Now that you’ve determined the appropriate level of coverage for your particular business or property, it’s time to find a policy with a financially strong insurance company that will offer appropriate protection at the best premium.
One would naturally assume that if various insurance companies are offering similar protection their pricing will be similar. However, in the insurance market, it’s not unusual for rates for similar coverage to vary quite a bit from one carrier to the next. Although you should always be vigilant and on the lookout for varying levels of protection in policies, in this post we will outline five scenarios where one insurer can be drastically less in premium costs while offering similar protection.
The following holds true for most types of coverage including property, general liability, workers comp, commercial auto liability, construction, builders risk, professional liability etc.
1. Premium rating methods and criteria vary between insurers.
Different insurance companies have different underwriting methodology and criteria. Based on the specifics of your business, one insurer’s underwriting method may be much better suited for your business.
2. Insurers vary pricing by location.
Location is a key factor in determining your premium amount. The location factor can vary greatly from one insurer to the next, which can at times result in significant differences in premium amounts. Depending on your location you may be much better off with a different insurance company.
3. Niche insurers will typically be better priced than others.
Insurers that have a strong focus on a specific industry develop an expertise on what the primary causes of claims are for that particular niche. They know how to weed out riskier applications and focus on insuring businesses least likely to experience claims. By cutting claims costs, they are then able to charge less premium and still turn a profit. If your business or investment property fits into a particular niche and based on your specific business/property characteristics qualifies for coverage according to their program guidelines you will likely benefit by paying much less premium. As an added benefit, you will also likely have better coverage as they tailor coverage to the specific unique risks of their particular niche.
4. Insurers vary with regard to how claims affect the premium.
Insurers can sometimes vary greatly with regard to how much any given claim will affect pricing. They also vary with regard to how long a claim will have an adverse effect. (typical range is 3-5 years) If your business has a significant claim(s) older than three years on record but less than five (calculated by the time the incident occurred) you will likely benefit from shopping with insurers that will only ask to see 3 years of claim history.
5. Some insurers will offer discounts for packaging various coverages.
If your business has various policies that would benefit from packaging, it is a good idea to check out the possibility that you could save a significant amount by combining coverages at an insurer that will give you steep discounts as a package.
A broker with knowledge of and access to insurance markets that are best suited for your particular business class or property – in your geographic area, combined with an understanding of your operations, is well positioned to get you the right policy from an insurance company that is right for your business or property. Shopping around can save you thousands of dollars in premiums a year without compromising on your protection.
If you have any questions regarding any of the above and how it may pertain to your business or property, please share them in the comments below or contact me directly and I’d be happy to assist you.
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