How to Buy Commercial General Liability Insurance

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Any company will have an exposure to the risk of loss as a result of injury or damage to third parties. A serious loss can result in financial ruin for the business and its owners. The primary method of protection is to procure commercial general liability insurance that pays for covered losses to third parties.

Things You'll Need

  • Insurance agent/broker
  • Projected business volume
  • Engage an insurance professional to assist in the search for insurance quotations and proposals. Most agents have the ability to secure quotations from multiple insurers to provide options in terms of coverage and pricing. Some agents also specialize in certain types of business and are experts in procuring coverage for those industries.

  • Work with the agent to determine the total limits of liability necessary for your business and risk. If high limits are desired, your agent likely will need to secure quotations from multiple insurers to build up the total limits.

  • Review the quotations provided by your agent. Ensure that you understand what is being presented by your agent and the insurer(s). If you require limits that can only be provided by multiple insurers, verify that the policies are "following form," which means each subsequent layer of insurance will provide the same coverage as the previous layer.

  • Bind the coverage with your agent and insurer and secure the binder of coverage. The binder will serve as evidence of the insurance you procured until the actual insurance policy is issued. Review the binder to verify it matches the terms provided to you in the quotation you relied on to make the binding decision.

  • Review your insurance policy to ensure it matches the binder and the terms you bound with your agent.

Tips & Warnings

  • In many instances, renewing your policy with the same insurer will build a relationship that may be beneficial in negotiating future policies or claims.
  • Do not make your decision purely based upon the premium being charged. You should always review the quality and reputation of the insurance company before purchasing any coverage.

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