By Wells Fargo
Becoming a Well-Informed Insurance Buyer
well-designed business insurance mium. Conversely, the lower the deduc- Keep the following in mind as you look
A program is essential when it comes to
protecting your business from the many
tible, the higher your premium will be.
When premiums are high or coverage
for business insurance designed to meet
risks you face every day. It can provide is difficult to obtain, you may want to • Make sure you have insured for the
you with an invaluable financial shield choose a higher deductible and pay for proper values of your property to
from losses, but only if you know what losses under the deductible out of your avoid coinsurance penalties.
type of insurance to buy, how much to pocket. The premium savings you will • Property coverage should be extend-
buy, and from whom to buy it. There is realize makes the most of your insurance ed to cover leased equipment.
only one way to make a wise choice when dollar, providing you with maximum pro- • Coverage should always be provided
it comes to purchasing insurance and tection against losses that can result in for lost rental income or loss of busi-
that is to make sure you know what ques- bankruptcy, debt financing, or the post- ness income as a result of damage
tions to ask. ponement of future business plans. from an insured peril.
To find the best cov- • Limits should be adequate to protect
erage for your business, Insurance can provide you with an against all perils.
you will need to compile invaluable ﬁnancial shield from losses, Liability coverage should provide cov-
at least the following erage for claims from damages arising
information for your
but only if you know what type of from your business premises as well as for
agent in order to begin insurance to buy, how much to buy, damages arising out of your goods or
the process: and from whom to buy it. products manufactured, sold, handled,
• Current business or distributed by you.
insurance policies Once you provide your agent with the Finally, it is very important to choose
• Updated payroll and sales records information you have compiled, you can which agent you want to take your
• Current financial statements expect to receive a comprehensive quote account to the insurance marketplace.
• Claim information from the current from an insurance company. You should The following questions will help you
year and three prior years review the quote in detail with the agent choose the right agent: How are you
• Current schedule of vehicles and for the following information: treated when you call the agency? Is the
drivers (name, DOB, and drivers’ • Have the payrolls been correctly sep- agency courteous and responsive? Does
license numbers) arated, and is the premium based on it quickly follow up on your requests, or
• Any promotional literature on your accurate payroll estimates? do you have to continually prompt them?
company • Is the auto schedule accurate? Also, does the agency deliver quotes in a
Once this information is in order, it’s • Does the quote include all the cov- timely manner? What does the agency do
time to assess how much “risk” you erage you and the agent identified on to ensure efficient handling of claims?
should retain. Insurance is a method of the application? Insurance provides essential protection
allowing you to transfer the risk of finan- • Does the quote include umbrella cov- against unexpected financial loss – pro-
cial uncertainty to an insurance compa- erage? tection that can mean the difference
ny in return for a known premium. So • If you need Product Liability cover- between survival and failure of your busi-
the first thing you want to calculate is how age, is that included in the quote? ness in the face of catastrophe. Since your
much of the financial uncertainty you are • Is the Property Coverage written on financial health can depend on your busi-
willing to take on and how much risk you an “all risk” basis or a “named peril” ness insurance, it is critical to consider all
want the insurance company to assume. basis? of the above factors in order to make an
The risk you retain is the deductible, • Is the Liability Coverage written on informed insurance buying decision. I
while the risk the insurance company an “occurrence” basis or a “claims-
assumes is the limit of liability over and made” basis? For more information on how Wells Fargo In-
above the deductible. Generally, the pre- • Are the policy limits high enough? surance Services can benefit your business,
contact Bill Velin at (800) 328-6311, ext. 3039,
mium you pay will depend on the deduc- Are they higher than you need? direct (952) 830-3039 or e-mail bill.velin@
tible you are willing to assume if a loss • Are you going to receive actual cash wellsfargo.com.
occurs. By choosing a higher deductible, value or replacement cost for dam- Visit https://secure.mybenergy.com/login/processlogin.asp?user
you retain more risk and pay a lower pre- aged property?
May-June 2010 | Automotive Recycling 21