What To Ask Your Liability Insurance Agent

Know the basics of your insurance policy

Introduction 
Being informed before you shop for liability insurance can make a big difference in your confidence with this complex topic. Start with these basic questions about how liability insurance works and then make a list of your own questions that come up as you read more about the topic and think about your business needs. Business liability insurance is one of many standardized policies offered to business owners as part of a package or by itself. It’s less expensive if purchased as part of a package.

What does my policy cover?
Your general liability policy covers bodily injury (to people other than your employees) and property damage that happen on your premises or on a jobsite, or that happen as a result of your business operations or things you sell. A typical general liability policy covers medical expenses on a no-fault basis when someone is injured at your business, and some kinds of personal injury are covered, such as false arrest, libel and slander. 

What’s not covered?
Your business liability insurance policy does not cover intentional acts or criminal acts and excludes punitive damages awarded by courts in cases of extreme negligence. General liability insurance excludes pollution liability and employment practices liability, but both of those coverages can be purchased separately. Your liability insurance may not cover professional liability, depending on the kind of work you do. Doctors, accountants and many other licensed professionals have to purchase separate professional liability for claims arising from their professional services.

How is the premium calculated?
When shopping for business liability insurance quotes, you’ll need basic information about your business to give your agent. Business liability insurance rates are based on your annual estimated gross payroll, gross sales, number of employees or other factors, depending on the type of business you operate. The rating basis (your gross payroll) is multiplied by a dollar amount that is based on the claims experience for your type of business.  Business policies are usually issued for a 12-month term.

How do I pay for my insurance?
Many insurance companies offer payment plans with small fees to cover processing costs. If your insurance company does not offer payment options, ask your agent about premium financing. A premium finance company issues a loan and pays the insurance company on your behalf and then bills you monthly for the payments on the loan. The interest increases the cost of your insurance, but your payments are spread over nine to 12 months, which can make your premium easier to budget and makeyour cash flow more predictable.

What happens if I have a claim?
Your business liability insurance policy has provisions that require you to report claims within a reasonable period. If you don’t, your insurance company might not cover the claim. When you become aware of a claim, call your agent or insurance company immediately. The claims examiner will guide you through the process, which includes discovering the facts, estimating the cost of your claim, hiring a lawyer to defend you, if necessary, and making payments to claimants.  

How do I renew my policy?
Your business liability insurance is usually issued for a one-year period. Ninety days before your policy expires, your agent should contact you to update your business information for your renewal. Your insurance agent will apply to insurance companies on your behalf, collect quotes and present you with one or two that best suit your business. Payment arrangements vary by company and agency, but most require a deposit to bind your renewal policy and provide continuous coverage. If you choose to finance your policy, your down payment may be as high as 20 percent of your premium.

Tips & warnings
Thanks to the Internet, your insurance company is a great source for loss control information and training. Look for articles, videos, podcasts, webinars, studies and data on how reduce claims. 

Insurance companies perform inspections to make sure your premises are safe and clean. Sometimes you will receive a list of things that have to be repaired or updated. Examples include parking lot repairs, ventilation system upgrades, wiring updates and roof repairs. If you don’t make the repairs or upgrades, your insurance company can give you 30 days notice and cancel your policy. 

Insurance companies must give you 10 days notice of cancellation if you don’t pay your premium.

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