Some Very Important Notes On California Insurance
Over the past several years of working with my clients and potential clients, there have been a few “special” situations we have encountered. In the past year, our website has been busy with requests for insurance quotes from California businesses looking for insurance coverage of all kinds. These requests have come from new start-ups to the companies that have been in business for years but have never acquired insurance which, to us, is just unimaginable.
One particular company that had requested insurance from our agency had been in business for well over 6 years, and its primary business was installing equipment that the public would be using. Based on claims experience, it is widely known that anytime the public uses a machine that you sell, manufacture, or install, it could lead to a situation resulting in a claim and/or a lawsuit just waiting to happen. In discussing the potential client’s insurance needs, it was evident from the start that this owner was having a difficult time comprehending a scenario where he would ever need a CA General Liability Insurance policy. He explained that the only reason he was considering purchasing an insurance policy was because a major client that he wanted to do business with was making insurance mandatory. After reviewing the client’s insurance needs and conferring with several carriers about this risk, we decided to pass on quoting his insurance. Most of the carriers we did discuss this account with declined to even provide us with a quote when we informed them that client had been in business for over 6 years and never purchased General Liability and OC Product Liability insurance coverage.
Please be aware that insurance carriers do not look favorably on companies that have been in business for years without insurance, and quite a few will not even offer any terms at all. A few carriers that agreed to look at this risk informed us that their terms would come with higher rates, and there would be several strict exclusions included to protect them from a potential claim due to the fact that the client never had prior coverage.
In another instance, a company that we were familiar with which had a great name and had been in business for several years contacted us to look for an Orange County Errors and Omissions insurance policy for their company. At first, we thought that they already had this type of coverage and had decided to either shop for a new carrier or a new broker or both. It turned out it was neither of those situations, since they never had E & O coverage before. This particular business deals in the information sector and does have a General Liability Policy, but in their case, the GL policy will not provide any coverage for their company’s professional services should a lawsuit be filed against them.
In this case, we are searching for a carrier that will fit their needs, and, again, we are running into the same problem with our carriers. Several carriers have declined to quote based on the fact there is no previous coverage, and the few carriers who are quoting have told us the rates will be higher, and, in fact, they are treating the business as a California start-up business even though they have been operating for some time.
In discussing a course of action with new business owners, we press upon them just how important it is to acquire the proper type of insurance when they start out and how it is in their best interests to do so. By making acquiring an insurance policy part of your business plan, it can help in two ways: the first, of course, is that an insurance policy will protect your business from the unexpected things that could adversely affect your company, and a second reason is that you will be building an insurance record with insurance carriers that can be verified. What this means is that each consecutive year your company has insurance, and, hopefully, there will be no claims, your company stands a very good chance of having better rates on your insurance, and if you decide to switch your coverage to another carrier since you have a track record, your business will be more attractive to other carriers.
Our advice is that if you would like to explore how having an insurance plan for your business can be an advantage, we advise you to sit down with a seasoned and professional insurance broker and discuss your options in detail. The experienced insurance brokers at PJO Insurance Brokerage in Orange County would be more than happy to help you through this process.
Patrick O’Neill – Owner