COMMERCIAL INSURANCE

The most vital current financial investments you can initiate in situations where you are a new business owner or are pondering to start a new business or have owned a business for many years. Every business comes with risks. Though some risks are minimal however, there are many risks that could lead to huge financial loss. Commercial insurance, here protects you from such familiar losses like property damage, business interruption, theft, liability and worker injury. Acquiring the most suitable commercial insurance can aid your business from severe losses or recover with minimal business interruption and financial impairment.

PURCHASING COMMERCIAL INSURANCE

The primary step in purchasing small business insurance is to contact a licensed insurance broker-agent who specializes in commercial coverage. A successful relationship with a reliable and proficient broker-agent is as imperative as gaining professional advice from an accountant, banker, human resources analyst, payroll specialist, lawyer or an honored business mentor. Established business contacts are notable referral source for recommending a commercial lines broker-agent, especially if the contacts are in the same or close-related industry. Professional broker-agent associations like The Insurance Brokers and Agents of the West(IBA West)  and the Western Insurance Agents Association(WIAA Group) can facilitate you in your search for a licensed broker-agent in your local area.

EXPECTATIONS FROM A BROKER-AGENT

Before regulating your broker-agent search, it’s mandatory to verify the broker-agent’s insurance license with the New York Department of Insurance. It is responsible for licensing all broker-agents who sell or market insurance in New York.  A broker-agent is issued a fire and casualty license, which enables him/her to sell commercial property and casualty insurance. With this method, the search for a competent broker-agent would be untroubled.

Brokers and agents act in different ways to secure insurance for consumers.  Brokers may sell for many insurance companies and are usually paid by you in the form of a broker fee charged for placing and servicing your insurance business. Agents are appointed by insurance companies and are paid a commission by the insurance company with which business is placed.  

Initially a broker-agent will meet with you to discuss your business operations and the exposures that are specific for your industry and business type. Or if you already have business insurance, the broker-agent will ask to review your current policy. The broker-agent is comparing limits, exposure bases, business classifications, exclusions, and endorsements in order to analyze any gaps, errors,­ or overlaps that may exist in your current commercial policy. The information provided in the application process to the broker-agent should be credible so that he can easily access your specific insurance needs and provide you best options to protect your business from any loss.

KIND OF INSURANCE NEEDED FOR DIFFERENT TYPES OF BUSINESSES

After reviewing the individual risk characteristics of your business, the broker-agent will determine various coverage options for purchasing commercial insurance. However, succeeding the broker-agent’s proposal, it’s your liability to make an informed decision and choose the appropriate insurance. A healthy relationship with the broker-agent gives you free passage to discuss any terms, conditions or concepts which are unclear. Howbeit, a defined knowledge of all types of available insurance coverage lines will also help in cases of business expansion as new exposure arises. The following commercial lines of insurance cover broad areas of exposure common to most business operations:

  • PROPERTY INSURANCE

    It provides coverage for property that could be stolen, damaged, or destroyed by a covered peril.The term “property insurance” includes many lines of available insurance:

  1. COMMERCIAL PROPERTY 

    Buildings you own or lease as a part of your business, your business personal property, and the personal property of others make up the basic coverage sections of commercial property insurance.

  2. INLAND MARINE 

    Inland marine is a particular type of property insurance that primarily covers damage to your business property while in transport. It also covers the liability exposure for the destruction that may occur to property in your care, custody, or control during transport.

  3. BOILER AND MACHINERY 

    This insurance covers business property, other property losses, and legal fees that may result from the malfunction of boilers and machinery.

  4. CRIME 

         It provides protection for the assets of your business including merchandise for sale, real property, money and securities.

  • CASUALTY INSURANCE

It provides coverage primarily for the liability exposure of an individual, business or organization. Liability from the negligent acts and omissions of an individual, business or organization that causes bodily injury and/or property damage to a third party is the subject of casualty insurance coverage.

  1. COMMERCIAL AUTOMOBILE 

    This coverage can protect your company from any liability stemming from automobiles used in your business or any damage to the covered automobile.

  2. COMMERCIAL GENERAL LIABILITY 

    This policy covers all hazards within the scope of the insuring agreement that are not otherwise excluded. It provides automatic coverage for new locations and activities of your business, which come about after policy inception and throughout the policy term.

  3. COMMERCIAL UMBRELLA 

    When a liability claim goes above the aggregate limit of liability, the policy limits are exhausted. By purchasing a commercial umbrella, you can protect your business from being liable for this excess liability judgment. It covers the amount of loss above the limits of a basic liability policy. Also, it provides coverage if a basic liability policy is not in force, along with, coverage for gaps in coverage under basic liability policies.

  4. WORKERS COMPENSATION 

    When an employee suffers a work related injury or illness, this insurance steps in to provide benefits based on the type of illness or injury sustained. It is based on a no-fault system, which means that an injured employee does not need to prove that the injury or illness was someone else’s fault in order to receive workers compensation benefits for an on-the-job injury or illness.

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A BUSINESS OWNERS POLICY

Drafted specifically for small businesses such as hardware stores, barbershops, greeting card shops, accountant offices or low-density apartment houses, a Business Owners Policy (BOP) is a combination commercial policy that covers property, general liability and business interruption. It is written with strict underwriting guidelines including maximum allowable square footage for office, retail, or apartment risks.

RATINGS OF COMMERCIAL POLICIES. SELECTION OF DEDUCTIBLES AND DEVELOPMENT OF PREMIUMS

The way a policy is rated determines how the policy premium is developed. Rating factors are based on the line of insurance you are purchasing. If you are purchasing commercial property insurance, the building rating formula is based on factors including square footage, type of construction, sprinklered or non-sprinklered, and the fire protection classification. If you are purchasing general liability insurance, the rating formula can be based on square footage, payroll, or gross sales depending on the general liability classification codes used. These are known as rating exposures.

Once the rating exposures are identified and the deductibles selected, the premium is calculated by a simple formula: rate x exposure = premium.  The deductible amount you choose will be calculated in the rate. The higher the deductible the lower the rate. By utilizing higher deductibles, you can bring your premium cost down; however, you do not want to jeopardize your company’s financial future by choosing overly large deductibles.

COMMERCIAL CLAIMS

Leaning on the type of loss your business endures, the duties and responsibilities required by you in a claim can be multiple. Therefore, it is important to remember that your broker-agent can assist you throughout the claims process. Whether you contact your broker-agent or the insurance company directly when filing a claim, you are required under the insurance contract to report all claims in a timely manner. This allows the insurance company to process the claim and conduct their investigation as quickly as possible.

Since commercial claims tend to be more complex, it is important for the company to assess the claim quickly in order to mitigate any situation that may have the potential for increased loss. This is especially crucial in liability claims, as there can be high dollar amounts at stake. When claims are not controlled early in the claims process, litigation from third parties can arise. Litigation can be expensive and often ends in a judgement much higher than if an experienced claim representative had handled the claim from the beginning.

Most business owners are aware that claims loss experience is reflected in the rating formula and directly affects premium costs. By following the duties outlined in your contract regarding claims, you are a partner with your insurance company in helping to keep claims costs to a minimum, which in turn helps keep your premium costs down.

The better your claims experience, the greater modification allowed to lower your premium.

  • DEDUCTIBLE

         The deductible on a commercial policy is the part of the loss that you pay up-front before your insurance company pays a claim. Based on the amount of the deductible as stated in your policy, the insurance company will pay up to the limits of the policy when a claim is covered after you have provided the deductible payment. The higher the absolute dollar amount (deductible), the lower your premium.

  • LOSS CONTROL

         One of the most effective ways to decrease the frequency and potential severity of  claims is through loss prevention and control.

Based on your type of business exposure, your broker-agent can offer suggestions on how to best control the loss exposures common to your business. The broker-agent along with your account underwriter claims representative, and loss control representative can create an entire program of loss prevention that includes specific modifications and procedures to follow that can help create a safer workplace. These programs can even include an employee safety program that incorporates awards and suggestions. When proven loss control methods are implemented, the public and workers are better protected, and your premium costs go down as your loss experience improves.

TROUBLE LOCATING INSURANCE FOR BUSINESS

Most businesses can easily obtain insurance in the standard insurance market with the assistance of a qualified broker-agent. However, if your business has experienced significant losses, it can be considered to be engaged in high-risk operations, or you have recently started your business, you may not be able to locate insurance in the standard commercial insurance market. Though in this case, your broker-agent can explain the options you may have in seeking and securing commercial insurance elsewhere.

  • SURPLUS LINE INSURANCE

          When you have had three applications turned down from a licensed commercial insurance carrier then, you can proceed to obtain insurance from the surplus line market. Surplus line companies offer insurance to businesses that cannot find insurance in the standard line insurance market. While these companies are not licensed by the New York department of insurance, they do have to go through an approval process that includes providing evidence of minimum capital and surplus requirements.

Nevertheless, when these requirements have been met to the New York department of insurance’s satisfaction, it may approve the company to conduct business in New York and subsequently add them to the List of Eligible Surplus Line Insurers (commonly referred to as the LESLI list).

A surplus line company can only be accessed through a specially licensed broker. The broker must have a surplus line license issued by the New York department of insurance in order to sell surplus line insurance. Before purchasing insurance from a surplus line insurance company, your broker must provide you with a disclosure notice under CIC Section 1764.1 that the insurance you are buying is being issued from a surplus line.

Although surplus line insurers must follow the Fair Claims Settlement Practices Regulations, the New York department of insurance has limited jurisdiction over the operation of surplus line insurers. If the company goes bankrupt, your only course of action will be through the courts. The New York Insurance Guarantee Association,which protects claims with admitted insurers, does not apply to surplus line insurers. A surplus line broker should be able to supply information on the financial solvency of any surplus line company that it represents. After checking the financial solvency of the surplus line company, you may also wish to verify that the surplus line company is approved by the New York department of insurance and currently on the LESLI list.

  • NEW YORK FAIR PLAN

           The New York FAIR Plan has been in operation since 1968 to provide basic property insurance to property owners who are unable to obtain insurance in the standard market. Although it was established by the legislature, it is not a state agency. It is an association of all property insurers licensed in the state, who participate according to the percentage of property insurance they write in New York. It was established to assure stability and accessibility of property owners to property insurance. The majority of New York FAIR Plan business is in designated urban, inner city, and areas subject to destructive wildfires.  While it primarily writes policies for personal property holders (homeowners), they do write a small percentage of policies for commercial property owners.

SPECIFIC RULES ON COMMERCIAL INSURANCE CANCELLATION AND NON-RENEWAL

Commercial insurance companies must follow the rules set out in the insurance code regarding commercial insurance cancellation and non-renewal. There are separate insurance code sections covering cancellation and non-renewal for workers compensation, auto, ocean marine, surplus line, reinsurance policies, and other commercial insurance lines. Therefore, its better to contact the New York department of insurance for a complete explanation if you run into any problems with cancellation or non-renewal notices.

NEW YORK SMALL BUSINESS INSURANCE

If you own a small firm with a number of employees or you plainly run a business on your own, then it’s obligatory to procure a New York small business insurance policy or in other terms, commercial insurance in NYC, to safeguard your business from unanticipated circumstances. Look at the right bottom and chat with us, if in doubt!

NEED FOR THE FOLLOWING  COMMERCIAL INSURANCES IN NYC

  • PROTECT YOUR BUSINESS (GL)

    For a business property to survive in a crowded place like New York, it’s essential to attain GENERAL LIABILITY protection. It covers the medical bills of those people who accidentally get injured in your workplace. Also, it covers the expense of fixing and replacing the personal property of any customer who might accuse you of property damage.

  • INSURE YOUR PROPERTY (BPP)

    By enlisting yourself with this policy, any damage caused to your building will be compensated. Furthermore, it also helps to replace items like merchandise or furniture.

  • EMPLOYEE PROTECTION (WC)

          Workers compensation becomes a necessity when there are employees involved. It fends all the medical expenses of the workers who get injured or sick while at work. Also, it pays the employee any wages he has missed due to the injury or illness. Along with it, if in case, any employee legally threatens the company, then it covers your legal fees as well.

  • UMBRELLA/EXCESS LIABILITY

          If in any case a settlement is larger than your general liability policy’s limits then, you need excess liability. This can cover any extra costs that you face when someone is hurt while visiting your business.

  • CYBER CRIME LIABILITY

    The immunity of business against the cyber crime is in-determined. You can however, prepare yourselves by obtaining this policy.


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