Reading a Business Insurance Policy
Business Insurance Policy When your agent gives you your insurance policy, it is not easy to know what all these pages mean. Let us understand the various parts of your policy and how it is structured. Let us understand how the policy varies with different types of business.
Double Check Your Premium
If a rate is not calculated correctly, it may be that despite the premium coming out at one amount, you are being charged a higher rate, it could be that you are subject to a “minimum premium.” Regardless of the rating factors, this will be the lowest premium you will get from the insurance company for your policy.
One of the reasons, by the way, that it is important to shop insurance coverage is precisely this one; the tolerance level to business risk factors may vary from company to company, and we could get a lower premium.
So back on track: next come to the insurance forms with standardized wording. Several insurance providers use wording standardized by the ISO. ISO (Office of Insurance Services) provides statistical analysis, underwriting, actuarial, and claims information. It also provides fraud identification tools and compliance; information on specific locations; policy language; and technical services.
They should use plain language and understandable English. However, that does not mean that it may not need some interpretation. It also makes references to previous pages. Taking as an example a cookbook, I used once, I was ready to prepare a dish on page 253 when it told me to use the beef stock described on page 40, which they assumed I had prepared earlier and had sitting around. I don’t cook it anymore.
ISO wording is used by most insurance companies, and if you see their designation at the bottom of a form, you know it has been standardized. This is a good thing because when comparing coverage plans from different providers, if they are using ISO forms, then you are comparing apples to apples. However, if an insurance company, in order to make it easier for you – supposedly – uses its own wording, you will not be able to compare it to the standards. This is called “manuscript wording” and there are many companies who do use it. It is not necessarily a bad thing, but you have to select your insurance company carefully and analyze the wording.
Usually, the property forms come after the declaration pages. It is often preceded by a rating page. The property form will define the types of property covered, where it is covered, how thoroughly it is covered and under what perils, and under what conditions, for more info, please click here. Exclusions are also noted in this section and should be examined, so you know what is not covered.
After the property section, you will see a number of endorsements that clarify what is not covered. These endorsements are usually added to improve coverage, or you can purchase the deletion of an exclusion.
After the property section generally comes the commercial general liability section. This insurance protects policyholders from a lawsuit if someone gets hurt or damage, body or property. It also defines whether or not other personal injuries such as false arrest, libel, libel, wrongful eviction, false imprisonment, and others are covered.
Another section defines who is insured, including family, employees, or any other. There is a section on what will be the responsibility of the insurance company and also a section on what is included and what is excluded.
A rating page may go before the liability section, just like with property coverage, and after the forms, there are endorsements to limit or enhance coverage in certain circumstances. Again, in some cases, you can pay to buy enhancements or to make limitations go away.
You may ask why there are endorsements. Good question. A standard policy form, visit youngamericainsurance.org, is a basic wording that may be used for many different types of businesses. Each of these businesses has different needs and ways of operating. You don’t need a different form for each type of wording. So, it is important to be sure to select the best insurance company or the one that better meets your business’s insurance needs.