From phone, internet, and cable to insurance, everyone loves to bundle. It’s convenient to work with one form, one agent, and one carrier for multiple policies, and bundling everything into one package sometimes saves the insured some money. Business owners needing both property and general liability (GL) policies have long had this option, but there may be some instances when a bundle isn’t in their favor. We’ll explain why, and let you know how to weigh your options.
Do We Need to Mention We’re in a Hard Market?
Hard insurance markets make more work for everyone, unfortunately. Between wildfires, hurricanes, rising construction costs, and everything related to COVID, “hard” might be an understatement right now. According to an Insurance Marketplace Realities 2021 report released late last year:
- General liability rates were predicted to increase more than 15%, double the increase of 2020.
- Property rates were expected to increase 15 to 25%.
Luckily, property increases are not as steep as the prediction, and rate increases are beginning to slow down. However, we are still seeing carrier appetites and guidelines changing. Meaning some risks that may have been written on a package product, may no longer qualify.
Packaged Policies vs. Hard Markets
The ability for your broker/agent to package commercial property and general liability policies is a bit more difficult in the current market. According to EJ Bradley, Assistant VP of Commercial Lines at Quaker Special Risk, some carriers have decided to stop offering certain coverages, or will only do so at much higher rate than they had previously. A carrier who used to provide a package policy may decide to stop providing commercial property (or general liability) coverage for that class of business entirely, meaning a package is no longer possible.
Second, when a carrier does provide both, Bradley says they might be able to provide a good rate for one part of the coverage, but in a hard market, for example, they may raise their commercial property rates considerably, making a packaged policy too expensive. And finally, a hard market may mean a carrier who provides both may not be able to provide as many options, meaning one of the coverages may not be as strong as it used to be.
Here are the typical pros and cons of businesses packaging commercial property and GL policies in a hard market:
- One carrier for both policies
- One broker/dealer
- One form
- Higher cost in a hard market
- May get better coverage with separate carriers
- May be hard to find a carrier who provides both depending on the class of business
But What Are the Chances … Really?
In the kind of market we have right now, businesses with the best chances of securing a packaged policy are those without a history of property and GL losses. More past losses will limit the amount of carriers a business can work with, and therefore, limit the chance to get a packaged policy. Bradley says the simpler the business and property, the better the chance it has to get a packaged policy at a good rate. If it’s a straightforward process for an underwriter and easy to assess the risks, the easier it’ll be to get packaged coverage. If the business is in an emerging industry like cannabis or renewable energy, the property is in a historic building, or it’s a coastal property during a year predicted to have an active hurricane season, that will complicate the process.
Some Tips for Handling Clients Needing Commercial Property and GL
- Analyze the business (past losses, location, business practices, etc.) to get a gauge for whether there will be challenges in finding coverage.
- Develop a relationship with a good broker/dealer who has access to many carriers. The better access they have, the better the chances they’ll be able to find you a packaged deal or the best rates for separate policies.
- Ask for all the options. The more information your client has to weigh price with convenience, the happier they’ll be.
- Start renewals early. If you go to renew a packaged policy and realize the carrier is significantly raising the rates for one of the coverages or will no longer be offering that coverage, you’ll have time to find another packaged policy or good rates on separate policies. Quaker Special Risk has strong relationships with multiple A-rated carriers and access to over 60 commercial lines markets. Contact us to get multiple options for commercial property and general liability coverages.