Commercial Insurance Premium Financing (Pay In Installments)
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Frequently Asked Questions About
Commercial General Liability Insurance
How much does commercial insurance cost?
Costs can vary widely based on industry and are also determined by zip code and often payroll and/or gross sales. Request a free quote to get an exact number.
What kind of business insurance do I need?
Most business owners need General Liability Insurance at the very least. If you have any non-owner employees, you will need workers compensation insurance too.
What is a Certificate of Insurance?
A Certificate of Insurance is proof of coverage. It lists the type and amount of liability coverage you have and other policy information when a third party requests it.
Is business insurance tax deductible?
Yes. you can deduct the cost of commercial insurance premiums. The IRS considers insurance a cost of doing business as long it benefits the business & serves a business purpose.
Commercial Insurance Premium Financing
Commercial Insurance Premium Financing. Also known as "premium funding", this payment is the option for individuals or businesses in need of non standard insurance coverage including commercial as well as higher risk policies. Different from the standard insurance policy, lower-risk 'admitted' business insurance, which allows the insured spread payments throughout the year; non-standard systems usually requires that you pay the entire premium in a lump-sum at binding or just within 30 days after policy inception.
This is where commercial insurance premium financing applies. A premium finance company lends you/your company the money to insure the costs of the insurance premium. What you do is sign the premium finance agreement, then a premium finance company pays the insurance premium as well as bills of your loan. You post your policy as collateral for the loan, thus freeing up cash for your businesses operational needs.
How does commercial insurance premium financing work? Learn how premium financing allows businesses to free up cash flow and get the policies they need.
Why Use Business Premium Financing?
Would you like an insurance company that will compete for your business? Most of the commercial insurers don't want to finance your premium. Besides, they just want all of the cash up front. Ultimately, they're in the insurance sector and don't need to act as lenders offering commercial insurance premium financing..
But many businesses can't afford to pay the total year's premium in a lump sum or simply don't want to give away all the cash right away. Above all, commercial insurance premium policies can cost your business several thousand of dollars or even more.
This is the point where commercial insurance premium financing enters the insurance picture. Such companies act in the same manner as to how a credit union or a bank operates. Ideally, a premium finance company loans their insurers the cash to cover the insurance premium as you make pay them over time through monthly installment payments. Also with commercial insurance premium financing, the business is supposed to put up at least 25% of the total price as deposit on the policy. It's very rare to have a policy issued without the down payment/deposit.
How To Get Commercial Premium Financing?
A good commercial broker most likely have several premium finance partners to work with, so you would not need to search yourself for the the commercial insurance premium financing loan.
The procedure is quite simple, as your agent prepares the paperwork for the loan, at the same instance he's preparing the application coverage for your business. You don't have to get uneasy because of the credit score or even the approval procedure to obtain such financing, which is different from asking for cash from the bank. This is because the insurance is just selling you the promise on paper, they're not lending your business any cash, or giving you assets that you may not pay for, or try to keep.
In case you do not pay future installments, they just revoke the promise (cancel your policy), then you owe any premiums and fees that are 'fully earned' (paid in full regardless of how ling you have the policy). What follows is that your insurance company just sends back a refund to your commercial insurance premium financing company, if the policy cancels for any reason, after they've subtracted their fees.
What Is The Cost Of Commercial Premium Financing?
Since commercial insurance premium financing companies are not "federally regulated banks", they can charge higher interest rates - and most of them do. But the good news is that there are many of them - so the stiff competition keeps them honest regarding their customer's interest rates.
Common interest rates can range from 10 to 20% of the amount to be financed. Also, you should keep a close eye on the charges as well. In other cases, your insurance agent might charge you a flat rate for your financing, which may just be included in the balance you finance. Most commercial insurance premium financing companies do add fees by raising your interest rate.
Commercial Premium Finance
Most importantly, you should continue to make your monthly installment payments as agreed, irrespective of whether you have disagreements with the insurance company over coverage or claims.
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Get useful tips and information about how much commercial insurance costs, small business risks and exposures, how insurance regulations effect your businesses' and detailed descriptions of coverages and exclusions and more. Most small businesses need to buy the following four types of insurance at a minimum to cover their operations from every day risks:
Property Insurance: This policy covers a business if the property used in the business is damaged or stolen as the result of common perils like fire or theft. Commercial property insurance covers the buildings, structures and also business personal property - which includes furniture, inventory, raw materials, machinery, computers and other items.
Liability Insurance: Any company can be sued. Slip-and fall lawsuits are very common and be costly. Customers can claim you injured them or damaged their property - and lawsuits are very expensive. Commercial liability insurance pays damages and can include attorney's fees and other legal expenses. It also ca pay for the medical bills of injured third parties
Commercial Auto Insurance: For vehicles owned by the business. Commercial auto insurance pays bodily injury or property damage costs for which the business is found liable - up the the policy limits for liability and property damage.
Workers Compensation Insurance: In almost every state employers must provide workers comp when there are W2 employees. Workers compensation pays for the medical care of employees and can replace a portion of lost wages - regardless of who was at fault for the injuries.
Quotes from leading small business insurance carriers including: ACE, AmTrust, Chubb, Cincinnati, CNA, Colony, Employers, Evanston, Fireman's, Foremost, Guard, Hanover, Hiscox, Liberty Mutual, Markel, MSA, Nationwide, Penn America, Philadelphia, Prime, Progressive, Scottsdale, The Hartford, Travelers, USLI, Utica First, Western World, Zurich & others.