INSURANCE 101 COMMERCIAL INSURANCE, A PRIMER

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1 INSURANCE 101 COMMERCIAL INSURANCE, A PRIMER

2 COMMERCIAL INSURANCE DESIGNED TO COVER LOSS EXPOSURES FOR BUSINESS AND NON-PROFITS

3 PERSONAL LINES Home Auto Pet Travel

4 COMMERCIAL INSURANCE Small & Medium Businesses Agribusiness & Farmowners Specialty Commercial

5 FINANCIAL SERVICES Life Retirement Banks

6 BASICS OF INSURANCE Law of Large Numbers Spreading the Risk Reduce Exposure Benefits to the Economy $300 Billion each year paid by insurers $1 Trillion contributed to the economy

7 INSURANCE DIVISONS Products Marketing and Sales Underwriting Customer Service Claims Reinsurance

8 PROPERTY AND CASUALTY Income for shareholders and stakeholders Property and Liability risks Premiums produce income Investments are Bonds & CD s, Real Estate and Prescious Metals Claims

9 PROFITABILITY Income less Expenses equals Profit Take care of customer after a loss

10 THINK ABOUT Premiums Claims Operating Expenses

11 TRADE COMBINED RATIO Claim Settlements Operational Expenses Operating Profit Loss Ratio and Expense Ratio go to the Trade Combined Ratio

12 LOSS RATIO Percentage of Premium paid in claims Losses divided by Earned Premium (underwriting discipline)

13 EXPENSE RATIO Efficiency of doing business Expenses divided by Earned Premiums Cash Flow Management and Expense Control

14 OTHER FACTORS Investments Surplus Funds (Capital Strength and unexpected losses) Assets (Written Premiums and Surplus) Indicators (AM Best) Guidelines by States

15 OTHER FACTORS Fraud ($30 Billion each year) Disasters ($29 Billion each year) Climate Change (Property/Litigation) Economy Soft Markets (Stable money) Hard Markets (Increasing premiums) Regulations (Highly regulated business)

16 DISTRIBUTION SYSTEMS Exclusive (Company owned i.e., State Farm, Progressive, etc. and company owned business) Independent (Sells products from many insurers and agent owns the business) Direct (Online and phone sales and company owned business)

17 AGENTS Retail Agents General Agents Brokers

18 MANAGE RISKS

19 COMPANY CHECKS ON BUSINESS Direct Written Premiums (DWP) Policies in Force (PIF) Quote 2 Bind (Q2B) Average Relationships per Household (ARPH) Retention (RET)

20 COMMERCIAL AUTO INSURANCE Designed to protect businesses against financial loss that results from owning and using autos

21 COMMERICAL LINES Monoline Policies (Contains a single coverage part or line of insurance) Multiline Policies (Contains tow or more coverage parts or lines of insurance)

22 COMMERCIAL PACKAGE POLICY (CPP) Commercial Auto Commercial Property Commercial General Liability Crime and Fidelity Commercial Inland Marine Equipment Breakdown Protection Farm Professional Liability Employment-related Practices Liability Liquor Liabilty Pollution Liability

23 COMMERCIAL PROPERTY PACKAGES (CPP) Not Eligilble Businessowners Policy Risks eligible for a homeowers programs Coverage excluded by state regulations

24 COMMERCIAL PROPERTY POLICY (CPP) Common Policy Conditions Common Policy Declarations Line of Insurance Declaration Pages Line of Insurance Coverage Forms Line of Insurance General Conditions Firms Endorsements

25 COMMERCIAL PACKAGE POLICY (CPP) Declarations Who is Insured When Insured How Insured

26 COMMERCIAL PACKAGE POLICY (CPP) Business Auto Coverage Commercial Auto Coverage Part Business Auto Declarations Business Auto Coverage Part Nuclear Energy Liability Exclusion Endorsement

27 COMMERCIAL PACKAGE POLICY (CPP) Auto Dealers Coverage Commercial Auto Coverage Part Auto Dealers Declarations Auto Dealers Coverage Form Nuclear Energy Exclusion Endorsement

28 COMMERCIAL PACKAGE POLICY (CPP) Motor Carrier Coverage Commercial Auto Coverage Part Motor Carrier Declarations Motor Carrier Coverage Form Nuclear Energy Liability Exclusion

29 COMMERCIAL PACKAGE POLICY (CPP) Commercial Types (show pics) Public Types (show pics) Private Passenger Types (show pics) Special Types not Classified or Rated (show pics0

30 CPP CARRIERS Common Carriers Firms that transport goods for anyone who needs their services Contract Carriers Firms that have agreements with specific companies to carry their merchandise Does not transport for the general public

31 CPP CARRIERS Intrastate Carriers Motor carriers who haul within the boundaries of a single state Subject to state regulations Interstate Carriers Motor carriers who haul between two or more states whos have anything to do with cargo coming from or going to another state Subject to state reguations Subject to federal regulation by the Office of Motor Carriers

32 MOTOR CARRIER ACT OF 1980 Proof of Financial Responsibility An assurance to the public that the motor carrier is able to make monetary compensation for a loss caused to others though the negligence of the trucker

33 MOTOR CARRIER ACT OF 1980 Compliance with Financial Responsibility Requirements Interstate carrier of nonhazardous materials Certificate of Insurance Self-insurance Surety Bond

34 MOTOR CARRIER ACT OF 1980 Compliance with Financial Responsibility Requirement Carriers of hazardous materials Insurance with endorsement MCS-90 attached to provide public liability coverage Surety Bond

35 MOTOR CARRIER ACT OF 1980 Environmental Restoration Payment for a judgement due because of destruction of natural resources through accidental discharge into or upon land, air, or water of any commodity transported by a motor carrier.

36 MOTOR CARRIER ACT OF 1980 Gross Vehicle Weight The total weight of a fully loaded truck, carrying the maximum load for which it was designed.

37 MOTOR CARRIER ACT OF 1980 Type Division Minimum limit of Liability I Nonhazardous property interstate $750,000 II Large quantities of certain hazardous $5 Million materials interstate or intrastate III Hazardous material not included in $1 Million Type II interstate or intrastate

38 MOTOR CARRIER COVERAGE Commercial Auto Coverage Part Motor Carrier Declarations Motor Carrier Coverage Form Nuclear Energy Liability Exclusion Endorsement

39 MOTOR CARRIER COVERAGE Who is an Insured The owner of a hired or borrowed trailer if it is connected to another covered auto that is a power unit The owner of a borrowed or hired trailer not connect to a power unit if the trailer is being used exclusively in the insured s business

40 MOTOR CARRIER COVERAGE Insured The lessor of a covered auto which is not a trailer while the auto is leased to a named insured under a written agreement if: The leased auto is used in the named insured s business as a motor carrier for hire; and The written agreement does not require the lessor to hold the named insured harmless

41 MOTOR CARRIER COVERAGE Not Insureds Other motor carriers for hire subject to motor carrier insurance requirements who meet thme by a means other than auto insurance, unless the named insured leases an auto to this motor carrier and agrees to hold that motor carrier harmless in a written lease agreement Other motor carriers for hire whose insurance does not provide primary coverage while their autos are leased to the motor carrier for use in the motor carrier s business Any rail, water, or air carrier for a detached trailer that is being transported by the carrier or loaded or unloaded from any unit of transportation by the carrier

42 MOTOR CARRIER COVERAGE Trailer Interchange Coverage Trailer Interchange Coverage Extensions (Supplementary Payments)

43 MOTOR CARRIER COVERAGE Physical Damage Coverage Primary (add notes) Excess (add notes)

44 MOTOR CARRIER COVERAGE Designation Symbols Motor Carrier Designation Symbols Business Auto Designation Symbols Truckers Designation Symbols

45 MOTOR CARRIER COVERAGE Sample Symbols (examples)

46 MOTOR CARRIER COVERAGE Business Auto Symbol 7 Trucking for Non-Trucking Use

47 ASSIGNMENTS TO HEAVY EQUIPMENT ADJUSTERS Company requirements Communication Reporting Coverage Coverage Coverage Liability Property Damage Heavy Equipment Property Damage (buildings, landscaping, trains, etc.) Personal Injury Personal Auto Attorneys Insured hired Claimant hired Phone calls and discussions

48 INSURANCE 101 OBJECTIVES The participant will Learn the basics of an insurers internal operation Learn the basics of a Motor Carrier Policy Understand internal company needs and requirements Active discussion

49 MOTOR CARRIER CLAIMS Insert examples and pictures of claims and the outcome Explain interaction between Underwriting Risks Managers (Safety) internal carrier and the trucking company Special Investigation Units and state investigation units Injury and property damage claims Levels of claim professionals Reinsurance Regulation (State DOI, pricing) Heavy costs (Litigation and tow companies)

50 CONTRACTOR EQUIPMENT FLOATER Inland Marine Coverage for Heavy Equipment (adding more)

51 BUSINESS AUTO COVERAGE FORM SYMBOLS

52 TRUCKERS COVERAGE FORM SYMBOLS

53 MOTOR CARRIER COVERAGE FORM SYMBOLS

54 MOTOR CARRIER COVERAGE FORM SYMBOLS

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