| What is?: |
Answer |
Occurrence |
|
Claims Made |
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| Insurance |
Think of Insurance as the necessary evil.
Insurance is intended to provide the insured with a level of security that would not otherwise be available. Think about the possibility of paying a very large claim that could bankrupt your company as compared to paying a modest premium for a Million dollars of protection. The premium is considerably more palatable then trying to find a Million dollars to pay a claim. |
Insurance – the Aleatory contract |
The meaning here relates to the premiums paid are not sufficient to pay the claims incurred.
More all of us hate to pay insurance premiums, but when, not if, the losses occur we are glad the insurance is in place. |
| Premiums – First year |
First year premiums for the NASBA Sponsored Insurance Programs should be consistent with the premiums from your expiring policy. |
Premiums – Second year and subsequent year renewals. |
Based on the first year losses and the number of participating members it is expected that premiums will begin to decrease in the 2 nd and subsequent years. |
Premium Increases |
The only reason that your premium may increase would be due to your company’s adverse loss experience. |
Profit Sharing |
An agreement has been reached with the various insurance companies that they will contractually guarantee to share any underwriting profit from the NASBA Insurance Programs with FirsTier and FirsTier has a contractual commitment to return this Profit Sharing to the NASBA members. |
| Profit Sharing Disbursements |
FirsTier will disburse to the participating members their pro-rata share of any profit sharing in the form of premium credits. |
Participation Agreement |
The reason you are asked to sign a Participation Agreement is due to the Profit Sharing.
The member can obtain their insurance through FirsTier without signing a Participation Agreement but will not be allowed to participate in the underwriting profits.
Likewise, NASBA members that do not participate in the NASBA Sponsored Insurance Programs will not be eligible to participate in the Profit Sharing Distributions. |
Participation Agreement – Long Term Commitment. |
The reason you are asked for a long term commitment to this program is due to the amount of time it takes to compute the profit and loss within the programs.
Each state has a statute of limitations for filing a claim and this is generally 2 years. All insurance policies do not renew on January 1st thereby we have to wait until 12-31 of the 3rd policy year to go through a complete 2 year cycle for the statute of limitations. |
Participation Agreement – Cancellation |
Should the NASBA member elect to cancel their coverage in the NASBA Sponsored programs they will forfeit any future profit sharing that may be calculated. |
Profit Sharing Calculation |
The profit sharing for year one will be computed in year 4 and credited to year 1. In year 5 for year 2 and year 6 for year 3. |
Policy Contract Period |
About 35% of all insurance programs renew at January 1 of each year, and 35% renew at July 1. The remained of the policies renew throughout the calendar year |
General Package Liability |
This policy provides Bodily Injury and Property Damage coverage to third parties that are damaged due to the negligent acts of the insured company.
The Property Insurance afforded under this policy is intended to insure the leasehold improvements you have made to space that has been rented, and to replace your business personal property lost due to an insured peril. |
Business Automobile Liability |
This policy provides Bodily Injury and Property Damage coverage to third parties that are damaged due to the negligent acts of the insured company.
This policy also should provide Non-owned Auto coverage in the event that an employee is driving their personal car in the scope of your business.
In the event of an accident the insurance from the employee would first respond and your Business Auto policy will provide excess coverage. |
Errors & Omissions Liability |
This policy provides Bodily Injury and Property Damage coverage to third parties that are damaged due to the negligent acts of the insured company.
This policy also should provide Non-owned Auto coverage in the event that an employee is driving their personal car in the scope of your business.
In the event of an accident the insurance from the employee would first respond and your Business Auto policy will provide excess coverage. |
Workers’ Compensation |
State insurance regulations require that if a company has 1 or more employees they are required to provide this coverage and failure to do so would void any defense the employer may have within the courts. |
Workers’ Compensation
Insuring the Business Owner |
Many states will allow the business owner to decline coverage under the Workers’ Compensation insurance act.
FirsTier highly recommends that the business owner accept this coverage due to the following:
1) This is the most economical form of disability insurance that can be acquired, and
2) If the business owner is hurt and cannot continue to work the compensation normally paid to the business owner within the company can be used to hire a replacement worker while the injured business owner receives wages from the Workers’ Compensation policy. |
| Umbrella Liability |
This coverage form is intended to provide limits of liability above those policy limits from the General Package, Business Auto and Workers’ Comp policies. |
| Director’s & Officers / Employment Practices Liability Insurance |
This coverage form is intended to provide the business owner protection from claims alleging misconduct or sexual harassment from shareholders or employees |
| Incurred Loss |
This is generally represented as a Loss Reserve posted by the insurance company represented as the amount they expect to pay for the designated claim. |
| Incurred But Not Reported Loss |
This is also referred to as the IBNR Loss Reserve. For General & Automobile Liability Claims most states have a Statute of Limitations that will run for 2 or more years from the date an incident occurs.
The insurance company recognizes that there is a claim occurring this moment in time that may not be identified or recognized as a claim until the Statute of Limitation is close to expiring. |
| Paid Loss |
This is generally represented as the amount the insurance company pays to a third party in the settlement of a claim. |
| Safety Group Participation Guidelines |
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| Lawsuits |
Business owners from every sector will attest to the fact that if you are in business the issue is not whether you will be sued. The issue is when will you be sued?
Insurance is meant to provide you will a defense to claims against you or your company and to pay claims that are a result of your negligence. |
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