Package your Insurance Policy?
Package your Insurance Policy? – Yes, as a business owner this
can help to reduce business expenses such as
high insurance premiums. This is why reviewing your
business insurance policy is so crucial. It is the
blueprint to your future and present business security.
Insurance for your business is business security and
peace of mind. So, let’s start our discussion with the basics of your business
or commercial policy.
Package Insurance Policy –
Understanding Commercial Insurance is the first area of review.
There is an industry standard for commercial insurance packaged policies.
This standard commercial package is through the ISO.
It is provided through many insurance carriers, these commercial packages, that is.
Insurance Form Types:
There are 2 common forms that you can find
sold on these packages policies and reason to understand the difference.
- 1. AAIS
- 2. Independently Developed Forms
Business Owners Insurance –
Having a Smaller Commercial Package is one package size you could run
into as a policyholder or business owner.
In either case of these policy packages, the smaller accounts
of insureds are covered through another type of policy.
This policy is quite different in coverages and
policy options to a large commercial account.
Why? This policy is a business owner’s insurance
policy or BOP and not a commercial policy for example.
Independent Policy Package?
This would be the independent policy version of
the ISO. ISO, or the Insurance Services Office,
has certain rules and forms that need to be followed.
These commercial package policies or CPP,
must include some forms to be complete and precise.
It is good to know and understand the different form types.
These coverage forms would include the following:
- 1. Common policy conditions,
- 2. Declarations page
- 3. Coverage parts.
The Insurance Package –
(The Insurance Sandwich)
No, the illustration is not an item found on a dinner menu, but an illustration of what you might find
in insurance packaging or bundling. Why the sandwich illustration?
Because when you think of a sandwich,
you envision different layers of ingredients, packed onto 2 slices of bread,
to make up your favorite sandwich.
We all have one for the most part. Some of us prefer our simple jelly sandwich
spread with peanut butter, while others will
prefer something a little different, meatier.
For example, some meat enhanced sandwiches may take your pick.
However, no matter the ingredients in the sandwich,
the process of packaging is the same.
The same can be applied to the insurance
pages in a commercial insurance package policy.
For example, some of the items found would include:
- The number for the policy
- Insurance Company name
- The insurance producer or agent or broker
- Named Insured
- Address of the name insured
- Description of business
- Dates of both policy expiration and effective date
Declaration Pages of Policy
As you continue down the declarations page,
or onto a different sandwich ingredient,
you will find the consideration clause.
So what exactly is this clause, and why should you
know about its existence?
Good Question and reason for discussion.
What is a Consideration Insurance Clause?
This consideration clause is the general policy
a statement that you find on your initial paperwork.
It is a known clause where an insurance carrier agrees to provide
insurance coverage for a small payment of premium.
This is usually your down payment or deposit for coverage to take place.
Of course, there are policy terms that should be reviewed prior to purchasing,
or before a claim or loss should occur.
Policy Terms and Coverage
These policy terms will cover what is included in the policy,
including a breakdown of premium. Commercial package policies
included many forms and information that make up a package.
This is where an understanding of the total package is advised.
There may be endorsements and
exclusions that you may not be aware of.
This can only leave your business or commercial operation
exposed to the elements and liabilities of doing business.
Commercial Package Policy –
This helps in the long run. This is because less
underwriting is involved in the process with a
packaged commercial policy. Why do you ask?
This is because packaged policies unlike
a monoline commercial policy,
have all its information enclosed on 1 policy.
A monoline is a standalone policy with no endorsements or other forms.
What additional coverages could you find on these policies? Great question.
This means if any additional addon coverage were placed on policy,
then more administrative costs would be incurred for the policyholder.
A bundled commercial policy is all-inclusive.
This means that all forms needed are enclosed, and multiple forms of protection
are included on one policy, a packaged one.
This definitely helps with complete business protection.
(Of a Packaged Commercial Policy)
Are there differences in policies types? Yes,
there are, and these differences come in the form of benefits.
There are benefits for having this type of packaged policy.
The first benefit to mention is the financial cost.
By having a commercial packaged policy, this will reduce costs.
It will cut down on administrative costs
big time and is one advantage to point out.
Financial Attributes – Added Benefits
Another positive financial attribute about a package policy is that it costs the
insurance company less to underwrite as we explained.
This is because, instead of issuing one package policy, there are
2 or more monoline policies that separate underwriters must touch.
This process can be done for the same insured who happens to have separate
policies. So, you can see where more costs for administrative needs
would be placed on actual policy fees.
Package Insurance Policy
Package policies can also help insurance companies. This because a package policy
will show all coverage limits and amounts on policy. It can provide a roadmap
in the areas of coverage needed, and show any gaps in coverage if they do exist.
Any gaps in coverage can be addressed with other coverage options or endorsement forms.
This other insurance coverage would be fulfilled through a form attached to this package
Each form helps in the reduction of exposure for both insured and insurer.
Exposure can be transferred or mitigated if under a package policy type.
As you can see, the benefits of having a packaged policy are overwhelming.
Always seek professional business support
and expertise throughout your business endeavors.