Understanding Commercial Insurance Claims

As a business, you may often rely on many types of commercial insurance to protect your financial interests. However, while the various components that may make up your commercial insurance portfolio are valuable, they may often represent significant expenses. Optimizing your business’s budget and ensuring your premiums are cost-effective requires an understanding of how various factors may impact your rates. Your claims history is a particularly relevant detail.

Why Is My Claims History Relevant?

Insurance carriers must protect their own financial interests and carefully vet all potential policyholders before issuing coverage. These processes typically entail a multifaceted analysis of your business’s unique circumstances. In addition to location, industry and workforce size, claims history is a key element of the quoting and approval processes, as it can offer insight into how likely your company may be to experience incidents and request financial assistance. Carriers may offer more affordable rates if your business’s history inspires confidence regarding potential claims.

How Might Insurance Companies Analyze Past Claims?

Insurers may conduct a comprehensive analysis of your business’s claims history. This typically requires a multistep approach, as they may look into the following:

• Frequency—Carriers likely consider businesses riskier if they’ve filed several claims against their commercial insurance policies in the past. Frequent claims indicate that your company may not be adept at avoiding accidents or other incidents, meaning offering coverage may require insurers to take on more risk.
• Severity—Whether your business has a limited history of claims or not, particularly costly ones could impact your rates. A single, isolated error requiring a significant payout may often cause your commercial insurance rates to increase upon renewal. It may even make carriers hesitant to offer or renew coverage altogether.

We’re Here to Help

For more information on commercial insurance and how claims may impact your coverage, contact INM Insurance Services, Inc. today.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.