Frequently Asked questions

Frequently asked questions submitted by business insurance clients and interested consumers alike. Some of these questions are unique to business insurance and not personal lines insurance (i.e.. Homeowners, personal auto, umbrella, etc.) coverages.

Our offices currently provide coverage policies anywhere in the state of California. Whether you are in need of Business Insurance, Contractors Insurance, General Liability, Professional Liability or just about any other type of professional insurance, we can help. Contact our office by selecting the "Contact Us" option from the main menu at the top of this page.


QUESTION: What is the difference between a Binder and a Certificate? My current broker tried to explain these to me and I'm still confused!

ANSWER: A Binder (of insurance) is simply a temporary confirmation of a policy order issued on 8 ½ x 11" paper (1-side) for your records confirming coverages have been ordered on your behalf by your insurance agent/ broker. This page of information confirms the coverages, limits, policy term, your agent/broker and the name of your business and address for both. It is not for public use but simply a substitute in the event a claim occurs prior to your receipt of the actual policy. Binders are usually issued for 60-90 day terms with the expectation that your policy will be mailed to you by then. If not, then a 2nd Binder should be issued until you receive your actual policy.

A Certificate-of-Insurance is very similar, however, used for a different purpose than a Binder. It is commonly used to illustrate proof (or - evidence) of insurance for a business, for example, a remodeling contractor. Prior to hiring a business for services, many times a consumer or hiring business may require that this business have minimum insurance coverages i.e.. Workers Compensation, and certain limits-of-liability. Rather than take a chance and "hope" that the hired business has the right coverages and limits, it's now common to include insurance requirements evidenced by a (Certificate-of-Insurance) in the project or job requirements prior to bidding out the needed services. The Certificate provides virtually the same information as a Binder (above) plus the addition of the policy numbers for each of the policies providing coverage.

QUESTION: Where can I go to find out about the financial strength and stability of my insurance companies for both my personal and business insurance coverages?

ANSWER: Great question and easy to aANSWER! Go back or click onto our Home page and visit the links to the following rating organizations for insurance companies: A.M. Best Co. (the firm used by insurance professionals since 1906), Duff & Phelps (rate on claims-paying ability), Moody's Rating Services, Standard & Poors and Weiss Insurance ratings. A.M. Best without a doubt is the most commonly used facility by insurance company professionals and agent/brokers alike. We recommend A+ rated insurance companies, however, would not recommend accepting a company rated less than B++ by A.M. Best Company.

QUESTION: A fellow business associate of mine insists on buying insurance from only "admitted" insurance companies and not "not-admitted" companies. What's the difference and what are the pitfalls?

ANSWER: An excellent question asked by a lot of people over the years! An "Admitted" insurance carrier is a company that has been approved by the California Department of Insurance and has "passed" the rigorous financial scrutiny required by them to have the backing of the California Insurance Guarantee Association or more specifically, the Guarantee fund in the event that that insurance company should become financially insolvent. The "Fund" will step in, investigate and settle on behalf of the insolvent carrier. This affords the consumer or business who purchased the insurance some protection, albeit a small %, for this rare scenario. A non-admitted insurance company, also known as a surplus lines insurance company is not licensed by the Calif. Dept. of Insurance. This type of company provides the policyholder or purchaser of coverages with no financial protection in the event it becomes insolvent. Non-admitted insurers must demonstrate to the California Dept. of Insurance their financial stability, reputation and integrity; maintain a minimum of $15 Million in capital and surplus at all times; have three (3) years seasoning (or qualify for an exception); have a valid license to transact insurance in their state of domicile; file financial information with the Department, and adhere to specific capitalization, investment and solvency standards established under the California Insurance code. Remember, Non-admitted insurance carriers approved to conduct business in California are actually admitted insurance carriers in their state of domicile. With some research you will find that there are non-admitted carriers conducting business in California that have a higher Best rating (A.M. Best Co.) than those of an "admitted" insurance carrier! Depending on the industry, many non-admitted carriers will be more competitive in their insurance premiums than their "sister" admitted insurance companies making them much more attractive of an insurance company to buy from. Again, we don't recommend buying insurance from companies rated lower than "A-" (Excellent) or "B++" (Very Good) by A.M. Best Company, whether admitted or non-admitted. Remember, non-admitted does not mean non-regulated.

QUESTION: I'm a contractor and was advised that a "Per Occurrence" deductible is better than a "Per Claim" deductible, why is this?

ANSWER: A "Per Claim" deductible, the more common of the two types, applies to General Liability coverages in the event of a loss. This is the amount of out-of-pocket expense you would be expected to pay in the settlement of each claim where, after investigation, it was determined that you or your business were deemed responsible for the damages (Bodily Injury and/or Property Damage). If only 1 person (party) was injured, you would be expected to pay your deductible (x1). For multiple injured parties resulting from any one accident or occurrence, you would pay your deductible x (times) the number of injured parties.

A "Per Occurrence" deductible often considered more preferable to the "per claim" option, has the potential to save the policyholder substantial money in the event of a claim involving 1+ parties. Using the example above, rather than paying a deductible amount for each injured party, the "per occurrence" deductible allows you important savings by only paying the deductible "once" regardless of the # of claimants or parties injured as a result of one (1) accident or occurrence.

QUESTION: The General Liability coverages on my business insurance policy have an Occurrence and Aggregate Limits referenced ... what's the difference?

ANSWER: The Occurrence limit is the maximum amount of coverage for any one (1) accident or occurrence during the one-year policy term. This applies whether you receive a claim for damages or a lawsuit. The Aggregate limit applies for all claims during the one year policy term. This limit is often time the same or double the Occurrence limit. Though it may cost a small amount of extra premium per year, we highly recommend an Aggregate limit that is double that of your Occurrence limit. Much better protection for very little additional premium.

QUESTION: I had my broker finance my business insurance policy over nine months and now I want to pay it off. How do I arrange this?

ANSWER: If you decide to pay-off the insurance "loan" within thirty (30) days of your policy effective date, contact your broker immediately by phone to arrange this and determine what available option(s) you have. Another course is to contact the finance company directly and advise them of your intentions. Be persistent and document phone calls, etc. that way you have a record of your efforts if someone needs to make an exception, etc. You should always have a copy of your finance agreement referencing: policy number(s), insurance companies providing coverage, account number and the address and phone number(s) of the finance company. Have one faxed to you if you can't locate your copy so that you may contact them with billing questions in the future. Remember, just like a standard bank loan paid off in advance, there may well be finance charges owed should you decide to terminate your finance contract early.

QUESTION: I hate to shop for business insurance because I feel like to get a good deal I have to contact several brokers and it's just too time consuming. Any suggestions?

ANSWER: Sure ... ask a friend or business associate who they use for placement of their coverages. Perhaps talking with a friendly competitor will provide you with some easy advice. Information is held in confidence and I wouldn't worry about a "shared" insurance broker divulging business confidences. You can always go to the Yellow pages and look for a specialist in business insurance or a firm representing several companies. Quite frankly, broker commissions are pretty level between insurance companies so the brokerage firm representing several companies generally provides you with a better opportunity to shop your coverages. When you approach 2-3+ brokers, often time, you risk them tripping over each other to obtain quotations from the same insurance carriers. When this happens, their efforts seem futile and they may lose interest in helping you and not even call you back! Unlike the radio advertisements we hear for buying "term life" and "personal auto" insurance on the Internet, obtaining quotes for business insurance coverages including Workers Compensation and Professional Liability require a considerable amount of effort well beyond simply reading down a chart of numbers for a final premium quote done in our referenced examples.

QUESTION: When asking for coverage quotations from a broker, how many should I get for a realistic comparison?

ANSWER: Generally, we recommend at least four (4) regardless of the type of coverages you're interested in buying. Realize that when you are purchasing business insurance coverages and you are a 1st-time buyer, depending on the coverage, you may not get the 4 quotations recommended. Some companies like to insure people or businesses that have had prior coverage and/or few (if any) claims. Workers Compensation coverage in California is a good example. With employee benefits under this type of coverage at their historic highest, carriers are very selective as to who they will write coverage for and the premium.

QUESTION: Any recommendations regarding Internet sites for insurance information?/b>

ANSWER: Sure ... check the links on our Home Page and the following: Consumerinsurance.com, insureit.com, aolbusiness.com.

QUESTION: How may we contact you to obtain a quotation for our in-home business?

AANSWER: Click on "Insurance Services" from the menu atop each page on this site and follow the easy, on-line questionnaire for your business. We will contact you by phone, fax, or e-mail with a brief coverage quotation for your review.

 

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