Commercial Property

I was lucky enough to be able to spend the last half of last week in a Commercial Property insurance course and just wanted to address some issues that some of you might find to be of value.

1.  Now days, some Agents are looking for an easy way out and writing business on a Business Owners Policy for those types of business that can fit under this form of insurance.  Basically, it was originally designed for small businesses to give property and general liability coverage with some built in features that make it easy to manage.  It is usually a less expensive way to get some great coverage.  Well, since the insurance market has become so competitive over the past couple years, many companies have expanded their guidelines to write this type of policy for larger businesses.  Sometimes up to $20m in sales. While there is generally nothing wrong with the policy, it can be very limiting in coverage if it is not endorsed correctly for the needs of your business.  In other words, if the agent doesn't take the time to find out what limits and coverages you need, then you are getting coverage limits designed for small business which might not meet your needs even though you fit into the program. 

2.  Do you know what types of claims are excluded from your commercial property insurance?  Standard policy forms generally exclude the following:
Earthquake, Flood, Property Away From Premise, Property of Others in your Care, Custody, or Control, Ordinance or Law, Vacancy (certain exclusions along with penalties for properties vacant >60 days), Employee Dishonesty, etc.

The reason for most exclusions on the commercial property forms is because there is generally a different policy designed to cover these items which requires its own specific underwriting.  There can be big differences in the insurance companies policy forms as far as what they include and what has been removed from the policy.  For price shoppers, this is really something to consider because with insurance as with most anything else, you usually get what you pay for.  Insurance rates are down significantly so if your premiums are down, don't assume that you are losing coverage- that is not my point here.  More than anything, if your looking for a better price, BE CAREFUL.  A good quote that has to do with comparing your insurance (or anything else for that matter) solely on price:

It’s Unwise to pay too much…
But it’s worse to pay too little. When you pay too much, you lose a little money – that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do. The common law of business balance prohibits paying a little and getting a lot – it can’t be done. If you deal with the lowest bidder, it is well to add something for the risk you run. And if you do that, you will have enough to pay for something better.

- John Ruskin

Remember, the best way for me to do my job is to know your business.  A couple hours spent every six months or one year along with constant communication about changes, operations, etc. will go along way in helping me do my job as an insurance agent.  Additionally, this is why a long-term business relationship with your insurance agent can be valuable to you.  Let's spend more time talking about your exposures and what types of policy options we can provide you with to meet your needs.  Keep in mind that not all risks are going to be worth it to you to transfer to an insurance company, but you ought to have the information so you can make those decisions as an Owner or Executive.