Insurance is one of the few line items on your profit and loss statement that renews itself. It shows up every year, the number moves a little, and unless something goes badly wrong nobody ever opens the policy to see what is underneath it.
What I find when I do open it is that the price was built on information that was accurate once. The business was classified a certain way when the policy was first written. Payroll or sales were estimated at binding and never revisited. Limits were set to satisfy a lender or a lease that has since changed. None of that gets corrected at renewal, because a renewal is a rate adjustment applied to whatever was already there.
So the money is usually not in shopping harder. It is in fixing what the policy was built on, and that is the part almost nobody goes back and checks.
Three things I look at first, because they move the number more than shopping does.
Cheaper coverage that does not respond is the most expensive thing you can buy. The goal is a policy priced on the truth about your business.
The whole review takes about twenty minutes with your declarations pages, and it happens before I quote anything.
Commercial business goes out to the open market through the specialty carriers and managing general agents I work with, which means the submission is built around your operation rather than fitted to whatever one company happens to want this quarter.
If your current agent is doing right by you, I will tell you that and get out of your way.
Coinsurance is a requirement that the building be insured for a set share of its replacement cost, commonly 80 or 90 percent. If the building is insured below that share when a loss happens, the carrier reduces what it pays on every claim, not only on a total loss. Because construction costs rose sharply in recent years, limits set several years ago often no longer meet the requirement.
On most Texas commercial property policies the wind and hail deductible is written as a percentage of the building value rather than a flat dollar amount, commonly one to five percent, often with a dollar minimum. On a three million dollar building, a two percent wind deductible means the first sixty thousand dollars of a hail claim is paid by the owner before the carrier pays anything.
Most general liability and workers compensation policies are rated on estimated sales or payroll and audited at the end of the term against actual figures. If the estimate given at binding was low, the carrier issues an additional premium bill after the audit. Getting the exposure estimate right at binding is what prevents an unbudgeted bill later.
A complete commercial submission generally takes two to four weeks to come back from the market with firm terms. That timeline starts once loss runs and a signed application are in hand, which is why gathering those early matters more than anything else in the process.
Loss runs are a report from your current carrier listing claims over the past several years, typically five, with amounts paid and reserved. Underwriters require them to price a commercial account. The insured requests them from their current agent or carrier, since carriers respond to their own policyholder rather than to a competing agent.
Send this over and I will get back to you. If you already have your declarations pages handy, that is all I need to get started.