Over the last few months, I’ve worked with a number of small businesses around the Dallas / Fort Worth area regarding their commercial insurance. In each case, I begin the conversation by letting them know that getting a commercial insurance quote is much different than getting a quote for car insurance. In order to provide them with an accurate quote there are several items of information I need to gather to present to each of the underwriters I work with.
Underwriters are looking for specific information for two main reasons; it helps them determine if the risk is appropriate for their insurance company and they want to provide an accurate quote. Without this data, the quote could be inaccurate which leads to a potential price change when it’s ready to be bound, and neither the prospective client nor me is happy when that happens.
Whether you are a startup or have been in business for a number of years or decades, here’s a list of the information I gather to provide you with an accurate quote.
General Information: Every quote begins with the same starting place; contact names, phone numbers, addresses, email addresses and how the business is organized (sole proprietorship, S Corporation, partnership, LLC, etc.). In addition, it’s important to know how long the business has been in operation. If it’s a startup, then what is the experience level of the owner(s) or leadership team, or in other words, have they done something like this before? In addition, I’ll need to know how many full and part time employees the company has and expects to have over the course of the year, as well as past and projected revenue.
Credit Information: Many commercial insurance companies in Texas utilize a company’s credit to determine the annual premium. To help them rate the policy, underwriters want to know the Federal Employer Identification Number or FEIN. For sole proprietorships or partnerships, social security numbers are needed. In these instances organizations and people with good and better credit pay less for their commercial insurance while people and organizations with lower credit scores pay more for the same insurance.
Claims History: If the company I’m quoting has been in business for a year or more, underwriters want a copy of prior loss runs. These are obtained from the current or prior insurance company and show what claims have been filed, when they were filed, and what payments were made. They also verify if there have been no prior claims. Claims activity increases the base premium and a claim free history helps keep the premium lower.
Property: Regardless of where the office is located (in a spare bedroom, an executive suite, office space, an owned building, etc., underwriters need to know when the building was constructed, the total square footage, and the square footage occupied by the business. I will also pull data on the construction style and type (tilt wall, exterior wall surface, roof type, etc.), as well as renovations to the roof, plumbing, and wiring. If there is business personal property such as desks, computer equipment, inventory, and more that needs to be included, lists and valuations of these items help.
Web Presence: Most businesses and organizations have some presence on the web. Underwriters want to know what that presence is, whether it’s a website, blog, or full-fledged order fulfillment system, as well as the level of revenues generated on-line versus some other method.
Supplemental Information: Commercial insurance companies will write some business types but not others. For instance there are companies that love working with restaurants, towing companies, and retailers, but they refuse to write dance clubs, biotech firms, and artisan trades. When we work with people in these niches, many carriers will require supplemental forms to better understand the risk that is specific to that industry. This can range from alcohol sales (total and percentage of revenue), to does the company work with uninsured subcontractors, to does the product require FDA approval.
Most of the people, businesses, and organizations I work with understand the need for this information and are more than willing to provide it. They want me to provide them with an accurate quote that won’t change if they proceed with it. Just as important, they want a policy that will fully protect them if something goes wrong and someone who’ll go to bat for them.
What do you think? Share your comments, questions, and experiences with me in the comments section of our blog or on our Facebook and Google + pages. I’d love to hear from you!