General liability insurance cost is complex and difficult
for the average consumer to understand. There are a few tricks of the trade
that you can use in your insurance buying process that can force the parties
that you are dealing with to present all this documentation in a format that is
useful for you as the consumer. Below we have outlined a few of those tips.
Executive summary. In your request for proposal either
online or face-to-face with a broker, you should insist on a one page executive
summary. It is fine for them to provide you with pages of detailed information
later on in the proposal, but the first page should be an executive summary
that clearly delineates everything that is in the detailed pages that follow.
Some of the key items in the executive summary that need to be spelled out is
the name and financial rating of the insurance carrier, the main coverages that
are being provided, and any exclusions and/or deductibles that are included in
the fine print.
Premiums/rates. Also in your executive summary you need to
make sure that it is clearly explained what the annual premiums are estimated
to be. The individual rates that go into developing the premium need to be
clearly stated, as well as what premium basis was used in developing the final
premiums. Some unscrupulous brokers will use the incorrect premium basis at the
beginning of the policy term and then at the end of the policy term you will be
stuck with a large additional premium at audit time.
Payment options. Finally, making sure that your executive
summary clearly outlines the payment options that are available to you. If
there's interest that is charged, or billing fees that are added on, this all
needs to be clearly explained. If the premium is nonrefundable and fully earned
that also needs to be explained in case you wanted to cancel the policy
midterm.
Insisting on a simple one page executive summary will force
your providers to articulate clearly and concisely what they are quoting and
thus it will be more user-friendly for you to understand.
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