WSR BLOG

In the same way that your credit score affects the rates you pay on a loan, insurance underwriting can affect the insurance rate you pay. It can also affect your eligibility-this means yes, you can be declined if you do not meet the underwriting criteria. This is why it’s important to understand insurance underwriting; when equipped with this information, you will know how to get the most favorable rates and policy terms.

When applying for insurance, you will provide information so your agent can complete your application. This information must be accurate, most especially in this technology-based society, where it is not hard to access information. Furthermore, most companies complete an onsite inspection and inspectors know exactly what to look for when looking at businesses.

A good start on making your business a favorable risk is to meet the building codes. This means that when you have a fire inspector or a city building inspector inspect the property, pay close attention and take action on their recommendations. Businesses housed in older buildings that are not up to code are often a problem. If you own the building, perhaps it is time to make an investment in your business by retrofitting your building and making it 100% compliant with your city or county’s building codes. Not only will this help you save on your insurance, but it will also increase your building’s value. If you rent, you can work with your landlord to have building improvements included in your lease. The other option is to move if your business is not location dependent, and find a newer or retrofitted building.

In addition to the resources of your local government, most insurance companies will send a Loss Control Specialist or Risk Manager to your business. These professionals will inspect your business to find hazards and put together a report on what needs to be addressed. You will then receive that report on the items that need to be attended to; depending on the item, you may be given a month until the next renewal to correct these hazards. If a hazard is not corrected, the insurance company may increase your rates or non-renew your policy. If hazards are properly addressed, you may qualify for credits on your next renewal.

When hazards are not attended to, there is a great chance of a claim occurring. Furthermore, the legal system sees preventable hazards as negligent and this can compound your claim. Claims have a great impact on premiums and eligibility; while claims do happen, they can be minimized and prevented. Keep in mind-claims can also impact your renewal premiums since policies are often re-evaluated or re-underwritten prior to renewal.

The bottom line is: those that manage their business, including hazards, save insurance companies money because they prevent claims. In return, insurance companies can reduce rates for these types of business. Yes, managing risks and hazards costs money, but it saves money on insurance premiums and prevents insurance claims.

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