General B2B Insurance

Question 1

If the debtor is claiming his agent did mot estimate their exposure correctly, what is your approach?

Answer 1

Even if the agent wrote the policy for a low amount of exposure, the insured still is paying the same amount of premium at the end of the year. In this kind of case the insured would have paid a lower premium through out the year and then would be billed for the additional payroll/sales come final audit. The insured of course doesn’t like having a large audit at the end of the year but again keep in mind that the agent has no way to determine what the total exposure will be exactly. The agent can only ask the insured how much their estimated sales/payroll will be and hope this amount will not be far off from the actual figures. Do not blame this on the agent; it is the insured’s reasonability to notify the agent of any major changes in their sales/payroll.

Question 2

Name both Cancelation types for Insurance Policies and briefly explain each

Answer 2

1. Short Rate Cancellation - Insured (debtor) cancels the policy prior to the original expiration date, the insurance company will typically cancel on a short rate basis. There is typically a penalty added and the insured is not entitled to the same discounts as if they allowed the policy to go full term. 2. Pro- Rate Cancellation - Insurance company cancels the policy for nonpayment prior to the original expiration date, the insured is entitled to a credit proportional to the amount of coverage left in the policy term.

Question 3

What is a P&C policy

Answer 3

A P&C policy for commercial insurance is a type of insurance that covers the property and liability risks of a business. P&C stands for property and casualty, which are two broad categories of insurance that protect businesses from various losses and damages.

Question 4

Describe property insurance.

Answer 4

Property insurance: This covers the physical assets of a business, such as buildings, equipment, inventory, furniture, and computers.It protects the business from losses caused by fire, theft, vandalism, natural disasters, and other perils

Question 5

Describe Liability Insurance

Answer 5

This covers the legal responsibility of a business for the harm it may cause to others, such as customers, suppliers, or third parties.It protects the business from lawsuits

Question 6

Describe PAGO Workers Compensation

Answer 6

Pay as you go Workers Compensation is simply an alternative way of making your premium payments. a business owner bundles or combines his/her workers compensation insurance with their payroll. The business owner contracts with a payroll service (i.e. ADP, Paychex etc.- reference SEQ3 in the AD screen) to withhold and pay their workers compensation premium just as they do for their payroll.

Question 7

What is an inland marine policy

Answer 7

inland marine a type of business insurance that helps cover products, materials and equipment while they are transported on land, such as by truck or train. This coverage is meant to help protect business property that is movable or used for transportation or communication purposes

Question 8

What are the 4 types of policies that may have an audit

Answer 8

General Liability, Workers Compensation, Business Owners Liability and Garage Liability

Question 9

WHAT IS EARNED PREMIUM

Answer 9

Earned premium represents any premium an insured has had coverage for prior to a cancellation.

Question 10

what are the 4 monopolistic states

Answer 10

North Dakota, Ohio, Washington & Wyoming

Question 11

What type of form is needed to cancel a policy.

Answer 11

Loss Policy Release (LPR) is the form used by insured and agents to cancel the policy.

Question 12

Broker vs Agent

Answer 12

Brokers are the middle man bw the agent and insurance companies and do not deal with insured. Agents work with the insured.

Question 13

What is an Excess and Surplus policy

Answer 13

Excess & Surplus lines (E&S) isa specialty market thatinsuresthings standard carriers won’t cover. The difficult or high-risk exposures in which E&S carriers specialize may range from a mobile home or a day care center to a multinational oil company. As with all E&S policies, there is Ø return premium if their actual exposure is less than the original policy estimates = no refund

Question 14

Why are we not allowed to provide a PIF confirmation receipt to an assigned risk pool policy?

Answer 14

Because the actual audit must be completed, and if they owe more than the original estimated amount, they are still liable. A PIF receipt could be perceived as a final endorsement

Question 15

How long does a policy take to cancel for non-payment?

Answer 15

The grace period is 45-60 days.

Question 16

Types of OOB files we will encounter and info to request?

Answer 16

1. Voluntary Dissolution- Notice to Creditors & Articles of Dissolution 2. Involuntary Dissolution- Corp failed to file the Required annual reports- Corp books, check registers 3. Sle of Biz- a.) Stock Sale- Assets & Liabilties were sold- stock sale agreement. b.) Asset Sale- notice to creditors & Asset purchase agreement 4. Shut doors only.

Question 18

What is an Error & Omissions Policy

Answer 18

Errors and omissions insurance (E&O) is a type of professional liability insurance that protects companies and their workers or individuals against claims made by clients for inadequate work or negligent actions.

Question 19

What is an LPR ?

Answer 19

Loss Policy Release s a cancellation form used to cancel policies by agents and insurance companies.

Question 20

Direct Bill vs Agency Bill

Answer 20

Direct bill is when the insurance co bills the insured directly and Agency Bill is when the insured is being billed directly from the agent, which means it is possible the insured does not know who the insurance company is. This is a PAGO policy or if the insured has multiple policies so they only get one bill.

Question 21

Name the 5 reasons a policy will be canceled.

Answer 21

1. non-payment 2. Coverage replaced or at the insured’s request 3. The insurance company was made aware that the Business Sold/Out of Business 4. After risk assessment by insurance company 5. Work Completed, which is similar to Insured’s Request.

Question 22

Summarize the reasons for an Audit.

Answer 22

The audit is mandatory at the end of a policy because it ensures the projected payroll & classifications you provided when you initiated the policy were accurate throughout the duration of your policy. The insured may go thru changes throughout the policy period, so this audit adjusts the premiums based on actual, rather than the projected numbers provided at the beginning. It can be best thought of as an end of policy reconciliation, that helps maintain fairness and accuracy in your premium payments. It is a way to ensure that businesses aren’t overpaying or underpaying for the coverage.

Question 23

What is a Surety Bond

Answer 23

A surety bond is a three-party agreement where a surety (usually an insurance company) guarantees to an obligee (the project owner or entity requiring the bond) that the principal (the contractor or business performing the work) will fulfill their contractual obligations. If the principal fails to meet these obligations, the surety is responsible for compensating the obligee or ensuring the completion of the contract. This bond is commonly used in construction and public projects to protect against losses if the contracted party does not complete the job as agreed.

Question 24

4 types of Audits

Answer 24

1. Phone audits: An insurance carrier goes through your payroll records and other relevant documents with you via phone. 2. Mail audits: You’re mailed audit forms to verify your payroll and other pertinent information–which you fill out and send back. 3. Physical Audits—Larger companies with higher insurance premiums likely need a physical audit. This means that the premium audit will take place at your headquarters. 4. Voluntary Audits—If you run a small business, your insurance company may only require a voluntary audit. With a voluntary audit, your insurer sends an audit form via mail. You’ll have to complete the audit form and provide supporting documentation

Question 25

WC premiums are determined by ?

Answer 25

1. Employee Wages/payroll, 2. Employee Class Codes that determine the risk of each job. These class codes are determined by the NCCI or the state. 3. Uninsured contractors or subcontractors, providing COI’s if insured.

Question 26

How does the audit ensure fairness from carrier to carrier?

Answer 26

The codes and classifications used to calculate the monthly premiums and final audit are generated by an independent agency, namely the NCCI for workers comp and the state regulatory agency for other types of policies.

Question 27

What is the difference bw an insurance carrier, underwriter and insurance provider.

Answer 27

In summary, while an insurance carrier is the company assuming the financial risk, an underwriter is the professional within that company assessing and pricing that risk. An insurance provider can be either a carrier or an intermediary selling insurance products from various carriers.

Question 28

How do you calculate a general liability policy premium?

Answer 28

A General Liability policy can be based on either sales and or payroll. When based on sales the premium is calculated by gross sales x class code divided by 1000.