Total CSR

Benefits when insureds secure a policy with an admitted carrier

-insured doesn't have to pay as many fees and taxes for the policy -state will step in and cover part or all of the insureds claims if the carrier fails -if the insured doesn't agree with how a claim was handled, they can appeal the decision to the state insurance department

premium financing can be offered to an insured by these parties

-policys insurance carrier surplus lines broker insureds insurance agency a bank premium finance company

3 steps required to determine the correct premium basis

1. understand the insured's business ops 2. discover the class code assigned to the insured's business operations 3. ascertain the class codes' appropriate premium basis

Insurable Interest

4 types of parties that may have an insurable interest in commercial property Owner - This party may lose their investment for the property and any income it may generate. Mortgagee or Lien Holder - This party may still be collecting loan payments from the owner for the property. Lessees or Tenants - This party may have the right to occupy the property for a set length of time. Signers of Contractual Agreements - This party may have a contractual arrangement with the user (often the lessee) of the property.

Class code

5 digit # used to classify a business' operation to help identify different workplace exposures

most common coinsurance percentages

80% of the property's total replacement cost 90% of the property's total replacement cost (5% premium credit) 100% of the property's total replacement cost (10% premium credit)

In most cases when placing general liability insurance, three completed ACORD forms must be provided to an insurance carrier:

ACORD 125, ACORD 126 and ACORD 829.

3 completed ACORD forms must be provided to an insurance carrier

Acord 125, 126, 829

There are two primary valuation methods in commercial property:

Actual Cash Value (ACV) - the cost to replace the property minus depreciation Replacement Cost - the cost to replace the property with like kind and quality without taking depreciation into account

2 kinds of carriers

Admitted and non-admitted (surplus lines)

Policy Checking

After the insurance carrier binds coverage for the insured, the insurance carrier issues a copy of the policy within two to four weeks. In most situations, the customer service representative will be sent the policy before it is sent to the insured. It is critical to check the policy for accuracy and resolve any discrepancies with the insurance carrier prior to sending the policy to the insured.

Choose a Coinsurance Provision Percentage

Agreement that requires an insured to purchase adequate insurance coverage limits for their property. Ideally, the coverage limits should reflect the total replacement cost of the property. The closer the insured's coverage limits are to 100% of the property's replacement cost, the cost of insurance decreases via premium credits (rate reductions).

additional coverages

As an attachment to both building and business personal property coverage, almost all commercial property policies will automatically include the following additional coverages: Debris Removal Preservation of Property Fire Department Service Charge Pollutant Clean Up and Removal Increased Cost of Construction Electronic Data (up to $2,500)

Coverage Extensions

As an attachment to both building and business personal property coverage, almost all commercial property policies will automatically include the following coverage extensions: Newly Acquired or Constructed Property Personal Effects and Property of Others Valuable Papers and Records (other than Electronic Data) Property Off-Premises Outdoor Property Non-owned Detached Trailers

final audit

Audits are performed to verify the insured's operations and to update their insurance policy with any changes. Audits have the potential to affect premium and classification rates.

property coverage

Building Business Personal Property (BPP) Business Income

Since there are three main coverages in the policy, there are three main replacement costs that need to be calculated:

Building Replacement Cost Business Personal Property Replacement Cost Business Income

building

Buildings - any six-sided structure Structures - anything other than a building Fixtures - any man-made objects attached to land in some manner (not including buildings or structures) Permanently Installed Machinery and Equipment Improvements and Betterments - any permanent alterations or repairs to buildings or structures including the addition, alteration, or repair of fixtures or permanently installed machinery or equipment

There are three steps an insured and the CSR must take when setting the coverage limits for a commercial property policy

Calculate Property Values Choose a Coinsurance Provision Percentage Write the Coverage Limits

Designated Construction Project(s) General Aggregate Limit Endorsement

Changes the aggregate limits to be applied on a 'per project' basis. The aggregate limits will then pay for the total of all claims during each project and will essentially reset with every new project throughout the policy term. Most often, the endorsement calls for each project to be listed by name within the policy.

Understand business operations

Collect insured's supplemental applications, having direct discussions with the insured and/or receiving the insured's past policy details

accord 125

Considered to be the foundation of all commercial applications, this document provides detailed information regarding the insured not duplicated on any other ACORD commercial application forms.

Premium Basis

Correct premium basis abbreviation for the appropriate location #, hazard #, and class code

endorsement order list

Coverage additions, modifications, exclusions

claims process

Customer service representatives have specific duties in the event a claim arises. Notify the insured's insurance carrier as soon as possible Collect the who, what, why, when and how regarding the occurrence from the insured Immediately send any notices of summons and/or complaints Cooperate with the insurance carrier

Ascertain the Premium Basis

Dependent on the distinctive first digit in the code number 10000-19999= Gross sales 40000-49000= Various Figures 50000-59999= Gross sales 60000-6999= Various Figures 90000-9999= Payroll or gross sales

Every insurance proposal is structured differently; however, the following should be included in each one,

Details for what is covered and excluded Pricing breakdown for the needed coverage Explanation regarding the payment terms Signed paperwork from the insured

Bind Order

Details for what is covered and excluded Pricing breakdown for the needed coverage Explanation regarding the payment terms Signed paperwork from the insured Bind orders must include, Signed ACORD 125 form Signed ACORD 126 form Signed ACORD 829 form Signed supplemental application(s) A copy of the deposit check Subjectivities (other forms as required by the insurance carrier) request to bind coverage

Coinsurance provision

Even if the cause of loss was covered, the insured's coverage limits may not be adequate enough to cover a loss and the insured has essentially broken their commitment with the insurance carrier. If so, a penalty is applied and the formula to calculate this penalty is shown below, (Coverage Limit / Coverage Limit Required) X Loss = Loss Amount Paid

Standard COVERAGE A Exclusions

Expected or Intended Injury Contractual Liability Liquor Liability Workers' Compensation And Similar Laws Employer's Liability Pollution Aircraft, Auto, or Watercraft Exclusion Mobile Equipment Exclusion War Exclusion Damage to Property Exclusion Damage to your Product Exclusion Damage to your Work Exclusion Damage to Impaired Property Exclusion

Broad Form

Fire Lightning Explosion Smoke Windstorm Hail Riot Civil Commotion Aircraft Vehicles Vandalism Sprinkler Leakage Sinkhole Collapse Volcanic Action + Falling Objects Weight of Snow Ice Water Damage Collapse from Specified Causes Sleet

Billing options when paying a premium

Full down payment 10% deposit with a monthly installment plan 10% down payment with a monthly installment plan 15% down payment with a monthly installment plan

Limits 2

Higher the requested policy limits, higher the premium quote

insured disagrees with outcome

In this case, the insured needs to submit a written and signed letter of dispute to the insurance company including: Name of business Policy number Phone number Email address Detailed description of the issues being disputed The insured would still need to pay the undisputed portion of the final audit pending resolution of the dispute.

voluntary audit

In this type of audit, the insurance carrier sends a 'Voluntary Audit Form' to the insured within 30 days of the policy expiration date. Usually sent via mail, the insured must complete the form and return it to the insurance carrier quickly. The main focus of the audit is to determine the insured's actual exposure figures during the policy year.

Currently Valued Loss Run Reports

Insured's specific policy period typically use the last 5 policy periods in their policy premium calculations

Standard COVERAGE B Exclusions

Knowing Violation of Rights of Another Material Published with Knowledge of Falsity Material Published Prior to Policy Period Criminal Acts Contractual Liability Breach of Contract Quality or Performance of Goods - Failure to Conform to Statements

Standard COVERAGE C Exclusions

Miscellaneous Type Vehicles Public or Livery Conveyance Residence or Premises Workers' Compensation Autos Owned by or Furnished or Available for Your Regular Use Autos Owned by or Furnished or Available for Regular Use by a "Family Member" Reasonable Belief of Entitlement Business War Nuclear Racing

Limits 1

Most often want it to be per policy unless in construction or manufacturing with multiples projects throughout the year then best to select PROJECT

Loss Run Reports

Must be requested from the insurance carriers who wrote each of the insured's policies over the last 5 policy periods

The CSR Support Cycle involves eight major steps:

Obtain Required Submission Information Complete ACORD Forms Send the Submission Receive and Review Quotes Create and Present the Proposal Bind Coverage with the Insurance Company Check the Policy Support the Insured

Collecting Estimated Annual Exposure Figures

Once the premium basis is determined, the estimated annual exposure figures can now be collected from an insured. Note: If an insured's premium basis is payroll, the employees' straight time wages are used to calculate total payroll (which is just a component of remuneration).

premium financing is beneficial as it

Optimizes their cash flow bullet Enables them to purchase the more comprehensive policy of a non-admitted carrier at an affordable price bullet Could be a "one stop" payment option for multiple policies bullet Creates a possible tax advantage

Two primary methods are used for writing commercial property coverage limits:

Schedule Coverage Blanket Coverage

Submission

Specific collection of documents provided to an insurance company allowing them to write an insurance policy. It is what determines the insured's policy premium or, in some cases, whether or not an insurance company will even consider releasing a quote. Submissions can be sent via fax, email, online, or through other bridging services

Policy checking involves reviewing the three documents that should contain identical information:

The QUOTE, including revisions, provided by the insurance carrier The PROPOSAL provided to the insured The POLICY being issued

Business Income This limit is more difficult to calculate as an insured has to make two different predictions:

The amount of income they are expected to generate over the policy period. The amount of time they will need to repair or replace property after a covered cause of loss.

Failing to collect Certificates of Insurance from contractors

The commercial general liability policy automatically covers the insured for suits due to an independent contractor's operations. The base rate applied for this coverage can be decreased if the insured obtains and keeps certificates of insurance for their independent contractors on file. Additionally, the certificates of insurance can preserve the liability limits of the insured and keep claims out of their loss experience.

Basic Form

The form provides coverage for the following perils Fire Lightning Explosion Smoke Windstorm Hail Riot Civil Commotion Aircraft Vehicles Vandalism Sprinkler Leakage Sinkhole Collapse Volcanic Action

Payroll-Based General Liability Policy

The insured's payroll information and payment details to others (including subcontractors and contract labor) during the course of their policy period is required to be provided. Source Documents (one of the following) Payroll vendor's payroll information reports Internal reporting application's payroll information reports Accountant's or bookkeeping service's payroll information If the insured paid for contracted labor: A report with names, description of work performed, date work started/ended, total amount paid and cost of materials supplied Verification Documents (one of the following) Federal Form 941 Federal Form W-2 Federal Form W-3 State Unemployment Wage Reports If the insured is a sole proprietor: Federal Form 1040 If the insured is a partnership: Federal Form 1065 If the insured is a corporation: Federal Form 1120 If the insured paid for contracted labor: Provide Certificates of Insurance (COI's) for subcontractors including dates worked

gross sales based gen liability policy

The insured's sales information during the course of their policy period is required to be provided. Source Documents (one of the following) Sales Journals General Ledger Income Statements/Profit & Loss Statement Verification Documents (one of the following) Federal Tax Returns State Sales Tax Returns Income Statements/Profit & Loss Statement

DYK?

There are many more standard endorsements used in CGL policies and even more that are specifically created by individual insurance carriers. Each endorsement that you do not recognize should be investigated to understand its true meaning and intent.

Business income

This coverage applies when there is a suspension of operations to restore or replace lost or damaged property. Under this coverage, the insurance carrier will pay the insured for the loss of business income incurred during the restoration or replacement period. The coverage applies to two different types of business income: Net income that would have been earned Continuing operating expenses (such as payroll)

Special form

This form also involves specifying perils; however, instead of listing the covered perils, the perils specified in the policy will be excluded from coverage. The Special Form is also referred to as 'all risks coverage' with coverage being provided for all perils unless excluded from the policy.

accord 829

This form can be attached with any other ACORD form. It provides insurance carriers with any additional policy information needed by the insured and/or carriers. It is used frequently as it is the document that is used to indicate that endorsements are to be quoted and issued with the policy.

Extra Expense

This is an optional sub-coverage that could be included with business income. Extra expense coverage also applies when there is a suspension of operations to restore or replace lost or damaged property. Under this coverage, the insurance carrier will pay the insured for the increased expenses incurred during the restoration or replacement period. The coverage applies to three different extra expenses incurred: Extra expenses to avoid the suspension of operations Extra expenses to minimize the suspension of operations Extra expenses to repair or replace property to reduce the business income loss

Blanket Coverage

This method involves writing coverage limits that blanket (applies to) different types of property coverage. The limits can be written in such a way that they apply to: More than one type of property coverage at the same location The same type of property coverage at multiple locations All types of property coverages at multiple locations Let's say there was a business income loss where the coverage limit was not adequate to cover the loss. If the policy's coverage limits were written as blanket coverage and in a certain way, the limit for building coverage AND the limit for business personal property coverage could be used to help cover the loss.

Insured does not comply

This situation is unfortunate and is beyond a CSR's ability to provide assistance. Below are a few of the possible outcomes: The insured's current policy might be canceled The insured's final audit premium could be increased

physical audit

This type of audit is far more extensive and is conducted within 60 days after the policy expiration. An individual, known as an 'auditor', visits the insured's business location(s) and completes an audit within 30 days.

Currently valued loss run report

Updated 90 days of when the insured's proposed policy period would begin

Employee benefits liability endorsement

Used to add coverage for damages the insured may incur due to an error or omission committed in the administration of employee benefits. Typically "administration" refers to the following activities, Describing benefit plans and eligibility rules to employees, other eligible family members, and beneficiaries Maintaining files and records related to employee benefits, whether the records are electronic or paper Enrolling, maintaining and terminating employees, eligible family members or beneficiaries in benefit plans Unlike the 'occurrence-based' coverage provided by the commercial general liability policy, this endorsement provides 'claims-made' coverage.

Completed Supplemental Applications

When required by an insurance carrier, either the producer or the customer service representative will send a supplemental application via email, mail, or fax to an insured for them to complete

Schedule Coverage

Writing coverage limits that are scheduled (specific) to each type of property coverage. At the time of a loss, this method makes the limit for building coverage separate from the limit for business personal property coverage, as well as, separate from the limit for business income coverage.

base rate

a rate the insurance carrier has filed with the state for a class code that is the starting point for premium calculations

In order to release the info, insurance carriers need to receive an

agent of service authorization letter from the insured

total amount due upon binding ( deposit)

amount the insured needs to pay upfront in order for the insurance carrier to bind coverage

premium basis

basis to which rates are applied to determine premium

total amount due binding

can be equate to a deposit amount the insured needs to pay upfront in order for the carrier to bind coverage

inspection and audit fee

can be equated to an expense fee an insurance carrier charges the insured to cover the expected costs of a policy inspection and or audit

Indemnity

coverage amount provided to the claimant for damages incurred due to the occurrence

important for CSRs to help understand two areas of concern

covered causes of loss coinsurance provision- penalty

missing on the policy

deductible

Discover the Class Code

determined by Insurance Services Office, Inc. (ISO). The ISO has provided a listing of class codes with descriptions for each to help discover the correct class code(s) for an insured.

A premium finance agreement could be canceled by nonpayment or cancellation of the insurance policy. If the agreement is canceled due to the insured canceling their policy, you must make sure notifications are sent in the manner that is specified in the insurance policy.

did u know

self-insured retention

dollar amount that must be paid by the insured before the insurance policy will respond to a potential claim

reserve

estimated amount set aside to cover an open claim's potential future expenses

quote should have

estimated annual exposure figure

Submissions include 4 different documents

estimated annual exposure figures supplemental actions currently valued loss run reports completed acord forms

estimated policy premium

exposure figure/ 1,000 X base rate if calculated estimated policy premium is too low, the insurance carrier will charge their minimum premium instead

Coverage Form: Occurrence

form of policy that will provide coverage for events which occur during the policy period regardless of when the claim is filed will respond to claims that come in during and after the policy has been canceled (if the incident occurred during the period in which coverage was in force)

subjectivities/contingencies

forms required by the insurance carrier in order for them to bind coverage with an insured

business personal property

furniture and fixtures machinery office equipment and supplies insured's interest as tenant in improvements and betterments any leased personal property the insured has a contractual responsibility to insure labor, materials, or services the insured provides for the property of others

A.M best Company rating

global credit rating shows the insurance carriers financial strength and credit worthiness. Insurance carrier is assigned a financial size category to enhance the usefulness of the AM best credit rating

deductibles

higher requested deductibles will make it more likely the application will be accepted and will decrease the premium quoted

premium basis

identical across all quotes received for a given renewal. premium should be calculated differently on certain quotes and cannot be prepared

Admitted carriers

insurance carriers that have been approved by the state's insurance department for following their standard rules and regulations

exposure

insured's level of risk to a loss or claim represented as actual/estimated figures

paid

losses paid to claimant during the reported period

paid (included)

losses paid to claimant during the reported period including an deductibles paid to the insurance carrier for said claim

minimum premium

most likely be different on every policy quote

minimum earned at binding

presented as a % lowest amount the insurance carrier will charge after coverage has been bound should the insured cancel the policy

Which document has a different limit total for Damage to Premises Rented to You?

proposal

Quotes

provide an accurate summary of pricing and coverage from the insurance company. Most often, quotes are made available to customer service representatives 14 to 30 days prior to the insured's current policy expiration date. Quotes can be received via email or through an insurance carrier's online system (if available).

Agent of service authorization letter

provides permission for the insurance carrier to release the insured's loss run data, most often, to the insured's current agent of record (you)

document listed a different total premium

quote

incurred

total amount of paid and reserve losses for a claim or policy period

incurred (included)

total amount of paid and reserve losses for a claim or policy period including any deductibles paid to the insurance carrier for said claim

claim number

unique identifier that attaches an insurance claim/loss to a specific claimant

Deposit

upfront payment by an insured to a carrier that does not help pay for a policy's premium Carriers offer this billing option typically for workers' compensation as the insured could owe additional funds once the insured's end-of-year audit is completed