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Commercial 101

Commercial 101

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Commercial 101

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  1. Commercial 101

  2. TWFG Commercial Business SchoolCommercial 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 Submission Checklist Post-Binding Checklist

  3. TWFG Commercial Business SchoolCommercial 101 Commercial 101 – 104 Commercial 102 How Does the Underwriting Process Operate? Commercial Insurance Policy Coverages: First Level Detail Silverplume Overview (Live Demo) Comparative Rater Overview (Live Demo)

  4. TWFG Commercial Business SchoolCommercial 101 Commercial 101 – 104 Commercial 103 Commercial Lines Basics Property: COPE Commercial Lines Basics Property: Building Commercial Lines Basics Property: Business Personal Property (BPP) Commercial General Liability (CGL) Module 3 Case Study

  5. TWFG Commercial Business SchoolCommercial 101 Commercial 101 – 104 Commercial 104 Commercial Auto Multi-Line Policy Types Workers Compensation Overview Endorsements Common to Most Policies

  6. TWFG Commercial Business SchoolCommercial 101 Industry Segment Classes Retail & Service Farm/Ranch Artisan Contractor Excess & Surplus Commercial Auto Professional Liability Workers Compensation Umbrella Commercial Real Estate Bonds Restaurant Financial Institutions Manufacturing Hotels/Motels Agriculture Medical Technology

  7. TWFG Commercial Business SchoolCommercial 101 Agenda Overview Basic Terms Policies Overview ACORD Forms Overview Post Binding Checklist Submission Checklist Work Flow Processes Quiz

  8. TWFG Commercial Business SchoolCommercial 101 Learning Objectives • Understand how soliciting/quoting/binding/servicing CL differs from PL • Understanding of basic Commercial Lines terms • Understanding of types of CL policies and what they cover • Awareness of important cross-sell coverages and policy types • Ability to complete basic ACORD form • Understanding what makes up a complete submission, and post-binding requirements

  9. TWFG Commercial Business SchoolCommercial 101 • How does Commercial Lines differ from Personal Lines? Degree of complexity Greater E &O exposure Necessity of being well trained Necessity of starting out small Admitted vs. Non-Admitted

  10. TWFG Commercial Business SchoolCommercial 101 • How does the selling process differ? Necessity of having credibility Knowing enough about a specific class to properly recommend coverage Commitment to continually updating your knowledge and skill level Necessity of being well prepared when presenting the quote

  11. TWFG Commercial Business SchoolCommercial 101 2 (continued). How does the selling process differ? Necessity of having a formal marketing plan Extremely low win rate for quoting walk-ins Your competition is well organized Proper servicing and regular contact necessary for retention This is a very competitive field

  12. TWFG Commercial Business SchoolCommercial 101 • How does the underwriting process differ? Greater number of exposures to evaluate Increases complexity of each exposure Greater financial risks Importance of providing complete and accurate information All underscore the importance of being qualified and knowledgeable

  13. TWFG Commercial Business SchoolCommercial 101 Commercial Insurance Basic Terms

  14. 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.

  15. TWFG Commercial Business SchoolCommercial 101 Insured: Person/entity that is named in the insurance policy. Usually the buyer.

  16. 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.

  17. TWFG Commercial Business SchoolCommercial 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.

  18. 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.

  19. TWFG Commercial Business SchoolCommercial 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.

  20. 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.

  21. 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.

  22. TWFG Commercial Business SchoolCommercial 101 Exposure An exposure is something or someone that is subject to a loss, such as a person, a building or a product. It is also commonly used to refer to the overall or specific characteristics of a risk that are evaluated by underwriting. For example, the Auto exposures or General Liability exposures. In this context, a specific exposure to be evaluated for a restaurant would be the cooking exposures.

  23. TWFG Commercial Business SchoolCommercial 101 Commercial Insurance Policies Overview

  24. 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.

  25. 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. Coverage applies to Bodily Injury and Property damage suffered by a third party. Injury stems from either the insured’s premises, products, or business operations. Exposures are typically grouped as follows:

  26. 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.

  27. TWFG Commercial Business SchoolCommercial 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.

  28. TWFG Commercial Business SchoolCommercial 101 Commercial Property Policy These policies provide coverage for the insured’s owned building and/or business personal property such as furniture, supplies, fixtures and inventory. Business Auto Policy This 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)

  29. TWFG Commercial Business SchoolCommercial 101 Inland Marine This 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.

  30. 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.

  31. TWFG Commercial Business SchoolCommercial 101 Professional Liability Protects traditional professionals (such as physicians) and quasi-professional (such as real estate brokers) from errors and omissions associated with their professional services. There is a distinction here between economic loss vs. bodily injury and property damamge.

  32. TWFG Commercial Business SchoolCommercial 101 Important Other Coverages/Polices

  33. TWFG Commercial Business SchoolCommercial 101 Workers Compensation Provides a sole remedy for injured workers Includes employer’s liability for injuries not covered by worker’s comp Losses associated with these coverages are excluded under all other CL forms Over 73% of claims facing companies today are from their own employees Going “bare” exposes an employer to a swift and costly end

  34. TWFG Commercial Business SchoolCommercial 101 Cyber Liability High incidences of identity theft and network hacking Costly regulatory compliance exposures Any business that handles customer data or has a large employee base is exposed Multiples levels of coverage available Minimum premiums starting at $500 Some carriers BOP products can endorse this coverage

  35. TWFG Commercial Business SchoolCommercial 101 Employment Practices Liability Insurance (EPLI) Exposures not covered by GL or WC forms Losses resulting from wrongful employment practices: • Discrimination, sexual harassment, retaliation, wrongful termination High dollar claims are common Over 73% of claims facing companies today are from their own employees Going “bare” exposes an employer to a swift and costly end Most BOP products can add this coverage at a nominal charge

  36. TWFG Commercial Business SchoolCommercial 101 Fiduciary Liability Errors and omissions coverage regarding the administration of company sponsored retirement savings plans, health plans, pensions, etc.

  37. TWFG Commercial Business SchoolCommercial 101 Commercial Umbrella Provides excess liability over underlying policies Provides broader coverages than underlying policies Provides primary liability where not covered by underlying policies

  38. TWFG Commercial Business SchoolCommercial 101 ACORD Forms Overview Common elements Full entity name & mailing address Business phone number Type of entity Nature of business Years in business Loss Payees/ Mortgagees/Additional Insureds General information Prior insurance information Loss history

  39. TWFG Commercial Business SchoolCommercial 101 Submissions Checklist All Submissions Completed ACORD forms for each line 3 year hard copy loss runs Completed required supplemental applications

  40. TWFG Commercial Business SchoolCommercial 101 Property Specific Date of construction for each building Updates for buildings over 20 years old Construction type Square footage per building List of occupants for LRO Burglar & fire alarms Replacement cost

  41. TWFG Commercial Business SchoolCommercial 101 GL Specific Description of operations Payroll/Sales for each classification Answer all underwriting questions List of Additional Insureds, including relationship Special coverage requests

  42. TWFG Commercial Business SchoolCommercial 101 Auto Specific Lists of drivers, including DOBs & DLs Answer all underwriting questions Year/Make/Model & VIN per vehicle Cost new per unit if available Garaging address/use/=radius per unit Loss Payees/Lessors per unit if applicable

  43. TWFG Commercial Business SchoolCommercial 101 Workers Compensation Specific List of class codes/payroll/number of employees List of all locations Include Experience Mod worksheet FEIN and NCCI number if Mod worksheet is not provided Answer all underwriting questions

  44. TWFG Commercial Business SchoolCommercial 101 Inland Marine Specific Schedule items over $2500 Lump 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

  45. 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

  46. TWFG Commercial Business SchoolCommercial 101 Inland Marine Specific Equipment Security Equipment in locked building Equipment fenced Equipment in locked and lighted yard Etc

  47. TWFG Commercial Business SchoolCommercial 101 Post Binding Checklist Signed ACORD applications 3 years prior loss runs Signed UM/UIM rejections – Auto Signed Officers/Owners Exclusion – WC Complete any “Subject To” items

  48. TWFG Commercial Business SchoolCommercial 101

  49. TWFG Commercial Business SchoolCommercial 101

  50. TWFG Commercial Business SchoolCommercial 101 QUIZ