, or threatened release or movement of pollutants. It also excludes specified pollution response costs and government claims for those costs. A public City of Beaumont contract includes the filed endorsement and its complete operative structure. Because the form uses broad causation language, it may affect routine business events as well as traditional environmental contamination. What qualifies as a pollutant and how the event occurred remain claim-specific questions under the policy and state law. ## What do the two exceptions preserve? [#what-do-the-two-exceptions-preserve] The building-equipment exception applies only to bodily injury sustained inside a building owned, occupied, rented, or loaned to an insured. The smoke, fumes, vapor, or soot must originate from equipment used to heat, cool, or dehumidify the building, or equipment that heats water for occupants' personal use. The hostile-fire exception can apply to bodily injury or property damage from heat, smoke, or fumes. It does not apply when the hostile fire originates at a waste handling, storage, disposal, processing, or treatment site, or where the insured or its contractors are performing pollution testing, cleanup, containment, treatment, or response work. ## Is CG 21 65 pollution liability insurance? [#is-cg-21-65-pollution-liability-insurance] No. The endorsement excludes far more than it restores. The EPA describes CG 21 55 and CG 21 65 as total pollution exclusions with only very limited exceptions. A business with environmental work, fuel tanks, waste, chemical releases, transportation pollution, or cleanup exposure may need a separate pollution policy or a different endorsement. Contract requirements sometimes specifically ask for the building-equipment and hostile-fire exceptions. That does not confirm every other pollution exposure is insured. ## Frequently Asked Questions ### Does CG 21 65 cover all smoke damage? No. Its exceptions depend on the source, type of harm, location, and activity. Other policy terms and exclusions also apply. ### Does the building-equipment exception cover property damage? The standard exception described in CG 21 65 applies to bodily injury inside the qualifying building, not property damage. ### Are pollution cleanup costs covered by the hostile-fire exception? Do not assume so. The form separately excludes specified testing, cleanup, removal, containment, treatment, and assessment costs. *This guide is for educational purposes and summarizes standard ISO policy language in original words. Menlo Insurance Services is not affiliated with Insurance Services Office, Inc. Your policy's terms, definitions, and endorsements control. Talk to a licensed broker about your actual pollution exposures.* ## The Bottom Line [#the-bottom-line] CG 21 65 is a broad pollution exclusion with two carefully limited exceptions, not affirmative environmental coverage. Identify the pollutant source, type of harm, location, and cleanup obligation before drawing a coverage conclusion. ## References . [City of Beaumont, California. Agreement and Commercial General Liability Endorsements]() . [Indiana Department of Environmental Management. Commercial General Liability Policy, CG 21 65 12 04]() . [United States Environmental Protection Agency. Financial Responsibility for Underground Storage Tanks: A Reference Manual]() # CG 22 79: Contractors Professional Liability Exclusion Explained (https://www.menloinsurance.com/library/forms/cg-22-79) Learn what CG 22 79 excludes from a contractor's CGL policy, how it treats hired design professionals, and what its construction-methods exception preserves. Markdown version: https://www.menloinsurance.com/library/forms/cg-22-79.md CG 22 79 excludes specified professional-services liability from a contractor's commercial general liability policy. It addresses engineering, architectural, and surveying services the contractor provides to others and such services provided or arranged in connection with the contractor's construction work. The form also preserves an important distinction: construction means, methods, techniques, sequences, and procedures used by the insured as a construction contractor are not treated as professional services under this endorsement. ## Key takeaways * **Design exposure excluded**: the endorsement applies to covered injury or damage arising from listed professional services. * **Hired professionals included**: it can reach design services performed on the contractor's behalf, not only services performed by employees. * **Construction methods distinguished**: the standard form carves the contractor's own construction means and methods out of its professional-services definition. * **Professional liability remains separate**: CGL and contractors professional liability policies serve different roles and should be coordinated. ## Which services does CG 22 79 address? [#which-services-does-cg-22-79-address] The 04 13 form applies to Coverage A bodily injury and property damage and Coverage B personal and advertising injury arising from the rendering or failure to render the specified professional services. New York's Office of General Services publishes the endorsement and identifies maps, shop drawings, opinions, reports, surveys, field orders, change orders, drawings and specifications, and related supervisory or inspection activities. The operative scope is limited to engineering, architectural, or surveying services supplied to others in a professional capacity, or provided or hired in connection with construction work the insured performs. The exact allegations and who performed the service matter. ## What is the construction means and methods exception? [#what-is-the-construction-means-and-methods-exception] The endorsement says professional services do not include the construction means, methods, techniques, sequences, and procedures employed by the insured in its capacity as a construction contractor. That language prevents the form from becoming a blanket exclusion for every judgment made on a jobsite. It does not turn design work into ordinary construction work. A contractor making structural calculations, approving design documents, or hiring an architect can still face the exclusion. Contracts sometimes require that a CGL professional exclusion be no broader than the 07 98 edition because of this distinction. ## How does CG 22 79 compare with CG 22 80? [#how-does-cg-22-79-compare-with-cg-22-80] CG 22 80 is titled Limited Exclusion - Contractors - Professional Liability. Its application differs, particularly for design services hired from independent professionals. The form number and edition should be reviewed rather than treating all contractor professional exclusions as equivalent. If a contractor performs design-build work or assumes responsibility for architects or engineers, a contractors professional liability policy may be needed. That policy has its own insured services, retroactive date, limits, retention, and reporting conditions. It does not automatically erase the CGL exclusion. ## Frequently Asked Questions ### Does CG 22 79 exclude every jobsite supervision claim? No. The form distinguishes related architectural or engineering supervision from the insured contractor's construction means and methods. Facts and allegations determine which applies. ### Does the exclusion apply when the contractor hires the designer? It can. The standard form addresses providing or hiring independent professionals to supply the specified services in connection with the insured's construction work. ### Is professional liability coverage included elsewhere in the CGL? Do not assume so. Review the complete CGL and any separate contractors professional liability policy for the actual design exposure. *This guide is for educational purposes and summarizes standard ISO policy language in original words. Menlo Insurance Services is not affiliated with Insurance Services Office, Inc. Your policy's terms, definitions, and endorsements control. Talk to a licensed broker about your construction and design services.* ## The Bottom Line [#the-bottom-line] CG 22 79 separates specified architectural, engineering, and surveying exposure from ordinary contracting activity. Review who performs design work, which documents the contractor approves, and whether separate professional liability coverage matches those responsibilities. ## References . [New York State Office of General Services. CG 22 79 04 13 Exclusion - Contractors - Professional Liability]() . [U.S. Securities and Exchange Commission. Engineering, Procurement and Construction Agreement]() # CG 22 80: Limited Contractors Professional Liability Exclusion (https://www.menloinsurance.com/library/forms/cg-22-80) Learn how CG 22 80 excludes a contractor's professional services while preserving construction operations and how it differs from the broader CG 22 79. Markdown version: https://www.menloinsurance.com/library/forms/cg-22-80.md CG 22 80 is a limited professional liability exclusion for contractors. It excludes injury or damage arising from engineering, architectural, or surveying services the insured provides in the capacity of an engineer, architect, or surveyor. It then states that the exclusion does not apply to the insured's operations connected with construction work performed by or on its behalf. That construction-operations provision makes CG 22 80 materially different from CG 22 79. ## Key takeaways * **Specified professional capacity**: the exclusion targets design services the insured provides as an engineer, architect, or surveyor. * **Construction operations preserved**: the standard form does not apply its exclusion to the insured's operations connected with construction work. * **Coverage A and B affected**: the exclusion can reach bodily injury, property damage, and personal and advertising injury. * **Separate professional policy still matters**: CGL coverage is not a replacement for contractors professional liability insurance. ## What does CG 22 80 exclude? [#what-does-cg-22-80-exclude] The 04 13 form lists professional services such as preparing or approving maps, shop drawings, opinions, reports, surveys, field orders, change orders, drawings, and specifications. It also includes related architectural or engineering supervision and inspection. The claim must arise from those services provided by the insured in the specified professional capacity. The endorsement also applies when a claim alleges negligent supervision, hiring, training, or monitoring if the underlying occurrence or offense involved those professional services. ## Why is it called a limited exclusion? [#why-is-it-called-a-limited-exclusion] CG 22 80 expressly leaves the insured's operations connected with construction work outside this exclusion. That does not guarantee coverage, because the insuring agreement, other exclusions, and policy conditions still apply. It does mean the form should not be summarized as a blanket professional-services exclusion for every activity on a project. CG 22 79 is broader in an important respect. It can address engineering, architectural, or surveying services the contractor provides or hires independent professionals to provide in connection with the contractor's work. CG 22 80 focuses on professional services provided by the insured and preserves its construction operations. Public project agreements sometimes prohibit any professional exclusion broader than CG 22 80 for that reason. ## What should a design-build contractor review? [#what-should-a-design-build-contractor-review] Map who signs or approves design documents, who contracts with outside designers, and which entity assumes design responsibility. Then compare the CGL exclusion with the contractors professional liability policy. That separate policy may have a claims-made trigger, retroactive date, retention, and definition of professional services that do not match the CGL. The edition matters. New York's contract-insurance guidance identifies CG 22 80 04 13 by its limited-exclusion title. A manuscript exclusion may be broader even if its heading sounds similar. ## Frequently Asked Questions ### Does CG 22 80 exclude all construction supervision? No. It targets listed professional services provided in an engineering, architectural, or surveying capacity and preserves operations connected with construction work. ### Is CG 22 80 the same as CG 22 79? No. CG 22 79 can reach specified services provided or hired in connection with the contractor's work. Compare the operative text, not only the titles. ### Does CG 22 80 provide professional liability coverage? No. It limits a CGL exclusion. Any affirmative professional liability coverage must be found in the applicable policy. *This guide is for educational purposes and summarizes standard ISO policy language in original words. Menlo Insurance Services is not affiliated with Insurance Services Office, Inc. Your policy's terms and endorsements control. Talk to a licensed broker about your construction and design responsibilities.* ## The Bottom Line [#the-bottom-line] CG 22 80 excludes defined professional services provided by the insured but preserves its operations connected with construction work. Design-build firms should coordinate that boundary with contracts and a separate professional liability policy. ## References . [Utica National Insurance Group. CG 22 80 04 13 Limited Exclusion - Contractors - Professional Liability]() . [Arizona Department of Transportation. I-17 DBOM Agreement Exhibits]() . [New York State Office of General Services. Guidelines for Insurance Requirements in Contracts]() # CG 22 92: Snow Plow Operations Coverage Explained (https://www.menloinsurance.com/library/forms/cg-22-92) Learn how CG 22 92 addresses completed snow plow operations under a CGL policy, what the auto policy covers, and which limits and exclusions remain in a claim. Markdown version: https://www.menloinsurance.com/library/forms/cg-22-92.md CG 22 92 modifies a commercial general liability policy to address bodily injury or property damage arising from completed snow plow operations. Within the defined products-completed operations hazard, it makes the auto exclusion inapplicable to an auto used for snow plow operations. It does not replace commercial auto insurance while the plow vehicle is being operated, and it does not guarantee coverage for every slip, fall, collision, or snow-removal dispute. ## Key takeaways * **Completed operations focus**: the endorsement addresses injury or damage after the snow plow work is complete. * **Limited auto-exclusion exception**: it changes how the CGL auto exclusion applies to that completed operation. * **Auto policy remains necessary**: ownership, maintenance, or use of the vehicle during active plowing remains an automobile exposure. * **Other CGL terms remain**: occurrence, completed-operations, contractual, and other exclusions and limits still control. ## Why does snow plowing create a coverage question? [#why-does-snow-plowing-create-a-coverage-question] A self-propelled vehicle with permanently attached snow-removal equipment is generally treated as an auto rather than mobile equipment under the CGL. The auto policy is designed for liability while that vehicle is being driven and operated. A later allegation that the finished plowing left an unsafe pile, ridge, or surface raises a completed-operations question. CG 22 92 says the CGL auto exclusion does not apply to bodily injury or property damage arising from completed snow plow operations. Industry analysis describes this as an exception for the completed-operation claim rather than active vehicle use. ## What does CG 22 92 not settle? [#what-does-cg-22-92-not-settle] The endorsement does not remove the need to prove an occurrence or satisfy the rest of Coverage A. It also does not decide whether work was complete, whether an insured breached a contract, or whether an exclusion for the insured's work applies. Coverage can depend on when the alleged hazardous condition was created and whether the claim arises from vehicle operation or from the condition left after completion. Report the claim to every potentially responsive insurer rather than assigning it to one policy from the accident description alone. ## What should a snow contractor verify? [#what-should-a-snow-contractor-verify] Review the underlying [CG 00 01](https://www.menloinsurance.com/library/forms/cg-00-01) CGL form. Confirm commercial auto covered-auto symbols for owned, hired, and non-owned vehicles, and confirm the CGL includes snow-removal operations in its classification and exposure information. Then review the CG 22 92 edition, completed-operations limits, contract requirements, and umbrella follow-form terms. The City of Dubuque requires CG 22 92 when contracted work involves snow or ice removal. The 12 07 form remains listed by its Snow Plow Operations Coverage title in multistate form references. A certificate alone does not prove the endorsement is attached. ## Frequently Asked Questions ### Does CG 22 92 cover a collision while the truck is plowing? It is directed at completed snow plow operations. Active ownership, maintenance, or use of the truck is ordinarily reviewed under commercial auto coverage. ### Does the endorsement cover every later slip and fall? No. It modifies one exclusion. The claim must still satisfy the CGL insuring agreement and all remaining terms. ### Can a landscaper rely on its summer CGL classification? No. Snow-removal operations and receipts should be disclosed and accepted by the insurer, with the required forms shown on the policy. *This guide is for educational purposes and summarizes standard ISO policy language in original words. Menlo Insurance Services is not affiliated with Insurance Services Office, Inc. Your policy's classifications, terms, limits, and endorsements control. Talk to a licensed broker about your snow operations.* ## The Bottom Line [#the-bottom-line] CG 22 92 addresses a narrow completed-operations issue after snow plowing, while the auto policy remains central during vehicle use. Snow contractors should coordinate both policies and verify the endorsement itself. ## References . [PropertyCasualty360. Snowplowing Claims and the CGL Form]() (accessed September 5, 2026) . [City of Dubuque, Iowa. Insurance Requirements for Truck Haulers and Truck Snow Plowing]() (accessed September 5, 2026) . [PropertyCasualty360. ISO General Liability Multistate Forms List Archive]() (accessed September 5, 2026) . [Independent Insurance Agents of Texas. CG 22 92 12 07 - Snow Plow Operations Coverage specimen]() (accessed September 5, 2026) # CG 22 94: Subcontractor Work Exclusion Explained (https://www.menloinsurance.com/library/forms/cg-22-94) Learn how CG 22 94 removes the subcontractor exception from the CGL damage to your work exclusion and why contractors should review it at renewal today. Markdown version: https://www.menloinsurance.com/library/forms/cg-22-94.md CG 22 94 is a commercial general liability endorsement that removes the subcontractor exception from the policy's damage to your work exclusion. The practical result is broader exclusion of completed-operations property damage to the named insured's work, even when a subcontractor performed the damaged work or caused the damage. This is a significant issue for general contractors, but it is not an exclusion for every injury, every construction defect, or every item of property damaged at a job. ## Key takeaways * **Subcontractor exception removed**: the standard exception for work performed on the insured's behalf no longer protects the insured's completed work. * **Completed work focus**: the endorsement concerns property damage to your work within the products-completed operations hazard. * **Other property is a separate question**: damage to property outside your work must be tested against the full policy and facts. * **Upstream insurance is not a substitute**: a subcontractor's policy, indemnity, or certificate does not restore the removed exception in the contractor's own CGL. ## What does CG 22 94 change? [#what-does-cg-22-94-change] The base CGL damage to your work exclusion ordinarily contains an exception when a subcontractor performed the damaged work or the work from which the damage arose. CG 22 94 replaces that provision without the exception. A 2026 West Virginia appellate decision describes the endorsement as eliminating the subcontractor exception entirely. For example, suppose a subcontractor's faulty installation causes damage to other parts of the contractor's completed project that are also within the policy definition of your work. CG 22 94 may place that property damage within the exclusion. Coverage still depends on the complaint, the cause and timing of damage, policy definitions, other exclusions, and governing law. ## What does the endorsement not do? [#what-does-the-endorsement-not-do] It does not rewrite the entire CGL policy. The endorsement addresses property damage to your work and does not itself exclude bodily injury. It also does not automatically decide whether damaged property belongs within your work, whether operations were complete, or whether another exception or coverage part applies. Courts analyze CG 22 94 alongside the occurrence requirement and the policy's other business-risk exclusions. The Tenth Circuit did that when reviewing a policy containing the 10 01 endorsement. A claim should be reported rather than self-denied from the form number alone. ## Why do construction contracts prohibit it? [#why-do-construction-contracts-prohibit-it] Owners often require completed operations coverage that remains responsive when subcontractor work damages the project. The City of Elgin lists CG 22 94 and CG 22 95 among prohibited limitations in its construction requirements. CG 22 95 is the designated-sites-or-operations version, while CG 22 94 removes the subcontractor exception without that scheduled limitation. Review both the contractor's policy and risk transfer from subcontractors. Additional insured status, indemnity agreements, and certificates can affect recovery paths, but none changes the wording of CG 22 94 in the contractor's own policy. ## Frequently Asked Questions ### Does CG 22 94 exclude all completed operations claims? No. It removes one important exception from the damage to your work exclusion. The precise property damaged, cause, timing, and all other policy terms still matter. ### Is CG 22 94 the same as CG 22 95? No. Both address subcontractor work, but CG 22 95 applies to designated sites or operations shown in its schedule. ### Will a subcontractor certificate cancel this exclusion? No. A certificate does not amend the contractor's policy. Separate indemnity and insurance rights may help, but they do not restore the deleted exception. *This guide is for educational purposes and summarizes standard ISO policy language in original words. Menlo Insurance Services is not affiliated with Insurance Services Office, Inc. Your policy's terms and endorsements control. Talk to a licensed broker and legal counsel about actual construction risks and contracts.* ## The Bottom Line [#the-bottom-line] CG 22 94 removes a valuable completed-operations exception for work done by subcontractors. Contractors should identify the endorsement before work begins, compare it with contract requirements, and review what property the policy treats as their work. ## References . [Intermediate Court of Appeals of West Virginia. Westfield Insurance Company v. Carpenter Reclamation, Inc.]() . [United States Court of Appeals for the Tenth Circuit. Mid-Continent Casualty Company v. JHP Development, Inc.]() . [City of Elgin, Texas. Proposal, Specifications, Contract and Bond Forms]() # CG 24 04: Waiver of Subrogation Endorsement Explained (https://www.menloinsurance.com/library/forms/cg-24-04) Learn how CG 24 04 waives an insurer's recovery rights after a covered loss, whose interests it protects, and what it does not change about insured status. Markdown version: https://www.menloinsurance.com/library/forms/cg-24-04.md CG 24 04 is a general liability waiver of subrogation endorsement. After the insurer pays a covered claim, the endorsement limits its ability to recover that payment from the person or organization protected by the schedule. It does not add that party as an insured or make the policy primary and noncontributory. Those are three different contract requirements. A contractor may need separate endorsements for additional insured status, payment priority, and waiver of recovery rights. ## Key takeaways * **Recovery rights only**: CG 24 04 changes what the insurer may do after paying a covered loss. * **No new insured**: the protected party does not become an additional insured through this form. * **No payment-order change**: the form is not a substitute for [CG 20 01](https://www.menloinsurance.com/library/forms/cg-20-01) primary and noncontributory wording. * **Schedule and timing control**: the protected party must fit the schedule, and the 12 19 edition requires the insured's own waiver before the loss. ## What does CG 24 04 do? [#what-does-cg-24-04-do] Subrogation lets an insurer pursue a third party responsible for a loss after the insurer has paid. The National Association of Insurance Commissioners describes it as the insurer's legal right to bring a liability action and seek reimbursement from the responsible third party. CG 24 04 waives that recovery right against the person or organization identified by its schedule, subject to the form's conditions. The endorsement does not expand which injuries or damage the policy covers. The insurer must first make a payment under the applicable coverage part. Limits, exclusions, deductibles, and every other condition still apply. ## What changed in the 12 19 edition? [#what-changed-in-the-12-19-edition] The 12 19 edition applies across a wider list of liability coverage parts and expressly ties the insurer's waiver to the insured having waived its own recovery right before the loss. A liability policy published in a City of Sacramento public record shows that sequence and limits the protection to the scheduled person or organization. California's insurance regulator separately recorded ISO's approval for CG 24 04 12 19 under its waiver-of-recovery title. The schedule can name a specific party or use qualifying blanket wording. Do not assume the words waiver of subrogation on a certificate resolve who qualifies. Read the actual schedule and the edition attached. ## How is it different from other contract endorsements? [#how-is-it-different-from-other-contract-endorsements] CG 24 04 protects against a later recovery action. [CG 20 10](https://www.menloinsurance.com/library/forms/cg-20-10) or [CG 20 37](https://www.menloinsurance.com/library/forms/cg-20-37) may grant additional insured status, while CG 20 01 can make existing additional insured coverage primary and noncontributory. None performs the same job as the waiver. Government construction requirements commonly list these items separately. The City of Dyersville requires CG 24 04 05 09 for waived recovery rights while separately naming additional insured forms and primary wording. Match each contract requirement to the corresponding policy provision before work begins. ## Frequently Asked Questions ### Does CG 24 04 make someone an additional insured? No. It waives certain insurer recovery rights against the protected party. Additional insured status requires a separate endorsement. ### Is CG 24 04 primary and noncontributory coverage? No. Primary and noncontributory wording addresses which policy pays first and whether it seeks contribution from another insurer. CG 24 04 addresses recovery against the scheduled party after payment. ### Does CG 24 04 cover workers compensation subrogation? No. CG 24 04 applies to the liability coverage parts listed in that endorsement. Workers compensation uses a separate waiver form, commonly WC 00 03 13. *This guide is for educational purposes and summarizes standard ISO policy language in original words. Menlo Insurance Services is not affiliated with Insurance Services Office, Inc. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## The Bottom Line [#the-bottom-line] CG 24 04 waives an insurer's recovery rights against a qualifying protected party after a covered payment. Review the edition and schedule, and do not use it as a substitute for additional insured or primary and noncontributory endorsements. ## References . [National Association of Insurance Commissioners. Glossary of Insurance Terms]() . [City of Sacramento. Public Liability Policy Record]() . [California Department of Insurance. March 2019 Rate Filing Approvals]() . [City of Dyersville. Construction Contract Insurance Requirements]() # CG 24 17: Contractual Liability for Railroad Work Explained (https://www.menloinsurance.com/library/forms/cg-24-17) Learn how CG 24 17 changes insured-contract treatment for a scheduled railroad and job site, what it does not replace, and what to verify before work begins. Markdown version: https://www.menloinsurance.com/library/forms/cg-24-17.md CG 24 17 changes how a commercial general liability policy treats certain contractual liability for work performed for, or affecting, a scheduled railroad at a designated job site. It addresses a narrow railroad issue in the policy's definition of an insured contract. It does not turn the railroad into an additional insured and does not replace railroad protective liability insurance. ## Key takeaways * **Both schedule entries matter**: the railroad and job site must be identified as the policy requires. * **The change is contractual**: it concerns liability assumed in a qualifying agreement, not every loss near railroad property. * **Separate requirements can coexist**: contracts often also request additional insured, railroad protective liability, and auto endorsements. * **Edition 10 01 is commonly specified**: public contracts still identify CG 24 17 10 01 by number. ## Why is CG 24 17 used? [#why-is-cg-24-17-used] The standard CGL insured-contract definition contains a railroad limitation for certain construction or demolition agreements near railroad property. CG 24 17 substitutes a definition for operations involving the scheduled railroad at the designated site, allowing the policy's contractual-liability framework to respond to a qualifying assumption of the railroad's tort liability. That distinction matters because the contractor's indemnity promise and the insurance policy are separate documents. CG 24 17 may address the policy treatment of the promise, but coverage still depends on the claim facts, the agreement, exclusions, conditions, limits, and applicable law. The City of Johnstown publishes CG 24 17 10 01 with its schedule for the railroad and job site. Union Pacific right-of-entry requirements likewise call for that edition or equivalent coverage and require the railroad property to be shown as the designated site. ## Is CG 24 17 the same as railroad protective liability? [#is-cg-24-17-the-same-as-railroad-protective-liability] No. CG 24 17 modifies the contractor's own CGL policy. Railroad protective liability is a separate project-specific coverage, commonly written with the railroad as named insured. A contract may require both. The same Union Pacific requirements identify CG 24 17 under the contractor's CGL section and separately require railroad protective liability on CG 00 35 or an equivalent form. They may also require CA 20 70 for commercial auto operations involving railroad property. Meeting one item does not establish compliance with the others. ## What should a contractor verify? [#what-should-a-contractor-verify] Start with the executed railroad, license, easement, or right-of-entry agreement. Confirm the exact railroad legal name, the designated job site, required edition or acceptable-equivalent language, limits, and whether subcontractors must carry the same endorsement. Then collect the policy endorsement, not just a certificate. Check that its schedule matches the project and that the policy period covers the work. Ask the broker to review any additional insured, waiver, auto, workers compensation, pollution, or railroad protective requirements separately. ## Frequently Asked Questions ### What does CG 24 17 cover? It changes the CGL policy's insured-contract definition for qualifying operations performed for, or affecting, the scheduled railroad at the designated job site. The entire policy and claim facts still control. ### Does CG 24 17 make the railroad an additional insured? No. It is a contractual-liability endorsement. If the contract also requires additional insured status, that is a separate requirement. ### Does CG 24 17 replace railroad protective liability insurance? No. Public railroad agreements commonly require CG 24 17 and a separate railroad protective liability policy or coverage form. ### What edition should I request? Many current public requirements specify CG 24 17 10 01 or equivalent coverage. Follow the contract and confirm the issued endorsement rather than assuming a form number alone is sufficient. *This guide is for educational purposes and summarizes standard ISO policy concepts in original language. Form numbers and titles are used only for identification. Menlo Insurance Services is not affiliated with or approved by Insurance Services Office, Inc. Your policy, contract, and attached endorsements control. Talk to a licensed broker about your actual exposures.* ## References . [Town of Johnstown, Colorado. CG 24 17 10 01 Contractual Liability: Railroads]() . [California Public Utilities Commission. Union Pacific Contractor's Right of Entry Agreement, Exhibit C]() # CG 24 26: Amendment of Insured Contract Definition Explained (https://www.menloinsurance.com/library/forms/cg-24-26) Learn how CG 24 26 narrows contractual liability under a CGL policy, what the causation and legality tests mean, and what businesses should review today. Markdown version: https://www.menloinsurance.com/library/forms/cg-24-26.md CG 24 26 amends the commercial general liability definition of an insured contract. Its practical effect is to narrow when the policy's contractual-liability exception can apply to an agreement in which your business assumes another party's tort liability. The endorsement does not cancel every indemnity agreement, and it does not decide whether the contract itself is enforceable. It changes the insurance analysis. ## Key takeaways * **It narrows contractual-liability treatment**: injury or damage must meet a causation test tied to you or those acting for you. * **Legality is built in**: the assumption counts only to the extent permitted by law. * **It is not additional insured coverage**: contractual indemnity and insured status are separate risk-transfer tools. * **The agreement still matters**: defense duties, indemnity scope, and state anti-indemnity rules require individual review. ## What does CG 24 26 change? [#what-does-cg-24-26-change] The CGL policy generally excludes liability assumed in a contract, then restores a defined category of insured contracts. Paragraph f of that definition can include part of an agreement in which the insured assumes another party's tort liability for bodily injury or property damage. CG 24 26 04 13 adds two important conditions to that category. The injury or damage must be caused, at least in part, by the named insured or someone acting on its behalf. The assumption must also be permitted by law. A public policy packet from Kitsap County reproduces the endorsement and these conditions. This can matter when an agreement demands indemnity for the other party's sole negligence. The contract may contain that promise, but the endorsement does not provide an unrestricted match. Whether coverage exists depends on the actual allegations, causation, governing law, and the rest of the policy. ## How is it different from additional insured status? [#how-is-it-different-from-additional-insured-status] Contractual liability concerns your business's promise to assume another party's tort liability. Additional insured status gives that party potential rights under your policy, subject to its endorsement. One does not automatically create the other. A contract can require indemnity, additional insured status, or both. Review each requirement on its own. Do not treat a certificate naming a party as proof that the policy covers the full indemnity obligation. ## What should you review before signing? [#what-should-you-review-before-signing] Compare the proposed indemnity clause with the policy's exact CG 24 26 edition. Identify whose conduct must cause the loss, whether the clause includes sole negligence, which state's law applies, and whether an anti-indemnity statute restricts the promise. Also check defense language. A contractual promise to defend can create timing and cost issues that are not resolved merely by showing that CG 24 26 is attached. Counsel can assess enforceability, while a licensed broker can explain how the issued policy responds. CG 24 26 04 13 remains identifiable in public policy inventories, including a Palm Beach County policy record. The attached endorsement, not a generic form description, controls the insured's coverage. ## Frequently Asked Questions ### Does CG 24 26 exclude all contractual liability? No. It amends the insured-contract definition and narrows one category. Other parts of the definition and the rest of the policy still require review. ### What is the main causation requirement? For the amended paragraph f category, the bodily injury or property damage must be caused in whole or in part by the named insured or those acting on its behalf. ### Is CG 24 26 an additional insured endorsement? No. It addresses contractual liability. Additional insured status must come from the policy's insured provisions or another endorsement. ### Can CG 24 26 override state law? No. The endorsement expressly limits the relevant assumption to the extent permitted by law, and state law may separately restrict indemnity agreements. *This guide is for educational purposes and summarizes standard ISO policy concepts in original language. Form numbers and titles are used only for identification. Menlo Insurance Services is not affiliated with or approved by Insurance Services Office, Inc. Your policy, contract, and attached endorsements control. Talk to a licensed broker and counsel about your actual agreement.* ## References . [Kitsap County, Washington. Roxy Bremerton Application Packet]() . [Palm Beach County, Florida. Policy Forms and Endorsements Inventory]() # CG 25 03: Per Project General Aggregate Endorsement Explained (https://www.menloinsurance.com/library/forms/cg-25-03) Learn how CG 25 03 creates a separate general aggregate for designated construction projects and what it does not change for completed operations on claims. Markdown version: https://www.menloinsurance.com/library/forms/cg-25-03.md CG 25 03 gives each construction project described in its schedule a separate general aggregate limit. Covered payments tied only to ongoing operations at one designated project reduce that project's aggregate instead of consuming the one general aggregate shared across the policy. The form does not replenish the products-completed operations aggregate by project. This endorsement protects limit capacity across multiple active jobs, but only when the claim and project fit its wording. ## Key takeaways * **Separate project buckets**: each designated construction project receives a general aggregate equal to the General Aggregate Limit in the declarations. * **Ongoing operations focus**: the project-specific calculation applies to sums attributable only to ongoing operations at one designated project. * **Completed operations stay separate**: those payments continue to reduce the policy's Products-Completed Operations Aggregate Limit. * **Designation controls**: the schedule or declarations must describe the projects covered by the endorsement. ## How does the CG 25 03 per project aggregate work? [#how-does-the-cg-25-03-per-project-aggregate-work] Without a per project endorsement, the CGL's general aggregate is generally shared across operations subject to that aggregate during the policy period. CG 25 03 creates a separate Designated Construction Project General Aggregate Limit for each project listed in its schedule. The limit for each project equals the General Aggregate Limit shown in the declarations. Current public works specifications from Whatcom County require the 05 09 edition or an equivalent and describe it as a per project general aggregate endorsement. Okanogan County contract provisions likewise require CG 25 03 05 09 when the general aggregate must apply separately to a construction project. ## What happens when a claim does not belong to one project? [#what-happens-when-a-claim-does-not-belong-to-one-project] A payment that cannot be attributed only to ongoing operations at a single designated project follows the policy's regular aggregate rules. It can reduce the general aggregate or products-completed operations aggregate, whichever applies, without reducing a designated project's general aggregate. The exact allocation depends on the policy and claim facts. This is why a vague schedule creates trouble. Confirm project names, addresses, and any blanket description before mobilization. If the business adds jobs during the policy term, ask how the carrier brings new projects within the endorsement. ## Does CG 25 03 create a per project completed operations aggregate? [#does-cg-25-03-create-a-per-project-completed-operations-aggregate] No. The 05 09 form directs products-completed operations payments to the Products-Completed Operations Aggregate Limit, not to the designated project general aggregate. Clinton County's public construction specifications include an earlier CG 25 03 edition that also treats completed operations separately. Saying that CG 25 03 automatically restores completed operations limits for each project is incorrect. Contracts also list the two aggregates separately. Whatcom County's specification requires a $3,000,000 general aggregate and a distinct $3,000,000 products-completed operations aggregate even while requiring CG 25 03. If a contract demands project-specific completed operations limits, ask the broker what separate endorsement or carrier wording satisfies it. ## Frequently Asked Questions ### Does CG 25 03 increase the each occurrence limit? No. The endorsement changes how the general aggregate applies to designated projects. The each occurrence limit shown in the declarations still applies. ### Does CG 25 03 apply to every project automatically? Not necessarily. The standard form applies to construction projects described in its schedule or declarations. Some carriers use broader proprietary wording, so the attached form controls. ### Does the per project aggregate include completed operations claims? No. Under CG 25 03 05 09, completed operations payments reduce the Products-Completed Operations Aggregate Limit rather than a designated project's general aggregate. *This guide is for educational purposes and summarizes standard ISO policy language in original words. Menlo Insurance Services is not affiliated with Insurance Services Office, Inc. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* ## The Bottom Line [#the-bottom-line] CG 25 03 preserves a separate general aggregate for each designated construction project's ongoing operations. It does not create a project-specific products-completed operations aggregate, so compare both limits with the contract before relying on the endorsement. ## References . [Whatcom County, Washington. Academy Road Stormwater Improvements Contract Documents]() . [Okanogan County, Washington. Chesaw Drainage Contract Provisions]() . [Clinton County, Iowa. Contract Documents and Technical Specifications]() # CG 25 04: Designated Location Aggregate Explained (https://www.menloinsurance.com/library/forms/cg-25-04) Learn how CG 25 04 applies a separate general aggregate at designated locations, what remains shared, and which policy details owners should verify now. Markdown version: https://www.menloinsurance.com/library/forms/cg-25-04.md CG 25 04 changes how the general aggregate limit applies under a commercial general liability policy. For covered claims attributable only to operations at one location listed in the endorsement, that location receives its own general aggregate equal to the amount shown in the declarations. The form is useful for businesses with several premises because a claim at one scheduled location generally does not reduce the separate aggregate for another. It does not multiply every limit in the policy or create separate completed operations aggregates. ## Key takeaways * **Schedule controls**: the separate aggregate applies only to designated locations described in the endorsement or declarations. * **Same stated amount**: each location's aggregate equals the policy's declared general aggregate, not a newly selected limit. * **Occurrence limits remain**: the each occurrence and other applicable sublimits still cap individual losses. * **Completed operations stay shared**: covered products-completed operations losses reduce the products-completed operations aggregate, not a separate location aggregate. ## How does CG 25 04 allocate limits? [#how-does-cg-25-04-allocate-limits] The 05 09 endorsement gives each scheduled location a separate aggregate for Coverage A damages and Coverage C medical expenses attributable only to operations there. Payments assigned to that location reduce its aggregate without reducing the aggregate available at another designated location. If a claim cannot be attributed only to one designated location, it follows the policy-wide aggregate structure. The endorsement also leaves the each occurrence, damage to premises rented to you, and medical expense limits in place. A separate aggregate therefore does not increase the most the insurer can pay for one occurrence. ## What counts as a location? [#what-counts-as-a-location] The endorsement defines a location by premises on the same or connecting lots. A street, roadway, waterway, or railroad right-of-way between premises does not necessarily make them separate locations. The actual schedule matters more than an address list or certificate shorthand. This is why a multi-site owner should compare the schedule with leases, statements of values, and operations. A newly acquired or omitted address should not be assumed to have its own aggregate until the policy confirms it. ## How is CG 25 04 different from CG 25 03? [#how-is-cg-25-04-different-from-cg-25-03] CG 25 04 is organized around designated locations. CG 25 03 is organized around designated construction projects and applies its separate aggregate to ongoing operations at those projects. A public construction requirement may mention either form as a way to apply the aggregate separately to a project or location. They are not interchangeable unless the contract and policy schedule support the same exposure. Neither standard form creates a separate products-completed operations aggregate for every location or project. Under CG 25 04, covered completed operations damages continue to reduce the products-completed operations aggregate. ## Frequently Asked Questions ### Does CG 25 04 increase the each occurrence limit? No. It changes the aggregate structure for designated locations. The each occurrence and applicable sublimits shown in the policy still apply. ### Does every business address automatically receive a separate aggregate? No. Review the endorsement schedule and declarations. The location must fit the policy's designation and definition. ### Does CG 25 04 provide a separate completed operations aggregate by location? No. Covered products-completed operations losses continue to reduce the policy's products-completed operations aggregate. *This guide is for educational purposes and summarizes standard ISO policy language in original words. Menlo Insurance Services is not affiliated with Insurance Services Office, Inc. Your policy's specific terms, conditions, schedules, and endorsements control. Talk to a licensed broker about your actual locations and limits.* ## The Bottom Line [#the-bottom-line] CG 25 04 can keep general aggregate capacity at one scheduled location from being consumed by claims assigned solely to another. Confirm every location in the schedule and remember that occurrence limits and the products-completed operations aggregate do not become separate by location. ## References . [City of Santa Fe, New Mexico. HDR Engineering Contract Insurance Policy Endorsements]() . [City of El Cajon, California. Construction Contracts Insurance Requirements]() . [City of Everett, Washington. Commercial General Liability Policy Endorsements]() # CP 00 10: Building and Personal Property Coverage Form Explained (https://www.menloinsurance.com/library/forms/cp-00-10) What the CP 00 10 Building and Personal Property Coverage Form covers, its three separate coverage categories, and why it always needs a causes of loss form. Markdown version: https://www.menloinsurance.com/library/forms/cp-00-10.md **CP 00 10 is the ISO Building and Personal Property Coverage Form, the standard form that insures a commercial building and its contents against direct physical loss or damage at the premises described in the declarations.** It is the most commonly used commercial property coverage form in the country, and it organizes everything it protects into three separate coverage categories, each with its own limit of insurance. If your commercial property policy covers a building, the equipment inside it, or customer property in your care, CP 00 10 is almost certainly the form doing that work. This page explains the three coverage categories, the property the form deliberately leaves out, and why the form covers nothing at all until a causes of loss form is attached to it. ## Key takeaways * **Three coverage items**: the form insures building, your business personal property, and personal property of others as separate items, each needing its own limit on the declarations. * **No perils of its own**: CP 00 10 describes what property is covered, but the perils come from a separate causes of loss form such as [CP 10 30](https://www.menloinsurance.com/library/forms/cp-10-30). * **The 100-foot rule**: business personal property away from the described building is covered only in the open or in a vehicle within 100 feet of the building or premises. * **Direct damage only**: the form pays to repair or replace property, not for the income you lose while closed, which is the job of [CP 00 30](https://www.menloinsurance.com/library/forms/cp-00-30). ## What does CP 00 10 cover? [#what-does-cp-00-10-cover] The insuring agreement pays for direct physical loss of or damage to covered property at the premises described in the declarations, caused by a covered cause of loss. Four things must all be true for a claim to pay: there is direct physical damage, the damaged item is covered property, the property is at the described premises, and the cause is one the attached causes of loss form covers. The form then splits covered property into three categories, and you buy a limit for each one you need: | Coverage item | What it includes | Typical example | | ------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------- | | Building | The described structure, completed additions, fixtures, permanently installed machinery and equipment, and property used to maintain the premises | The building itself, a permanently installed generator, the HVAC system | | Your business personal property | Furniture, machinery and equipment, stock, tenant improvements and betterments, and leased property you must insure by contract | Shop equipment, inventory, the countertops a tenant installed | | Personal property of others | Property of other people in your care, custody, or control at the described premises | A customer's machine in your shop for repair | The split matters at claim time and at rating time. Building coverage generally carries a cheaper rate than business personal property, so items that qualify as building, like permanently installed equipment, should be counted in the building limit. Personal property of others is a distinct item, and if you hold customer property without buying that coverage, a fire that destroys it leaves you explaining the gap to your customers. Coverage for others' property here is direct damage only, so a customer's loss-of-use claim needs a different form. ## Why does CP 00 10 need a causes of loss form? [#why-does-cp-00-10-need-a-causes-of-loss-form] CP 00 10 identifies the subject of insurance, but it never lists a single peril. A commercial property policy must attach a causes of loss form, and that separate form decides whether the loss event itself is covered. The basic form CP 10 10 and broad form CP 10 20 cover named perils only, while the special form [CP 10 30](https://www.menloinsurance.com/library/forms/cp-10-30) covers everything not excluded. The coverage form provides the same property coverages regardless of which causes of loss form you pick, so the pairing decision is where the real breadth of your policy gets set. A policy with generous limits on CP 00 10 but only the basic causes of loss form still leaves theft and water damage uncovered. ## What property does CP 00 10 not cover? [#what-property-does-cp-00-10-not-cover] The form lists seventeen categories of property not covered, and the reasons follow a pattern. Some property belongs on specialized policies, like money and securities, autos held for sale, and most vehicles licensed for road use. Some is barely exposed to loss, like foundations below the lowest basement floor, underground pipes, and land. Some is too exposed, like most outdoor fences, antennas, and crops. Electronic data gets only a small additional coverage rather than full treatment, and the cost to restore information on valuable papers and records is likewise limited to a modest coverage extension. ### The unscheduled building trap Business personal property inside a building that is not described in the declarations is not covered, even when that building sits within 100 feet of your premises. Stock moved into a nearby shed for the winter is uninsured until the shed is added to the policy. Location rules trip up more insureds than the exclusion list does. Business personal property is covered in or on the described building, or in the open or in a vehicle within 100 feet of the building or premises, whichever distance is greater. New locations get limited automatic coverage through a coverage extension, but the safe habit is telling your broker before property moves, not after. Builders working away from the premises should compare this form against a builders risk policy, which our [builders risk insurance guide](https://www.menloinsurance.com/library/guides/builders-risk-insurance-guide) covers in depth. ## How do you set the form up correctly? [#how-do-you-set-the-form-up-correctly] Most CP 00 10 claim disputes trace back to decisions made at placement, not at the loss. Work through these checks with your broker before binding: * **Sort property into the right coverage item**: decide with your broker whether gray-area items like bolted-down machinery count as building or business personal property, and document the intent so the cheaper building rate applies where it should. * **Buy limits that satisfy coinsurance**: the limit for each item must meet the coinsurance percentage on the declarations at the time of loss, or a penalty shrinks every partial claim payment. * **Add personal property of others if you hold it**: repair shops, warehouses, and consignment sellers need this third coverage item, because your own business personal property limit does not respond to customer property. * **Pair the form with the right causes of loss form**: confirm the declarations show the special form CP 10 30 unless there is a deliberate reason to accept named perils only. ## Where can you see the actual form? [#where-can-you-see-the-actual-form] Menlo does not host ISO forms because they are copyrighted by Insurance Services Office, Inc. You can read the real text through your own policy, which attaches every form issued on it, or by asking your broker for the specimen your carrier files. Regulator-approved filings are also publicly viewable through [SERFF Filing Access](https://filingaccess.serff.com/), the state filing system, though the forms there remain copyrighted and are for reading, not copying. ## Frequently Asked Questions ### What is the difference between building and business personal property under CP 00 10? Building means the described structure plus completed additions, fixtures, and permanently installed machinery and equipment. Business personal property is everything movable that you own and use in the business, such as furniture, equipment that is not permanently installed, and stock. The distinction matters because each carries its own limit and rate. ### Does CP 00 10 cover lost income while my business is closed? No. CP 00 10 pays only for direct physical loss or damage to covered property. Income you lose during the shutdown and the extra costs of operating from a temporary location belong to the Business Income (and Extra Expense) Coverage Form CP 00 30, which is a separate purchase. Our guide to [commercial property insurance](https://www.menloinsurance.com/library/guides/commercial-property-insurance-explained) walks through how the pieces fit together. ### Does CP 00 10 cover flood or earthquake? Not by default. The perils come from the attached causes of loss form, and even the special form CP 10 30 excludes flood and earth movement. Those exposures need separate policies or endorsements, so ask your broker to address them explicitly rather than assuming the property form responds. ### Is a tenant's build-out covered under CP 00 10? Yes, as improvements and betterments within your business personal property coverage. The form covers your use interest as a tenant in fixtures, alterations, and additions you paid for but cannot legally remove. The value should be included when you set your business personal property limit, or scheduled separately so the building rate applies. *This guide is for educational purposes and summarizes standard ISO policy language in Menlo's own words. Form numbers and titles are cited for identification only, and Menlo Insurance Services is not affiliated with Insurance Services Office, Inc. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # CP 00 18: Condominium Commercial Unit-Owners Coverage Form Explained (https://www.menloinsurance.com/library/forms/cp-00-18) Learn how CP 00 18 covers a commercial condo owner's business personal property, coordinates with association insurance, and treats unit improvements. Markdown version: https://www.menloinsurance.com/library/forms/cp-00-18.md CP 00 18 is the ISO commercial property coverage form for a business or professional firm that owns a commercial condominium unit. It does not provide a separate Building coverage category. Instead, it covers qualifying property under Your Business Personal Property, subject to the selected causes of loss, and coordinates with insurance carried by the condominium association. It is not the Business Income (Without Extra Expense) form, which is CP 00 32. The condominium documents allocate property between the unit owner and association. Compare that allocation with the actual covered-property wording; a bylaws obligation is not itself an insurance grant. ## Key takeaways * **No separate Building coverage**: qualifying unit-owner property is addressed under Your Business Personal Property. * **Documents define the boundary**: the declaration, bylaws, and applicable state law help determine whether the unit owner or association must insure an item. * **Association coverage can apply first**: CP 00 18 is excess when association insurance covers the same property. * **Income coverage is separate**: CP 00 18 protects property and does not itself replace lost income after a shutdown. ## What property can CP 00 18 cover? [#what-property-can-cp-00-18-cover] CP 00 18 covers qualifying property under Your Business Personal Property when a limit appears in the declarations. That category can include furniture, machinery and equipment, stock, other business property, and leased personal property the unit owner must insure. It can also include owned fixtures, improvements, and alterations that become part of the building. The form does not provide a separate Building coverage category. Personal Property of Others is a separate category, with its own requirements and limit. The form follows much of the structure of [CP 00 10](https://www.menloinsurance.com/library/forms/cp-00-10) but changes provisions to fit condominium ownership. Insurance industry analysis identifies CP 00 18 10 12 as the dedicated form for business or professional firms that own commercial condominium units. The selected causes of loss form, such as [CP 10 30](https://www.menloinsurance.com/library/forms/cp-10-30), determines which causes of direct physical loss or damage are covered. ## How does it coordinate with the association policy? [#how-does-it-coordinate-with-the-association-policy] CP 00 18 recognizes that two policies may touch the same building element. Property that the condominium association must insure under its agreement or bylaws is not covered property under the unit-owner form. If association insurance nevertheless covers the same property that qualifies under CP 00 18, the unit-owner coverage is excess and does not contribute with the association insurance. Do not settle the boundary only by asking who paid for an improvement. A wall, built-in cabinet, HVAC component, sign, or floor finish may be allocated differently by the condominium documents and state law. Optional CP 04 18 can add forms of loss assessment and miscellaneous real property coverage when attached. ## What does CP 00 18 not solve by itself? [#what-does-cp-00-18-not-solve-by-itself] The base form does not guarantee that every unit loss is covered. Flood, earthquake, equipment breakdown, ordinance costs, and water backup depend on the causes of loss form and endorsements. The declarations control limits, deductibles, premises, and options. CP 00 18 is not business income insurance. A covered fire can stop operations, but lost revenue and continuing expenses require separate coverage. The commercial property forms list distinguishes CP 00 18 from CP 00 30 and CP 00 32. ## What should a commercial condo owner review? [#what-should-a-commercial-condo-owner-review] Start with the condominium declaration, bylaws, association policy, unit-owner policy, and any occupant lease. List improvements, fixtures, equipment, stock, and property of others, then identify which policy is meant to insure each item. Confirm that names and addresses match the ownership records. Ask for the association's current property evidence and deductible. Review loss assessment exposure because the association may assess owners after damage to common property. Value improvements at current replacement cost and update limits after renovations or equipment purchases. ## Frequently Asked Questions ### Is CP 00 18 a business income coverage form? No. CP 00 18 is the Condominium Commercial Unit-Owners Coverage Form. ISO form CP 00 32 is Business Income Without Extra Expense, while CP 00 30 combines business income and extra expense. ### Does CP 00 18 cover the entire condominium building? No. CP 00 18 has no separate Building coverage category. It covers qualifying unit-owner property under Your Business Personal Property, while the condominium documents, association policy, declarations, and applicable law help determine the boundary. ### Can CP 00 18 cover improvements inside my unit? It can include qualifying fixtures, improvements, and alterations that the unit owner owns under Your Business Personal Property, subject to the policy terms and limits. Property the association is required to insure under its agreement or bylaws is excluded. ### What is the difference between CP 00 18 and CP 00 17? CP 00 18 is written for the commercial condominium unit owner. CP 00 17 is the Condominium Association Coverage Form, designed for property insured by the association. *This guide is for educational purposes and summarizes standard ISO policy concepts in original language. Form numbers and titles are used only for identification. Menlo Insurance Services is not affiliated with or approved by Insurance Services Office, Inc. Your policy, condominium documents, and attached endorsements control. Talk to a licensed broker about your actual exposures.* ## References . [FC&S Expert Coverage Interpretation. Condominium Commercial Unit Owners Coverage]() (accessed September 5, 2026) . [FC&S Expert Coverage Interpretation. ISO Commercial Property Forms List]() (accessed September 5, 2026) . [Rough Notes. CP 00 17 and CP 00 18 Coverage Form Analysis]() (accessed September 5, 2026) # CP 00 30: Business Income (and Extra Expense) Coverage Form Explained (https://www.menloinsurance.com/library/forms/cp-00-30) How the CP 00 30 Business Income (and Extra Expense) Coverage Form pays for lost income and extra costs while a business rebuilds after property damage. Markdown version: https://www.menloinsurance.com/library/forms/cp-00-30.md **CP 00 30 is the ISO Business Income (and Extra Expense) Coverage Form, which pays the actual loss of business income you sustain when direct physical damage from a covered cause of loss forces you to suspend operations, plus the extra expenses you incur to keep the business running.** It is the most frequently used time element form in commercial property insurance, and it responds during the period of restoration, the window between the damage and the date the property should reasonably be repaired. Property insurance that rebuilds your building does nothing about the revenue that stops while contractors work. This page explains what the form counts as business income, how the period of restoration starts and ends, and why the coinsurance condition makes an accurate income projection the most important number on the policy. ## Key takeaways * **Business income is two things**: the net income the business would have earned plus the normal operating expenses, including payroll, that continue during the shutdown. * **A direct damage trigger**: the suspension must be caused by direct physical loss at the described premises from a covered cause of loss, so the [CP 10 30](https://www.menloinsurance.com/library/forms/cp-10-30) or another causes of loss form controls the trigger. * **Two clocks**: business income coverage begins 72 hours after the damage, while extra expense coverage begins immediately. * **Coinsurance on projected income**: the required limit is a percentage of the net income and operating expenses for the 12 months following policy inception or the most recent anniversary date, whichever is later, so a low estimate produces a penalty at claim time. ## What does CP 00 30 pay for? [#what-does-cp-00-30-pay-for] The form pays the actual loss of business income you sustain due to the necessary suspension of your operations during the period of restoration. Business income means the net income, meaning net profit or loss before income taxes, that would have been earned, plus continuing normal operating expenses incurred, including payroll. A business projected to earn $100,000 with $50,000 of continuing expenses recovers $150,000 for the shutdown period. The definition works even for an unprofitable business, because a company heading for a $10,000 loss with $50,000 in continuing expenses still recovers $40,000, which puts it exactly where it would have been without the fire. The form restores your position, it never improves it. Extra expense is the second insuring agreement, covering necessary expenses during the period of restoration that you would not have incurred without the damage. That includes relocating to temporary quarters, equipping the replacement space, and overtime to catch up. Expenses to repair or replace property are covered only to the extent they reduce the loss otherwise payable, so paying a premium for rush delivery of a critical machine makes sense when it shortens the shutdown. Businesses that cannot afford any interruption at all, like medical practices and newspapers, sometimes carry the standalone Extra Expense Coverage Form CP 00 50 instead. ## How does the period of restoration work? [#how-does-the-period-of-restoration-work] The period of restoration is the engine of the form, because loss is only paid inside it. It runs on two different clocks depending on the coverage, and it ends on the earlier of the date the property should be repaired with reasonable speed and similar quality or the date business resumes at a new permanent location: | Feature | Business income | Extra expense | | ---------------------- | ------------------------------------------------------------------------------------------------ | ------------------------------------------ | | Begins | 72 hours after the direct physical loss | Immediately after the direct physical loss | | Ends | When the property should reasonably be repaired, or business resumes at a new permanent location | Same ending point | | Waiting period buyback | Available by endorsement | Not needed | Two details in that definition carry real money. The period ends when repairs should be complete with reasonable speed, not when they actually finish, so an insured who drags out the rebuild does not extend the recovery. And the policy expiration date has no effect on it, because the policy in force at the time of loss pays for the entire period of restoration even if the policy expires mid-rebuild. The 72-hour wait on the business income side can be shortened or removed by endorsement, which matters to businesses where three dark days is serious revenue. ### Rental value is a separate election The declarations let you cover business income including rental value, business income other than rental value, or rental value alone. Landlords electing rental value should count not just rents but the tenant-paid charges, like taxes and utilities, that would fall back on them during a shutdown. ## How does business income coinsurance work? [#how-does-business-income-coinsurance-work] If a coinsurance percentage appears on the declarations, the limit you carry is measured against the net income and operating expenses for the 12 months following policy inception or the most recent anniversary date, whichever is later, multiplied by that percentage. Carry less than the formula requires and the recovery on every claim is reduced proportionally, using the familiar did-over-should calculation. The honest way to comply is a business income worksheet, which projects the coming year's income rather than copying last year's tax return. Choosing the percentage itself is a judgment about how long a worst-case shutdown would last, because a business that could be down 18 months needs a higher percentage than one that could relocate in a month. Our [business income insurance guide](https://www.menloinsurance.com/library/guides/business-income-insurance-explained) walks through the worksheet in more detail. ## What has to be true before the form pays? [#what-has-to-be-true-before-the-form-pays] The trigger is stricter than most insureds assume. The suspension must be caused by direct physical loss of or damage to property at the described premises, and that damage must come from a covered cause of loss under the attached causes of loss form. A neighborhood power outage, a supplier failure, or a pandemic closure with no physical damage at your premises does not trigger the base form, though additional coverages for civil authority and endorsements for dependent properties and utility services address some of those gaps. Because the causes of loss form controls the trigger, a business income policy paired with a named perils form inherits every hole in it, which is one more reason most buyers pair CP 00 30 with the special form [CP 10 30](https://www.menloinsurance.com/library/forms/cp-10-30). The underlying property values themselves sit on [CP 00 10](https://www.menloinsurance.com/library/forms/cp-00-10), and both forms should be built from the same understanding of the operation. ## Where can you see the actual form? [#where-can-you-see-the-actual-form] Menlo does not host ISO forms because they are copyrighted by Insurance Services Office, Inc. You can read the real text through your own policy, which attaches every form issued on it, or by asking your broker for the specimen your carrier files. Regulator-approved filings are also publicly viewable through [SERFF Filing Access](https://filingaccess.serff.com/), the state filing system, though the forms there remain copyrighted and are for reading, not copying. ## Frequently Asked Questions ### What is the difference between CP 00 30 and CP 00 32? CP 00 30 covers both business income and extra expense. CP 00 32 provides the same business income coverage without extra expense, substituting a narrower coverage called expenses to reduce loss, which pays extra costs only up to the amount they save the insurer. Businesses that would spend real money to stay open during a rebuild want CP 00 30. ### Does CP 00 30 pay if the power goes out but my building is undamaged? Not under the base form, because the trigger requires direct physical damage at the described premises from a covered cause of loss. An off-premises utility interruption needs a utility services time element endorsement, and damage at a key supplier or customer needs a dependent properties endorsement. ### How long does CP 00 30 keep paying? Through the period of restoration, which ends when the property should reasonably be repaired with similar quality or when business resumes at a new permanent location, whichever comes first. An extended business income provision then continues coverage for a limited time after reopening while revenue climbs back, and that window can be lengthened by endorsement. ### Does CP 00 30 cover payroll during a shutdown? Yes. Continuing normal operating expenses explicitly include payroll, so wages you keep paying while closed are part of the business income loss. Endorsements exist to limit or exclude ordinary payroll for insureds who would furlough staff, which lowers the required limit and the premium. *This guide is for educational purposes and summarizes standard ISO policy language in Menlo's own words. Form numbers and titles are cited for identification only, and Menlo Insurance Services is not affiliated with Insurance Services Office, Inc. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # CP 10 10: Causes of Loss Basic Form Explained (https://www.menloinsurance.com/library/forms/cp-10-10) Learn which named perils CP 10 10 covers, how the Basic Form works with CP 00 10, and what Broad or Special coverage can add for a commercial property. Markdown version: https://www.menloinsurance.com/library/forms/cp-10-10.md CP 10 10 is the Causes of Loss Basic Form in the commercial property program. It uses a named-peril approach: covered property must suffer direct physical loss or damage caused by a peril the form lists, unless an exclusion or limitation removes coverage. The form identifies causes of loss. A coverage form such as CP 00 10 separately identifies the property, limits, and extensions. ## Key takeaways * **Basic means named perils**: an unlisted cause is not covered merely because the damage was sudden. * **It works with another coverage form**: CP 10 10 does not decide which building or business property is insured. * **Broad and Special are materially different**: they can address causes absent from the Basic Form. * **Exclusions still apply to listed perils**: the peril name is the start of the analysis, not the end. ## Which causes of loss does CP 10 10 name? [#which-causes-of-loss-does-cp-10-10-name] The standard 10 12 form lists fire, lightning, explosion, windstorm or hail, smoke, aircraft or vehicles, riot or civil commotion, vandalism, sprinkler leakage, sinkhole collapse, and volcanic action. Each peril has a definition or limitation. For example, vandalism does not simply create general theft coverage, and interior rain damage generally requires the wind or hail to first create an opening under the form's conditions. Read the exact cause and exclusions rather than relying on the eleven-item summary. The linked public policy contains the complete six-page CP 10 10 10 12 form; this explanation concerns that edition, not that policyholder's specific coverage. A current insurer training guide shows how a commercial property policy starts with a property coverage form and adds Basic, Broad, or Special causes of loss. ## How does Basic differ from Broad and Special? [#how-does-basic-differ-from-broad-and-special] [CP 10 30](https://www.menloinsurance.com/library/forms/cp-10-30), the Special Form, generally covers direct physical loss unless excluded. CP 10 20, the Broad Form, remains named-peril but adds causes such as falling objects, weight of snow, ice or sleet, and certain water damage, plus a collapse additional coverage. Basic Form does not ordinarily cover theft, accidental discharge from plumbing, or falling objects simply because those events damage insured property. Endorsements and state or carrier modifications can change the result. ## What should a business compare? [#what-should-a-business-compare] Start with the property schedule under [CP 00 10](https://www.menloinsurance.com/library/forms/cp-00-10) or another attached coverage form. Then identify the cause-of-loss form, deductible, valuation, coinsurance, protective safeguards, vacancy terms, and endorsements. Map the building's real exposures, including theft, roof loads, plumbing leaks, equipment breakdown, flood, earthquake, and ordinance or law. A lower premium is not a savings if the retained causes of loss are financially unacceptable. Ask for side-by-side Basic, Broad, and Special quotes with material exclusions highlighted. ## Frequently Asked Questions ### Does CP 10 10 cover theft? The standard Basic Form does not provide general theft coverage. Vandalism includes limited treatment of building damage caused by burglars, subject to the form. ### Does CP 10 10 insure my building and inventory? Not by itself. A coverage form such as CP 00 10 identifies covered property and limits. CP 10 10 supplies the named causes of loss. ### Is CP 10 10 the same as special-form coverage? No. Basic Form covers listed perils. Special Form generally covers direct physical loss unless excluded. ### Are flood and earthquake covered? Standard commercial property causes-of-loss forms exclude flood and earth movement. Separate coverage or endorsements may be available. *This guide is for educational purposes and summarizes standard ISO policy concepts in original language. Form numbers and titles are used only for identification. Menlo Insurance Services is not affiliated with or approved by Insurance Services Office, Inc. Your policy, declarations, and attached forms control. Talk to a licensed broker about your property.* ## References . [Gull Aire Village Association. CP 10 10 10 12 - Causes of Loss - Basic Form, PDF pages 46-51]() (accessed September 5, 2026) . [USLI. Fundamentals First Commercial Property Training]() (accessed September 5, 2026) # CP 10 30: Causes of Loss Special Form Explained (https://www.menloinsurance.com/library/forms/cp-10-30) How the CP 10 30 Causes of Loss Special Form works, why open perils coverage beats the basic and broad named perils forms, and what it still excludes. Markdown version: https://www.menloinsurance.com/library/forms/cp-10-30.md **CP 10 30 is the ISO Causes of Loss Special Form, which covers direct physical loss on an open perils basis, meaning every cause of loss is covered unless the policy specifically excludes or limits it.** It is the broadest of the three ISO causes of loss forms, and attaching it to a commercial property policy shifts the burden of proof to the insurer, which must point to an exclusion to deny a claim. A commercial property policy must include a causes of loss form, because coverage forms like [CP 00 10](https://www.menloinsurance.com/library/forms/cp-00-10) describe what property is insured but not what events are covered. This page explains how the special form differs from the basic and broad named perils forms, how its exclusions actually define the coverage, and why the defined term specified causes of loss quietly gives coverage back in several places. ## Key takeaways * **Open perils, not all perils**: the form covers direct physical loss unless excluded or limited, which is broad but never unlimited. * **Burden of proof flips**: under the basic and broad forms the insured must prove a named peril caused the loss, while under CP 10 30 the insurer must prove an exclusion applies. * **Exclusions are the coverage**: flood, earth movement, ordinance or law, wear and tear, and the other exclusions draw the real boundaries of the form. * **Theft is the headline upgrade**: the special form covers theft, which neither CP 10 10 nor CP 10 20 includes, subject to special dollar limits on a few property types. ## How does CP 10 30 compare to the basic and broad forms? [#how-does-cp-10-30-compare-to-the-basic-and-broad-forms] ISO publishes three causes of loss forms, and they build on each other. The basic form CP 10 10 names eleven covered perils, including fire, lightning, explosion, windstorm or hail, smoke, and vandalism. The broad form CP 10 20 keeps those and adds falling objects, weight of snow, ice or sleet, water damage, and an additional coverage for collapse. The special form then covers everything the broad form covers plus every other cause of direct physical loss that is not excluded, with theft as the most valuable addition: | Causes of loss | Basic CP 10 10 | Broad CP 10 20 | Special CP 10 30 | | ------------------------------------------------------------------------------------------- | -------------- | -------------- | ---------------- | | Fire, lightning, explosion, windstorm or hail, smoke, vandalism, and the other basic perils | Covered | Covered | Covered | | Falling objects, weight of snow, ice or sleet, water damage, collapse | Not covered | Covered | Covered | | Theft | Not covered | Not covered | Covered | | Any other direct physical loss not excluded | Not covered | Not covered | Covered | The practical difference shows up in the claim file. Under a named perils form, the insured must prove the loss came from a listed peril, and any event that slips between the definitions goes unpaid. Under the special form, an unexplained loss is covered unless the insurer can establish that an exclusion or limitation applies. That is why the premium difference between broad and special is usually money well spent, and why our overview of [commercial property insurance](https://www.menloinsurance.com/library/guides/commercial-property-insurance-explained) treats the special form as the default recommendation. ## What does the special form exclude? [#what-does-the-special-form-exclude] Because anything not excluded is covered, the exclusions do the work that the named perils list does on the other forms. The first group excludes [ordinance or law](https://www.menloinsurance.com/library/guides/ordinance-or-law-coverage), earth movement, governmental action, nuclear hazard, utility services, war, water, and fungus, wet rot, dry rot and bacteria. This group carries anti-concurrent causation wording, which means the loss is excluded when one of these causes contributes to it directly or indirectly, regardless of any other cause acting at the same time or in any sequence. The wording exists to override efficient proximate cause rules in many states, and storm surge is the classic example, because insureds argued wind was the true cause of coastal flooding until insurers made the water exclusion sweep in everything it touches. The later exclusion groups handle predictable and maintenance-driven losses without the anti-concurrent causation lead-in. Wear and tear, rust, decay, settling, smog, [mechanical breakdown](https://www.menloinsurance.com/library/guides/what-is-equipment-breakdown-coverage), and insect or rodent damage are excluded, as is continuous seepage or leakage of water over 14 days or more and freezing of plumbing when no effort was made to maintain heat. Flood and earthquake deserve special attention, because buyers routinely assume the special form picks them up and it does not. Both need dedicated endorsements or standalone policies, a gap that also flows through to time element coverage since [CP 00 30](https://www.menloinsurance.com/library/forms/cp-00-30) borrows its covered causes of loss from whichever form is attached. ### Special dollar limits on theft Theft coverage under CP 10 30 carries per-occurrence sublimits for a few property types, including $2,500 for furs, $2,500 for jewelry and precious metals, $2,500 for patterns, dies, molds and forms, and $250 for stamps, tickets and letters of credit. Jewelers and similar operations need specialty coverage rather than reliance on the special form. ## What are specified causes of loss? [#what-are-specified-causes-of-loss] Buried in the definitions is a term that quietly gives coverage back. Specified causes of loss means fire, lightning, explosion, windstorm or hail, smoke, aircraft or vehicles, riot or civil commotion, vandalism, leakage from fire-extinguishing equipment, sinkhole collapse, volcanic action, falling objects, weight of snow, ice or sleet, and water damage, a list that roughly mirrors the broad form perils. Several exclusions and limitations carve exceptions around it. Excluded wear and tear that results in a specified cause of loss leaves the resulting damage covered, a pollutant release caused by a specified cause of loss is covered, and fragile articles, animals, and certain builders' equipment are covered only when a specified cause of loss or building glass breakage does the damage. The additional coverage for collapse likewise responds when hidden decay or a specified cause of loss produces an abrupt collapse. Reading an exclusion without checking for a specified causes of loss exception is the fastest way to misjudge this form. ## Where can you see the actual form? [#where-can-you-see-the-actual-form] Menlo does not host ISO forms because they are copyrighted by Insurance Services Office, Inc. You can read the real text through your own policy, which attaches every form issued on it, or by asking your broker for the specimen your carrier files. Regulator-approved filings are also publicly viewable through [SERFF Filing Access](https://filingaccess.serff.com/), the state filing system, though the forms there remain copyrighted and are for reading, not copying. ## Frequently Asked Questions ### Does CP 10 30 cover flood or earthquake? No. Water, which includes flood, surface water, and sewer backup, and earth movement, which includes earthquake, are both excluded with anti-concurrent causation wording. Both exposures require separate policies or endorsements, and coastal or fault-zone businesses should treat them as mandatory conversations with their broker. ### What does open perils mean on the special form? It means covered causes of loss are defined as direct physical loss unless excluded or limited by the policy. Instead of proving the loss matches a named peril, the insured only shows direct physical damage occurred, and the insurer must identify an applicable exclusion to deny the claim. Older editions said all risks, and the wording was changed because the form never covered literally everything. ### Is theft covered under CP 10 30? Yes, and that is the biggest single difference from the basic and broad forms, which do not cover theft at all. A few property types carry special per-occurrence dollar limits, including $2,500 for jewelry and furs and $250 for stamps and tickets, and theft can be excluded by endorsement when an insured wants a premium credit. ### Which causes of loss form should my business carry? The special form is the right answer for most businesses, because it covers theft, accidental damage, and unexplained losses the named perils forms miss, and it puts the burden of proof on the insurer. The basic or broad forms fit mainly when a carrier restricts a tough risk or a tight budget forces the tradeoff, and the decision should be made knowingly, not by default. *This guide is for educational purposes and summarizes standard ISO policy language in Menlo's own words. Form numbers and titles are cited for identification only, and Menlo Insurance Services is not affiliated with Insurance Services Office, Inc. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # CP 12 18: Loss Payable Provisions Explained (https://www.menloinsurance.com/library/forms/cp-12-18) Learn how CP 12 18 protects loss payees, lenders, buyers, and building owners, and how its four clauses match different financial interests in insured property. Markdown version: https://www.menloinsurance.com/library/forms/cp-12-18.md CP 12 18 is a commercial property endorsement that records another party's financial interest in covered property and tells the insurer how to handle a covered loss with that party. Its four options are Loss Payable, Lender's Loss Payable, Contract of Sale, and Building Owner Loss Payable. Selecting the wrong clause can give the interested party less protection than the transaction requires. The endorsement does not add insurance limits. Payment remains capped by the interested party's financial stake, the covered property's limit, and the rest of the policy. ## Key takeaways * **Four different relationships**: the schedule selects one clause for the loss payee's actual interest. * **Lender protection is stronger**: the lender clause can preserve a qualifying creditor's recovery when the named insured's acts or noncompliance defeat the insured's claim. * **Mortgageholder is not a generic label**: a mortgageholder holds a real-property security interest, while CP 12 18 can also address creditors with interests in personal property. * **No extra limit**: the form changes payment rights and claim handling, not the amount of insurance purchased. ## What are the four CP 12 18 clauses? [#what-are-the-four-cp-12-18-clauses] The schedule identifies covered property, the loss payee, and one of four clauses. A publicly available Grinnell Mutual policy containing CP 12 18 10 12 confirms the four choices and states that the endorsement neither increases the limit nor pays a loss payee beyond its financial interest. | Clause | Typical interest | Basic effect | | --------------------------- | --------------------------------------------------------- | ---------------------------------------------------------------------------- | | Loss Payable | Co-owner or other party with an insurable interest | Loss is adjusted with the named insured and paid jointly as interests appear | | Lender's Loss Payable | Creditor secured by covered property | Adds independent protections similar to mortgageholder protections | | Contract of Sale | Buyer under a contract to purchase covered property | Treats the buyer as an insured for the covered property subject to the sale | | Building Owner Loss Payable | Landlord whose building is occupied by the insured tenant | Directs adjustment and payment for the described building owner's property | The Texas State Bar's real estate insurance guidance also identifies these four choices and warns that ordinary Loss Payable status is weaker than Lender's Loss Payable status. ## How is a lender loss payee different from a mortgageholder? [#how-is-a-lender-loss-payee-different-from-a-mortgageholder] A mortgageholder is a lender whose security is real property. The standard building coverage form already contains a mortgageholders condition for a mortgageholder named in the declarations. CP 12 18's Lender's Loss Payable Clause can address a creditor's interest in covered building or business personal property established through financing documents. The lender clause can preserve the lender's right to payment even when the insurer denies the named insured's claim because of the insured's acts or failure to comply, provided the lender satisfies the clause's duties. Real financing agreements often require both roles when the lender has interests in different property. One SEC-filed credit agreement requires CP 12 18 Lender's Loss Payable protection and separately requires mortgagee status. ## What should the business verify? [#what-should-the-business-verify] Match the selected clause to the transaction documents. Check the exact legal name and address, location and building numbers, property description, and clause number. Then confirm the same information appears in the policy or declarations. Do not rely on a certificate alone. Ask for the endorsement page and confirm whether the interested party is a simple loss payee, lender loss payee, buyer, building owner, or mortgageholder. The labels determine claim rights after a loss. ## Frequently Asked Questions ### Does CP 12 18 increase the property insurance limit? No. The endorsement does not increase the applicable limit and will not pay a loss payee more than its financial interest in the covered property. ### Is every loss payee protected if the insured's claim is denied? No. The basic Loss Payable Clause generally ties payment to the insured's claim. The Lender's Loss Payable Clause provides stronger independent protection when its conditions are met. ### Can a landlord be listed under CP 12 18? Yes. The Building Owner Loss Payable Clause is designed for the owner of a described building in which the named insured is a tenant. The schedule and lease must identify the relationship correctly. *This guide is for educational purposes and summarizes standard ISO policy language in original words. Menlo Insurance Services is not affiliated with Insurance Services Office, Inc. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker and legal counsel about your property and financing arrangements.* ## The Bottom Line [#the-bottom-line] CP 12 18 offers four loss payable arrangements, and each gives a different party different claim rights. Use the clause that matches the secured interest or ownership relationship, then verify the schedule against the loan, sale, or lease documents. ## References . [Grinnell Mutual. Commercial Property Policy with CP 12 18 10 12]() . [State Bar of Texas. Risk Allocation: Indemnity, Waiver, and Insurance]() . [U.S. Securities and Exchange Commission. EXIM Credit Agreement Insurance Requirements]() # HO 00 03: Homeowners 3 - Special Form Explained (https://www.menloinsurance.com/library/forms/ho-00-03) Learn how the HO 00 03 homeowners form covers the dwelling, personal property, loss of use, liability, and medical payments, plus its major coverage gaps. Markdown version: https://www.menloinsurance.com/library/forms/ho-00-03.md HO 00 03 is the Homeowners 3 - Special Form, commonly called an HO-3. It combines property and personal liability coverage for an eligible owner-occupied residence. Its defining split is easy to miss: the dwelling and other structures generally receive open-peril coverage, while personal property is insured only for named causes of loss. ## Key takeaways * **Buildings and belongings use different cause-of-loss tests**: Coverage A and B are broader than standard Coverage C. * **Open peril still has exclusions**: flood, earth movement, wear, deterioration, and other limitations require review. * **The form includes more than property**: loss of use, personal liability, and medical payments to others are built into the structure. * **Edition and state changes matter**: HO 00 03 10 00, 05 11, and 03 22 are not identical contracts. ## What property does HO 00 03 cover? [#what-property-does-ho-00-03-cover] Coverage A applies to the dwelling, while Coverage B applies to eligible other structures. These cover direct physical loss unless excluded. Coverage C applies to personal property owned or used by an insured, but only when a listed peril causes the loss. Coverage D can pay qualifying additional living expense, fair rental value, or prohibited-use loss after a covered event. The Texas Department of Insurance describes the HO 00 03 building coverage and the separate named-peril approach for personal property in its approval order. A specimen 10 00 policy from the Insurance Information Institute shows how definitions, property coverages, exclusions, conditions, and liability sections work together. ## Why is HO-3 not the same as all-risk insurance? [#why-is-ho-3-not-the-same-as-all-risk-insurance] Open-peril coverage means the insured does not need to find the cause in a short covered-peril list for the dwelling. It does not mean every kind of damage is covered. The form excludes or limits losses involving flood, earth movement, neglect, ordinance or law, power failure, deterioration, faulty work, and other causes, with important exceptions. Personal property remains named-peril unless an endorsement broadens it. Valuable jewelry, money, securities, firearms, watercraft, and business property can also face special dollar limits. ## What liability coverage is included? [#what-liability-coverage-is-included] Coverage E addresses qualifying claims for bodily injury or property damage for which an insured is legally liable. Coverage F provides limited medical payments to others without requiring the same liability determination. Motor vehicle, watercraft, aircraft, business, professional-services, and intentional-injury exclusions can create substantial gaps. Review occupancy as well as limits. A long vacancy, regular short-term rental, home business, or move away from the residence premises can change eligibility or coverage. The current ISO multistate form list identifies HO 00 03 03 22, while several states continue to use earlier editions. ## Frequently Asked Questions ### What is the main difference between HO 00 03 building and contents coverage? The dwelling and other structures generally use an open-peril approach. Personal property is generally covered only for named perils. ### Does an HO-3 cover flood? Standard homeowners forms exclude flood. Separate flood insurance may be needed. ### Does HO 00 03 automatically pay replacement cost for belongings? Not necessarily. Personal property valuation depends on the policy and endorsements, such as HO 04 90. ### Why does the edition date matter? Revisions can change definitions, exclusions, conditions, and available endorsements. Read the edition attached to the actual policy and state amendments. *This guide is for educational purposes and summarizes standard ISO policy concepts in original language. Form numbers and titles are used only for identification. Menlo Insurance Services is not affiliated with or approved by Insurance Services Office, Inc. Your policy, declarations, state amendments, and attached endorsements control. Talk to a licensed agent about your home.* ## References . [Texas Department of Insurance. Order Approving ISO Residential Property Policy Forms]() . [Insurance Information Institute. HO 00 03 10 00 Homeowners 3 - Special Form Sample]() . [FC&S Expert Coverage Interpretation. ISO Homeowners Forms List]() # HO 04 90: Personal Property Replacement Cost Explained (https://www.menloinsurance.com/library/forms/ho-04-90) Learn how HO 04 90 replaces actual cash value with replacement cost for eligible personal property, which items stay ineligible, and how claims are settled. Markdown version: https://www.menloinsurance.com/library/forms/ho-04-90.md HO 04 90 changes how a homeowners policy settles covered losses to eligible personal property. Instead of permanently deducting depreciation through actual cash value, the endorsement can pay replacement cost when its repair-or-replacement conditions are met. It does not remove the deductible, increase the Coverage C limit, or turn an uncovered cause of loss into a covered one. ## Key takeaways * **Coverage changes valuation, not covered causes**: the loss must first be insured by the underlying policy. * **Most Coverage C property can qualify**: common household belongings are the primary use case. * **Some property remains at actual cash value**: antiques, memorabilia, neglected items, and obsolete stored items are examples. * **Replacement usually must happen**: claim payment can begin on an actual-cash-value basis until repair or replacement is completed. ## What does HO 04 90 change? [#what-does-ho-04-90-change] Without replacement-cost treatment, personal property is commonly settled at actual cash value, which accounts for age and condition. HO 04 90 changes eligible Coverage C property to replacement-cost loss settlement. A current sample policy reproduces HO 04 90 03 22 and identifies eligible property, ineligible property, and the settlement condition. The form can also address awnings, outdoor antennas and equipment, carpeting, and household appliances when the policy covers them. Certain separately scheduled items can qualify when they are not already subject to agreed-value settlement. The actual form and schedule control. ## Which property does not receive replacement cost? [#which-property-does-not-receive-replacement-cost] The current standard endorsement keeps several categories on actual cash value. These include antiques and fine art that cannot be replaced, memorabilia and collectibles whose age or history contributes to value, property not maintained in good working condition, and outdated or obsolete articles kept in storage. That distinction avoids treating a unique historic object like a newly purchased household item. Separately scheduling valuable property may provide different valuation options, but it is not automatic. ## How does a claim get paid? [#how-does-a-claim-get-paid] The policy first determines whether the cause of loss and property are covered. The deductible, Coverage C limit, and any special sublimits still apply. The endorsement then measures the least applicable amount under its repair, replacement, and limit rules. If the insured has not repaired or replaced the property, the insurer may initially settle at actual cash value and release additional replacement-cost benefits after the work or purchase is completed within the required period. Keep an inventory, photographs, receipts, and replacement invoices. Ask the adjuster for the deadline and documentation requirements in the issued edition. ## Frequently Asked Questions ### Does HO 04 90 cover every personal property loss? No. It changes loss valuation for eligible property. The underlying policy's covered causes of loss, exclusions, deductible, and limits still apply. ### What is the difference between replacement cost and actual cash value? Replacement cost does not deduct depreciation when the endorsement's conditions are met. Actual cash value generally reflects age, condition, and depreciation. ### Are antiques covered at replacement cost? The standard endorsement lists antiques, fine art, and similar irreplaceable property as ineligible. Scheduled coverage may offer other settlement terms. ### Do I have to replace damaged property? Replacement is generally required to collect benefits above actual cash value. Read the issued form for timing and settlement details. *This guide is for educational purposes and summarizes standard ISO policy concepts in original language. Form numbers and titles are used only for identification. Menlo Insurance Services is not affiliated with or approved by Insurance Services Office, Inc. Your policy, declarations, and attached endorsements control. Talk to a licensed agent about your property.* ## References . [Starwind Personal Lines. HO-6 Sample Policy Containing HO 04 90 03 22]() . [FC&S Expert Coverage Interpretation. Standard Homeowners Endorsements Discussed, Part 4]() # HO 17 32: Unit-Owners Coverage A Special Coverage Explained (https://www.menloinsurance.com/library/forms/ho-17-32) Learn how HO 17 32 changes condo unit-owner Coverage A from named perils to open-peril coverage, what property it affects, and which exclusions remain. Markdown version: https://www.menloinsurance.com/library/forms/ho-17-32.md HO 17 32 changes Coverage A under an HO-6 condominium unit-owners policy from named-peril treatment to special, or open-peril, coverage. It applies to eligible real property insured under Coverage A, not automatically to personal belongings under Coverage C and not to property insured by the condominium association's master policy. ## Key takeaways * **It is an HO-6 Coverage A endorsement**: it is built for a condominium unit owner's real-property interest. * **Open peril does not mean every loss**: the endorsement covers direct physical loss unless excluded or limited. * **Coverage C is separate**: personal property needs its own cause-of-loss and valuation review. * **The master policy still matters**: bylaws and the association policy help determine what the unit owner must insure. ## What property can HO 17 32 affect? [#what-property-can-ho-17-32-affect] HO-6 Coverage A can insure building items and alterations, appliances, fixtures, and improvements that are part of the residence premises when the policy makes the unit owner responsible for them. The exact boundary varies with the coverage form, declarations, condominium documents, and master policy. Without HO 17 32, that property is commonly covered only for named causes of loss. The endorsement replaces that approach with coverage for direct physical loss unless the loss falls within an exclusion or limitation. A carrier-hosted copy of HO 17 32 05 11 reproduces the special-coverage structure and its detailed exclusions. ## What does open-peril coverage not mean? [#what-does-open-peril-coverage-not-mean] Open-peril coverage is sometimes called all-risk coverage, but that shorthand can mislead. The form contains exclusions and limitations for causes and conditions such as wear and tear, deterioration, latent defect, settling, certain water or freezing losses, mold, earth movement, and ordinance or law, subject to the policy's precise exceptions. The endorsement also does not raise the Coverage A limit. A broader cause-of-loss basis will not solve an underestimated limit for flooring, cabinetry, interior walls, or improvements. ## How should a condo owner coordinate coverage? [#how-should-a-condo-owner-coordinate-coverage] Read the condominium declaration and bylaws, then obtain the association's current certificate and master-policy coverage summary. Determine whether the master policy is bare walls, single entity, or another arrangement and identify the deductible assessment exposure. Set the HO-6 Coverage A limit around the property the unit owner must insure. Then confirm that HO 17 32 is actually listed. Current insurer materials identify HO 17 32 03 22 as an available unit-owner special-coverage endorsement. Ask separately about Coverage C replacement cost, loss assessment, water backup, ordinance or law, and flood. ## Frequently Asked Questions ### Does HO 17 32 make an HO-6 policy open peril? It changes eligible Coverage A property to an open-peril basis. It does not automatically change Coverage C personal property. ### Does open peril mean every cause of loss is covered? No. Direct physical loss is covered unless excluded or limited by the endorsement and the rest of the policy. ### Does HO 17 32 increase my Coverage A limit? No. It changes the covered-cause basis. The declarations still show the applicable limit. ### Can the association master policy replace HO 17 32? Not necessarily. The master policy and condominium documents determine the association's responsibility, while the HO-6 addresses the unit owner's interest. *This guide is for educational purposes and summarizes standard ISO policy concepts in original language. Form numbers and titles are used only for identification. Menlo Insurance Services is not affiliated with or approved by Insurance Services Office, Inc. Your policy, condominium documents, and attached endorsements control. Talk to a licensed agent about your unit.* ## References . [Badger Mutual Insurance Company. HO 17 32 05 11 Unit-Owners Coverage A Special Coverage]() . [Starwind Personal Lines. Condominium Unit Owner Coverage Options]() # HO 24 75: Supplemental Watercraft Liability Coverage Explained (https://www.menloinsurance.com/library/forms/ho-24-75) Learn how HO 24 75 restores homeowners liability coverage for scheduled watercraft, which uses stay excluded, and why hull coverage requires separate review. Markdown version: https://www.menloinsurance.com/library/forms/ho-24-75.md HO 24 75 is a homeowners endorsement for liability involving a described watercraft. It extends personal liability and medical payments to others; it does not itself add physical-damage insurance for the boat. ## Key takeaways * The vessel and relevant engine or navigation details must be correctly described. * Business use, rentals and paid carriage remain important exclusions. * The racing exclusion has exceptions for sailing vessels and predicted log cruises. ## Why add a watercraft endorsement? [#why-add-a-watercraft-endorsement] A homeowners policy's treatment of boats depends on its wording, including factors such as propulsion, length and horsepower. Insurance Agents & Brokers' licensing manual describes HO 24 75 as a way to cover described boats outside certain base-policy size or engine restrictions. That does not mean every insurer offers it or every boat qualifies. Review the actual homeowners form and proposed endorsement together. The [HO 00 03 guide](https://www.menloinsurance.com/library/forms/ho-00-03) explains the broader distinction between property and liability coverage. ## What needs to be described? [#what-needs-to-be-described] Check the vessel description and length, motor information and horsepower, ownership, and annual navigation period. A renewal checklist should flag a replacement boat, engine upgrade, changed ownership, longer season or new use. Do not assume the old schedule automatically covers a changed exposure. FC\&S publishes the liability and exclusion provisions with ISO permission. Those provisions extend Coverage E and Coverage F to described watercraft and retain important restrictions. ## Which uses remain excluded? [#which-uses-remain-excluded] The reproduced provisions exclude rental to others, carrying people or cargo for payment, and business use. Organized racing or practice is excluded, but the wording excepts sailing vessels and predicted log cruises. That exception removes this particular racing restriction; it does not guarantee coverage under every remaining term. Employee injuries connected with specified watercraft duties also require review. Read the exact edition rather than assuming all watercraft endorsements use identical wording. ## Frequently Asked Questions ### Does HO 24 75 cover damage to my own boat? The endorsement itself adds liability protection, not hull coverage. Any existing homeowners property protection is a separate, limited question. Compare dedicated boat coverage for physical damage and other needs. ### Can I use it for paid charters? Do not rely on it for that use: paid carriage and business use are excluded in the reproduced provisions. ### Is this an official downloadable form? No. This is an original educational explainer. Request the exact issued endorsement and edition from the insurer or agent. *Educational explanation, not a policy or coverage determination. Menlo Insurance Services is not affiliated with ISO. The actual policy, schedule and endorsements control.* ## References . [Insurance Agents & Brokers. 2025 Licensing Exam Preparation Manual, Chapter 5, page 45: Watercraft (HO 24 75)]() (accessed September 5, 2026) . [FC&S Expert Coverage Interpretation. Supplemental Watercraft Liability Coverage Endorsement HO 24 75: reproduced provisions and analysis]() (accessed September 5, 2026) # MCS-90: The Federal Public Liability Endorsement for Motor Carriers Explained (https://www.menloinsurance.com/library/forms/mcs-90) What the MCS-90 endorsement does, why it is a federal judgment guarantee rather than insurance, the 49 CFR 387 limits, and how it differs from BMC-91 filings. Markdown version: https://www.menloinsurance.com/library/forms/mcs-90.md **The MCS-90 is the federal endorsement that obligates an insurer to pay any final judgment against an FMCSA regulated motor carrier for public liability, meaning bodily injury, property damage, or environmental restoration, arising from the negligent operation, maintenance, or use of its motor vehicles, even when the policy itself would not cover the loss.** It exists so that a member of the public injured by an interstate trucker never goes uncompensated because of a coverage technicality, and it is required by the financial responsibility rules in 49 CFR Part 387. The MCS-90 is not an ISO endorsement and it is not really insurance. It is a promise the insurer makes to the public on the carrier's behalf, and the carrier must pay the insurer back for anything the policy alone would not have owed. This page explains how that mechanism works, what the federal minimum limits are, and how the endorsement relates to the BMC-91 filings brokers handle alongside it. ## Key takeaways * **A judgment guarantee, not coverage**: the MCS-90 pays final judgments for public liability regardless of policy exclusions or schedules, then the insurer can demand reimbursement from the insured for any payment the policy did not actually owe. * **Federal minimums apply**: 49 CFR 387.9 sets the floor at $750,000 for general freight, $1 million for oil and certain hazardous cargo, and $5 million for the most dangerous hazardous materials. * **The endorsement stays with the policy**: the MCS-90 attaches to the carrier's auto liability policy, while the BMC-91 or BMC-91X is the separate certificate the insurer files electronically with the FMCSA. * **Cancellation has teeth**: the endorsement requires 35 days written notice between insurer and insured, and the FMCSA filing stays effective until the agency processes the insurer's cancellation notice. ## What does the MCS-90 do? [#what-does-the-mcs-90-do] Congress decided in the Motor Carrier Act of 1980 that the public should be able to collect from a financially responsible party whenever a regulated motor carrier's negligence causes injury on the highway. The FMCSA implements that mandate through 49 CFR Part 387, which requires carriers to maintain proof of financial responsibility at prescribed minimum levels. Most carriers satisfy the requirement with liability insurance, and the MCS-90 is the endorsement that converts an ordinary auto liability policy into qualifying proof. The endorsement's core promise runs to the public, not to the insured. If an injured claimant wins a final judgment against the carrier for public liability arising from the negligent operation, maintenance, or use of a motor vehicle subject to the federal rules, the insurer must pay that judgment up to the endorsement limit. It must pay even if the truck involved was never scheduled on the policy, even if a policy exclusion would otherwise apply, and even if the carrier breached a policy condition. The usual coverage defenses simply do not run against the judgment creditor. Public liability under the federal rules means bodily injury, property damage, and environmental restoration. That last item matters for carriers hauling anything that can spill, because the endorsement reaches cleanup obligations arising from accidental discharge of cargo that ordinary pollution exclusions would push away. ## Why is the MCS-90 not really insurance? [#why-is-the-mcs-90-not-really-insurance] Courts describe the MCS-90 as creating a [suretyship style obligation](https://www.menloinsurance.com/library/guides/mcs-90-endorsement-explained). The insurer stands as a guarantor of the carrier's judgment debts to the public, and a guarantor who pays a debt the underlying contract never covered gets to collect from its principal. The endorsement says exactly that in two directions. The insured must reimburse the insurer for any payment the insurer would not have been obligated to make under the policy alone, and the insured must pay the insurer back for any payment caused by a violation of the policy's terms. The practical consequences for a trucking client are significant. The MCS-90 does not fill coverage gaps for the carrier, it papers over them for the public and then sends the carrier the bill. A carrier that lets an owner operator run under its authority in an unscheduled tractor is not covered for the resulting loss, it is merely a debtor to its own insurer after the insurer pays the victim. The endorsement also carries no defense obligation, because it responds to final judgments rather than to claims. Most courts additionally treat it as a backstop of last resort that is triggered only when no other collectible insurance is available to satisfy the judgment. ### The reimbursement clause is not theoretical Insurers do pursue MCS-90 reimbursement, and the amounts track the judgment, not the premium. A carrier relying on the endorsement instead of properly scheduled coverage is effectively self insuring with the insurer as its collection agent. ## What are the federal filing thresholds? [#what-are-the-federal-filing-thresholds] The minimum levels of financial responsibility come from 49 CFR 387.9 and depend on the cargo. These figures are federal regulatory facts, and contracts or shippers frequently require more: | Operation | Cargo | Federal minimum | | --------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------- | --------------- | | For hire, interstate, vehicles over 10,000 lbs GVWR | Non hazardous property (general freight) | **$750,000** | | For hire or private, interstate or intrastate | Oil, and certain hazardous materials or hazardous waste in bulk | **$1,000,000** | | For hire or private, interstate or intrastate | The most dangerous hazardous materials, including Division 1.1 through 1.3 explosives, poison gas, and highway route controlled radioactive materials | **$5,000,000** | Passenger carriers follow a separate schedule in 49 CFR 387.33 and use the companion MCS-90B endorsement rather than the MCS-90. Note that the $750,000 general freight minimum has been unchanged since the 1980s, which is why many shippers and brokers treat $1 million as the practical market floor for trucking liability limits. ## MCS-90 vs BMC-91 and BMC-91X [#mcs-90-vs-bmc-91-and-bmc-91x] Brokers new to transportation often conflate the endorsement with the filing. They are two different documents doing two different jobs: * **MCS-90** is the endorsement attached to the carrier's auto liability policy. The carrier keeps it with the policy and must produce it on request. It is not sent to the FMCSA. * **BMC-91** is the certificate of insurance the insurer files electronically with the FMCSA to evidence that a single policy provides the full required limit. * **BMC-91X** is the variant filed when the required limit is stacked across more than one policy or insurer, for example a primary policy plus an excess layer. * **BMC-35** is the notice the insurer files to cancel a BMC-91 or BMC-91X filing, and the filing generally remains effective until 30 days after the FMCSA receives it. A carrier's operating authority depends on the filings staying active. If an insurer files a BMC-35 and no replacement filing arrives in time, the FMCSA revokes the carrier's authority, which is an immediate business shutdown rather than a paperwork problem. ## When do brokers see the MCS-90? [#when-do-brokers-see-the-mcs-90] Any client that holds or is applying for interstate operating authority needs the endorsement and the matching filing. That includes long haul truckers, regional for hire fleets, and private carriers hauling regulated quantities of hazardous materials. The request typically surfaces at three moments. First, at new venture placement, when the FMCSA will not activate authority without an active filing. Second, at renewal or remarketing, when the incoming insurer must file before the outgoing insurer's BMC-35 takes effect. Third, in shipper and broker contracts, which often demand evidence of the MCS-90 alongside certificates showing limits above the federal floor and proof of [motor truck cargo insurance](https://www.menloinsurance.com/library/guides/motor-truck-cargo-insurance) for the freight itself. Because the MCS-90 follows the policy rather than specific vehicles, underwriters price trucking risks knowing the endorsement exposes them beyond the scheduled fleet. Expect questions about owner operators, trip leasing, and any operations outside the declared radius, since those are exactly the exposures the endorsement can sweep in. ## Where can you see the actual form? [#where-can-you-see-the-actual-form] The MCS-90 is a federal form published by the FMCSA, so unlike ISO forms it is freely available. You can read the current version on the [FMCSA website](https://www.fmcsa.dot.gov/) and the underlying financial responsibility rules in [49 CFR Part 387](https://www.ecfr.gov/current/title-49/subtitle-B/chapter-III/subchapter-B/part-387). Your carrier's issued endorsement is attached to the auto liability policy, and your broker can confirm the associated BMC-91 or BMC-91X filing status through the FMCSA licensing and insurance system. ## Frequently Asked Questions ### Is the MCS-90 the same as auto liability coverage? No. The auto liability policy covers the carrier for covered autos on the policy's own terms. The MCS-90 guarantees payment of final judgments to the public even when those terms would deny coverage, and the insurer can recover any such payment from the carrier afterward. A carrier with an MCS-90 but poorly structured coverage is protected against nothing. ### Does the MCS-90 satisfy the FMCSA filing requirement by itself? No. The endorsement rides with the policy, while the proof the FMCSA records comes from the insurer's electronic BMC-91 or BMC-91X filing. Both must exist. A carrier can lose its operating authority over a lapsed filing even while the endorsement sits properly attached to its policy. ### Does the MCS-90 cover cargo damage or injuries to employees? No. The endorsement excludes injury to or death of the insured's employees while engaged in the course of their employment, and it excludes loss to property the carrier is transporting. It exists for members of the public harmed by the carrier's vehicles, not for workers compensation or cargo exposures, which need their own coverage. ### How much notice is required to cancel an MCS-90? The endorsement itself requires 35 days written notice between the insurer and the insured. Separately, the insurer cancels its FMCSA filing with a BMC-35 notice, and the filing generally remains effective until 30 days after the agency receives it, which gives the carrier time to secure replacement coverage before its authority is revoked. *This guide is for educational purposes and summarizes federal motor carrier financial responsibility requirements in Menlo's own words. Form designations and titles are cited for identification only, and Menlo Insurance Services is not affiliated with the Federal Motor Carrier Safety Administration or any other agency of the U.S. Department of Transportation. The regulations in 49 CFR Part 387, your policy's specific terms, and your filed endorsements control. Talk to a licensed broker about your actual exposures.* # WC 00 03 13: Waiver of Subrogation Endorsement Explained (https://www.menloinsurance.com/library/forms/wc-00-03-13) What the WC 00 03 13 waiver of subrogation endorsement does, why construction contracts demand it, and what it costs to add to a workers compensation policy. Markdown version: https://www.menloinsurance.com/library/forms/wc-00-03-13.md **WC 00 03 13 is the NCCI endorsement that waives your workers compensation insurer's right to recover what it paid on an employee injury from a third party named in the endorsement's schedule.** Without it, an insurer that pays benefits to your injured worker can subrogate, meaning it can sue whoever caused the injury to get its money back, and on a jobsite that "whoever" is often the general contractor or project owner who hired you. Upstream parties demand this waiver in construction contracts precisely so your carrier cannot come after them. If a contract requires a "waiver of subrogation" on your workers comp, this is the form it means. This page explains how the waiver works, why the written contract wording matters, and what it costs to provide. ## Key takeaways * **It waives recovery, not benefits**: your injured employee still collects full workers comp benefits, the endorsement only stops your insurer from recouping those payments from the scheduled party. * **An endorsement is mandatory**: unlike general liability or business auto policies, workers comp allows no waiver of subrogation before or after a loss without this endorsement attached. * **Scheduled or blanket**: the standard form applies only to the person or organization named in its schedule, though many carriers offer nonstandard blanket versions triggered by written contract. * **It usually costs extra**: carriers typically charge a premium for the waiver because giving up recovery rights raises their net loss costs. ## What does WC 00 03 13 do? [#what-does-wc-00-03-13-do] The unendorsed workers compensation policy gives the insurer subrogation rights through its Recovery From Others condition. When the carrier pays benefits to your injured employee and someone else caused the injury, the carrier steps into the claim and pursues that responsible party for reimbursement. The policy also obligates you to protect those rights, which collides head-on with a construction contract that promises the general contractor your carrier will not pursue them. WC 00 03 13 resolves the conflict by having the insurer formally give up its right of recovery against the party shown in the schedule, where state law permits a waiver at all. The endorsement contains a sentence that ties the waiver to work you perform under a written contract requiring you to obtain it, which keeps the waiver from applying to every interaction with the scheduled party. That written contract trigger is why the paperwork sequence matters. The agreement needs to be signed before the work and before any loss, the same discipline that applies to the additional insured endorsements like [CG 20 10](https://www.menloinsurance.com/library/forms/cg-20-10) that travel alongside it in contract insurance requirements. ## Why do contracts require it? [#why-do-contracts-require-it] Picture a subcontractor's employee injured on a project because of the general contractor's negligence. The employee collects workers comp from the subcontractor's policy and cannot sue their own employer, but the carrier can subrogate against the GC, which puts the loss right back on the party the contract meant to protect. General contractors and owners close that loop by requiring every subcontractor to carry WC 00 03 13 in their favor, almost always in the same contract clause that demands additional insured status on the general liability policy and a certificate evidencing both. Our guides to [additional insured endorsements](https://www.menloinsurance.com/library/guides/additional-insured-endorsements-explained) and the [certificate of insurance](https://www.menloinsurance.com/library/guides/certificate-of-insurance-guide) cover those companion requirements. The two ways carriers issue the waiver differ in what they cover and what can go wrong: | Approach | How it works | Watch out for | | ---------------------------------- | --------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------- | | Scheduled (standard WC 00 03 13) | The waiver applies only to the person or organization named in the schedule | **Every entity must be scheduled**, and a missed entity means no waiver for that party | | Blanket (nonstandard carrier form) | The waiver applies automatically to any party a written contract requires | **The executed written contract is the trigger**, so unsigned agreements leave the party unprotected | The scheduling risk is real enough that failing to add a required entity is a recognized source of errors and omissions claims against agents. If your contracts routinely require waivers, a blanket endorsement removes the per-contract scramble, but the written contract discipline still has to hold. ### Some states restrict or prohibit the waiver Workers compensation is a statutory line, and a handful of states do not allow subrogation rights to be waived at all, while others limit how the waiver can apply. Never promise a waiver in a contract before your broker confirms your state and carrier can actually deliver it. ## What does the waiver cost? [#what-does-the-waiver-cost] Carriers charge for WC 00 03 13 because waiving recovery rights means claims they might have recouped stay on their books, which flows into your loss experience. Pricing varies by carrier and state, commonly as a flat charge per scheduled waiver or a small percentage of the premium tied to the affected work. A blanket waiver typically carries a single ongoing charge instead of per-entity fees, which is one more reason contractors who sign many contracts prefer it. Remember that a subrogation recovery would otherwise reduce the losses in your experience modification calculation, so the waiver has a second, quieter cost in the claims your mod absorbs. Our [workers compensation insurance guide](https://www.menloinsurance.com/library/guides/workers-compensation-insurance-guide) explains how the experience mod turns claims into premium. ## Where can you see the actual form? [#where-can-you-see-the-actual-form] Menlo does not host NCCI forms because they are copyrighted by the National Council on Compensation Insurance, Inc. You can read the real text through your own policy, which attaches every endorsement issued on it, or by asking your broker for the specimen your carrier files. Regulator-approved filings are also publicly viewable through [SERFF Filing Access](https://filingaccess.serff.com/), the state filing system, though the forms there remain copyrighted and are for reading, not copying. Note that some states use their own bureau versions of the waiver instead of the national NCCI form. ## Frequently Asked Questions ### Does a waiver of subrogation hurt my injured employee? No. The employee's workers compensation benefits are set by statute and are not affected. The endorsement only changes what happens after benefits are paid, by stopping the insurer from recovering those payments from the scheduled third party. ### Is a certificate of insurance proof that the waiver exists? No. A certificate is an information snapshot and confers nothing by itself. The waiver exists only if WC 00 03 13 or a blanket equivalent is actually attached to the policy, so careful upstream parties request a copy of the endorsement along with the certificate. ### What is the difference between a scheduled and a blanket waiver? The standard WC 00 03 13 waives recovery only against the party named in its schedule, so each entity must be added individually. A blanket waiver is a nonstandard carrier form that applies automatically to any party a written contract requires, which removes the risk of forgetting to schedule someone. ### Can my carrier refuse to provide WC 00 03 13? Yes. The waiver is optional for the carrier, some underwriters decline it for high-hazard work, and some states prohibit it entirely. Confirm availability with your broker before signing a contract that requires one, because the contractual obligation binds you either way. *This guide is for educational purposes and summarizes standard NCCI policy language in Menlo's own words. Form numbers and titles are cited for identification only, and Menlo Insurance Services is not affiliated with the National Council on Compensation Insurance, Inc. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # What Is Actual Cash Value (ACV) in Insurance? (https://www.menloinsurance.com/library/glossary/actual-cash-value) Actual cash value is replacement cost minus depreciation, the default way property policies value a loss. How ACV is calculated and how it compares to RCV. Markdown version: https://www.menloinsurance.com/library/glossary/actual-cash-value.md **Actual cash value is the cost to replace damaged property with new property of like kind and quality at the time of the loss, minus depreciation for age and wear. It is the default valuation method in commercial property policies, which means a ten year old roof gets paid as a ten year old roof.** You meet the term in two places: the valuation condition of your property policy and the settlement worksheet after a loss. The second one is where the surprise usually happens. Auto policies settle total losses the same way, which is the shortfall [gap insurance](https://www.menloinsurance.com/library/guides/what-is-gap-insurance) exists to close when a loan balance runs past the depreciated value. ### Actual Cash Value _Replacement cost new, reduced by depreciation, measured at the time of the loss._ The cost to replace covered property with property of like kind and quality at the time of the loss, reduced by depreciation for the age, use, and condition of the property that was lost. ## How is actual cash value calculated? [#how-is-actual-cash-value-calculated] Start with what a brand new equivalent would cost today, then subtract depreciation. Depreciation reflects how much useful life the property had already consumed. A $60,000 roof with a 20 year life, destroyed by hail in year ten, has an actual cash value near $30,000 before your [deductible](https://www.menloinsurance.com/library/glossary/deductible) comes off. The adjuster will ask for installation dates, invoices, and maintenance records to set the depreciation figure, so you should keep those documents somewhere that will not burn with the building. The valuation happens at the time of the loss, not when the policy was written. Prices move. A limit that matched values two years ago can be short today, which also matters for the [coinsurance](https://www.menloinsurance.com/library/glossary/coinsurance) calculation that runs on the same at loss values. ## Actual cash value vs replacement cost: what is the difference? [#actual-cash-value-vs-replacement-cost-what-is-the-difference] The Building and Personal Property Coverage Form [CP 00 10](https://www.menloinsurance.com/library/forms/cp-00-10) values losses at actual cash value unless [replacement cost](https://www.menloinsurance.com/library/glossary/replacement-cost) is activated by an X on the declarations. Replacement cost pays with no deduction for depreciation, so the ten year old roof gets paid as a new roof. That is the whole difference, and on older buildings it can be the difference between rebuilding and closing. Even when replacement cost is activated, [certain property stays at actual cash value](https://www.menloinsurance.com/library/guides/actual-cash-value-vs-replacement-cost), including awnings, outdoor equipment, and property of others unless a separate extension is added to the declarations. ## What should brokers watch on ACV valuations? [#what-should-brokers-watch-on-acv-valuations] For professionals: check the valuation entry on every renewal, because carriers increasingly force older roofs to actual cash value by endorsement, and a client who believes they bought replacement cost will not read the endorsement until after the hailstorm. Document the offer and the client's choice in the file. Also confirm which valuation the coinsurance limit was built on. A limit set from replacement cost values but a policy valued at ACV leaves premium on the table, and the reverse leaves the client underinsured. ### Example A print shop's twelve year old press is destroyed in a fire. A new equivalent press costs $80,000, but the press had used roughly half of its expected service life, so the adjuster values it at $40,000. With a $2,500 deductible, the ACV settlement is $37,500. Under replacement cost coverage the same claim would have paid $77,500 once the replacement press was actually purchased. ## Frequently Asked Questions ### Is actual cash value the same as market value? No. Market value reflects what a buyer would pay and includes land, location, and demand. Actual cash value ignores all of that. It is the cost to replace the property new, minus depreciation, so ACV can sit far above or below market value. ### How do adjusters determine depreciation? They compare the property's age against its expected useful life, adjusted for condition and maintenance. Adjusters ask for purchase invoices, installation dates, and service records. Better documentation generally means less aggressive depreciation, so keep records for roofs, HVAC, and major equipment off site. ### Can I switch from ACV to replacement cost? Usually yes, by having replacement cost marked on the declarations of CP 00 10, typically at renewal. Expect a higher limit requirement and more premium, since the insurer is now paying new for old. Some older roofs and buildings may not qualify. *This definition is for educational purposes. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # What Does Additional Insured Mean? (https://www.menloinsurance.com/library/glossary/additional-insured) Additional insured meaning: a party added to another business's liability policy by endorsement. How CG 20 10 works and why contracts require the status. Markdown version: https://www.menloinsurance.com/library/glossary/additional-insured.md **An additional insured is a person or organization granted insured status on someone else's liability policy, almost always by endorsement, because a contract requires it.** The status is limited: the additional insured is covered only for liability arising out of the named insured's work, premises, or operations, not for its own unrelated exposures. You will meet the term in contracts. A landlord requires it of tenants, a general contractor requires it of every subcontractor, and a project owner requires it of the general. ### Additional Insured _Insured status on another party's policy, limited to liability tied to that party's work or premises._ A party added by endorsement to another organization's liability policy, receiving insured status limited to liability arising out of the named insured's operations, work, or premises. ## Why do contracts require additional insured status? [#why-do-contracts-require-additional-insured-status] Three protections drive the requirement. First, it backs up the indemnity language: contracts pair a [hold harmless agreement](https://www.menloinsurance.com/library/glossary/hold-harmless-agreement) with additional insured status so that if a statute or court voids the indemnity, the insurance still responds. Practitioners call it the belt and suspenders approach. Second, the endorsement buys a defense. When both parties are sued over the [named insured's](https://www.menloinsurance.com/library/glossary/named-insured) work, the insurer defends the additional insured too, and if the additional insured meets its policy duties those defense costs are paid as supplementary payments outside the limit of insurance. Third, it blunts subrogation, since insurers generally do not pursue recovery from their own insureds on the same policy. Sophisticated contracts go further and demand the coverage be [primary and noncontributory](https://www.menloinsurance.com/library/glossary/primary-and-noncontributory), so the additional insured's own policy sits untouched. ## How is additional insured status actually added? [#how-is-additional-insured-status-actually-added] Under ISO forms it takes an endorsement, full stop. The workhorse is [CG 20 10](https://www.menloinsurance.com/library/forms/cg-20-10), which covers the scheduled party for liability arising from the named insured's ongoing operations. Completed operations exposure, the source of most construction claims, needs a separate endorsement, so a contract that says "including completed operations" is asking for CG 20 37 alongside CG 20 10. Some carriers write blanket additional insured wording into proprietary forms, triggered whenever a written contract requires the status. The edition date matters too: post 2004 editions add "caused in whole or in part" language, requiring the named insured to be at least partly responsible before the additional insured is covered. A certificate reviewer who rejects your COI because it names the endorsement but not the edition date is doing exactly this analysis. The full form family is covered in our guide to [additional insured endorsements](https://www.menloinsurance.com/library/guides/additional-insured-endorsements-explained). ### Example Southlake Properties hires Metro City Construction to build out a retail center and requires additional insured status on Metro City's CGL via CG 20 10. A pedestrian trips over Metro City's staged materials and sues both companies for $200,000. Metro City's insurer defends and settles for both parties. Without the endorsement, Southlake tenders the claim to its own policy, pays its own deductible, and its loss history absorbs a claim caused entirely by its contractor. ## Frequently Asked Questions ### What is the difference between an additional insured and a certificate holder? An additional insured has actual coverage rights under the policy through an endorsement. A [certificate holder](https://www.menloinsurance.com/library/glossary/certificate-holder) merely receives a certificate showing coverage exists and has no rights under the policy at all. A certificate alone never creates additional insured status. ### Does an additional insured pay for the coverage? Not directly. The named insured buys the endorsement, and many carriers charge a per endorsement fee or build blanket status into the premium. The real cost lands on the named insured's policy, whose limits and loss history absorb the additional insured's claims. ### Does additional insured status cover the additional insured's own negligence? Usually only partially. Current ISO endorsements cover the additional insured for injury caused in whole or in part by the named insured, and many states bar coverage for the additional insured's sole negligence. Older 1985 edition wording was broader. Edition dates decide this. ### Can additional insured status apply after the job is finished? Only with a completed operations endorsement such as CG 20 37. CG 20 10 alone stops at ongoing operations, which is why construction contracts commonly require both forms and why certificate reviewers check for the pair. *This definition is for educational purposes. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # What Is an Aggregate Limit? (https://www.menloinsurance.com/library/glossary/aggregate-limit) Aggregate limit is the most your policy pays for all claims combined during the policy term. How the general aggregate and products aggregate work on CG 00 01. Markdown version: https://www.menloinsurance.com/library/glossary/aggregate-limit.md **An aggregate limit is the most your insurer will pay for all covered claims combined during the policy term.** Your per occurrence limit caps any single loss, but the aggregate is the ceiling on the whole year. Once claims payments use it up, coverage for that line is gone until renewal, no matter how many months remain. You will see aggregate limits on the [declarations page](https://www.menloinsurance.com/library/glossary/declarations-page) of a general liability policy, and contract insurance requirements almost always specify both a per occurrence and an aggregate figure. ### Aggregate Limit _The policy-term ceiling that every paid claim draws down._ The maximum amount an insurer will pay for the sum of all covered losses during the policy period, regardless of the number of claims, claimants, or occurrences. ## How do aggregate limits work on a general liability policy? [#how-do-aggregate-limits-work-on-a-general-liability-policy] The standard commercial general liability form, [CG 00 01](https://www.menloinsurance.com/library/forms/cg-00-01), carries two aggregates, and they do not mix. The General Aggregate Limit caps everything paid under the policy except products and completed operations losses: premises liability, medical payments, personal and advertising injury, and damage to rented premises all draw it down. The Products-Completed Operations Aggregate is a separate pool that pays only bodily injury and property damage within the products-completed operations hazard, meaning claims from your products or from work you have finished. A typical small business policy shows $1,000,000 per [occurrence](https://www.menloinsurance.com/library/glossary/occurrence) with a $2,000,000 general aggregate and a $2,000,000 products aggregate. Each paid claim applies first against the occurrence limit, then reduces whichever aggregate it belongs to. You cannot move money between the two aggregates, and once one is exhausted the insurer also stops defending new claims under it. ## What happens when the aggregate runs out? [#what-happens-when-the-aggregate-runs-out] Coverage under that aggregate simply ends for the rest of the policy term. Say a contractor's policy pays a $700,000 premises claim in March and a $900,000 slip and fall in June against a $2,000,000 general aggregate. Only $400,000 remains for every other non-products claim that year. A third premises loss of $600,000 in August collects $400,000, and the insured owes the rest personally. A products claim in September, though, would still be paid in full from the untouched products aggregate. This is why lenders and project owners ask for evidence that your aggregate is intact, and why the certificate reviewer on a large project may reject a COI showing a shared aggregate already eroded by prior claims. Underwriters can add a designated project general aggregate endorsement so each job gets its own aggregate. ### Example A plumbing contractor carries CG 00 01 limits of $1,000,000 per occurrence, $2,000,000 general aggregate, $2,000,000 products-completed operations aggregate. During the policy year the insurer pays a $600,000 premises liability claim and an $800,000 claim for a customer injured at the shop. The general aggregate now holds $600,000. In month eleven, a water heater the contractor installed two years earlier fails and floods a home for $250,000. That claim is completed operations, so it pays in full from the separate $2,000,000 products aggregate. ## Frequently Asked Questions ### What is the difference between per occurrence and aggregate limits? The per occurrence limit is the most the policy pays for any single occurrence. The aggregate limit is the most it pays for all occurrences combined during the policy term. A $1,000,000 per occurrence and $2,000,000 aggregate policy can fully pay two maximum losses in one year. ### Do aggregate limits reset each year? Yes. Aggregates apply to the policy period, so a renewal starts a fresh aggregate. They do not reset mid-term, and extending a policy period usually does not add aggregate unless the insurer endorses it. ### Can I restore an exhausted aggregate? Sometimes. Some insurers offer an aggregate reinstatement endorsement for an additional premium, and umbrella policies can sit above exhausted underlying aggregates. Ask your broker before the aggregate is gone, not after. ### Why does my contract require a $2,000,000 aggregate? The other party wants assurance that earlier claims against you will not empty the policy before their claim arrives. Since your aggregate is shared across all your work that year, larger projects often require a per project aggregate endorsement instead. *This definition is for educational purposes. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # What Is Business Income Coverage? (https://www.menloinsurance.com/library/glossary/business-income) Business income coverage replaces lost profit and continuing expenses while fire or storm damage shuts you down. How CP 00 30 and the restoration period work. Markdown version: https://www.menloinsurance.com/library/glossary/business-income.md **Business income coverage replaces the net income a business would have earned, plus its continuing normal operating expenses including payroll, while covered physical damage forces a suspension of operations.** Property insurance rebuilds the building. Business income coverage pays for the months of lost revenue while the rebuilding happens. Most owners meet the term while buying a property policy, then meet it again after a fire, when the mortgage and key salaries keep coming due against zero sales. Many call it business interruption insurance, the older name for the same coverage. ### Business Income _Lost net income plus continuing expenses during the period of restoration._ Coverage for the loss of net income and continuing normal operating expenses, including payroll, sustained during the period of restoration after direct physical loss to property at the described premises by a covered cause of loss. ## How does business income coverage work? [#how-does-business-income-coverage-work] The trigger is strict: there must be direct physical loss or damage to property at the described premises, caused by a covered [peril](https://www.menloinsurance.com/library/glossary/peril), and that damage must cause a suspension of your operations. A power outage down the street or a supplier's fire does not qualify without added endorsements. The standard ISO form is [CP 00 30](https://www.menloinsurance.com/library/forms/cp-00-30), Business Income (And Extra Expense), which also pays extra expense: the costs of avoiding or shortening the shutdown, like renting temporary space or expediting equipment. Payment runs through the period of restoration, which under the current ISO form begins immediately after the damage and ends when the property should be repaired with reasonable speed, not when it actually is. An insured who drags out repairs eats the difference. Extended Business Income then covers the earnings ramp up after reopening for up to 60 days, extendable by endorsement. ## How much business income coverage do you need? [#how-much-business-income-coverage-do-you-need] Start with a 12 month projection of net income plus continuing expenses, then honestly estimate your worst case downtime, including permitting and equipment lead times that routinely stretch past a year. The form's own [coinsurance](https://www.menloinsurance.com/library/glossary/coinsurance) clause penalizes underinsurance against projected annual figures, so the limit and the coinsurance percentage have to be set together. CP 00 30 offers ways around that math: the Monthly Limit Of Indemnity and Maximum Period Of Indemnity options replace coinsurance with simpler caps, and Agreed Value suspends the coinsurance clause entirely when the underwriter accepts your business income worksheet. That worksheet is the operational crux. The adjuster who shows up after a loss will ask for financial statements, tax returns, and sales projections, and the insured who completed a worksheet at binding has already assembled the proof. The full worksheet walkthrough is in our [business income insurance guide](https://www.menloinsurance.com/library/guides/business-income-insurance-explained). ### Example A kitchen fire closes a 24 table restaurant for five months. The restaurant carries $400,000 of business income coverage on CP 00 30. The claim pays $210,000 in lost net income and continuing expenses, including the chef's salary to keep her from leaving, plus $35,000 in extra expense for a temporary catering kitchen that preserved the banquet contracts. Extended Business Income covers another $18,000 while dinner traffic rebuilds over the six weeks after reopening. ## Frequently Asked Questions ### Is business income the same as business interruption insurance? Yes. Business interruption is the traditional name, and business income is the term ISO forms use today. Both describe coverage for lost income and continuing expenses during a shutdown caused by covered physical damage. ### Does business income coverage include payroll? Yes, as a continuing normal operating expense. Ordinary payroll can be limited or excluded by endorsement to save premium, but cutting it means the coverage will not fund keeping trained staff through the shutdown. ### How long does business income coverage pay? Through the period of restoration: from immediately after the damage under the current ISO form until the property should reasonably be repaired and operations resumed. Extended Business Income adds up to 60 days after reopening, and endorsements can lengthen it. Editions before the 2012 revision built in a 72-hour waiting period before business income began. ### Does business income cover losses from a power outage or pandemic? Generally no. The form requires direct physical loss or damage at the described premises by a covered cause of loss. Off premises utility failure needs a specific endorsement, and courts have overwhelmingly held virus related closures do not meet the physical damage trigger. *This definition is for educational purposes. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # What Is a Certificate Holder? (https://www.menloinsurance.com/library/glossary/certificate-holder) Certificate holder meaning: the party named on a certificate of insurance as proof coverage exists. Why a certificate holder is not an additional insured. Markdown version: https://www.menloinsurance.com/library/glossary/certificate-holder.md **A certificate holder is the person or organization named in the certificate holder box of a certificate of insurance, receiving the certificate as evidence that another party carries the coverage shown.** The status is informational only. Being a certificate holder gives you no coverage, no policy rights, and no claim to the limits listed. The term shows up whenever one business asks another to prove it is insured: a landlord before handing over keys, a general contractor before a sub starts work, a client before signing a service agreement. ### Certificate Holder _The recipient of a certificate of insurance. Proof of coverage, not coverage._ The party to whom a certificate of insurance is issued, named in the certificate holder section of a form such as the ACORD 25, as the recipient of evidence that the described policies were in force on the issue date. ## What rights does a certificate holder actually have? [#what-rights-does-a-certificate-holder-actually-have] Almost none, and that is by design. The [ACORD 25](https://www.menloinsurance.com/library/forms/acord-25) certificate says so on its face: it is issued as a matter of information only, confers no rights upon the certificate holder, and does not amend, extend, or alter the coverage described. The certificate is a snapshot showing what policies existed on the day it was issued. If the [named insured](https://www.menloinsurance.com/library/glossary/named-insured) cancels the policy the following week, the certificate holder's paper does not change that. Modern ACORD wording promises cancellation notice only "in accordance with the policy provisions," which for most policies means notice goes to the first named insured, not to certificate holders. If your contract requires actual coverage rights or guaranteed notice, the certificate is the wrong tool. Those protections take policy endorsements. ## Certificate holder vs additional insured: which do you need? [#certificate-holder-vs-additional-insured-which-do-you-need] This is the distinction that decides real claims, and our [certificate holder vs additional insured guide](https://www.menloinsurance.com/library/guides/certificate-holder-vs-additional-insured) compares the two side by side. A certificate holder receives proof that someone else has insurance. An [additional insured](https://www.menloinsurance.com/library/glossary/additional-insured) is granted insured status on that policy by endorsement, with the right to a defense and to the limits for liability arising from the named insured's work. A landlord who is merely a certificate holder on a tenant's liability policy collects nothing from that policy when a customer injured in the tenant's store sues the landlord too. The same landlord as an additional insured gets a defense and indemnity. Certificate reviewers at well run firms check both: the certificate holder box for their exact legal name and address, and the description of operations section for additional insured wording backed by a specific endorsement, since a typed sentence on a certificate cannot create coverage the policy does not contain. How to run that review is covered in our [certificate of insurance guide](https://www.menloinsurance.com/library/guides/certificate-of-insurance-guide). ### Example A property manager requires every vendor to name it as certificate holder before working on site. An HVAC contractor's condenser install later floods a tenant's server room, and the tenant sues the property manager for $80,000. The certificate on file proves the contractor carried a $1,000,000 CGL policy, which helps the manager tender the claim, but the certificate itself gives the manager no rights. Because the contract also required additional insured status via CG 20 10, the contractor's insurer accepts the tender and defends the manager. ## Frequently Asked Questions ### Is a certificate holder covered by the insurance policy? No. A certificate holder receives evidence that coverage exists and nothing more. The ACORD 25 states it confers no rights on the holder. Coverage rights require insured status under the policy, usually through an additional insured endorsement. ### Does a certificate holder get notified if the policy cancels? Not reliably. Current ACORD forms promise notice only in accordance with policy provisions, and standard policies direct cancellation notice to the first named insured. Guaranteed notice to a third party requires a specific notice of cancellation endorsement. ### Should my business be a certificate holder or an additional insured? Both serve different jobs. Ask to be certificate holder to verify and file proof of the other party's coverage, and require additional insured status in the contract whenever their work could get you sued. For hired vendors and contractors, that is most of the time. ### Who issues a certificate of insurance? The insurance agent or broker for the insured party issues it, most often on the ACORD 25 for liability coverage. You request it from the vendor, the vendor's broker issues it, and you confirm the details against your contract's insurance requirements. *This definition is for educational purposes. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # What Is Coinsurance in Insurance? (https://www.menloinsurance.com/library/glossary/coinsurance) Coinsurance requires insuring property to a set percentage of its value, often 80%. How the penalty formula works, plus a worked example of an underinsured loss. Markdown version: https://www.menloinsurance.com/library/glossary/coinsurance.md **Coinsurance is a property insurance condition that requires you to insure your property for at least a stated percentage of its value, usually 80% or more. Carry less than that amount and the policy pays only a proportional share of any loss, a reduction known as the coinsurance penalty.** You will find the percentage printed next to each coverage on your policy declarations. It sits there quietly until a partial loss, which is exactly when it does its damage. ### Coinsurance _Insure to the required percentage of value or share proportionally in every partial loss._ A policy condition requiring the insured to carry a limit of insurance equal to at least a specified percentage of the property's value at the time of loss, with recoveries reduced proportionally when the limit falls short. ## How does the coinsurance penalty formula work? [#how-does-the-coinsurance-penalty-formula-work] The formula is amount carried divided by amount required, multiplied by the loss. Adjusters call it Did over Should times Loss. The amount required is the value of the covered property at the time of the loss, using the valuation your policy applies, whether [actual cash value](https://www.menloinsurance.com/library/glossary/actual-cash-value) or [replacement cost](https://www.menloinsurance.com/library/glossary/replacement-cost), multiplied by the coinsurance percentage on the declarations. Say a building is worth $250,000 when it burns and the clause reads 80%. You needed a limit of at least $200,000. Carry that or more and the penalty never applies. Carry less and every claim, even a small one, gets cut by the same fraction you were short. The [deductible](https://www.menloinsurance.com/library/glossary/deductible) then comes off after the penalty. ## Why does the penalty catch so many businesses? [#why-does-the-penalty-catch-so-many-businesses] Because the required amount is measured at the time of the loss, not when the policy was written. Construction costs rise mid term, and a limit that satisfied the clause in January can fail it by November. Property valuation studies have long found that a large share of commercial buildings carry limits below their replacement value. The practical defenses on the Building and Personal Property Coverage Form [CP 00 10](https://www.menloinsurance.com/library/forms/cp-00-10): set limits from projected values twelve months out, add an Inflation Guard percentage on the declarations, or activate the Agreed Value option, which suspends the coinsurance condition entirely. Agreed Value carries an expiration date of no more than twelve months, and coinsurance snaps back the day it lapses, so calendar the renewal. ### Example A machine shop's building is worth $100,000 on the day a fire causes $10,000 in damage. The policy has an 80% coinsurance clause, so the required limit was $80,000. The owner carried only $40,000. The formula: $40,000 divided by $80,000 equals 0.50, times the $10,000 loss equals $5,000, minus a $1,000 deductible, for a settlement of $4,000. Had the owner carried the required $80,000, the same fire would have paid $9,000. ## Frequently Asked Questions ### Is this the same as coinsurance in health insurance? No. Health insurance coinsurance is your fixed share of every medical bill, like 20% after the deductible. Property coinsurance is a penalty that applies only when you insured the property for less than the required percentage of its value. ### What does 80% coinsurance mean? It means your limit of insurance must equal at least 80% of the property's value at the time of loss. Meet that threshold and the insurer pays covered losses in full up to the limit. Fall short and payments shrink proportionally. ### Does the coinsurance penalty apply to total losses? It bites hardest on partial losses. In a total loss you collect your full limit either way, but that limit was too low to rebuild, which is its own penalty. Partial losses get reduced by the Did over Should fraction. ### How do I avoid a coinsurance penalty? Insure to full projected value, not last year's number. Ask your broker about Inflation Guard and the Agreed Value option on CP 00 10, which suspends coinsurance for up to twelve months when the insurer accepts your statement of values. *This definition is for educational purposes. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # What Is an Insurance Declarations Page? (https://www.menloinsurance.com/library/glossary/declarations-page) An insurance declarations page summarizes who is insured, what is covered, limits, deductibles, and premium. How to read each section of your dec page. Markdown version: https://www.menloinsurance.com/library/glossary/declarations-page.md **An insurance declarations page is the front section of your policy that identifies who is insured, what property or operations are covered, the policy period, the limits of insurance, the deductibles, and the premium. It is the only part of the policy written specifically about you.** Everything after the dec page is standardized form language shared by thousands of policyholders. The declarations are where your policy becomes yours, which makes it the first page to check and the most common place to find an error. ### Declarations Page _The personalized front page of a policy: who, what, when, how much, and for what premium._ The section of an insurance policy stating the named insured, mailing address, policy period, coverages, limits of insurance, deductibles, premium, and the list of forms attached to the policy. ## What does each section of the declarations page show? [#what-does-each-section-of-the-declarations-page-show] A commercial property dec page runs in a predictable order: * Named insured and mailing address, which control who can make policy changes and where notices go * Policy period, the dates coverage starts and ends * Description of premises, listing each location with its construction and occupancy * Coverages provided, with a limit of insurance, covered causes of loss, and [coinsurance](https://www.menloinsurance.com/library/glossary/coinsurance) percentage for each * Optional coverages such as replacement cost or agreed value, active only when an entry appears * Mortgageholders, the lenders entitled to loss payment and notice * [Deductible](https://www.menloinsurance.com/library/glossary/deductible), with any exceptions * Forms applicable, the exact list of forms and endorsements that make up your policy If a coverage has no limit shown, you do not have it. That single rule explains most dec page disputes. ## Why should you check your dec page at every renewal? [#why-should-you-check-your-dec-page-at-every-renewal] Because the dec page is where drift happens. Property values rise while limits sit still, a location gets sold but keeps generating premium, a form number quietly changes edition and coverage shrinks with it. Read the declarations against reality once a year: are all locations listed, do limits match current rebuild costs, is the optional coverage you asked for actually marked? One detail practitioners check that buyers miss: coverage begins and ends at 12:01 AM in the time zone of the mailing address shown on the declarations, not the property location. A business with a California mailing address and a Florida warehouse has a three hour gap in its assumptions at each renewal boundary. ### Example A bakery owner pulls the renewal declarations and compares them to the prior year. The building limit still reads $400,000, unchanged since 2021, while a contractor recently quoted $560,000 to rebuild. With the 80% coinsurance clause shown on the same page, the required limit is $448,000, so the bakery is silently exposed to a coinsurance penalty on every partial loss. One renewal review catches it, and the fix costs a modest premium increase. ## Frequently Asked Questions ### Is the declarations page the same as the policy? No. The declarations are one section of the policy, the personalized summary. The full policy adds the coverage forms, conditions, and endorsements listed under Forms Applicable. The dec page tells you what you bought, the forms tell you what it means. ### Can I use my declarations page as proof of insurance? Often yes. Many lenders and landlords accept a dec page because it shows the insurer, policy number, dates, and limits. Some contracts specifically require a certificate of insurance instead, so ask what the reviewer will accept first. ### Where do I find my deductible on the dec page? Look for a labeled Deductible section, usually below the coverage schedule. Commercial property declarations show a base deductible plus exceptions, since perils like wind or hail can carry separate, higher deductibles that only appear in that exceptions line. ### What is a supplemental declarations page? An extra schedule attached when the standard dec page runs out of room, common for businesses with many locations or vehicles. A checkbox on the main declarations indicates one is attached. It carries the same weight as the main page. *This definition is for educational purposes. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # What Is an Insurance Deductible? (https://www.menloinsurance.com/library/glossary/deductible) An insurance deductible is the part of a covered loss you pay before the insurer pays. How deductibles apply per occurrence and what they do to your premium. Markdown version: https://www.menloinsurance.com/library/glossary/deductible.md **An insurance deductible is the amount of a covered loss you absorb before your insurer pays anything. If your policy carries a $1,000 deductible and a fire causes $10,000 in covered damage, the insurer pays $9,000. Higher deductibles lower your premium because you keep more of every loss.** Your deductible appears on the declarations page, and it comes back up in every claim conversation. Knowing exactly how it applies keeps the settlement math from surprising you. ### Deductible _Your retained share of each covered loss, subtracted before the insurer pays._ The portion of a covered loss the insured retains, subtracted from the adjusted loss amount before the insurer pays, applied once per occurrence in most property policies. ## How does a deductible apply per occurrence? [#how-does-a-deductible-apply-per-occurrence] In commercial property policies, the deductible applies once per occurrence, meaning once per loss event, no matter how many items of covered property that event damages. One windstorm that tears up two buildings triggers one deductible, not two. Two separate storms a month apart trigger two. The deductible also reduces the amount of the loss, not your limit of insurance, so a loss that exceeds your limit still pays the full limit. The order of operations matters too: if a [coinsurance](https://www.menloinsurance.com/library/glossary/coinsurance) penalty applies, the adjuster reduces the loss for coinsurance first, then subtracts the deductible from what remains. When the adjusted loss is smaller than the deductible, the insurer pays nothing and the claim may still land on your loss history. ## How does your deductible affect your premium? [#how-does-your-deductible-affect-your-premium] Directly. The deductible is the slice of every loss you agree to self fund, and insurers price coverage down as that slice grows. Raising a property deductible from $1,000 to $5,000 buys a real [premium](https://www.menloinsurance.com/library/glossary/insurance-premium) credit, and it also filters small claims out of your loss runs, which helps at renewal. The right level is the largest amount your business can absorb without strain in a bad month. A deductible you cannot actually pay is not savings, it is a gap. Some perils carry their own deductibles: wind and hail deductibles in storm prone states are often a percentage of the limit rather than a flat dollar amount, which turns a 2% deductible on a $2,000,000 building into $40,000. ## How is a deductible different from a self-insured retention? [#how-is-a-deductible-different-from-a-self-insured-retention] With a deductible, the insurer typically handles the claim from dollar one and collects your deductible afterward or subtracts it from the payment. With a [self-insured retention](https://www.menloinsurance.com/library/glossary/self-insured-retention), you pay first and the policy only starts responding once your own payments exhaust the retention. SIRs appear mostly in liability programs for larger businesses. If you carry a standard commercial property or auto policy, you almost certainly have a deductible, not an SIR. ### Example A landscaping company insures two buildings under one policy: Building 1 for $60,000 and Building 2 for $80,000, with a $250 deductible. A single storm causes $60,100 of damage to Building 1 and $90,000 to Building 2. The insurer pays $59,850 on Building 1, the loss minus the one deductible, and the full $80,000 limit on Building 2, because the deductible applies only once per occurrence. Total payment: $139,850. ## Frequently Asked Questions ### Do I pay my deductible to the insurance company? Usually not as a check. The adjuster subtracts the deductible from the claim payment, so you receive the covered loss minus the deductible and cover the gap with the repair contractor yourself. Some programs bill deductibles separately. ### Do liability policies have deductibles? Standard general liability policies typically have none, so a slip and fall claim pays from dollar one. Larger businesses sometimes take liability deductibles or self-insured retentions in exchange for premium credits. Property, auto physical damage, and cyber almost always carry deductibles. ### Is a higher deductible worth it? Often yes, if you can absorb it. You save premium every year and keep small claims off your loss runs. Price the credit at two or three deductible levels and compare the annual savings against the extra retained risk. ### What is a percentage deductible? A deductible calculated as a percentage of your limit of insurance rather than a flat dollar amount, common for wind and hail. A 2% deductible on a $2,000,000 building means you retain $40,000 of a storm loss. *This definition is for educational purposes. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # What Is an Experience Modification Rate? (https://www.menloinsurance.com/library/glossary/experience-modification-rate) Experience modification rate (emod) explained for brokers: how NCCI calculates the mod, primary vs excess losses, unit stat data, and what moves it at renewal. Markdown version: https://www.menloinsurance.com/library/glossary/experience-modification-rate.md **An experience modification rate is a factor that adjusts a workers compensation premium up or down by comparing an employer's actual losses with the losses expected for other employers of the same size in the same classifications.** A mod of 1.00 is average. A 1.25 debit mod adds 25% to manual premium, a 0.80 credit mod cuts it 20%. You will see the mod on the policy's Information Page, in Item 4, where it multiplies the premium subject to experience rating. It is the single number most clients ask about at renewal. ### Experience Modification Rate _Actual losses versus expected losses, expressed as a single premium multiplier._ A factor calculated under an experience rating plan, most often NCCI's, that modifies workers compensation premium based on an employer's own loss history relative to expected losses for its class and payroll. ## How is the emod calculated? [#how-is-the-emod-calculated] Insurers report each employer's payroll and losses to NCCI through unit statistical reports, filed 18 months after policy inception and updated annually after that. NCCI's Experience Rating Plan then compares actual losses against expected losses for the employer's class codes and payroll over a three year experience period. The period excludes the most recent policy year, because its claims are too green to value reliably. So a 2026 mod is built from the 2022, 2023, and 2024 policy years. This lag matters in practice: a bad claim year hits the mod the following year and stays in the formula for three renewals. An employer qualifies for experience rating once its premium clears a state specific eligibility threshold, either in a single year or cumulatively across the period. Below that threshold, the business simply pays manual rates with no mod at all. ## Why do small claims hurt the mod more than one big one? [#why-do-small-claims-hurt-the-mod-more-than-one-big-one] The formula splits every claim at a dollar threshold called the split point. NCCI now sets this point state by state, filed with each state's annual rates, rather than the single countrywide figure it used before the methodology change. Losses below the split point are primary losses and enter the formula at close to full weight. The portion above it is excess loss, which is discounted heavily and capped. The logic is that frequency predicts future losses better than severity: an employer with ten $15,000 claims is signaling a broken safety culture, while one $150,000 claim may be bad luck. Ten small claims can therefore raise a mod more than a single large one totaling the same dollars. This is also why medical only claims get special treatment. In most NCCI states they are reduced by 70% before entering the formula, a real incentive to report even minor injuries rather than pay them out of pocket, which Part Four of the policy prohibits anyway. ### Example A drywall contractor with $900,000 in payroll carries a 1.32 mod after two lost time claims, a $48,000 shoulder injury and a $61,000 fall. Manual premium of $58,000 becomes $76,560. Its competitor in the same class codes runs a 0.87 mod and pays $50,460 on identical payroll. On a project that requires a mod under 1.00 to bid, the first contractor is locked out entirely. ## What should you check before renewal? [#what-should-you-check-before-renewal] Pull the NCCI mod worksheet and reconcile every claim against current [loss runs](https://www.menloinsurance.com/library/glossary/loss-runs). Look for claims listed at stale reserve values, claims that closed below the reserve reported at the [unit stat valuation date](https://www.menloinsurance.com/library/guides/experience-mod-guide), and recoveries that never made it into the data. Subrogation recoveries reduce reported losses, so a claim recovered at 100% should not be dragging the mod. Payroll errors and wrong class codes distort expected losses just as badly as bad claim data. If the numbers on the worksheet do not match [the carrier's own loss runs](https://www.menloinsurance.com/library/guides/how-to-read-loss-runs), request a correction and a mod revision through NCCI or the state rating bureau. The mechanics of the underlying policy are covered in our [workers compensation insurance guide](https://www.menloinsurance.com/library/guides/workers-compensation-insurance-guide). ## Frequently Asked Questions ### What is a good experience mod rate? Anything under 1.00 beats the average for your class and payroll size. Well run employers in hazardous classes often sit between 0.75 and 0.90. Many general contractors and project owners now require subs to hold a mod below 1.00 as a bid qualification. ### How long does a claim affect my emod? Three renewal cycles. The experience period uses three policy years and skips the most recent one, so a claim first enters the mod about two years after the injury and drops out three years later as the window rolls forward. ### Can I lower my mod before renewal? You can correct it, not negotiate it. Close stale open claims, verify reserves at the unit stat valuation date, confirm subrogation recoveries were reported, and fix payroll or class code errors. Genuine reductions come from fewer claims, which takes a safety program and time. ### Who calculates the experience modification rate? NCCI in most states, using carrier reported unit statistical data. A handful of states, including California, New York, and Wisconsin, run independent rating bureaus with their own formulas. The concept is the same, the split points and eligibility thresholds differ. *This definition is for educational purposes. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # What Is an Extended Reporting Period (Tail Coverage)? (https://www.menloinsurance.com/library/glossary/extended-reporting-period) Extended reporting period (ERP) or tail coverage lets claims be made after a claims-made policy ends. Basic vs supplemental ERPs, pricing, and placement traps. Markdown version: https://www.menloinsurance.com/library/glossary/extended-reporting-period.md **An extended reporting period is an additional stretch of time after a claims-made policy ends during which claims can still be made and trigger coverage under the expired policy.** The market calls it tail coverage. It covers only claims arising from wrongful acts that happened between the retroactive date and policy expiration, not new work performed after the policy ends. You will place ERPs whenever a client leaves a claims-made program: nonrenewal, a carrier move to an occurrence form, a retirement, or the sale of the business. ### Extended Reporting Period _A reporting window that survives the claims-made policy it extends._ A period after the expiration of a claims-made policy during which claims first made against the insured may still trigger coverage, limited to acts committed on or after the retroactive date and before policy expiration. ## How does an extended reporting period work? [#how-does-an-extended-reporting-period-work] A claims-made form pays only when the claim is first made during the policy period, for acts on or after the retroactive date. Cancel or nonrenew the policy and every future claim falls outside that window, even claims from work performed while coverage was in force. The ERP repairs this by extending the reporting window without extending the coverage period. Claims-made forms typically build in a basic ERP with two tails, both at no additional premium: 60 days after expiration for claims first made after the policy ends, plus a longer 5 year window for claims that arise from occurrences the insured actually reported to the insurer during the policy period. The supplemental or additional ERP is the one the client buys, running for a fixed term of years or unlimited, priced as a percentage of the expiring premium stated in the declarations. Two mechanics trip people at the desk: the election window for the supplemental ERP is short, often 60 days from expiration, and on many professional and management liability forms the tail is withheld when the policy was cancelled for nonpayment of premium, though the ISO general liability form imposes no such bar. ## What does tail coverage not do? [#what-does-tail-coverage-not-do] An ERP extends reporting, nothing else. It does not cover acts committed after the policy expired, does not advance the retroactive date, and on most forms does not reinstate limits, so the expiring policy's remaining [aggregate limit](https://www.menloinsurance.com/library/glossary/aggregate-limit) is all the tail ever has. If earlier claims ate the aggregate, the tail can be an expensive empty shell, which is why you pull [loss runs](https://www.menloinsurance.com/library/glossary/loss-runs) before quoting one. The cleaner alternative when the client is simply changing carriers is prior acts coverage: the new claims-made policy carries the old retroactive date forward, keeping the reporting window alive without a tail purchase. Reserve the ERP for true exits, when there is no next policy to carry the retro date. The full trigger comparison, including how switching between forms creates gaps, is in our guide to [occurrence versus claims-made policies](https://www.menloinsurance.com/library/guides/occurrence-vs-claims-made-policies). ### Example An engineering firm retires its principal and lets its claims-made professional liability policy, $2,000,000 aggregate with a 2015 retroactive date, expire on June 30. The firm buys a five year supplemental ERP for 150% of the $18,000 expiring premium, a one time charge of $27,000. In year three, a 2024 structural design surfaces a defect claim for $900,000. The claim is first made during the ERP and arises from an act after the retroactive date and before expiration, so the expired policy defends and pays from its remaining aggregate. ## Frequently Asked Questions ### Is tail coverage the same as an extended reporting period? Yes. Tail coverage is the market name for the extended reporting period, most often the supplemental ERP purchased at policy termination. Both describe the same thing: extra time to report claims under an expired claims-made policy. ### How much does an extended reporting period cost? Supplemental ERPs are priced as a percentage of the expiring annual premium, stated in the declarations. On the ISO general liability form the charge is capped at 200% of the annual premium, though some professional liability tails run higher. It is a one time charge, and it is rarely negotiable after expiration. ### How long do I have to buy tail coverage? The election window is set by the policy and is short, often 60 days from the end of the policy period. Miss it and the option is gone. Calendar the deadline the day you learn a claims-made policy is terminating. ### Does an ERP give the insured new limits? Usually no. Most forms make the ERP subject to the expiring policy's remaining limits, so prior claims that eroded the aggregate reduce what the tail can pay. Some insurers offer reinstated limits for the ERP at an added charge, so ask at quoting. *This definition is for educational purposes. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # What Is a Hold Harmless Agreement? (https://www.menloinsurance.com/library/glossary/hold-harmless-agreement) Hold harmless agreement definition: a contract clause transferring risk so one party is not held responsible for claims. Limited, intermediate, and broad forms. Markdown version: https://www.menloinsurance.com/library/glossary/hold-harmless-agreement.md **A hold harmless agreement is a contract provision that transfers risk from one party to another, in which the party giving the promise agrees that the protected party will not be held responsible for claims arising from a specific activity.** Depending on how it is written, that can include claims caused by the protected party's own negligence. You will sign one before almost every construction subcontract, equipment lease, or venue rental, usually bundled with an [indemnification clause](https://www.menloinsurance.com/library/glossary/indemnification-clause) in the same paragraph. ### Hold Harmless Agreement _One party promises the other will not be held responsible for claims from a defined activity._ A contractual risk transfer in which one party agrees to hold another harmless from liability or legal claims related to a specified activity, sometimes including losses caused by the protected party's own actions. ## How is a hold harmless agreement different from indemnification? [#how-is-a-hold-harmless-agreement-different-from-indemnification] The two terms travel together in contracts and get used interchangeably, but they do different jobs. The hold harmless promise is the assurance: it transfers the risk, saying the protected party will not be held responsible. Indemnification is the payment: to indemnify is to make the other party whole after a loss, with the indemnitor absorbing the financial consequences of the indemnitee's liability. A useful memory aid from casualty coursework is that hold harmless transfers the risk while indemnification writes the check. In practice you should read the two clauses as one risk transfer package, then ask the question that actually matters: how much of the other party's fault did your company just agree to carry? ## What are the three forms of hold harmless agreements? [#what-are-the-three-forms-of-hold-harmless-agreements] Contract drafters and underwriters sort these clauses into three tiers by how much fault shifts downstream. * Limited form: you are responsible only to the degree of your own fault. Partial fault, partial obligation. * Intermediate form: you carry the entire loss whenever you share any fault at all, and escape only if the protected party was solely negligent. Partial fault, full obligation. * Broad form: you carry everything arising from the work, even losses caused by the protected party's sole negligence. No fault required, full obligation. The tiers matter because states police them. Most states have some form of anti-indemnity statute, and broad form wording, along with some intermediate wording, has been voided in many of them. Texas, for example, enacted its Construction Anti-Indemnity Act (Insurance Code Chapter 151) in 2011, which voids a construction clause requiring one party to indemnify another for that other party's own negligence. This is why an upstream party rarely relies on the clause alone and also demands [additional insured](https://www.menloinsurance.com/library/glossary/additional-insured) status on your policy as a backup if a statute guts the contract language. ### Example A property owner hires Metro City Construction as general contractor for a $2,000,000 retail build-out. The contract contains a broad form hold harmless clause requiring Metro City to hold the owner harmless even for the owner's sole negligence, plus additional insured status on Metro City's CGL. A pedestrian is injured by falling debris and sues both parties for $400,000. If the state's anti-indemnity statute voids the broad form wording, the owner still tenders the claim to Metro City's insurer through its additional insured endorsement. ## Frequently Asked Questions ### Is a hold harmless agreement legally enforceable? Often, but not always. All but six states have anti-indemnity statutes, and many void broad form clauses that shift the protected party's sole negligence, especially in construction. Enforceability turns on your state and the wording, so have contracts reviewed before you sign. ### Does my insurance cover a hold harmless agreement? Frequently yes. The CGL policy covers liability you assume in an insured contract for bodily injury and property damage, which picks up many hold harmless promises. Coverage does not extend to every promise you can sign, so send contracts to your broker before work starts. ### What is the difference between limited, intermediate, and broad form? Limited form makes you pay only for your share of fault. Intermediate form makes you pay the whole loss if you share any fault, excusing you only when the other party is solely negligent. Broad form makes you pay even for the other party's sole negligence. *This definition is for educational purposes. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # What Is an Indemnification Clause? (https://www.menloinsurance.com/library/glossary/indemnification-clause) Indemnification clause meaning: a contract provision where one party agrees to pay for another's losses. How the indemnitor, indemnitee, and CGL coverage fit. Markdown version: https://www.menloinsurance.com/library/glossary/indemnification-clause.md **An indemnification clause is a contract provision in which one party, the indemnitor, agrees to pay for losses or liabilities incurred by the other party, the indemnitee.** To indemnify means to make whole: the clause shifts the financial burden of a claim from the party who suffered it to the party who promised to absorb it. You will find one in nearly every construction contract, commercial lease, and service agreement, almost always alongside a [hold harmless agreement](https://www.menloinsurance.com/library/glossary/hold-harmless-agreement) in the same risk transfer section. ### Indemnification Clause _The indemnitor agrees to absorb the financial consequences of the indemnitee's liability._ A contractual provision obligating one party to compensate another for specified losses or liabilities, restoring the indemnitee to the position it held before the loss. ## How does an indemnification clause work? [#how-does-an-indemnification-clause-work] The clause names who pays, for what, and how far the promise reaches. The indemnitor assumes the financial consequences of the indemnitee's liabilities within the described scope, typically claims arising out of the indemnitor's work. Scope is where the fights happen. A clause tied to your own negligence is a limited form transfer. A clause obligating you whenever you share any fault is intermediate form. A clause covering even the indemnitee's sole negligence is broad form, and that last tier is where courts push back. Most states have anti-indemnity statutes limiting how much of an upstream party's own fault can be pushed downstream. Texas, for example, enacted its Construction Anti-Indemnity Act (Insurance Code Chapter 151) in 2011, voiding a construction provision that requires a party to indemnify another for that other party's own negligence. Related but distinct: hold harmless is the assurance that transfers the risk, indemnification is the actual payment of the loss. ## Does insurance cover contractual indemnification? [#does-insurance-cover-contractual-indemnification] Partly, through a definition worth knowing. The CGL policy excludes liability assumed under contract, then hands most of it back through an exception for an insured contract. That defined term includes the part of a contract pertaining to your business in which you assume the tort liability of another party for bodily injury or property damage to a third person. Sign a subcontract indemnifying the general contractor for injury claims arising from your work and your CGL can respond on the GC's behalf. The coverage has edges you should respect. It applies to tort liability for bodily injury and property damage, not to professional obligations, contract penalties, or every promise a drafter can invent, and endorsements exist that strip sole negligence indemnity back out. When a claim arrives, the adjuster's first request is the signed contract, and an unsigned or postdated agreement is the fastest route to a denied tender. Upstream parties know indemnity clauses can be voided by statute, which is why they also require [additional insured](https://www.menloinsurance.com/library/glossary/additional-insured) status and a [waiver of subrogation](https://www.menloinsurance.com/library/glossary/waiver-of-subrogation) as parallel routes to your policy. ### Example An electrical subcontractor signs a $150,000 subcontract agreeing to indemnify the general contractor for bodily injury claims arising from the electrical work. A journeyman's faulty splice sparks a fire that burns a carpenter, who sues the GC for $300,000. The GC tenders the suit under the indemnification clause. Because the sub assumed the GC's tort liability for bodily injury, the agreement qualifies as an insured contract, and the sub's CGL insurer defends and pays the claim within its $1,000,000 occurrence limit. ## Frequently Asked Questions ### What is the difference between an indemnification clause and a hold harmless agreement? Hold harmless is the promise that the protected party will not be held responsible, the risk transfer itself. Indemnification is the payment that makes the protected party whole after a loss. Contracts usually pair them, but they are distinct obligations. ### Who is the indemnitor and who is the indemnitee? The indemnitor gives the promise and pays, typically the downstream party such as a subcontractor. The indemnitee receives the protection, typically the upstream party such as a general contractor or property owner. ### Are indemnification clauses enforceable? Usually within limits. All but six states have anti-indemnity statutes, and many void clauses requiring indemnity for the indemnitee's sole negligence, particularly in construction contracts. The wording and your state's statute decide, so get contracts reviewed. ### Does my general liability policy cover indemnity agreements? Often yes. The CGL insured contract exception covers tort liability for bodily injury or property damage you assume under a qualifying contract. It does not cover every contractual promise, and endorsements can narrow it, so send the contract to your broker first. *This definition is for educational purposes. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # What Is an Insurance Binder? (https://www.menloinsurance.com/library/glossary/insurance-binder) An insurance binder is temporary proof that coverage is in force before the policy is issued. How binders differ from policies and certificates of insurance. Markdown version: https://www.menloinsurance.com/library/glossary/insurance-binder.md **An insurance binder is a temporary contract of insurance that puts coverage in force before the policy itself is issued. It identifies the insurer, the named insured, the coverage, limits, and effective date, and it obligates the insurance company to pay covered claims from that date forward.** Binders show up at the pressure points: a real estate closing, an equipment loan funding, a lease signing where the policy paperwork is still days away. The binder is what lets the deal close on time. ### Insurance Binder _A short temporary contract that makes coverage real while the full policy is being issued._ A temporary agreement, issued by an insurer or an authorized agent, that provides evidence coverage is in force until the policy is issued or the binder expires. ## How does an insurance binder work? [#how-does-an-insurance-binder-work] An agent with binding authority can put coverage in force on the spot. That authority is granted in the agency agreement with the insurer, which typically allows the agent to issue and deliver binders and policies, collect premiums, and service the business. When your broker says you are bound, a contract exists even though no policy document does yet. The binder itself is short, often one or two pages, stating the insurer, insured, coverage types, limits, deductibles, and effective date. Every binder carries an expiration date, commonly 30 to 90 days, and it dies automatically when the policy is issued. You should ask for the policy before the binder expires. A closing file with an expired binder and no policy is evidence of nothing. ## Binder vs policy vs certificate: what is the difference? [#binder-vs-policy-vs-certificate-what-is-the-difference] The binder is a temporary contract of insurance. The policy is the permanent contract that replaces it, with the full [declarations page](https://www.menloinsurance.com/library/glossary/declarations-page), forms, and endorsements that actually govern a claim. A certificate of insurance is neither: it is an informational snapshot confirming that coverage existed on the day it was issued, and it grants the [certificate holder](https://www.menloinsurance.com/library/glossary/certificate-holder) no coverage rights at all. Lenders at a closing want a binder or an evidence of property insurance form, because those create or confirm enforceable rights. Certificate reviewers on construction projects reject binders for the opposite reason: they want proof of an issued policy with specific endorsements, not a temporary placeholder. For professionals: an unauthorized or sloppy binder is an E\&O classic. Bind only within your written authority, confirm the carrier accepted the risk, and diary the binder expiration so no client sits bare between an expired binder and an unissued policy. ### Example A plumbing contractor is closing an SBA loan on a $180,000 excavator on Friday. The lender requires evidence of $200,000 in equipment coverage before funding. The policy will take two weeks to issue, so the broker binds coverage Thursday and sends the lender a binder showing the insurer, the equipment schedule, the limit, and a 60 day expiration. The loan funds Friday. The policy arrives twelve days later and the binder terminates on issuance. ## Frequently Asked Questions ### How long is an insurance binder good for? Until the stated expiration date, commonly 30 to 90 days, or until the policy is issued, whichever comes first. If the policy has not arrived as expiration approaches, contact your broker for an extension or the issued policy. ### Can I file a claim under a binder? Yes. A binder is a real contract of insurance, so a covered loss during the binder period is payable on the terms of the policy being issued. The insurer adjusts the claim as if the full policy were already in hand. ### Does a binder guarantee my final premium? No. The binder usually shows an estimated premium. The issued policy states the actual premium, and audited lines can adjust again after the policy period ends. Treat the binder number as a close estimate, not a locked price. ### Is a certificate of insurance the same as a binder? No. A certificate is informational only and confers no rights on the holder. A binder is a temporary contract that actually provides coverage. Lenders generally want binders or evidence forms, while project owners typically want certificates from issued policies. *This definition is for educational purposes. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # What Is an Insurance Premium? (https://www.menloinsurance.com/library/glossary/insurance-premium) An insurance premium is the price you pay for coverage. How insurers calculate premiums from exposure bases, rates, experience mods, and end of term audits. Markdown version: https://www.menloinsurance.com/library/glossary/insurance-premium.md **An insurance premium is the price you pay an insurance company for coverage during the policy period. Insurers calculate it by multiplying a rate by your exposure base, such as payroll, gross sales, or property values, then adjusting the result for your loss history, credits, and surcharges.** The premium appears on your declarations page and on every invoice, but the math behind it lives in the insurer's rating manuals. Understanding the three moving parts tells you which ones you can actually influence. ### Insurance Premium _Rate times exposure base, adjusted by modifications: the price of transferring your risk._ The amount charged by an insurer for coverage during the policy period, calculated by applying rates to the insured's exposure base and adjusting for experience and schedule modifications. ## How are insurance premiums calculated? [#how-are-insurance-premiums-calculated] Three ingredients: an exposure base, a rate, and modifications. The exposure base measures the size of your risk. Workers compensation uses remuneration, meaning payroll, and general liability commonly uses payroll or gross sales, while property uses building and contents values. The rate is a price per unit of that base, set by classification. In workers compensation, every job classification carries a code and a rate per $100 of payroll. A retail shoe store under code 8008 with $1,000,000 of expected payroll and a rate of 1.28 generates $12,800 of premium before adjustments. Riskier classifications carry higher rates, which is why a roofing payroll dollar costs many times a clerical payroll dollar. You control the base by how you grow, and you influence the classification by keeping payroll records that separate duties cleanly. ## What do experience mods and other adjustments change? [#what-do-experience-mods-and-other-adjustments-change] After the base premium is computed, modifications move it up or down. The biggest one for workers compensation is the [experience modification rate](https://www.menloinsurance.com/library/glossary/experience-modification-rate), a factor built from your past losses. A 1.15 mod raises the shoe store's premium about 15%, while a 0.85 mod cuts it. Your [loss runs](https://www.menloinsurance.com/library/glossary/loss-runs) feed that factor, which is one reason a higher [deductible](https://www.menloinsurance.com/library/glossary/deductible) that keeps small claims off the books can pay for itself. Insurers also apply schedule credits and debits for safety programs and housekeeping, premium discounts on larger accounts, and fixed charges like an expense constant. Each item appears as its own line on the workers compensation Information Page, so you can see exactly where the number came from. ## Why did you get a premium bill after the policy ended? [#why-did-you-get-a-premium-bill-after-the-policy-ended] Because premiums on payroll and sales based policies start as estimates. At the end of the term the insurer [audits your actual exposures](https://www.menloinsurance.com/library/guides/workers-comp-audit-guide) and recalculates. If actual payroll ran higher than the estimate, you owe the difference. If it ran lower, you get a refund or credit. The auditor will ask for payroll journals, 941 tax filings, and overtime records, and will reclassify payroll that your records cannot separate into the highest applicable rate. Clean quarterly records are the cheapest premium reduction available. ### Example A retail shoe store estimates $1,000,000 in annual payroll under classification code 8008 at a rate of 1.28 per $100 of remuneration, producing $12,800 in base workers compensation premium. An experience modification factor of 1.15 and other adjustments bring the estimated standard premium to $15,132. A premium discount of $968 and a $120 expense constant land the total estimated premium at $14,284, all of it subject to recalculation at the end of term audit. ## Frequently Asked Questions ### What is the difference between a premium and a deductible? The premium is the price you pay for the policy whether or not you ever have a claim. The deductible is the share of each covered loss you absorb when a claim happens. Raising the deductible typically lowers the premium. ### Why did my premium go up with no claims? Rates and exposures both move. Carriers file rate increases, your payroll or sales grew, property values rose with construction costs, or a scheduled credit expired. Ask your broker to show renewal rating side by side with the expiring policy. ### What is a premium audit? An end of term review comparing your estimated exposures to actual figures from payroll and sales records. The insurer bills the shortfall or refunds the excess. Refusing the audit usually triggers an audit noncompliance charge, so cooperate and prepare records early. ### What is a minimum premium? The smallest amount the insurer will charge for issuing the policy, regardless of how low your audited exposures come in. On the workers compensation Information Page it appears as its own line, often a few hundred dollars. *This definition is for educational purposes. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # What Is Loss of Use Coverage? (https://www.menloinsurance.com/library/glossary/loss-of-use) Loss of use coverage pays additional living expenses or lost rent when covered damage makes your home unlivable. What Coverage D includes and excludes. Markdown version: https://www.menloinsurance.com/library/glossary/loss-of-use.md **Loss of use coverage pays the extra costs of living somewhere else while covered damage makes your home unfit to live in, and it pays the rent you lose when damage drives out a tenant.** Your dwelling coverage rebuilds the house. Loss of use covers the hotel, the rental, and the takeout in between. You will find it in your homeowners policy as Coverage D, and you will care about it the night a kitchen fire puts your family in a hotel with no idea for how long. ### Loss of Use _The cost of being displaced: additional living expenses and lost rental income._ Homeowners policy coverage for additional living expenses and fair rental value when a covered loss makes the residence uninhabitable, paying for the shortest time reasonably required to repair the damage or permanently relocate. ## What does loss of use actually pay for? [#what-does-loss-of-use-actually-pay-for] Two things, plus one narrow extra. Additional living expense covers the increase in your normal costs of living: the rental house or extended stay hotel, restaurant meals beyond your usual grocery spend, extra commuting mileage, pet boarding, and laundry service. The key word is increase. If your mortgage is $2,400 and the temporary rental is $3,100, the coverage pays the $700 difference plus the other added costs, because you would have paid the mortgage anyway. Fair rental value applies when you rent out part of the home: it pays the rent you lose while the unit is unrepaired, minus expenses that stop, like the tenant's utilities. The narrow extra is civil authority coverage, which pays when the government blocks access to your home because a neighboring property was damaged by a covered peril, commonly capped at about two weeks under standard homeowners forms. ## How much loss of use coverage do you get? [#how-much-loss-of-use-coverage-do-you-get] Most homeowners policies set Coverage D as a percentage of your dwelling limit, commonly 20% to 30% for owner occupied homes, with renters and condo forms using a percentage of personal property coverage instead. The details vary by insurer and state, so check your own declarations page rather than assuming. Payment lasts for the shortest time reasonably required to repair or replace the home, not until you feel settled, and it is not reduced by your [deductible](https://www.menloinsurance.com/library/glossary/deductible) applying elsewhere in the claim. Keep every receipt from day one. The adjuster will ask you to document both your normal monthly costs and the new ones, because the claim pays the gap between them, and displaced families who reconstruct expenses from memory months later routinely leave money unclaimed. After a widespread disaster, rents spike exactly when you need them, which is a reason to review the percentage before renewal if you live in wildfire or hurricane country. ### Example A washing machine supply line bursts while a family of four is away for a weekend, soaking the floors of their $450,000 home. Repairs take four months. Their policy's Coverage D limit is 30% of dwelling, $135,000. The claim pays $2,900 a month for a comparable furnished rental, about $600 a month in added meal and commuting costs, and $400 for boarding two dogs the rental would not accept, roughly $15,600 total, all well inside the limit. ## Frequently Asked Questions ### Does loss of use pay my whole rent at the temporary place? It pays the increase over your normal living costs, not the whole tab. Your regular mortgage or rent continues to be your responsibility, and the coverage adds what displacement costs on top of it, from higher rent to extra meals and mileage. ### How long will loss of use coverage last? For the shortest time reasonably required to repair the home or to relocate permanently, subject to the Coverage D limit. Some policies also cap the period, often at 12 or 24 months, so read your own form and ask your broker. ### Is loss of use the same as business income coverage? They rhyme. Loss of use is the personal lines version, covering displaced households and lost residential rent. [Business income](https://www.menloinsurance.com/library/glossary/business-income) is the commercial version, replacing a company's lost earnings and continuing expenses during repairs after covered damage. ### Does loss of use apply if I evacuate for a hurricane but my home is fine? Usually not. The coverage requires your home to be uninhabitable from a covered loss, or access blocked by civil authority because a neighboring property suffered one. A precautionary evacuation with no damage generally does not trigger it. *This definition is for educational purposes. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # What Are Loss Runs? (https://www.menloinsurance.com/library/glossary/loss-runs) Loss runs are carrier-issued claim history reports underwriters use to price your account. How to request them, valuation dates, and why open reserves matter. Markdown version: https://www.menloinsurance.com/library/glossary/loss-runs.md **Loss runs are reports issued by an insurance carrier listing every claim reported under a policy: the date of loss, a description, amounts paid, reserves on open claims, and each claim's status.** Underwriters read them the way a lender reads a credit report, as the account's track record in the carrier's own numbers. You will need them at every market submission, every agency of record change, and any time a client disputes what their claim history actually shows. Requesting them early is routine, and carriers expect it. ### Loss Runs _The carrier's official record of claims, payments, and reserves under a policy._ A claim history report produced by an insurer for a specific insured and policy period, showing reported claims with paid amounts, outstanding reserves, and claim status as of a stated valuation date. ## How do you request loss runs? [#how-do-you-request-loss-runs] Send a written request to the current or prior carrier, signed by the insured or submitted by [the broker of record](https://www.menloinsurance.com/library/guides/broker-of-record-letter). Most carriers accept requests through their agency portal, and many make loss runs downloadable there directly. Ask for five years of history, which is the standard lookback most underwriters require, and ask for currently valued reports. A submission with loss runs valued more than 90 days old will bounce back from most underwriting desks with a request for fresh ones. Turnaround varies. Portal downloads are instant, emailed requests can take days to a few weeks, and several states set statutory deadlines for carriers to respond. If a client is leaving a carrier on bad terms, get the request in before the relationship sours further. The carrier owns the data, and the insured only has a right to a copy of it. ## What do valuation dates and open reserves mean? [#what-do-valuation-dates-and-open-reserves-mean] Every loss run states a valuation date, the snapshot date for all its figures. A claim shown open with a $60,000 reserve on a March valuation may close for $9,000 by June, and the two reports tell very different stories to an underwriter. Reserves are the adjuster's estimate of what an open claim will ultimately cost, not money already spent, yet underwriters price incurred losses, which means paid plus reserved. This is why [reviewing open reserves before marketing](https://www.menloinsurance.com/library/guides/how-to-read-loss-runs) an account is real work, not paperwork. A claim that settled below its reserve, or one where a [subrogation](https://www.menloinsurance.com/library/glossary/subrogation) recovery came in after the valuation date, is overstating the client's losses. For workers compensation, the same reserve figures feed the unit statistical data behind the [experience modification rate](https://www.menloinsurance.com/library/glossary/experience-modification-rate), so a stale reserve costs premium twice. ### Example A roofing contractor's loss runs show an open general liability claim reserved at $85,000 from a ladder incident 20 months ago. The broker calls the adjuster before marketing the account and learns the claimant accepted $22,000 six weeks earlier. The broker requests re-valued loss runs showing the claim closed at $22,000 and submits those instead. Incurred losses on the submission drop $63,000, and the account qualifies for a carrier whose appetite guide caps five year incurred losses at $100,000. ## Frequently Asked Questions ### How far back should loss runs go? Five years is the standard underwriting lookback for most commercial lines. Some carriers accept three years for small accounts, and umbrella or workers compensation underwriters sometimes ask for more. A no losses letter covers years with no claims. ### How long does it take to get loss runs from a carrier? Anywhere from minutes to a few weeks. Agency portals produce them instantly, emailed requests to a carrier's loss run department commonly take five to fifteen business days, and some states impose statutory response deadlines on carriers. ### What is a currently valued loss run? One whose valuation date is recent, usually within 90 days of the submission. Because open reserves change as claims develop, underwriters discount or reject reports with old valuation dates. Always check the valuation date before sending a report to market. ### Do loss runs show claims that were reported but never paid? Yes. Reported incidents typically appear even when closed with no payment, listed as closed with zero paid. That works in the insured's favor, because a pattern of reported but unpaid claims reads far better than the same count with dollars attached. *This definition is for educational purposes. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # What Are Monopolistic States in Workers Comp? (https://www.menloinsurance.com/library/glossary/monopolistic-states) Monopolistic states (North Dakota, Ohio, Washington, Wyoming) require workers comp from the state fund only. What brokers must know about stop gap coverage. Markdown version: https://www.menloinsurance.com/library/glossary/monopolistic-states.md **Monopolistic states are the four states, North Dakota, Ohio, Washington, and Wyoming, where employers must buy workers compensation coverage from the state fund, with no private carrier option.** A monopolistic state fund is state created, state owned, and state operated, and it writes all workers compensation insurance for that state. You run into the term the moment a client hires an employee in one of the four states, because the [standard multistate placement](https://www.menloinsurance.com/library/guides/monopolistic-states-workers-comp) you would normally make simply is not available there. ### Monopolistic States _Four states where only the state fund can write workers compensation._ States in which workers compensation insurance may be purchased only from a state operated fund: North Dakota, Ohio, Washington, and Wyoming. Private carriers cannot write workers compensation coverage in these states. ## How do monopolistic states affect a workers comp policy? [#how-do-monopolistic-states-affect-a-workers-comp-policy] The Information Page of a standard workers compensation policy cannot list a monopolistic state in Item 3.A., and the Other States insurance in Item 3.C. excludes them too. Common 3.C. wording reads "all states except the monopolistic states and those listed in Item 3.A." So an Oklahoma contractor whose crew picks up unexpected work in Missouri has Other States coverage, but the same crew working in Wyoming has none. Coverage there must come from the Wyoming fund, enrolled before work begins. This is the operational trap: state funds do not backdate, and the auditor who finds unreported Ohio payroll on a private carrier policy will remove it from that policy without the Ohio fund picking it up retroactively. Brokers should ask about employee home states and travel patterns at every renewal, not just at placement. ## What is stop gap coverage and why do you need it? [#what-is-stop-gap-coverage-and-why-do-you-need-it] Monopolistic state funds pay statutory workers compensation benefits but do not include employers liability coverage, the Part Two protection a standard policy provides for employee injury suits that fall outside the no fault bargain. Suits alleging the employer's own negligence, third party over actions, and consortium claims from an injured worker's spouse all land in that gap. Stop gap coverage fills it, typically added by endorsement to the employer's commercial general liability policy for the monopolistic state exposures. Ohio's fund, as one example, leaves employers liability entirely to the private market. A multistate insured with any payroll in the four states should show stop gap employers liability on the CGL, with limits matching the employers liability limits carried elsewhere in the program. Miss it and the account has a bare spot no certificate reviewer will catch, because certificates rarely show what is absent. ### Example A Washington machine shop insures through the state fund, as required. A press operator loses two fingers and collects statutory benefits, then his attorney sues the shop directly, alleging removal of a machine guard. The state fund policy pays the comp benefits but provides no defense for the suit. Because the shop's broker had added a stop gap employers liability endorsement to its CGL with a $1,000,000 limit, the endorsement funds the defense and the eventual $250,000 settlement. ## Frequently Asked Questions ### Which states are monopolistic for workers compensation? North Dakota, Ohio, Washington, and Wyoming. Employers with workers in these states must buy coverage from the state fund. Every other state allows private carriers, though many also operate competitive state funds alongside them. ### What is stop gap coverage? Employers liability coverage for monopolistic state exposures, usually added by endorsement to the general liability policy. It covers employee injury suits the state fund does not, such as negligence claims, third party over actions, and consortium claims. ### Can my regular workers comp policy cover employees in Ohio? No. Ohio payroll must be insured through the Ohio state fund, and Item 3.C. Other States wording specifically carves out monopolistic states. Enroll with the fund before employees begin work there and add stop gap coverage to the CGL. ### Do monopolistic state funds use experience rating? The funds run their own rating programs separate from NCCI, and an employer's fund experience does not flow into its NCCI [experience modification rate](https://www.menloinsurance.com/library/glossary/experience-modification-rate). Request the fund's claim history separately when marketing the rest of the account. *This definition is for educational purposes. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # What Is a Named Insured? (https://www.menloinsurance.com/library/glossary/named-insured) Named insured means the person or business listed in the policy declarations. First named insured duties, insured status tiers, and common entity gaps. Markdown version: https://www.menloinsurance.com/library/glossary/named-insured.md **A named insured is the person or organization listed by name in the policy declarations as the party the policy is written for.** Everywhere the policy says "you" or "your," it means the named insured. Other parties can gain insured status, but the named insured holds the contract itself, with its full rights and its full duties. You will see the term the first time you read your own declarations page, and again whenever a contract asks who holds the policy. Getting the name and entity type exactly right is the whole game. ### Named Insured _The party the policy is written for, listed by name in the declarations._ A person or organization specifically listed in the declarations of an insurance policy, entitled to the policy's full rights and bound by its duties, as distinguished from parties who receive insured status automatically or by endorsement. ## Who counts as an insured beyond the named insured? [#who-counts-as-an-insured-beyond-the-named-insured] Commercial liability policies build [insured status in three tiers](https://www.menloinsurance.com/library/guides/named-insured-vs-additional-insured). Named insureds are listed in the declarations. Automatic insureds gain status through their relationship to the named insured under the Who Is An Insured section: a sole proprietor's spouse for business conduct, partners in a partnership, executive officers and directors of a corporation, employees acting within the scope of their work, and real estate managers acting on the named insured's behalf. The third tier is [additional insureds](https://www.menloinsurance.com/library/glossary/additional-insured), outside parties added by endorsement because a contract demands it. Entity type drives the automatic tier, which is why it matters. Under CG 00 01, a newly acquired or formed organization qualifies as a named insured automatically, but only for 90 days or until the policy period ends, and never if it is a partnership, joint venture, or LLC. Those need their own listing. ## What does the first named insured do? [#what-does-the-first-named-insured-do] When several named insureds appear, the one listed first carries duties the others do not. The first named insured is responsible for paying premiums, is the party the insurer sends cancellation or nonrenewal notice to, receives any return premium, and is authorized to request policy changes on everyone's behalf. Choose it deliberately. On a program covering a holding company and six operating entities, the first named insured should be the entity with the treasury function and the people who read carrier mail, because a cancellation notice sent to a dormant shell that no one checks becomes a lapsed policy nobody saw coming. Brokers reviewing a renewal should confirm the first named insured still exists and still matches the entity paying the bill. ### Example J\&J Renovations, a partnership, incorporates as J\&J Renovations Inc. The agent renames the CGL policy to the corporation and drops the partnership. Two years later a deck the partnership built collapses. The corporation's policy does not respond, because the partnership that performed the work is no longer a named insured and prior entities get no automatic status. Keeping both the original partners and the new corporation as named insureds, with the corporation listed first, would have preserved completed operations coverage. ## Frequently Asked Questions ### What is the difference between a named insured and an additional insured? A named insured is listed in the declarations and holds the policy's full rights and duties. An additional insured is an outside party granted limited insured status by endorsement, usually to satisfy a contract, with coverage only for liability tied to the named insured's work or premises. ### Who should be the first named insured? The entity that pays the premium and manages the insurance program. It receives cancellation notices, return premiums, and the authority to make policy changes, so it should be an active company whose mail and email actually get read. ### Does my new LLC automatically have coverage under my existing policy? No. The CGL's newly acquired organization provision excludes partnerships, joint ventures, and LLCs, and even eligible corporations get only 90 days of automatic status. A new entity should be added to the declarations before it starts operating. ### Are my employees insured under my business policy? Generally yes, as automatic insureds for acts within the scope of their employment. That status has exceptions, including injury to co-workers, which belongs to workers compensation instead. Employees are not named insureds and cannot alter the policy. *This definition is for educational purposes. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # What Is an Occurrence in Insurance? (https://www.menloinsurance.com/library/glossary/occurrence) Occurrence in insurance means an accident, including continuous or repeated exposure to the same harmful conditions. Why the definition decides how claims pay. Markdown version: https://www.menloinsurance.com/library/glossary/occurrence.md **An occurrence is an accident, including continuous or repeated exposure to substantially the same general harmful conditions.** That single sentence from the general liability policy decides whether a loss is covered at all, how many limits apply to it, and which policy year pays when damage develops slowly over time. You will see the word in three places: the insuring agreement, which covers injury or damage caused by an occurrence, the each occurrence limit on your declarations, and the label on your policy type. ### Occurrence _An accident, including gradual harm from repeated exposure to the same conditions._ An accident, including continuous or repeated exposure to substantially the same general harmful conditions, that results in bodily injury or property damage during the policy period. ## How does the occurrence definition affect coverage? [#how-does-the-occurrence-definition-affect-coverage] The definition is deliberately wider than the plain word accident. A dropped pallet is an occurrence, but so is a slow pipe leak that soaks a neighboring suite for eight months, because continuous exposure to the same harmful conditions counts. What the definition filters out is intent. Injury or damage expected or intended from the standpoint of the insured is excluded, so coverage responds to your negligence, not your business plan. The definition also does counting work. The each occurrence limit on [CG 00 01](https://www.menloinsurance.com/library/forms/cg-00-01) is the most the insurer pays for any one occurrence, and every payment then reduces the applicable [aggregate limit](https://www.menloinsurance.com/library/glossary/aggregate-limit). When one event injures forty people, whether that is one occurrence or forty determines whether one limit or forty limits apply, and adjusters ask early about the cause because a single proximate cause generally means a single occurrence. ## What is an occurrence policy versus a claims-made policy? [#what-is-an-occurrence-policy-versus-a-claims-made-policy] An occurrence policy covers injury or damage that happens during the policy period, no matter when the claim is filed. The policy you carried in 2021 answers a 2026 lawsuit about a 2021 injury, even though it expired years ago. A claims-made policy instead covers claims first made during the policy period, which is why professional liability and directors and officers forms need retroactive dates and an [extended reporting period](https://www.menloinsurance.com/library/glossary/extended-reporting-period) when coverage ends. Standard commercial general liability is written on the occurrence form, so most business owners never choose between the two. If you buy specialty lines, the trigger differences are worth twenty minutes of your attention, and the full comparison is in our guide to [occurrence versus claims-made policies](https://www.menloinsurance.com/library/guides/occurrence-vs-claims-made-policies). ### Example A heating contractor installs a furnace in 2024. A cracked heat exchanger leaks carbon monoxide through the winter of 2026, and the homeowners sue for bodily injury that year. The continuous exposure counts as an occurrence, and because the contractor's CGL is an occurrence form, the policy in force when the injury happened responds, subject to its $1,000,000 each occurrence limit. The claim is paid even though the 2026 lawsuit arrived after that policy expired. ## Frequently Asked Questions ### Is an occurrence the same as a claim? No. The occurrence is the accident or exposure that causes injury or damage. The claim is the demand for money that follows, sometimes years later. Occurrence policies key coverage to when the harm happened, not when the claim shows up. ### Does an occurrence have to be sudden? No. The definition expressly includes continuous or repeated exposure to substantially the same general harmful conditions, so gradual damage like a long running leak or fume exposure can qualify, as long as the insured did not expect or intend the harm. ### What is the each occurrence limit? It is the most your policy pays for bodily injury and property damage from any one occurrence, shown on the declarations. Payments under it also reduce your general aggregate or products-completed operations aggregate for the policy term. ### Can multiple injuries be one occurrence? Often yes. Injuries traceable to a single proximate cause, like one contaminated food batch, are generally treated as one occurrence sharing one limit. Courts differ at the edges, which is why the count is fought over in large losses. *This definition is for educational purposes. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # What Is a Peril in Insurance? (https://www.menloinsurance.com/library/glossary/peril) A peril in insurance is the cause of loss a policy covers, like fire, wind, or theft. Named perils vs open perils and why the difference decides your claim. Markdown version: https://www.menloinsurance.com/library/glossary/peril.md **A peril is the specific cause of loss that damages your property, such as fire, windstorm, theft, or a burst pipe. Insurance policies either name the perils they cover or cover every peril except the ones they exclude, and that structural difference often decides whether your claim gets paid.** You will see the word on your declarations under the heading Covered Causes of Loss, and again in a claim denial letter if the cause of your loss was never on the list. ### Peril _The cause of loss itself: fire, wind, theft, water. Policies cover perils, not bad luck in general._ A cause of loss, such as fire, windstorm, or theft. A policy responds only when covered property is damaged by a peril the policy covers. ## What is the difference between named perils and open perils? [#what-is-the-difference-between-named-perils-and-open-perils] A named perils policy covers only the causes of loss printed on the form. In commercial property, the Causes of Loss Basic Form names eleven: fire, lightning, explosion, windstorm or hail, smoke, aircraft or vehicles, riot or civil commotion, vandalism, sprinkler leakage, sinkhole collapse, and volcanic action. The Broad Form adds falling objects, weight of snow, ice, or sleet, and certain water damage. An open perils policy flips the logic. The Causes of Loss Special Form [CP 10 30](https://www.menloinsurance.com/library/forms/cp-10-30) covers direct physical loss from any cause unless the policy excludes or limits it. Theft is the everyday difference: not a named peril on Basic or Broad, covered under Special. If you do not know which form your business carries, check the declarations before you assume. ## Why does the burden of proof matter to you? [#why-does-the-burden-of-proof-matter-to-you] Under a named perils form, you must show your loss came from one of the listed perils before the insurer owes anything. Under an open perils form, the burden reverses: the insurer must point to a specific exclusion or limitation to deny the claim. That reversal is worth real money in murky losses. Water stains appear on a ceiling and nobody saw what happened. On a named perils form, the adjuster's first question is which listed peril you can prove caused it. On CP 10 30, the adjuster has to find an exclusion that fits. Open perils coverage costs more, and for most businesses it earns the difference. ## Are some perils always excluded? [#are-some-perils-always-excluded] Yes. Even the Special Form excludes flood and other water perils, earth movement, wear and tear, rust and decay, mechanical breakdown, and settling or cracking, among others. Flood is the one that surprises owners most, and the exclusion applies whether the water came from nature or a broken levee. Some excluded perils can be bought back individually, and flood is usually insured through a separate policy. Ask your broker which exclusions on your form have a buyback available. ### Example A boutique's stockroom is burglarized over a weekend and $18,000 of inventory disappears. Under the Basic or Broad Form, theft is not a named peril, so the claim is denied. Under the Special Form CP 10 30, theft is not excluded, so the claim pays $18,000 minus the deductible. The premium difference between the forms for a shop this size is often a few hundred dollars a year. ## Frequently Asked Questions ### What perils does a basic form commercial property policy cover? Eleven named causes of loss: fire, lightning, explosion, windstorm or hail, smoke, aircraft or vehicles, riot or civil commotion, vandalism, sprinkler leakage, sinkhole collapse, and volcanic action. Anything not on that list, including theft, is not covered. ### Is theft a covered peril? Only under open perils coverage. The Basic and Broad Forms do not name theft, so it is excluded by omission. The Special Form CP 10 30 covers theft because nothing excludes it, subject to limitations for certain property types. ### Is flood a covered peril? No, not under standard property forms, including the Special Form. The water exclusion applies whether the flooding is natural or man made. Flood coverage comes through a separate flood policy or a specific buyback endorsement. ### What is the difference between a peril and a hazard? A peril is the cause of loss itself, like fire. A hazard is a condition that makes the peril more likely or more severe, like oily rags stored next to a furnace. Insurers price hazards and pay for perils. *This definition is for educational purposes. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # What Does Primary and Noncontributory Mean? (https://www.menloinsurance.com/library/glossary/primary-and-noncontributory) Primary and noncontributory means the named insured's policy pays first and seeks no contribution from the additional insured's coverage. CG 20 01 explained. Markdown version: https://www.menloinsurance.com/library/glossary/primary-and-noncontributory.md **Primary and noncontributory is a coverage status in which the named insured's policy pays a covered loss first and does not ask the additional insured's own insurance to contribute.** Contracts pair it with additional insured requirements so the downstream party's policy absorbs the loss alone, leaving the upstream party's limits and loss history untouched. You will see the phrase in the insurance requirements section of nearly every construction subcontract and commercial lease, and you will field certificate requests demanding it in writing. ### Primary and Noncontributory _The named insured's policy responds first, with no contribution demanded from the additional insured's insurer._ An other insurance arrangement in which the named insured's policy applies as primary and the insurer agrees not to seek contribution from other insurance available to an additional insured on the same basis. ## How does the CG 20 01 endorsement work? [#how-does-the-cg-20-01-endorsement-work] Without modification, the Other Insurance condition in [CG 00 01](https://www.menloinsurance.com/library/forms/cg-00-01) decides how overlapping policies share a loss, contributing by equal shares if the other policy permits it and otherwise pro rata by limits. An additional insured facing a claim would rather not share at all. The [CG 20 01](https://www.menloinsurance.com/library/forms/cg-20-01) endorsement, Primary And Noncontributory Other Insurance Condition, edition 12 19, amends that condition so the named insured's policy is primary to the additional insured's own coverage and will not seek contribution from it. Two conditions gate the change: the person or organization must actually be an additional insured under the policy, and a written contract must require the coverage to apply on that basis. IRMI's definition captures the second half of the phrase: noncontributory insurance will not seek contribution from other policies that apply to the loss on the same basis. ## What does CG 20 01 not do? [#what-does-cg-20-01-not-do] It grants no additional insured status. This is the error that generates E\&O files. CG 20 01 only rewires the Other Insurance condition, so an upstream party named nowhere else on the policy gets nothing from it. Status must come from an additional insured endorsement such as [CG 20 10](https://www.menloinsurance.com/library/forms/cg-20-10) for ongoing operations or [CG 20 37](https://www.menloinsurance.com/library/forms/cg-20-37) for completed operations, with CG 20 01 layered on top. Check the contract wording against the forms before you issue the certificate, because sophisticated certificate reviewers reject COIs that recite primary and noncontributory without listing an endorsement number that actually delivers it. Remember too that the endorsement addresses sharing, not breadth: the additional insured still gets only the coverage the AI endorsement grants, capped by the named insured's limits and eroded [aggregate](https://www.menloinsurance.com/library/glossary/aggregate-limit). ### Example A landlord's lease requires the tenant's CGL to name the landlord as [additional insured](https://www.menloinsurance.com/library/glossary/additional-insured) on a primary and noncontributory basis. The tenant's broker attaches CG 20 11 for the premises and CG 20 01 for the other insurance condition. A visitor is injured in the tenant's suite and sues both parties for $750,000. The tenant's $1,000,000 policy defends the landlord and pays the loss alone. Without CG 20 01, the tenant's and landlord's insurers would have shared the loss under their Other Insurance conditions, and the landlord's loss history would carry the claim. ## Frequently Asked Questions ### Does primary and noncontributory make someone an additional insured? No. CG 20 01 only modifies the Other Insurance condition. Additional insured status must be granted separately, by an endorsement like CG 20 10 or CG 20 37 or by a blanket provision. The two requirements travel together in contracts but are met by different forms. ### Is a certificate showing primary and noncontributory enough? No. A certificate of insurance confers no coverage by itself. The wording must appear in the policy through CG 20 01 or equivalent language, and careful reviewers ask for the endorsement copy, not just the checked box on the ACORD form. ### What happens without primary and noncontributory wording? The Other Insurance conditions of both policies control. The additional insured's own insurer may be required to contribute by equal shares or pro rata, which puts a claim on the additional insured's loss runs, exactly what the contract meant to prevent. ### Does CG 20 01 apply without a written contract? No. The endorsement applies only when a written contract or agreement requires the insurance to be primary and not seek contribution. An oral agreement or a handshake requirement leaves the standard sharing provisions in place. *This definition is for educational purposes. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # What Is Replacement Cost in Insurance? (https://www.menloinsurance.com/library/glossary/replacement-cost) Replacement cost insurance pays to replace damaged property with no deduction for depreciation. How to activate it, what it pays, and how it differs from ACV. Markdown version: https://www.menloinsurance.com/library/glossary/replacement-cost.md **Replacement cost is a property insurance valuation method that pays the amount needed to replace damaged property with new property of like kind and quality, with no deduction for depreciation. The policy pays what a new equivalent costs today, not what your used property was worth the moment it burned.** The term shows up as an optional coverage on your policy declarations and again after a loss, when the adjuster explains what triggers the full payment. Both moments reward reading the fine print early. ### Replacement Cost _Pays for new property of like kind and quality, with depreciation left out of the math._ The cost to replace damaged property with new property of comparable material and quality at current prices, without any deduction for depreciation. ## How do you activate replacement cost coverage? [#how-do-you-activate-replacement-cost-coverage] On the Building and Personal Property Coverage Form [CP 00 10](https://www.menloinsurance.com/library/forms/cp-00-10), losses are valued at [actual cash value](https://www.menloinsurance.com/library/glossary/actual-cash-value) by default. Replacement cost is an Optional Coverage, activated by marking an X next to the items it applies to on the declarations: building, personal property, or both. No X, no coverage, regardless of what anyone remembers discussing at renewal. Personal property of others stays at actual cash value even then, unless the Extension of Replacement Cost to Personal Property of Others is also added to the declarations. You should confirm all three entries at every renewal, because a lapsed X is one of the cheapest errors to fix before a loss and one of the most expensive to discover after. ## What does replacement cost actually pay? [#what-does-replacement-cost-actually-pay] The policy pays [the least of three amounts](https://www.menloinsurance.com/library/guides/actual-cash-value-vs-replacement-cost): the limit of insurance, the cost to replace with property of like kind and quality, or the amount you actually spend. Here is the operational catch adjusters enforce: the insurer does not pay on a replacement cost basis until the property is actually repaired or replaced. Until then you receive actual cash value. You can take the ACV settlement now and still claim the replacement cost difference later, as long as you notify the insurer within 180 days of the loss. Replacement cost also excludes increased costs from building codes and ordinances. Those need [Ordinance or Law coverage](https://www.menloinsurance.com/library/guides/ordinance-or-law-coverage), a separate purchase. ## Does replacement cost change your coinsurance math? [#does-replacement-cost-change-your-coinsurance-math] Yes. The [coinsurance](https://www.menloinsurance.com/library/glossary/coinsurance) requirement is calculated on the value of the property under the valuation you chose. Choose replacement cost and your required limit is built on replacement values, which run higher than depreciated values. A limit that satisfied an 80% coinsurance clause under ACV can fail it under replacement cost. Brokers should reprice the limit whenever the valuation changes, not just the premium. ### Example A metal fabricator's shop building burns. Rebuilding costs $900,000. Under actual cash value, depreciation on the 25 year old structure cuts the payment to roughly $550,000. With replacement cost marked on the declarations and a $1,000,000 limit, the insurer pays $550,000 up front, then the remaining $350,000 once the rebuild is complete. If the owner chose not to rebuild, the claim would settle at actual cash value. ## Frequently Asked Questions ### Can I take an ACV settlement now and claim replacement cost later? Yes. Under CP 00 10 you may settle at actual cash value first and still claim the replacement cost difference, provided you notify the insurer within 180 days of the loss and eventually repair or replace the property. ### Does replacement cost cover building code upgrades? No. Increased costs from enforcement of ordinances or building codes are excluded from the replacement cost calculation. Ordinance or Law coverage handles that exposure and must be purchased separately, which matters most for older buildings in updated code jurisdictions. ### Do I have to rebuild at the same location? Generally you may rebuild elsewhere, but the insurer will not pay more than the cost to rebuild at the original premises. Moving to a more expensive site puts the difference on you, so run the numbers before committing. ### Is replacement cost the same as the market value of my building? No. Market value includes land and location and reflects what a buyer would pay. Replacement cost is purely the construction cost of a comparable new building, which can sit well above market value in older neighborhoods. *This definition is for educational purposes. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # What Is a Self-Insured Retention (SIR)? (https://www.menloinsurance.com/library/glossary/self-insured-retention) Self insured retention (SIR) is the amount the insured pays before the policy responds. How an SIR differs from a deductible in defense, limits, and claims. Markdown version: https://www.menloinsurance.com/library/glossary/self-insured-retention.md **A self-insured retention is the dollar amount the insured must pay on a covered loss before the policy obligates the insurer to respond.** Unlike a deductible, which the insurer typically fronts and bills back, an SIR leaves the first layer of each claim, often including defense costs, entirely in the insured's hands. Brokers run into SIRs in two places: [commercial umbrella forms](https://www.menloinsurance.com/library/guides/umbrella-vs-excess-liability), where the SIR is a defined term on the declarations, and large-account casualty programs, where carriers use retentions instead of deductibles on the primary layer. ### Self-Insured Retention _The insured funds the retention layer before the insurer's obligations attach._ The dollar amount stated in the declarations that the insured must pay before the insurance applies, with the insurer's coverage and typically its defense obligation sitting above that amount. ## How is an SIR different from a deductible? [#how-is-an-sir-different-from-a-deductible] The money can look identical on a proposal, but the mechanics differ on every claim. With a [deductible](https://www.menloinsurance.com/library/glossary/deductible), the insurer handles the loss from dollar one, pays it, then collects the deductible back from the insured. The insurer controls defense and settlement throughout, and on liability forms the deductible often erodes nothing but the insured's wallet. With an SIR, the insured pays first. The insured funds the retention, frequently including defense costs within it, and the insurer's limit sits above the retention rather than being reduced by it. The practical consequences matter to your client: under an SIR the insured usually must manage or fund its own defense inside the retention, prove the retention has been exhausted with actual payments, and carry the credit risk of its own claim handling. Carriers also care about collectability. An insured that cannot fund a $250,000 SIR mid-claim becomes the insurer's problem, which is why underwriters ask for financials before granting one. ## How does the SIR work on a commercial umbrella? [#how-does-the-sir-work-on-a-commercial-umbrella] The Commercial Liability Umbrella form CU 00 01 04 13 defines self-insured retention as the amount listed in the declarations that the insured pays before the umbrella applies, but only for occurrences or offenses not covered by the underlying insurance. When the umbrella is broader than the underlying policies, it drops down and becomes primary for that loss, subject to the SIR. The SIR does not apply when the umbrella pays excess of an exhausted underlying [aggregate limit](https://www.menloinsurance.com/library/glossary/aggregate-limit), because that loss was covered by underlying insurance. Sizing matters when you place the account: a $10,000 SIR on a drop-down claim is a nuisance, a $100,000 SIR is a balance sheet event. ### Example A machine shop's driver causes a $300,000 liability loss in Mexico. The business auto policy's coverage territory excludes Mexico, so the underlying policy pays nothing. The shop's umbrella has worldwide territory, so it drops down as primary, subject to the $25,000 SIR on its declarations. The shop pays the first $25,000 and the umbrella pays the remaining $275,000. Had the same loss occurred in Texas and exhausted the $1,000,000 underlying limit, the umbrella would have paid the excess with no SIR at all. ## What should you check before recommending an SIR program? [#what-should-you-check-before-recommending-an-sir-program] Read the retention wording, not just the number. Confirm whether defense costs erode the SIR, whether the insurer has any duty to defend within it, and what proof of payment the carrier requires before its layer attaches. Adjusters on SIR programs routinely ask for paid loss documentation, not reserves, before contributing a dollar. Then match the retention to the client's [loss runs](https://www.menloinsurance.com/library/glossary/loss-runs) and cash flow. A retention that saves 15% of premium but sits below the client's working layer of claims just converts insurance into a payment plan with extra administration. ## Frequently Asked Questions ### Is an SIR the same as a deductible? No. With a deductible the insurer pays the claim from the first dollar and recovers the deductible from the insured. With an SIR the insured pays first, often including defense costs, and the insurer's coverage and defense duty attach only above the retention. ### Does an SIR reduce the policy limit? Typically no. The limit sits above the retention, so a $1,000,000 policy over a $100,000 SIR can pay a full $1,000,000. Liability deductibles under the standard ISO endorsement (CG 03 00) do not reduce the limit, though some manuscript within-limits programs do erode it, so read the form. ### Who defends a claim inside the SIR? Usually the insured. Most SIR wording gives the insurer no duty to defend until the retention is exhausted, so the insured hires counsel and pays defense costs within the retention. Some forms let the insurer participate earlier at its own option. ### Why do umbrellas have an SIR at all? The SIR only applies when the umbrella is broader than the underlying policies and drops down to pay as primary. It keeps the insured responsible for a first layer on losses no underlying insurer covered, and it never applies when underlying limits are simply exhausted. *This definition is for educational purposes. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # What Is a Special Lines' Surplus Line Broker? (https://www.menloinsurance.com/library/glossary/special-lines-surplus-line-broker) Special lines' surplus line broker: California's Ins. Code 1760.5 license for placing marine, aviation, and railroad risks with non-admitted insurers. Markdown version: https://www.menloinsurance.com/library/glossary/special-lines-surplus-line-broker.md **A special lines' surplus line broker is a California license, created by Insurance Code section 1760.5, that authorizes the holder to place marine, aircraft, spacecraft, and interstate railroad insurance with non-admitted insurers. Unlike a regular surplus line broker, the holder skips the diligent search, files no SL forms, and owes no surplus lines premium tax.** You will run into this license if you place ocean cargo, hull, or aviation business in California, where much of the capacity sits in London and other foreign markets. The California Department of Insurance lists it as a distinct license type, and the statute itself is short enough to read in one sitting. ### Special Lines' Surplus Line Broker _California's separate non-admitted license for marine, aviation, and railroad risks._ A California license under Insurance Code section 1760.5 authorizing placement of marine, aircraft, spacecraft, and interstate railroad insurance with non-admitted insurers, exempt from the diligent search requirement and the surplus lines premium tax. ## What risks can a special lines' surplus line broker place? [#what-risks-can-a-special-lines-surplus-line-broker-place] Section 1760.5 draws the boundaries by subject matter, not by market conditions. Marine insurance is the big category: cargo in export or import trade, hull, protection and indemnity, marine builder's risk, ship repairer's liability, dry docks, and war risk. The statute expressly carves out bridges and tunnels, so a bridge builder's risk placement needs a regular surplus lines license even though the water underneath looks maritime. The other two buckets are aircraft or spacecraft insurance and insurance on interstate railroad property and operations. These lines share a trait: the risks move across borders, admitted appetite is thin, and the working markets are often London syndicates and other foreign insurers. That is exactly why the legislature built them a separate door. If your placement does not fit one of these categories, the license does you no good. ## How is it different from a regular surplus line broker? [#how-is-it-different-from-a-regular-surplus-line-broker] Three exemptions do the work. First, no diligent search: a [surplus lines broker](https://www.menloinsurance.com/library/glossary/surplus-lines-broker) must normally document admitted market declinations before going non-admitted under Insurance Code section 1763, but section 1760.5(b) exempts special lines placements from that requirement entirely, so no SL-1 or SL-2 ever gets filed with the stamping office. A reviewer at the Surplus Line Association never sees these placements at all. Second, no tax. Section 1760.5(g) keeps the premium outside California's 3.0% surplus lines tax, a material saving on a seven figure hull account. Third, a smaller bond: $10,000 instead of the $50,000 a regular surplus line broker posts. Everything else about placing [surplus lines insurance](https://www.menloinsurance.com/library/guides/surplus-lines-insurance) still applies, including the fact that non-admitted carriers sit outside the guaranty fund. ## How do you get the license? [#how-do-you-get-the-license] The prerequisites match the regular surplus lines license: you need active California Property and Casualty Broker-Agent licenses first. There is no separate examination for the special lines license itself, and the term runs two years. File through the CDI with the $10,000 bond and the application fee, and renew on the same cycle as your underlying licenses. Who actually holds it? Brokers whose books are ocean marine, aviation, or railroad. A generalist E\&S wholesaler rarely bothers, because the regular surplus lines license already covers those risks. The special lines version exists to strip the filing and tax friction from lines the admitted market never wrote anyway. ### Example A freight forwarder in Long Beach needs $4M of ocean cargo cover on containerized exports to Asia. A special lines' surplus line broker places the open cargo policy with a London syndicate for $95,000. No declinations are gathered, nothing is filed with the Surplus Line Association, and the invoice shows no 3% surplus lines tax or stamping fee, roughly $3,000 the client keeps versus a standard E\&S placement. ## Frequently Asked Questions ### Can a special lines' surplus line broker place general liability or property? No. The license only covers marine (excluding bridges and tunnels), aircraft or spacecraft, and interstate railroad risks under Insurance Code section 1760.5. Any other non-admitted placement in California requires a regular surplus line broker license and its full filing and tax obligations. ### Why is there no surplus lines tax on these placements? Section 1760.5(g) exempts the premium from the 3% tax. These are mobile international risks, historically written through London and other foreign markets, and California chose not to burden them with the filing and tax machinery built for domestic E\&S business. ### Do I still need the regular surplus lines license too? Only if you place non-admitted risks outside the three special lines categories. Many marine and aviation specialists hold both so a mixed account never stalls. The regular license needs a $50,000 bond, the special lines license only $10,000. ### Where is the statute? California Insurance Code section 1760.5, available at leginfo.legislature.ca.gov, with the diligent search exemption in section 1760.5(b). The California Department of Insurance licensing pages list the application requirements, bond amount, and two year term. *This definition is for educational purposes. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # What Is Subrogation in Insurance? (https://www.menloinsurance.com/library/glossary/subrogation) Subrogation lets your insurer recover a paid claim from the party that caused the loss. How it works, why your deductible comes back, and when it is waived. Markdown version: https://www.menloinsurance.com/library/glossary/subrogation.md **Subrogation is your insurer's right to step into your shoes after paying your claim and recover that payment from whoever actually caused the loss.** You get paid first under your own policy, then the insurer pursues the at-fault party or their insurer for reimbursement. If the recovery succeeds, you typically get your deductible back too. The word comes up in three places: in your policy's conditions, in claim letters after an accident, and in contracts that ask you to waive it. Each one uses the same underlying idea. ### Subrogation _After paying your claim, your insurer pursues the party that caused the loss._ The transfer to your insurer of your right to recover damages from a third party, to the extent the insurer has paid you for the loss. ## How does subrogation work in practice? [#how-does-subrogation-work-in-practice] Say a delivery driver runs a red light and destroys your parked work van. Your commercial auto insurer pays your claim in full so you can replace the van now, minus your deductible. Your insurer then chases the driver's insurer for the whole amount, because the accident was their insured's fault. When that recovery comes through, your insurer keeps what it paid and returns your deductible. You got speed and certainty, the at-fault party ultimately paid, and your loss history looks better than it would if the claim had stayed on your account as a net loss. The policy machinery behind this sits in a condition usually titled transfer of rights of recovery. It requires you to preserve the insurer's recovery rights, which is why claim instructions tell you not to sign releases or accept settlements without your insurer involved. Signing away the recovery right after a loss can void coverage for that claim. ## Why do contracts ask you to waive subrogation? [#why-do-contracts-ask-you-to-waive-subrogation] Construction and lease contracts routinely require a [waiver of subrogation](https://www.menloinsurance.com/library/glossary/waiver-of-subrogation), which stops your insurer from pursuing the other contract party even when that party caused the loss. A general contractor does not want your workers compensation insurer suing it to recover benefits paid to your injured employee. The waiver keeps claims from circulating among project participants, and insurers charge a premium for giving up the recovery right. The waiver must usually be in writing before the loss happens. ### Example A tenant's employee slips on a staircase the landlord failed to maintain. The tenant's workers comp insurer pays $40,000 in benefits, then subrogates against the landlord and recovers the full amount. If the lease had contained a mutual waiver of subrogation, the insurer could not have pursued the landlord, and the $40,000 would have stayed on the tenant's loss history. ## Does subrogation affect your premiums? [#does-subrogation-affect-your-premiums] Yes, in your favor. Recovered claims reduce your net losses, and for workers compensation the recovery flows into the loss data behind your [experience modification rate](https://www.menloinsurance.com/library/glossary/experience-modification-rate). A subrogated claim that comes back at 100% can end up costing you far less at renewal than the same claim with no recovery. This is one reason insurers investigate fault carefully even after they have already paid you. ## Frequently Asked Questions ### Do I get my deductible back through subrogation? Usually yes. When your insurer recovers from the at-fault party, standard practice is to reimburse your deductible out of the recovery, in full if the insurer recovers 100% and proportionally if it recovers less. ### Can I settle with the at-fault party myself? Not without involving your insurer if you want coverage. Accepting a settlement or signing a release can destroy the insurer's recovery rights, and most policies treat that as a breach of the policy conditions. ### What is a waiver of subrogation? A policy endorsement, required by a written contract, in which your insurer gives up its right to recover a paid claim from the specific party named in the contract. It is standard on construction projects and commercial leases and usually carries a premium charge. *This definition is for educational purposes. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # What Is a Surplus Lines Broker? (https://www.menloinsurance.com/library/glossary/surplus-lines-broker) Surplus lines broker: the specially licensed broker who places coverage with non-admitted insurers after the admitted market declines a risk. License and tax. Markdown version: https://www.menloinsurance.com/library/glossary/surplus-lines-broker.md **A surplus lines broker is a specially licensed insurance broker authorized to place coverage with non-admitted insurers when carriers in the standard admitted market decline a risk. Before making the placement, the broker must usually document a diligent search of the admitted market, and afterward the broker remits the surplus lines premium tax to the state.** You will meet this term when your business gets quoted through the excess and surplus lines market: a new venture, a tough claims history, or a class of business admitted carriers will not touch. The quote arrives through a wholesaler, and the paperwork suddenly includes tax line items your standard policies never had. ### Surplus Lines Broker _When the admitted market says no, the surplus lines broker takes the risk to non-admitted insurers._ A broker holding a surplus lines license who negotiates coverage on behalf of a client with non-admitted insurers, documents the required diligent search, remits the surplus lines premium tax, and files each placement with the state. ## What does a surplus lines broker actually do? [#what-does-a-surplus-lines-broker-actually-do] The broker's job is access. Non-admitted insurers are not licensed in your state, so an ordinary agent cannot bind coverage with them. A surplus lines broker can, and that is the whole point of the license. Most retail agents do not hold one. They send declined risks to a wholesale [surplus lines insurance](https://www.menloinsurance.com/library/guides/surplus-lines-insurance) broker who shops the E\&S market on their behalf. The trade is real coverage for reduced protection. Non-admitted carriers do not participate in state guaranty funds, and their rates and forms are not filed with regulators. E\&S carriers often use manuscript policy forms with provisions that differ from standard filed forms, which is why you should read an E\&S quote line by line rather than assume it mirrors the admitted policy it replaces. The difference between [admitted and non-admitted carriers](https://www.menloinsurance.com/library/guides/admitted-vs-non-admitted-carriers) drives everything else on this page. ## What is the diligent search requirement? [#what-is-the-diligent-search-requirement] Before placing your risk with a non-admitted insurer, the broker must confirm the admitted market genuinely rejected it. In most states that means documenting declinations from around three admitted carriers actually writing that class of business. In California the broker files a diligent search declaration, the SL-2, and a certificate reviewer at the stamping office will bounce a filing whose declinations name carriers that do not even write the class. Two paths skip the search. If the coverage sits on the state's export list of risks the admitted market is known to avoid, no declinations are needed. Large buyers who qualify as exempt commercial purchasers can also waive the search in writing. ## Who pays the surplus lines tax? [#who-pays-the-surplus-lines-tax] You do, through the broker. Admitted carriers pay state premium taxes themselves, but a non-admitted insurer has no license to tax, so the state collects from the broker instead. The surplus lines broker calculates the tax, shows it on your invoice, and remits it. In California that is a 3.0% surplus lines premium tax plus a 0.18% stamping fee paid to the Surplus Line Association, which reviews every filing. Rates vary by state, listed in our [surplus lines tax rates by state](https://www.menloinsurance.com/library/guides/surplus-lines-tax-by-state) guide, and since the federal NRRA took effect in 2011, only your home state taxes the placement and only your home state's surplus lines license matters. A California broker needs active Property and Casualty Broker-Agent licenses plus a $50,000 bond under Insurance Code section 1765(c). Marine, aviation, and railroad risks follow a separate California license, the [special lines' surplus line broker](https://www.menloinsurance.com/library/glossary/special-lines-surplus-line-broker), with its own rules. ### Example A roofing contractor with two liability claims gets declined by three admitted carriers. The retail agent sends the account to a wholesale surplus lines broker, who places a $1M/$2M general liability policy with a non-admitted carrier for $28,000. The invoice adds $840 in California surplus lines tax and a $50.40 stamping fee, and the broker files the SL-1 and SL-2 with the Surplus Line Association within 60 days. ## Frequently Asked Questions ### Is a surplus lines broker the same as a wholesale broker? Usually in practice, not by definition. The surplus lines license is what authorizes non-admitted placements. Most holders work at wholesale brokerages that retail agents send business to, but a retail broker can hold the license directly and place E\&S business without a wholesaler. ### Is surplus lines insurance safe to buy? It can be. Non-admitted carriers skip rate and form filing but still face eligibility and capital requirements, and many are large, highly rated insurers. The real loss is guaranty fund protection: if the carrier fails, no state fund steps in to pay your claim. ### Why is my surplus lines policy taxed separately? Because the insurer is not licensed in your state and pays no premium tax there. The state collects through the broker instead, so the tax and any stamping fee appear as line items on your invoice rather than being baked into the rate. ### Do I need declinations for every surplus lines placement? No. Coverage on your state's export list needs no diligent search, and exempt commercial purchasers can waive it in writing. Everything else typically requires documented declinations from admitted carriers, roughly three in most states. Your broker handles the filing. *This definition is for educational purposes. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.* # What Is a Waiver of Subrogation? (https://www.menloinsurance.com/library/glossary/waiver-of-subrogation) Waiver of subrogation explained: your insurer gives up its right to recover a paid claim from the party named in your contract. How WC 00 03 13 works. Markdown version: https://www.menloinsurance.com/library/glossary/waiver-of-subrogation.md **A waiver of subrogation is an agreement in which your insurer gives up its right to recover a paid claim from a specific party, usually because a contract you signed requires it.** After a loss, the insurer still pays you. It simply cannot turn around and pursue the party named in the waiver, even if that party caused the loss. You will meet this term in construction contracts and commercial leases, almost always in the insurance requirements section, sitting next to additional insured and certificate demands. ### Waiver of Subrogation _The insurer pays the claim but gives up recovery against the party named in the contract._ An agreement in which one party relinquishes its insurer's right to recover a paid loss from another party, typically required by written contract before the loss occurs. ## How does a waiver of subrogation work on a workers comp policy? [#how-does-a-waiver-of-subrogation-work-on-a-workers-comp-policy] Workers compensation is the strictest line for waivers. Under the Recovery From Others condition of the standard policy, the insurer holds [subrogation](https://www.menloinsurance.com/library/glossary/subrogation) rights against anyone liable for an employee's injury, and unlike general liability, those rights cannot be waived before or after a loss without an endorsement. Some states do not allow the waiver at all. Where permitted, the [WC 00 03 13](https://www.menloinsurance.com/library/forms/wc-00-03-13) endorsement waives the insurer's right of recovery against the person or organization named in its schedule. The form includes optional wording that limits the waiver to work performed under a written contract requiring it. If your general contractor demands a waiver, this endorsement is what your broker orders, and it must be issued before the injury happens. ## Why do contracts require the waiver? [#why-do-contracts-require-the-waiver] An upstream party does not want to be sued by your insurer. Picture a general contractor on a hospital project. Your employee is hurt on site, your workers comp insurer pays $60,000 in benefits, then subrogates against the GC for unsafe conditions. The GC just paid for your claim through its own liability program. Requiring a waiver of subrogation from every subcontractor stops claims from circulating among project participants and keeps each party's losses on its own policy. The tradeoff runs against you: a waived claim stays on your loss history as a net loss and flows into your [experience modification rate](https://www.menloinsurance.com/library/glossary/experience-modification-rate), and insurers typically charge a premium for the endorsement. ## What is a blanket waiver of subrogation? [#what-is-a-blanket-waiver-of-subrogation] A scheduled waiver names one entity. When a contractor signs dozens of contracts a year, underwriters may attach a non-standard blanket endorsement that applies automatically to any party when a written contract requires the waiver. Blanket wording removes a real E\&O trap: if a scheduled waiver misses one entity your contract promised to cover, the insurer can still subrogate against that entity, and the resulting dispute lands on the agent who failed to schedule it. Certificate reviewers check for this too. A COI that does not show the waiver, or shows it without a form number or blanket reference, usually comes back rejected. ### Example A drywall subcontractor signs a $400,000 subcontract that requires a waiver of subrogation in favor of the general contractor. Its broker adds WC 00 03 13 naming the GC. Six months in, an employee falls from a scaffold the GC's crew erected badly, and the comp insurer pays $85,000 in benefits. Without the waiver, the insurer would have recovered from the GC and the recovery would have softened the claim's hit to the sub's mod. With the waiver in place, the full $85,000 stays on the sub's loss history. ## Frequently Asked Questions ### Does a waiver of subrogation cost anything? Usually yes. Many insurers charge a flat fee or a small percentage of premium per waiver, and a blanket waiver carries its own charge. The larger cost is indirect: waived claims stay on your loss history as net losses and can raise your experience mod at renewal. ### Can a waiver of subrogation be added after a loss? No. On workers compensation the waiver must be endorsed before the injury, and policies in other lines generally exclude coverage when recovery rights are signed away after a loss. Get the endorsement issued when you sign the contract, not when a claim appears. ### Is a waiver of subrogation the same as additional insured status? No. A waiver stops your insurer from recovering a paid claim from the other party. Additional insured status gives that party direct coverage under your policy. Construction contracts commonly require both, and each needs its own endorsement. ### Do all states allow waivers of subrogation on workers comp? No. A handful of states prohibit or restrict waiving workers compensation subrogation rights. If you have employees or contracts in more than one state, ask your broker to confirm the waiver is valid where the work is performed. *This definition is for educational purposes. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.*