P&C Insurance Comparison Shopping Advice
All business owners know they need insurance to protect their livelihood, their families and to remain in compliance with local statutes in most circumstances.
Insurance is truly an intangible product so most small biz owners really have a hard time wrapping their head around eactly what they are paying for. Figuring out what is a competitive premium and what is a gross overcharge is confusing for most.
We spoke with 3 of the most respected professionals in the insurance industry to help clear up some of that confusion. Each of the gurus agreed to share numerous tips to keep in mind when shopping for or renewing your business insurance policies…
1. Kevin P. Foley, CPA, CPCU of PFT&K Insurance Brokers
“If your property deductible doesn’t sting, it’s not high enough.
All business owners, but especially service providers, need to be aware of what’s not covered. For example, claims arising from errors or omissions are not covered. Consider a videographer taping Bridezilla’s wedding. She’s not happy with the end product. She sues. There’s no coverage so you’re on your own. You need a professional liability policy to the fill the hole in your general liability.
Understand the rate to insure “building” are cheaper than “personal property” (contents). The significance is very apparent in restaurant type businesses. The policy defines building to include refrigeration, ventilation, cooking, dishwashing, or laundering equipment. If your investment in that equipment is $100,000 and you insure it as contents at a rate of $3 (per $100 of value) you’d pay $3,000 for insurance. If you use the building rate of $1 (per $100 of value) you’d have paid $1,000. You overpaid your insurance $2,000 EACH YEAR.”
Learn more about Kevin and PFT&K Insurance Brokers.
2. Thomas L. Santamorena, CIFI of High Tech Insurance Solutions
“The cost of your insurance is directly linked to your policy’s deductible amount. The deductible is the amount of money that you agree to payas part of a claim, before your insurer pays the remaining amount toward thatc laim. For example, if your vehicle incurred $1,000 of damage in an accident and your deductible was $250, you would pay the first $250 and your insurer would pay the remaining $750. The higher the deductible, the lower the premium.
Liability insurance premiums are typically based on business sales and payroll estimates provided prior to policy inception. If the actual amounts turn out to be higher after the policy has been issued, you may need to pay an incremental premium. Conversely, if the amounts are less than estimated, you could get a refund.
Other factors that influence your liability premiums include your type of business and the risks generally associated with it. For example, a toy manufacturer may pay $3 per $1,000 of sales. Thus, on $10 million of sales, the premium would be $30,000. A company that manufactures a less ‘risky' product or engages in a less risky business, such as a florist, may pay $1.50 per $1,000 of sales, or $15,000.
Insurance companies evaluate a business’s risk for liability coverage based on numerous factors: the number of claims filed within a nindustry or probability of a claim for a similar type of company; the financial stability and longevity of a business; state laws; business products and/or operations; and a business’s approach to handling and preventing potential risks.
If you have solid, documented practices and safety procedures in place, you may be considered a lower risk by an insurance company for liability insurance and therefore be charged lower premiums.
Review all insurance policies annually and note any changes that may affect your coverage costs. For example your premiums could be impacted by the addition or reduction of employees, clients product offerings or inventory, alterations to your building, or changed state regulations.
Find out how plans differ to make sure you are purchasing the best policy for your particular business and at a competitive price.
Claim a tax deduction for your premiums on fire, casualty and burglary insurance.”
Learn more about Thomas and High Tech Insurance Solutions.
3. John Espenschied, Owner of Insurance Brokers Group
“A new business can have some challenges finding insurance unless you have prior experience in that same industry. Make sure to mention any experience, especially if in a potentially higher risk type business like roofing or construction.
The easiest way to find affordable small business insurance is to shop online. There are multiple insurance companies that specialize in small or new business and premiums start as low as $350/yr.
If you current have current business insurance you’ll need to provide a loss history report from your current insurance company. Since insurance companies are not able to check for prior business losses they will require the report, but the good new is if you have prior business insurance it may qualify you for lower rates.
Also, ask about credits. If you have a current insurance policy or getting quotes from other carriers that are lower ask your broker to inquire about credits. Underwriters have the discretion to discount or apply credits to earn your business, if the risk looks favorable to the insurance company.
Summary: Shop, shop, shop and shop some more. Rates for small business can really vary, but you need to spend a little bit of time to find the best rates for your business.”
Learn more about John and Insurance Brokers Group.