Margin Clause: What is it? - Insurance Broker (2024)

FAQs

Margin Clause: What is it? - Insurance Broker? ›

A margin clause is a nonstandard commercial property insurance provision. When a margin clause is in force it states that the most the insured can collect for a loss at a given location is a specified percentage of the values reported for that location on the insured's statement of values.

A margin clause is a section of an insurance policy that limits how much a property can grow in insurable value from what was originally declared in the coverage contract, in what's called the “statement of value.” The margin may be stipulated as a growth percentage, such as 25% growth in value, or as a value ...

The Blanket Limit is a single amount of insurance shown in the Declarations. 2. Margin Clause a. For property subject to a Blanket Limit, the maximum loss payable will be computed by multiplying the Margin Clause Percentage shown in the Schedule by its value shown in the latest statement of values.

“For many years, as an insurance company we have been rather generous when issuing leeway clauses. This refers to incidents where even though there is a case of underinsurance, the clause protects the client with an additional 20%, or another maximum, to match the actual values.

For example, if the escalation clause includes a 5% increase, the coverage amount will increase by 5% each year. This means that the policyholder will have greater protection against fire damage as the value of the property increases over time.

Having a margin account allows you to borrow money to purchase investments. If your margin account dips below a certain threshold you may receive a margin call, or a request to add more funds. If you don't respond to a margin call your broker may sell some of your securities or liquidate your entire account.

How long do I have to satisfy a margin call? Margin calls must be settled immediately, but no later than the displayed due date. If steps aren't taken to satisfy the margin call, your broker will sell enough of your securities to bring your account back into compliance.

For example, imagine your business owns three warehouses that are each valued at $1.5 million. As a result, you would purchase a blanket policy with a limit of $4.5 million to protect all three properties.

The Customer agrees to maintain in all accounts with the Broker such positions and margins as required by all applicable statutes, rules, regulations, procedures and custom, or as the Broker deems necessary or advisable. The Customer agrees to promptly satisfy all margin and maintenance calls.

Blanket limit is a single limit of insurance that applies over more than one location or more than one category of property coverage or both.

What is 80 insurance clause? ›

For example, if 80% coinsurance applies to your building, the limit of insurance must be at least 80% of the building's value. If the policy limit you have selected does not meet the specified percentage, your claim payment will be reduced in proportion to the deficiency.

An escape clause is a contractual provision that absolves one party to the contract of performance under specific conditions. An escape clause relieves one party of liability for nonperformance if certain conditions are met. Insurance policies frequently contain escape clauses.

Negligence is when when someone covered by your policy acts in a reckless or unreasonable way, which results in damages or losses. Negligence is insurance lingo for describing reckless or unreasonable actions that result in damages or losses because of you, someone covered on your policy, or someone else.

Proximate cause refers to the primary event or series of events that directly leads to an insured loss. It is the direct cause that sets in motion a chain of events, which ultimately results in the damage or loss covered by an insurance policy.

An "escalation clause” is a provision commonly found in insurance policies that allows for an automatic adjustment or increase in the coverage limits and premiums over time. This is done typically to keep pace with inflation or changes in the value of insured property.

An escalation clause is only triggered if there are competing offers, so you should not include an escalation clause in your purchase offer unless you and your real estate agent are confident that there will be multiple offers. The seller is not accepting escalation clauses.

Maintenance margin is the minimum amount of equity that an investor must maintain in the margin account after the purchase has been made. Maintenance margin is currently set at 25% of the total value of the securities in a margin account as per FINRA requirements.

Insurance companies maintain a profit margin of around 5 percent, with 68 percent of premiums applied toward paying claims, 25 percent spent on overhead and 2 percent set aside for taxes [source: Insurance Information Institute].

Taking these factors into consideration, most insurance agency owners operate with an average profit margin between 2 percent and 10 percent. Agency owners are advised to consult with an accountant or tax advisor when trying to structure your specific agency.

In business accounting, margin refers to the difference between revenue and expenses, where businesses typically track their gross profit margins, operating margins, and net profit margins. The gross profit margin measures the relationship between a company's revenues and the cost of goods sold (COGS).