Here are the eight most important items needed to get a Commercial Insurance Quote
Many times while talking to a prospect and gathering information an insurance agent gets the response “why do you need that, I just need a quote”. This is typically in response to the agent asking for the Employer Identification Number, the classification code of the business, or the average payroll for the past three years. Agents can usually give a business owner a ballpark estimate of your premium depending on the state and industry, but that estimate is not an accurate quote. Without certain key bits of information the insurance agent and the insurance underwriter at each carrier cannot give the business owner a formal insurance quote. There are many valid reasons why a business owner may not want to give out lots of proprietary information to multiple insurance agents. This is where partnering with an independent agent can really benefit a small business. By partnering with an independent agent, you can give this sensitive information to just one agency and they can do the shopping for you. Regardless of whether you partner with an independent agent or do the shopping yourself, there are certain bits of information that are necessary to shop for commercial insurance. Here are eight pieces of information you need to gather before begging your insurance shopping journey.
Correct Name and Spelling of the Company
It is very important that you give the insurance agent the accurate name and spelling of the company you are representing. This is going to be on file with the state department of insurance. If anything is inaccurate about the information it can cause major headaches down the road with the state governing body and with the claims department within the insurance carrier. The way in which the company is formed is also crucial for Officer & Partner Exclusion Regulations per state.
Accurate Phone Number and Address
Just like the name of the business, it is equally important to have an accurate address and phone number on file. The accurate information includes both the business and the current agent. Phone numbers and email addresses are extremely important for the agent working on your quote and the future insurance carrier. Most underwriters for most insurance carriers require agents requesting a quote to enter an email address upon quoting and binding an account. This is typically for billing purposes. If your business has a PO Box instead of a physical address, that is acceptable. Although in some instances a physical address is needed for the application and auditing process.
Years in Business
The number of years in business is crucial for most insurance carriers. If you are a relatively new business owner (Less than five years in business) it is a good idea to also include the number of years you have worked in the industry. This will not be formally counted, but most underwriters will take it into consideration when determining premium. In some instances, a business has been in business for a number of years and is just now needing general liability or Workers Compensation Insurance for the first time. If this is the case, most underwriters are going to want to know why. Frequently this is because of growth, hiring your first employee, or working as a contractor where it is required for the contract. The insurance carrier will need to know all of this information in order to give you an accurate quote.
Federal or Employer Identification Number
This number is needed for a number of reasons. First and foremost, this number acts as the social security number of the business. It is the main way each individual agency, agent, and carrier identify your business and their relationship to it. This is particularly important because of your businesses relationship with the National Council on Compensation Insurance (NCCI). This is the main governing body that determines ncci class codes and the recommended premium rate. This will show the classification code you have used in the past as well as any specific audits of your company. If the class code changes, the underwriter will want to have a description of the reason for the change in classification code.
Officer and Owner Information
Depending upon the state or states your business operates and how the company was formed, the information of the owner and officers may be necessary to get an accurate insurance quote. This may seem invasive, but all of the information an agent is asking for is necessary. Depending upon a lot of this information there may be exclusions, credits, or discounts you are available for. If you do not offer this information to your agent it can result in you paying more for premium.
Estimated Annual Wages
The estimated payroll is something a business owner should take seriously when applying for commercial insurance. It may be difficult to calculate or predict, but it is essential to managing your commercial insurance premium. These estimates should be broken down by employee classification type (office, field, sales, etc.). Workers Compensation Rates in particular are based primarily on payroll. The insurance carrier comes up with your rate by using your payroll times the rate of the class of business per 100 in payroll. For a startup or a seasonal business, this estimation can be difficult. If you partner with an independent agent, they should be able to help you get a rough estimation. You can start by taking the money per hour you pay certain employees, determine how many hours per week they will work, and finally determine how many weeks out of the year will they be working for your business. This number will give you a real number that you can give the agent to quote with.
Detailed Description of Operations
An Insurance Agent needs to understand what your business does on a day-to-day basis. This will help them place your business in the proper classification code. Not properly classifying your business can cost your business immensely more in premium as well as create several headaches when you have to file a claim. Construction is one industry where this is very important. Telling your insurance agent that you operate a construction company does not give the agent or carrier a lot to go on. They need to know what kind of construction you are taking on. Your insurance agent will need to know if you work primarily on commercial or residential properties. Your insurance carrier will want to know if you work primarily on new construction or existing properties? Each of these differences in construction bring their own unique risks. Depending upon what exactly you and your employees are doing, you may be charged more or less because of the risks you are taking on. This is why it is extremely important for the owner or operator of the business to take an adequate amount of time to discuss the operations of the business. The more information an insurance agent has about your business and your priorities, the more likely they are to provide you with a group of insurance products you will be happy with.
Copy of your Claims History
The Loss Runs or Claims History of your business is crucial to get an accurate quote. No insurance carrier will give your business a quote without know the claims history of your business. You can get a copy of this document from your current carrier. You do not have to contact your current carrier if you do not feel comfortable doing so. When you are dissatisfied with your current agency (even if you are just checking around to make sure they are getting you the best deal) you can get this information from the carrier without talking to your agency.
In closing, I cannot tell you how important it is to always be honest when going through this process. This goes for your agent and carrier. Most every question someone within the industry asks you has a paper trail. They will find out the answer to the question at some point during the process. To not be truthful throughout this process will cause stress to you and your business sooner than later. Additionally remember that insurance agents are there to help you. At least they should be. Talk to them long and honestly about the ins and outs of your business and what you value in your relationship with an insurance agency. The more honest you are with your agent and the more information you give them, the more likely the agency is to find a set of insurance coverages that will satisfy your needs.