Understanding Commercial General Liability Insurance: Covering Legal Risks
PSA on the insurance world today – and it doesn't matter which insurance company, or broker you work with – this is an industry wide issue.
The insurance marketplace is in a hard market - it is tightening up and it's happening fast. It's happening especially fast for home and auto insurance companies regardless of what state you're in, however California, Florida, Louisiana, Colorado and Texas are being hit especially hard. Carriers are putting a full stop on issuing any new policies across the country and carriers that have not put a moratorium on binding new coverage are either leaving the market altogether or selling their book to other carriers. They simply can't operate profitably in this inflationary market. EVERY DAY we are hearing about a pause or full stop on writing new business (most recently Kemper). Some carriers are requiring full premium payment upfront or requiring a 30 day hold on new applications. Carriers are shifting underwriting guidelines to “weed out” the type of business they don't want to write. Some carriers WILL NOT reinstate coverage if it lapses, no matter the reason.
The market is disrupted and it WILL affect you. If it hasn't yet – it will. I have personally seen premiums double and triple what they were previously.
If you have an auto or home insurance policies – be prepared for your rates to increase and keep your fingers crossed that you actually get renewal terms, regardless of how much they increase. It isn't personal, it's not based on a claim you may or may not have had – it's simply the cost of doing business in this current market.
The cost to rebuild your home is up dramatically due to the rising cost of materials and labor. Supply chain for materials continues to be an issue. Carriers simply can't survive paying these higher prices to rebuild without charging more premium.
The cost to repair your car is also up dramatically due to the rising cost of auto parts and labor to fix the car. In addition, parts in vehicles now include technology features. Replacing a side mirror or windshield used to be $500 – now it's easily triple that number.
The cost of medical care continues to skyrocket.
Litigation is expensive and settlements are rising at an unprecedented rate.
Both the frequency and severity of auto accidents have increased, along with the rising frequency of auto fatalities.
Reinsurance (the insurance that an insurance carrier buys to help cushion catastrophic loss) is at, or approaching capacity in many markets and rising costs are unsustainable. This is a significant issue affecting the property & casualty industry and pricing correction is anticipated at least through 2024.
This won't last forever as the insurance market is cyclical in nature, but in the meantime here are some suggestions to get thru the hard market.
Consider higher deductibles – this will not only help save premium, but avoiding smaller claims also will help protect your future insurability.
Safe Driving telematics programs – some insurance carriers offer this discount if you're willing to install a device in your car that monitors your driving behaviors and provides a discount for good driving.
Discounts reviews – make sure you're getting every discount you're entitled to. Each carrier has different discount opportunities. Make sure your agent or broker is reviewing these with you.
DO NOT let your policy cancel for any reason. Carriers are not reinstating coverage as easily as they once did. If it does cancel they may require premium in full if they are willing to reinstate.
Bundle your auto and home (and boat, RV, valuable articles & excess liability) for more discounts and package pricing.
Avoid moving from carrier to carrier. Tenure helps if you have a claim and have been with the carrier more than 2 years.
Absorb small claims when you're able and save your insurance coverage for catastrophic losses. Always speak to your agent or broker BEFORE turning in a claim to determine if it's prudent to turn in the claim. “Using” your insurance isn't always the best option. Yes, we all know that's WHY you have insurance, but in this market – too many claims may result in you no longer having ANY insurance options.
In my 37 years in the insurance industry – I have NEVER seen the markets taking the actions they're taking today. I used to say “you can get insurance for ANYTHING, you just have to be willing to pay the premium” – that is NO LONGER the case. I have had clients for which I simply have not been able to offer a solution.
Lastly, please remember as agents & brokers – we do not make the rules, we do not have control over the rates and we don't make the decision as to whether the insurance carrier will issue or renew your coverage. We ARE here to educate you, make sure you have the best coverage for your situation, counsel you in regards to claims and support you though these tough times.