Property & Casualty Insurance/Business Insurance

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Question
Hi James,

I had a quick question about a business owner's policy. This particular policy happens to cover an Aerospace company that is a distributor of Aerospace hardware, i.e. nuts, bots, fasteners etc.

I'm just curious what part the Estimated and/or annual sales of the business plays In the insurance policy. If the policy covers business personal property, Liability and the actual building itself, what does sales have to do with anything?

Answer
Hi Brian,

I need to make an assumption to answer your question, and that is: The rating basis for the policy is the amount of contents (aka Business Personal Policy).  This means the policy is NOT rated on sales or square footage of the location.  So if the rating basis is the amount of contents coverage, the following are a couple of reasons the underwriters will require your gross sales:
- There might be certain eligibility requirements for the specific businessowners policy program, such as sales less than $5MM or $10MM
- A traditional businessowners policy provides unlimited business interruption, subject only to a 12 month time period. By understanding your gross sales, the insurance carrier can see what their exposure is to a large business interruption loss.

Hope this helps.  If my initial assumption is wrong, please get back to me as there would be other reasons for the carrier to need to know this information.

James Berliner

Property & Casualty Insurance

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James R. Berliner, CPCU

Expertise

My specialty is personal and busines insurance, relating to the property and casualty field. Homeowners, Auto, Business Auto, Workers Compensation, Business Interruption, Crime, Directors & Officers Liability, Employment Practices Liability, Professional Liability, General Liability, Umbrella Liability, etc.

Experience

I am the owner of my own agency (established 1970), have obtained my CPCU designation, and am licensed in many states.

Organizations
IIABA (Independent Insurance Agents and Brokers of America), CPCU Society, PIACT (Professional Insurance Agents of Connecticut - Board of Directors)

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