In this final installment, we continue to look at ways for businesses to help keep their insurance costs as low as possible.
- Maintain, to the greatest degree possible, the same expiration dates and insurance carriers on all of your policies. This will assist in adding to your negotiating clout with a particular insurer and could also prevent disputes between policies.
- In the current market, claims are more closely scrutinized so negotiate policy enhancements where possible and use carriers that offer broader coverages. With insurers suffering underwriting losses, claims representatives are closely analyzing policy language after the time of a claim. Even in a difficult market, the better accounts still can negotiate policy language that is broader than average. For example, many coinsurance penalty clauses should be removed from property insurance policies by way of an agreed value clause. Make your policies as bullet-proof as possible.
- If you are insured with unlicensed insurance carriers, also called surplus lines insurers, be aware that you may not be protected by the Michigan State Guarantee Fund if the insurer becomes insolvent. Check the financial rating of these carriers by reviewing the A.M. Best Guide rating service which your agent should have access to. Another issue is that any advance premiums paid to an insurance carrier that becomes insolvent will not, for the most part, be returned. For example, if you pay a $100,000 premium and the insurance carrier becomes insolvent after six months, you will be hard-pressed to receive a $50,000 return premium.
- Avoid leaving your current carrier because of a nominal increase. Consider the long-term history of your premiums. If you move to an unknown new insurance company, you may face mid-term expensive loss control requirements, cancellations, or non-renewals.