Sunday, July 30, 2017

Delaware Business Insurance Update from CNC Insurance Associates Inc. " Claim Reserves Could Be Increasing Your Rates ! ". 7-30-17

So, you have to submit a claim on your business insurance. You call your insurance agent and or company and go through the process of getting your claim resolved. Depending on the type and the size, this process can be quick or it can be drawn out. Sometimes it is a pleasant experience and sometimes it is not. I do feel that the industry tries to make the claim experience with their policyholders a good one, but the insurance contract is complicated and it can cause tension between you and the insurance company. Most of the time claims are paid and you are able to move on to get back to business as usual. This is where we start the conversation about reserves. What is a reserve?  A reserve is a sum of money that the insurance company adds to the total claim paid out just in case more has to be paid later. These added amounts can increase rates as they are counted when determining the loss ratio of a business. Many times these amounts will be held against policyholders years after their claim was settled. If no one is tracking or advocating for the reduction or elimination of these reserves, the business owner will pay more than they should. It is important that you talk with your insurance professional about any possible reserves you may have on past claims. Find out if they are causing  your rates to go up and see if you can get them reduced or eliminated. Also, understand that a reserve benefits the insurance company and not you the policyholder. Be diligent and make the inquiry to your insurance company to see if they have continued to apply reserves against closed and settled claims. Until next time be careful out there and know your risks.

G. Kevin Nemith President of CNC Insurance Associates Inc. & The Business Insurance Center
Serving DE, MD, PA, NJ & VA