As you begin a career in insurance, it will be critical that you develop a familiarity with applications used in the Agency Management System (AMS). Continue reading for more details on the applications you will be using every day to manage client information.
What Are Acord Forms?
ACORD forms are universally recognized documents that contain information which most, if not all, insurance carriers require be completed in order to provide a quote back to the agency. There are several Acord forms and each serves a purpose specific to the type of coverage that it represents. Of all of the forms, however, the first one you will use quite often the Acord 126.
What is an Acord 126 form?
The Acord 126 form is more commonly known as the Commercial General Liability Section. This application is used to record client information including things like insured’s exposure, loss history and other necessary business operations details. This form will always be used in combination with the Acord 125 when creating a carrier submission.
You may be looking at this and wondering if you need to know how to fill out accord 126? The answer to this question is, absolutely! This application is used on almost every commercial insurance policy to provide the necessary details regarding the liability exposure of the business so it is important that you understand how to complete an Acord 126.
Let’s look over a few key points in the form that you will want to make sure you pay attention to when completing the Acord 126:
Page 1 begins with a section for Agency and Insured information. In this area of the form you will need to provide the Agency name, Effective Date and First Named Insured.
The following section of the first page is designed to gather information regarding Coverage and Limits. In the first box you will need to check the box next to Commercial General Liability. Also be sure to select Occurrence rather than Claims Made unless required to do so. To the right, you will need to specify how the aggregate should apply. You will most often see this as “per policy” but be sure you understand the operations and whether “per project” or “per location” are a better fit for the client. You will also need to enter General Liability limits. The following are the most common, but be sure to adjust these as appropriate for the client:
GENERAL AGGREGATE – $2,000,000
PRODUCT & COMPLETED OPERATIONS AGGREGATE – $2,000,000
PERSONAL & ADVERTISING INJURY – $1,000,000
EACH OCCURRENCE – $1,000,000
DAMAGE TO RENTED PREMISES – $50,000
MEDICAL EXPENSE – $5,000
EMPLOYEE BENEFITS – $1,000,000
After entering limits, you’ll want to take a moment to note Other Coverages, Restrictions and/or Endorsements. This area is used to stipulate one or two more restrictions and/or endorsements for the policy. If many endorsements are required for the policy, complete and attach ACORD 829 to ACORD 126 and enter “See attached Forms & Endorsements Schedule.“
Now that you’ve completed the coverage and limits information, it’s time to move onto the Schedule of Hazards. In this section, you will first need to enter the location number which should correspond with the location number already identified on the Acord 125. The next box is for the Hazard. You will want to start with #1 for each location and number sequentially.
For example, if Location 1 has two buildings, you will enter Loc# 1 for both, but Haz #1 and Haz #2 respectively. Location 2 would start over as Loc #2, Haz #1.
Next you will need to specify the class code for the location and hazard. These class codes should reflect the class codes found on the Estimated Annual Exposure Figures documents sent to or provided by the insured. If unknown, use the ISO Classification Table.
In the following box, you will show the premium basis. Enter the correct premium basis abbreviation for the appropriate location #, hazard # and class code. Abbreviation details can be found at the bottom of this section.
After entering the premium basis, you can move onto the exposure. Enter the correct estimated annual exposure figure for the respective location #, hazard #, class code and premium basis.
For each location and hazard identified, you will also need to enter the Classification Description. This will be based off of the ISO Classification Table description that corresponds with the class code that has already been identified.
After the schedule of hazards you will see a section with questions Claims Made policies. This only needs to be completed if the policy is being written on a claims made basis. If this is the case, answer the questions and provide an explanation for any “yes” answers.
At the end of Page 1 you will come to the Employee Benefits Liability section of application. Be sure to enter all information requested including: Deductible per Claim (most commonly $1,000), the Number of Employees and Number of Employees covered under the employee benefits plan. And finally, the Retroactive date which represents the first date the insured had EBL coverage in place. If this is the first time the insured is purchasing this type of coverage, you will want to use the policy effective date.
Now that you’ve conquered the first page of the form, you are ready to move onto Page 2. At the top of the page, you will come a section of questions for Contractors. This is used to help provide a better understanding of the operations. There is a series of 6 questions which should be answered “yes” or “no” in the right-hand column. All “yes” responses will need additional explanation. At the bottom of this section, you will need to describe work performed by subcontractors if applicable.
In the next section, you will need to provide details for Products and Completed Operations. In the top of this section you will need to include the following information: name of the product(s) manufactured/sold or service(s) provided by the insured, annual gross sales for each product, number of units manufactured or sold each year, amount of time product or service has been marketed, useful life of the product or service and product use.
In the next area of the products/completed operations section, you will find a series of 10 questions. You will need to answer all questions by indicating “yes” or “no” in the far-right column. All “yes” answers will also require a detailed explanation.
You have now finished Page 2 and are ready to move along to Page 3 of the Acord 126. At the top of the page you will see a section for Additional Interest or Certificate Recipient. In this area you will enter the name and address of the Additional Interest and identify the Interest type by checking the appropriate box in the left-hand column.
The remainder of Page 3 and most of Page 4 will be dedicated to General Information. In this section you will find 22 questions. All questions need to be reviewed answered as either “yes” or “no” in the column to the right. Be sure to include an explanation for all those that are answered “yes.”
At the end of the form, you will find a section for the Producer and Applicant signatures. These will not be required for the submission but will need to be collected upon binding.
Other Important Notes:
An Acord 126 fillable form (as well as other Acord forms) should be available in your Agency Management System. You can complete the form and then send an Acord 126 PDF to the client to review and sign.
Some of the details reviewed will pre-fill in your AMS. This will save you time when completing the Acord 126 form.