Not all business insurance policies are created equal. Riskier businesses are typically insured through a surplus lines carrier, which can be a bit trickier than dealing with a standard lines carrier. It is important to understand all the fine print on these types of commercial general liability insurance policies, as discussed below.

Understanding The Meaning of “Minimum Earned”

One of the first things you should notice on a surplus business insurance policy is the note on the declarations page that says “Minimum Earned.” Business insurance agencies say this can usually be found at the top right on the Declarations Page, underneath the breakdown of the policy premium. “Minimum Earned” refers to the premium amount that is non-refundable, which is typically 25 percent. So if a surplus commercial general liability insurance policy is not renewed, or a new policy started and then canceled after a month, 25 percent of the premium will not be refunded.

What Does It Mean By “Fully Earned?”

In addition to the minimum earned premium, there are other items and endorsements that are fully earned on these policies. For one, all fees are fully earned, which means regardless of when the policy is canceled, those fees will not be refunded. Other items that are fully earned are the additional insured and waiver of subrogation endorsements. These endorsements are fully earned and are not pro-rated. If an additional insured or waiver of subrogation endorsement is added, with only two months before the expiration/renewal of the policy, the cost is the same as if it was added at the beginning of the business insurance policy term.

Auditing A Business Insurance Account

Finally, it is important to note that all business insurance agencies reserve the right to audit an account, which could result in a premium increase if a major change is caught by the audit. While certain insurance policies, such as workers' compensation, are audited every year, commercial general liability insurance policies are not always audited regularly, but it is still possible for this to happen. This should not be a problem if you check your policy and ensure the operations and property limits on it reflect what your business needs.

There are many reasons why you may need to cancel a business insurance policy. You may have received a quote for a lower premium, or perhaps you need to change your business insurance agency in order to obtain coverage through an endorsement your current carrier does not offer. Whatever the reason may be, try to make this change at renewal time so you are not paying for fully earned endorsements and coverage without using it. Business owners have enough to worry about without adding yet another thing to their list of duties, such as worrying about commercial general liability insurance coverage. Call the insurance professionals at Jones & Associates Insurance, and let us work for you to ensure your business has the proper coverage!

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Decoding Commercial General Liability Insurance!