Commercial Ins question

Discussion in 'Business Operations' started by nfarr, Jul 13, 2006.

  1. nfarr

    nfarr LawnSite Member
    Messages: 84

    For those of you that carry commercial liability insurance and have had to use it, Who do you use and what has your experiance been?

    I currently have Nationwide with 2Million general liability and a rider for the mowers and other equipment. I pay about 1K for the total policy.

    I am trying to lower expenses, however, I dont want to save money at the expense of having problems if I ever need to use it.
  2. topsites

    topsites LawnSite Fanatic
    Messages: 21,653

    Your premium does NOT pay for claims. The premium pays for the InsCo's lease on their building, their electric bill, the telephone, the cabinets and files and paper and clips and pens and pins and crap, and of course, their employee's wages in addition to their own insurance policy and taxes also. That is what your premium pays for.

    Only a small percent (less than 10 but likely closer to 3-4%) gets put aside in an emergency fund to cover for the unforeseen, should it happen, the InsCo actually plans on paying less than ONE claim per insured member in a lifetime. The reason for this is most people just don't have that many accidents, at least not with commercial insurance.

    So, if you plan on having a claim, you need to tell this to your agent so they can double your rates as this will help cover things. If you do not do this and should you actually have a claim, your rates will go so high that you will not be able to afford commercial insurance and if your business relies on it, then that is the end.

    That having been said, if your current rates are over $600-700 a year, then you're already paying close to double the lowest, since most of them charge about that much because they already know most people DO plan on having at least one claim in a lifetime. If you do not intend on having said claim, you may can find a NO-claims policy which means exactly that. Oh, they'll pay, but don't plan on it... If you can find such a policy, my cost is around $400 / year.

    So no matter how you look at it, you're either already paying for the claim in case it happens or you have a policy where you don't want to have a claim ever... Either way your money would be better off in the bank but you need to be able to put aside 20 or 50 k over the next few years.
  3. heather lawn sp

    heather lawn sp LawnSite Senior Member
    Messages: 681

    Why all the hatred?

    Where did you get the insurance company's loss ratio figures from?
  4. lawnspecialties

    lawnspecialties LawnSite Silver Member
    Messages: 2,524

    I also have Nationwide for my liabilty and theft/fire coverage. About $900/year. My house and vehicles are with Nationwide so I get a fairly good deal, I think. I will say this, though. Last October my two RedMax blowers were stolen and I filed a claim. Minus my deductible, it paid me around $640 if I remember correctly. Back in May I paid my yearly premium and it was about the same as last year.

    Maybe they know if they raise my rates a lot or try to drop me, I take all my business and go elsewhere.:)
  5. topsites

    topsites LawnSite Fanatic
    Messages: 21,653

    The hatred comes from having paid high premiums because everybody shares the loss when someone files a claim.

    It's similar to lawsuit happiness, I hate that crap, too... Everybody pays the price.

    Obviously, this is just grand for all the folks who believe insurance and lawsuits exist for exactly that reason. RUN from them kind, RUN!
  6. lawnspecialties

    lawnspecialties LawnSite Silver Member
    Messages: 2,524

    I think that might be another reason my rates didn't go up. It was obvious to them this was a legit claim. I had sheriff reports, pawn shop visits, etc. done by myself. Hey, I wanted the azzes caught more than anyone. Nationwide definitely knew this wasn't some zero trying to get some of his premiums back through a scam.
  7. Fantasy Lawns

    Fantasy Lawns LawnSite Bronze Member
    Messages: 1,912

    Liability Insurance is based on number of employees full time & part time .....

    A solo with $1M will be much cheaper than another with 6 full time or even part time along with estimated total payroll .... just as if they did landscaping, pesticide, tree trim .... all this adds too the cost ....

    After this than the WC premium .... which is based directly on total payroll cost (this includes bonus, holiday pay etc.) varies from state to state

    Oh ....n I've had 2 claims bout $12k total .... n my premiums really did NOT go up .... 1st was back in 1997 n the 2nd one was last summer rates did NOT go up ..... n too be true my total cost of premiums .... they did cover these cost n plus bout 15-20% too the insurance compay ..... ie I've paid near to $16k last 9 year in Liabilty Insurance .... almost what I pay yearly in WC ....

    So somebody else must be paying the lease on their building, their electric bill, the telephone, the cabinets and files and paper and clips and pens and pins and crap, and of course, their employee's wages in addition to their own insurance policy and taxes also ...
  8. RedWingsDet

    RedWingsDet LawnSite Gold Member
    from Detroit
    Messages: 3,556

    Im paying $3800 per year for 1mil Liability, workers comp on 2 guys, my equipment and my truck.

    I thought it was cheap, but apperantly not. dangit
  9. Chris@CRU

    Chris@CRU LawnSite Member
    Messages: 72

    Numerous factors are used to calculate your premiums. Loss Ratio, area of the country, population density, how shrewd your broker is, quality of your carrier, etc. These DO NOT apply to Workman's Comp however. As far as the insurance companies making money, that is done through a distribution of risk through reinsuruers. This means other companies "buy into" a portion of your potential claim. That money is in turn placed into a account. Portions of this money is then invested to generate more revenue.
    As you have a claim or "Loss", these are review at renewal, ans compared with prior years (usually past 4 years) and dependent upon nature of claim and dollar value attached, determine if you have higher rates and if you will be renewed at all. Most carriers have protocols and provide a measure of leniency for their insured.
    Chris Ramsey
    Loss Control Manager
    Capital Risk Underwriters
  10. nfarr

    nfarr LawnSite Member
    Messages: 84

    That is good to know. I also use them for my personal residence as well as vehicles. My wife had a minor traffic accident about a year ago and our rates did not go up at all.

    Over the last three years, I have not made any claims because my deductible has been high and the equipment stolen was worth less.

    On one occasion a home I rehabbed was broken in causing about $4K in damge. If I had made a claim I would have been dropped and had to look for another provider of a builders risk policy. I did not want to risk another break in or fire, etc. It was a 500K home in DC.

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