commercial 101
DESCRIPTION
Commercial 101. TWFG Commercial Business School Commercial 101. Commercial 101 – 104 Commercial 101 Overview Commercial Insurance Basic Terms Commercial Insurance Polices: Overview Important Auxiliary Coverages ACORD Forms Overview Commercial Lines Workflow Process - PowerPoint PPT PresentationTRANSCRIPT
TW
FG C
omm
ercial Business School – C
omm
ercial 101
1
Commercial 101
TW
FG C
omm
ercial Business School – C
omm
ercial 101
2
TWFG Commercial Business SchoolCommercial 101
Commercial 101 – 104Commercial 101
OverviewCommercial Insurance Basic TermsCommercial Insurance Polices: OverviewImportant Auxiliary CoveragesACORD Forms OverviewCommercial Lines Workflow ProcessSubmission ChecklistPost-Binding Checklist
TW
FG C
omm
ercial Business School – C
omm
ercial 101
3
TWFG Commercial Business SchoolCommercial 101
Commercial 101 – 104Commercial 102
How Does the Underwriting Process Operate?Commercial Insurance Policy Coverages: First Level DetailSilverplume Overview (Live Demo)Comparative Rater Overview (Live Demo)
TW
FG C
omm
ercial Business School – C
omm
ercial 101
4
TWFG Commercial Business SchoolCommercial 101
Commercial 101 – 104Commercial 103
Commercial Lines Basics Property: COPECommercial Lines Basics Property: BuildingCommercial Lines Basics Property: Business Personal Property (BPP)Commercial General Liability (CGL)Module 3 Case Study
TW
FG C
omm
ercial Business School – C
omm
ercial 101
5
TWFG Commercial Business SchoolCommercial 101
Commercial 101 – 104Commercial 104
Commercial AutoMulti-Line Policy TypesWorkers Compensation OverviewEndorsements Common to Most Policies
TW
FG C
omm
ercial Business School – C
omm
ercial 101
6
TWFG Commercial Business SchoolCommercial 101
Agenda
Overview Basic TermsPolicies OverviewACORD Forms OverviewPost Binding ChecklistSubmission ChecklistQuiz
TW
FG C
omm
ercial Business School – C
omm
ercial 101
7
TWFG Commercial Business SchoolCommercial 101
Learning Objectives
Understand how soliciting/quoting/binding/servicing CL differs from PL
Understanding of basic Commercial Lines termsUnderstanding of types of CL policies and what they coverAwareness of important cross-sell coverages and policiesAbility to complete common ACORD formsUnderstanding how prepare a submission, as well post-
binding procedure
TW
FG C
omm
ercial Business School – C
omm
ercial 101
8
TWFG Commercial Business SchoolCommercial 101
1. How does Commercial Lines differ from Personal Lines?
Degree of complexityGreater E &O exposureNecessity of being well trainedNecessity of starting out smallAdmitted vs. Non-Admitted
TW
FG C
omm
ercial Business School – C
omm
ercial 101
9
TWFG Commercial Business SchoolCommercial 101
2. How does the selling process differ?
Necessity of having credibilityKnowing enough about a specific class to properly recommend coverageCommitment to continually updating your knowledge and skill levelNecessity of being well prepared when presenting the quote
TW
FG C
omm
ercial Business School – C
omm
ercial 101
10
TWFG Commercial Business SchoolCommercial 101
3. How does the selling process differ?
Greater number of exposures to evaluateIncreases complexity of each exposureGreater financial risksImportance of providing complete and accurate informationAll underscore the importance of being qualified and knowledgeable
TW
FG C
omm
ercial Business School – C
omm
ercial 101
11
TWFG Commercial Business SchoolCommercial 101
3 (continued). How does the selling process differ?
Necessity of having a formal marketing planExtremely low win rate for quoting walk – insYour competition is well organizedProper servicing and regular contact necessary for
retention –This isa very competitive field
TW
FG C
omm
ercial Business School – C
omm
ercial 101
12
TWFG Commercial Business SchoolCommercial 101
Commercial Insurance Basic Terms
TW
FG C
omm
ercial Business School – C
omm
ercial 101
13
TWFG Commercial Business SchoolCommercial 101
Before delving too far into the realm of Commercial Insurance, it’s a good idea to discuss some
important terms.
TW
FG C
omm
ercial Business School – C
omm
ercial 101
14
TWFG Commercial Business SchoolCommercial 101
Insured:
Person/entity that is named in the insurance policy. Usually the buyer.
TW
FG C
omm
ercial Business School – C
omm
ercial 101
15
TWFG Commercial Business SchoolCommercial 101
Insurance Contract:
Insurance policies are contracts. With only a few exceptions, insurance contracts are two party contracts. The two parties are the insured and the insurer. Although third parties (those who file claims against the insured) may benefit from the insurance contract, the insurer’s primary duty is the insured. The insurer either acts on behalf of the insured in situation where the insured would be legally liable for damages, or pays the insured directly for damage to the insured’s property.
TW
FG C
omm
ercial Business School – C
omm
ercial 101
16
TWFG Commercial Business School
Commercial 101
Liability:
This term appears often in the titles of different types of commercial insurance. It refers to acts for which the insured is held legally liable. These acts are what “trigger” coverage under many policies. Most liability insurance contracts today are open peril, meaning that all causes of loss are covered except those specifically excluded. So, if the insured does something that causes harm or damage to other, and that “something” is not an excluded act, then the insurance policy will respond.
TW
FG C
omm
ercial Business School – C
omm
ercial 101
17
TWFG Commercial Business SchoolCommercial 101
First Party Coverage :
This refers to coverage for things that the insured owns. When these are damaged, the insurer pays the insured (first party) directly. Typical examples are building and business personal property.
TW
FG C
omm
ercial Business School – C
omm
ercial 101
18
TWFG Commercial Business School
Commercial 101
Third Party Coverage:
This refers to liability claims. The third party is the individual/entity that is damaged due to the insured’s acts. They are also known as the “claimant”, as they bring a claim against the insured. Note that the third party is not a party to the insurance contract, but does benefit.
TW
FG C
omm
ercial Business School – C
omm
ercial 101
19
TWFG Commercial Business SchoolCommercial 101
Who is the Second Party?
The insurer is the second party. So, the insurance contract is a two party contract between the insured (first party) and the insurer (second party). When there are liability claims, a claimant (third party) may be paid for damages.
TW
FG C
omm
ercial Business School – C
omm
ercial 101
20
TWFG Commercial Business SchoolCommercial 101
Property & Casualty (P&C)
Property and Casualty Insurance (P&C) refers to the primary exposures covered by the most common commercial insurance policies. Property refers to physical property such as building and contents or auto physical damage. Casualty refers to liability, such as auto liability or commercial general liability.
TW
FG C
omm
ercial Business School – C
omm
ercial 101
21
TWFG Commercial Business SchoolCommercial 101
Commercial Insurance Policies Overview
TW
FG C
omm
ercial Business School – C
omm
ercial 101
22
TWFG Commercial Business SchoolCommercial 101
There are a number of common policy types for commercial insurance. Following is a list with some basic description of what each policy covers.
TW
FG C
omm
ercial Business School – C
omm
ercial 101
23
TWFG Commercial Business SchoolCommercial 101
Commercial General Liability (CGL)
As the name indicates, this policy provides coverage for acts committed by the insured for which it is held legally liable. These acts are limited to the insured’s premises, operations, products and completed operations. Typical exposures would be:
TW
FG C
omm
ercial Business School – C
omm
ercial 101
24
TWFG Commercial Business SchoolCommercial 101
Premises
Injury to others while they are on the insured’s premises. For example, someone slips and falls at a place of business.
Operations
Damage or injury to others while work is in progress off the insured’s premises. For example, a contractor severs a water line while digging to install a fence post.
TW
FG C
omm
ercial Business School – C
omm
ercial 101
25
TWFG Commercial Business School
Commercial 101
Products
Damage or injury caused by the insured’s product. For example, a consumer is injured when a chain comes loose from a chain saw.
Completed Operation
Damage or injury to others caused by the insured’s completed work off premises. For example, three weeks after a plumber completes repairs at a residence, the glue on the repaired pipe fails, causing a leak which damages carpet and sheetrock.
TW
FG C
omm
ercial Business School – C
omm
ercial 101
26
TWFG Commercial Business SchoolCommercial 101
Commercial PropertyThese policies provide coverage for the insured’s owned building and/or business personal property such as furniture, supplies, fixtures and inventory.
Business AutoThis policy provides liability coverage for the insured’s autos. It may also provide physical damage coverage to the insured’s autos (a form of first party coverage)
TW
FG C
omm
ercial Business School – C
omm
ercial 101
27
TWFG Commercial Business SchoolCommercial 101
Inland MarineThis is a form of property coverage used for specifically valuable items or for items that do not stay at the insured’s premises. The most common example is mobile equipment such as bulldozers or tractors owned by a contractor.
TW
FG C
omm
ercial Business School – C
omm
ercial 101
28
TWFG Commercial Business SchoolCommercial 101
Workers Compensation and Employers Liability
Often just referred to as Workers Compensation coverage, this type of policy provides no-fault coverage for injuries to employees. In other words, if an employee gets injured on the job, he/she does not have to prove that the employer was negligent or at fault. Workers Compensation pays regardless of fault. It is mandatory in most states. The policy also provides coverage to the employer for non-workers compensation claims that an employee might file against the employer.
TW
FG C
omm
ercial Business School – C
omm
ercial 101
29
TWFG Commercial Business SchoolCommercial 101
Professional Liability
The CGL defines professional acts and excludes them from the policy. This is done because professionals are held to a standard of conduct greater than what is contemplated under the “general” liability policy. Therefore, separate professional liability coverage is needed.
TW
FG C
omm
ercial Business School – C
omm
ercial 101
30
TWFG Commercial Business SchoolCommercial 101
Workers Compensation
Provides a sole remedy for injured workersIncludes employer’s liability for injuries not covered by worker’s compLosses associated with these coverages are excluded under all other CL formsOver 73% of claims facing companies today are from their own employeesGoing “bare” exposes an employer to a swift and costly end
TW
FG C
omm
ercial Business School – C
omm
ercial 101
31
TWFG Commercial Business SchoolCommercial 101
Cyber Liability
High incidences of identity theft and network hackingCostly regulatory compliance exposuresAny business that handles customer data or has a large employee base is exposedMultiples levels of coverage availableMinimum premiums starting at $500Some carriers BOP products can endorse this coverage
TW
FG C
omm
ercial Business School – C
omm
ercial 101
32
TWFG Commercial Business SchoolCommercial 101
Employment Practices Liability Insurance (EPLI)
Exposures not covered by GL or WC formsLosses resulting from wrongful employment practices:– Discrimination, sexual harassment, retaliation, wrongful
terminationHigh dollar claims are commonOver 73% of claims facing companies today are from their own employeesGoing “bare” exposes an employer to a swift and costly endMost BOP products can add this coverage at a nominal charge
TW
FG C
omm
ercial Business School – C
omm
ercial 101
33
TWFG Commercial Business SchoolCommercial 101
Fiduciary Liability
Errors and omissions coverage regarding the administration of company sponsored retirement savings plans, health plans, pensions, etc.
TW
FG C
omm
ercial Business School – C
omm
ercial 101
34
TWFG Commercial Business SchoolCommercial 101
Commercial Umbrella
Provides excess liability over underlying policiesProvides broader coverages than underlying policiesProvides primary liability where not covered by underlying policies
TW
FG C
omm
ercial Business School – C
omm
ercial 101
35
TWFG Commercial Business SchoolCommercial 101
ACORD Forms Overview
Common elementsFull entity name & mailing addressBusiness phone numberType of entityNature of businessYears in businessLoss Payees/ Mortgagees/Additional InsuredsGeneral informationPrior insurance informationLoss history
TW
FG C
omm
ercial Business School – C
omm
ercial 101
36
TWFG Commercial Business SchoolCommercial 101
Submissions ChecklistAll Submissions
Completed ACORD forms for each line3 year hard copy loss runsCompleted required supplemental applications
TW
FG C
omm
ercial Business School – C
omm
ercial 101
37
TWFG Commercial Business SchoolCommercial 101
Property Specific
Date of construction for each buildingUpdates for buildings over 20 years oldConstruction typeSquare footage per buildingList of occupants for LROBurglar & fire alarmsReplacement cost
TW
FG C
omm
ercial Business School – C
omm
ercial 101
38
TWFG Commercial Business SchoolCommercial 101
GL Specific
Description of operationsPayroll/Sales for each classificationAnswer all underwriting questionsList of Additional Insureds, including relationshipSpecial coverage requests
TW
FG C
omm
ercial Business School – C
omm
ercial 101
39
TWFG Commercial Business SchoolCommercial 101
Auto Specific
Lists of drivers, including DOBs & DLsAnswer all underwriting questionsYear/Make/Model & VIN per vehicleCost new per unit if availableGaraging address/use/=radius per unitLoss Payees/Lessors per unit if applicable
TW
FG C
omm
ercial Business School – C
omm
ercial 101
40
TWFG Commercial Business SchoolCommercial 101
Workers Compensation Specific
List of class codes/payroll/number of employeesList of all locationsInclude Experience Mod worksheetFEIN and NCCI number if Mod worksheet is not providedAnswer all underwriting questions
TW
FG C
omm
ercial Business School – C
omm
ercial 101
41
TWFG Commercial Business SchoolCommercial 101
Inland Marine Specific
Schedule items over $2500Lump all items under $2500 to “Unscheduled Equipment”
Loose Tools – Indicate max value per item, Usually $250. List sum as separate entry under “Unscheduled Items”
Provide type/description/serial #/model/manufacturer/model year per item – becomes important in the event of a claim
Most Contractors’ Equipment is insured at ACV- advise insured
TW
FG C
omm
ercial Business School – C
omm
ercial 101
42
TWFG Commercial Business SchoolCommercial 101
Inland Marine Specific Continued
Rented/Leased Equipment
Total rent/lease receipts for last 12 months
Value of highest value item expected to lease in next 12 months
Total value of rented/leased equipment for next 12 months
Average value of rented/leased equipment at any one time
TW
FG C
omm
ercial Business School – C
omm
ercial 101
43
TWFG Commercial Business SchoolCommercial 101
Inland Marine Specific
Equipment Security
Equipment in locked building
Equipment fenced
Equipment in locked and lighted yard
Etc
TW
FG C
omm
ercial Business School – C
omm
ercial 101
44
TWFG Commercial Business SchoolCommercial 101
Post Binding Checklist
Signed ACORD applications3 years prior loss runsSigned UM/UIM rejections – AutoSigned Officers/Owners Exclusion – WCComplete any “Subject To” items
TW
FG C
omm
ercial Business School – C
omm
ercial 101
45
TWFG Commercial Business SchoolCommercial 101
TW
FG C
omm
ercial Business School – C
omm
ercial 101
46
TWFG Commercial Business SchoolCommercial 101
TW
FG C
omm
ercial Business School – C
omm
ercial 101
47
TWFG Commercial Business SchoolCommercial 101
QUIZ
TW
FG C
omm
ercial Business School – C
omm
ercial 101
48
TWFG Commercial Business SchoolCommercial 101
1. Why is it Important to Fully Complete an ACORD Form?
TW
FG C
omm
ercial Business School – C
omm
ercial 101
49
TWFG Commercial Business SchoolCommercial 101
1. Why is it Important to Fully Complete an ACORD Form?
Answer:To avoid delays in getting a quote.
TW
FG C
omm
ercial Business School – C
omm
ercial 101
50
TWFG Commercial Business SchoolCommercial 101
2. What is the difference between first party and third party coverage? Give an example of each.
TW
FG C
omm
ercial Business School – C
omm
ercial 101
51
TWFG Commercial Business SchoolCommercial 101
2. What is the difference between first party and third party coverage? Give an example of each.
Answer:First party coverage applies to the insured. Example: Comprehensive coverage on an auto.
Third party coverage benefits someone other than the insured, for acts committed by the insured. Example: Auto liability, which pays the other party.
TW
FG C
omm
ercial Business School – C
omm
ercial 101
52
TWFG Commercial Business SchoolCommercial 101
3. Name 3 types of commercial insurance polices.
TW
FG C
omm
ercial Business School – C
omm
ercial 101
53
TWFG Commercial Business SchoolCommercial 101
3. Name 3 types of commercial insurance polices.
Answer: Commercial General liability (CGL), Commercial Property, Business Auto, Inland Marine, Workers Compensation, Professional Liability
TW
FG C
omm
ercial Business School – C
omm
ercial 101
54
TWFG Commercial Business SchoolCommercial 101
4. Define Completed Operations as it relates to the CGL. Give an example of a Completed Operations exposure.
TW
FG C
omm
ercial Business School – C
omm
ercial 101
55
TWFG Commercial Business SchoolCommercial 101
4. Define Completed Operations as it relates to the CGL. Give an example of a Completed Operations exposure.
Answer:Completed operations relates to completed work done by the insured away from his/her premises. Example: Plumbing work done by a contactor at a residence. Once work is complete and the contractor leaves, any resulting loss from work performed would be a completed operations loss.
TW
FG C
omm
ercial Business School – C
omm
ercial 101
56
TWFG Commercial Business SchoolCommercial 101
Future Classes
February 7th Commercial 102February 14th Commercial 103February 21st Commercial 104
TW
FG C
omm
ercial Business School – C
omm
ercial 101
57
TWFG Commercial Business SchoolCommercial 101
Industry Segment Classes
Retail & Service Farm/RanchArtisan Contractor Excess & SurplusCommercial Auto Professional LiabilityWorkers Compensation UmbrellaCommercial Real Estate BondsRestaurant Financial InstitutionsManufacturing Hotels/MotelsAgriculture Medical Technology
TW
FG C
omm
ercial Business School – C
omm
ercial 101
58
TWFG Commercial Business SchoolCommercial 101
Questions???