Insurance companies haven’t always been known for their simplicity. We know – we’ve heard the frustrations of first-time entrepreneurs who want to protect their business, so they can get back to running their business.
And we’re here to help.
Here are some of the top questions we hear, answered.
Why am I being charged for my subcontractors on my audit?
Subcontractors affect both general liability and work comp audits and are a common source of misunderstanding. If a subcontractor does not maintain their own workers compensation policy, their payroll will be charged against your work comp audit since they performed the work on your behalf. For general liability, work performed by uninsured subcontractors is also charged against your policy, often with a surcharge. In either case, if the subcontractor provides a certificate of insurance before they begin work, your business will not be penalized.
Why should I have coverage on my tools?
Business owners want to protect their assets, no matter the industry. But insuring a contractor’s tools and equipment isn’t as straightforward as you may think.
If you were a coffee shop owner, your commercial property insurance would protect the business assets that you keep inside, like the tables, chairs, refrigerators and espresso machines. But commercial property insurance is typically designed to protect the assets that remain inside the covered property – not equipment that is on the move like your tools.
That’s where tools and equipment insurance comes in. Also known as inland marine insurance, stolen tools insurance is designed to cover your assets that move from one site to the next. Tools and equipment insurance protects against lost tools, stolen tools and damaged tools. If your tools are stolen out of the truck or off a job site, go missing after you loaned them to a crew member, or get damaged by vandals, tools and equipment policies are designated to cover it.
Why did my premium go up?
The American Property Casualty Insurance Association (APCIA) has looked into the impact of inflationary pressures on commercial lines insurance in the US and identified three main drivers:
Spikes in inflation over the past year have considerably increased the payouts insurers have made. The consumer price index jumped 8.5% from a year earlier. APCIA also reported that insurance claims inflation has been rising faster than Consumer Price Index (CPI), outpacing premium increases.
Lawsuits and Larger Verdicts
When lawsuits against insured businesses become more likely to lead to large verdicts, the cost of the insurance policy that covers those verdicts may rise as well. The Property and Casualty (P&C) industry incurred losses for general liability have sky rocketed more than 57% over the last five years.
Increase in Catastrophic Weather Events
Property insurance rate inflation is largely due to the increasing number of natural catastrophes occurring throughout the country. Hurricane activity and intensity continue to grow, as does the frequency and destruction of wildfires, tornadoes and flooding.
In response, commercial property insurers have been making changes to coverage terms and conditions, increasing deductibles and shrinking policy limits. These moves have been especially pronounced in areas with higher exposure to natural catastrophes.
If I file a claim will my insurance rates go up?
One of the top concerns most people have about filing a claim is whether it will impact their premium rates, or whether they may even lose their coverage. Many believe in some cases, it may even be better not to file a claim at all.
Whenever you file a claim, it gets logged into a database system known as CLUE – the Comprehensive Loss and Underwriting Exchange. Each time you make a claim, whether major or minor, that information gets added to this system. It’s one that insurance companies refer to when determining your overall insurance rates. If you’ve had zero claims or no claims in several years, you’ll be viewed as a lower insurance risk than those who have made more claims.
But this system alone is not the only factor in determining your rates or renewal. Insurers also consider your overall payment history. If you have a steady and consistent track record of paying your premiums on time, you’re seen as a more reliable insurance customer and less of a financial risk to the policy provider.
On the other hand, if you’ve experienced a more substantial claim you’ll definitely want to involve your insurance company.
What to do Next?
Have Healy Group advisors review your business insurance policies and check that your limits are sufficient. Ask what the cost is to bump it up under higher limit scenarios.
About the Authors:
Scott Johnson is the self-proclaimed Director of Purpose and Passion, and a mentor, leader, and head cheerleader for Healy Insurance division. In his professional life, Scott embraces the Healy Spirit, helping others and giving value first. He is also the author of Insurance Caffeine, an E-magazine featuring commercial and personal insurance-related topics.
Bekky Groshans is a Senior Account Manager and Team Leader, working with a Healy Insurance advisor Scott Johnson to manage insurance risks for his commercial business accounts. In addition, Bekky leads and manages the Healy Insurance account managers team.