While you may feel your local representative understands insurance and has placed you with the best possible coverages, the best fit for you and your company in always an individual who understands the finer points of insurance and your business/industry.
There are four parts to an insurance policy:
2) Insuring Agreement,
While you may feel safe, protected and covered after reading those first few pages (Declarations) which include your information, limits, coverages, etc… it will be the Exclusions section you should read (as well as the entire policy) where 99% of the real information resides.
An Exclusion is defined as a provision within a policy that eliminates coverage for certain acts, property, types of damage or locations.
The easiest way to think of an exclusion is to think about the twist at the end of a film. You’ve watched (or in this case read) the first 85 minutes only to find out the main character was the killer the entire time. That killer is the exclusion. The exclusions main job is to let you know that the coverages stated earlier actually:
- a) doesn’t apply to your business,
- b) applies to your business (but with a sub-limit),
- c) could have applied to your business as you did not (insert business practice here).
Sample language from a standard BOP:
(4) Dependent Property means property owned, leased or operated by others whom you depend on to:
(a) Deliver materials or services to you or to others for your account.
BUT services do not include:
(i) Water, communication, power services or any other utility services; or
(ii) Any type of website or internet service.
Above you find an example of a BOP (Business Owners Policy) where coverage was purchased for a company who conducts business online. While insurance polices can be long and difficult to read at times, I must ask: is it worth losing your business over the fine print your local agent missed/did not understand? If a loss occurs and that loss is excluded in your policy, understand that you will not have coverage regardless of what the color brochure your agent left behind may have said. Do your homework. Always double check your representative’s work or find professionals who:
1) understand your business/industry,
2) licensed properly (varies by state)
3) experienced with commercial insurance.
If your current representative who handles your insurance was selected because “they are family” or “best friend from college,” you may want to ask yourself, what do they really know about my industry and business. If you would not hire them to work at your company, you should not have them work for your company as your insurance agent. Commercial insurance in today’s digital age has made the process of understanding, applying and combining old and new policies together more complicated than decades past. While your “old college roommate” might have the best intentions, they might not have the best expertise.
By John Benson