Large Business Insurance Buying Guide

Buying insurance for a large business can be a daunting task, but it doesn't have to be. According to the article, a typical large business has over 500 employees, making it a significant investment to protect.

The first step in buying insurance is to determine the types of policies your business needs. This includes liability insurance, property insurance, and workers' compensation insurance, which are often mandatory for businesses with a certain number of employees.

Business owners should also consider the cost of insurance, which can range from 5% to 15% of annual revenue. This may seem like a lot, but it's a small price to pay for the peace of mind that comes with knowing your business is protected.

To make the process easier, many large businesses choose to work with a broker who can help them navigate the complex world of insurance.

Contacting a licensed insurance broker-agent is a crucial step in purchasing commercial insurance for your large business. They specialize in commercial coverages and can provide professional advice.

Business contacts can be excellent referral sources for recommending a commercial lines broker-agent, especially if they're in the same industry as your business. They can give you a personal recommendation based on their experience.

Professional broker-agent associations can also assist you in finding a licensed commercial insurance broker-agent. The Insurance Brokers and Agents of the West (IBA West) and the Western Insurance Agents Association (WIAA Group) are two such associations that can help.

Looking through the local yellow pages under the insurance section can also aid in locating the phone numbers of broker-agents specializing in commercial insurance. This can be a quick and easy way to get started.

A broker-agent is a licensed professional who specializes in commercial insurance. They must be licensed by the California Department of Insurance (CDI) to sell insurance in the state.

In California, a broker-agent is issued a fire and casualty license, which allows them to sell commercial property and casualty insurance. This license is required under Section 1725 of the California Insurance Code.

A broker-agent must prominently display their license in their office and print their license number on business cards, written price quotations, and print advertisements. This is a requirement under CIC 1725.5.

Brokers and agents act differently in securing insurance for consumers. Brokers may sell for many insurance companies and are usually paid by the business owner in the form of a broker fee.

Agents, on the other hand, are appointed by insurance companies and are paid a commission by the company with which business is placed.

A Business Owners Policy (BOP) is a valuable insurance package for large businesses, combining general liability and commercial property insurance in a single, cost-effective plan.

This policy includes protection for property damage, liability claims, and business interruptions, with optional Hired/Non-Owned Auto Coverage to safeguard against work-related auto accidents. A BOP can also provide coverage for loss of income due to covered business closure, legal defense, settlements, and costs for third-party injuries, theft of business property and equipment, and theft or damage of property by a third-party.

Here are some key coverage sections and limits of insurance to consider:

The CGL policy has separate limits of insurance for general liability, fire legal liability, products and completed operations liability, advertising and personal liability, and medical payments, with an aggregate limit of liability in force for these areas.

A Business Owners Policy (BOP) is a combination commercial policy that covers property, general liability, and business interruption.

The BOP is specifically designed for small businesses, making it most suitable for "main street" businesses like hardware stores, barbershops, and greeting card shops.

Qualifying businesses can enjoy very competitive premiums, which is a great perk for small business owners.

A BOP is typically written with strict underwriting guidelines, including a maximum allowable square footage for office, retail, or apartment risks.

A deductible is the amount you pay out of pocket before your insurance company pays a claim. It's a crucial aspect of your business insurance policy.

The type of deductible used in a commercial policy is called an "absolute dollar amount." This means that you'll pay a fixed amount for each claim, regardless of the total cost.

The higher the deductible, the lower your premium. This is because you're essentially self-insuring for a larger portion of the loss. For example, if you choose a higher deductible, your premium will be lower, but you'll need to pay more out of pocket when a claim is made.

Here are some common types of deductibles:

Opting for a low deductible will increase the cost of your business insurance policy. This is because you're not self-insuring as much, so the insurance company needs to charge more to cover the increased risk.

Remember to choose a deductible that works for your business. If you're not sure, it's always a good idea to speak with your broker-agent for guidance.

Classification and Limits are crucial aspects of a commercial policy. A specific code or codes are assigned to your business based on exposures common to your type of operation. This classification determines premium and is an important part of the rating formula.

Commercial policies can be classified in various ways, but the type of business you run will determine how a CGL policy is classified. The classification process is the first step to determine premium.

A Business Auto Policy (BAP) has the flexibility to provide coverage for business, personal, non-owned, or hired autos. This policy can differ by vehicle and coverage can be separately scheduled along with corresponding coverages.

Commercial automobile exposures can be more complex, requiring specialty coverages to be considered based on the individual needs of your business. A Combined Single Limit (CSL) is commonly used for commercial automobile policies, creating higher limits for both bodily injury and property damage coverages.

Here are some common commercial automobile CSLs:

The type of business you operate will also determine if you need to protect the personal property of others. This is referred to as Personal Property of Others and can include property in your business's care, custody, and control.

Commercial claims can be complex and require timely reporting to the insurance company. This allows them to process the claim and conduct an investigation as quickly as possible.

Reporting claims in a timely manner is crucial, especially in liability claims, where high dollar amounts are at stake. If claims are not controlled early, litigation from third parties can arise, leading to expensive judgments.

Your broker-agent can assist you throughout the claims process and is often your first point of contact when filing a claim. They can help you navigate the process and ensure you're meeting your duties under the insurance contract.

A good claims experience can lead to a lower premium, as insurance companies reward businesses with a good claims history. On the other hand, a poor claims history can result in higher premiums, as insurance companies raise rates for industries with high claims frequencies.

Filing a claim is a complex process, especially for businesses. Commercial claims require timely reporting to the insurance company to process and investigate the claim as quickly as possible.

Your broker-agent is your first point of contact for filing a claim, and they can assist you throughout the claims process. This is crucial in liability claims, as high dollar amounts are at stake.

Not reporting claims in a timely manner can lead to litigation from third parties, which can be expensive and result in a judgment higher than if the claim had been handled by an experienced representative. This is why it's essential to turn all claims over to your broker-agent or insurance company as soon as you're aware of the claim.

A history of business insurance claims is a red flag for insurance companies, signaling that your business may be inherently risky or not taking proper steps to mitigate risk. This can affect your premium costs.

Insurance companies consider claims history when determining industry-wide rates. If many people in your industry have filed claims, rates may increase for everyone. Conversely, if few claims have been filed in your industry, rates may decrease due to good claims performance.

You can choose the covered causes of loss in your property policy, and they're divided into two main categories: specified perils and open perils.

Specified perils consist of a list of each peril to be insured against, such as fire, explosion, windstorm, vandalism, and so on. You can usually request basic specified perils or broad specified perils coverage.

Broad specified perils coverage adds to the list of covered perils found under basic specified perils.

Earth movement (including earthquake) and flood are two common perils that are excluded under open perils coverage.

Open Perils coverage covers all losses unless they are specifically excluded, making it more comprehensive protection, but also more costly than a specified perils policy.

Here's a quick rundown of the two main categories:

As a large business owner, it's essential to have a basic knowledge of the types of insurance coverage available to protect your operations.

A broker-agent will present you with different coverage options for purchasing commercial insurance, and it's your responsibility to make an informed decision and choose the insurance that best fits your business plan.

You should feel free to discuss any unclear terms, conditions, or concepts with your broker-agent, as it's part of their service to answer your questions and help you understand the insurance you're purchasing.

Commercial insurance can be complicated, but having a broker-agent with experience dealing with businesses similar to yours can make a big difference.

The types of insurance coverage available include commercial lines that cover broad areas of exposure common to most business operations.

As your business changes and expands, having this knowledge will help you purchase insurance coverage as new exposures arise.

Your broker-agent's proposal is just a proposal, and it's up to you to choose the insurance that best fits your business plan.

When choosing a policy for your large business, it's essential to understand the options available. Property coverage is rated based on the size, quality, and location of the property, as well as the total amount of coverage requested.

The rating factor for property insurance is determined by the underwriter, who might offer a specific rate per $100 in replacement cost. For example, a newer frame building in North Texas with a replacement cost of $2,000,000 might be offered a $0.50 rate per $100 in replacement cost.

A Business Owners Policy (BOP) is a valuable insurance package that combines general liability and commercial property insurance in a single, cost-effective plan. This policy can include protection for property damage, liability claims, and business interruptions.

Here are some essential coverages included in a BOP:

Umbrella insurance provides an extra layer of protection for your business, adding coverage beyond what your existing policies offer. This can be especially useful if you're looking to pad your existing insurance policies.

A commercial umbrella can cover the amount of loss above the limits of a basic liability policy, protecting your business from being liable for excess judgments. This can include coverage for commercial automobile, CGL, workers compensation, or any liability policy.

A commercial umbrella may also provide coverage if a basic liability policy is not in force, and can fill gaps in coverage under basic liability policies. This means you can have peace of mind knowing your business is protected even if something goes wrong.

Commercial umbrella policies typically have a Self-Insured Retention (SIR) amount, which is similar to a deductible. This means you'll need to pay the first $10,000 of a loss before the umbrella policy responds.

Inland marine insurance offers a wide range of coverage forms and specialty coverages to suit different business needs.

Accounts receivable insurance is a type of coverage that can protect businesses from losses due to non-payment or bad debt.

Consignment insurance is another option that covers goods while they are in transit or being stored by a third party.

Equipment floaters, such as contractors equipment, can be covered with a separate policy to protect against damage or loss.

Installation floaters are also available to cover equipment during installation or construction projects.

Motor truck cargo insurance can help protect businesses from losses due to theft, damage, or loss of goods while in transit.

Trip transit insurance covers goods while they are being transported from one location to another.

Valuable papers (records) insurance can protect businesses from losses due to damage or loss of important documents.