Michigan Insurance Company Insurance Policy Information
Michigan Insurance Company Insurance.Insurance companies play the vital role of helping individuals, commercial ventures, and other organizations gain financial security even in the event of unforeseen circumstances.
Insurance companies provide compensation to their customers for losses they have experienced if covered as specified in a written contractual agreement. Property and casualty insurers can offer many types of coverage to businesses and individuals, including aviation coverages, automobile liability and physical damage, bonds, crime, errors and omissions, general liability, inland and ocean marine, professional liability, real and personal property, and workers compensation.
Life and health insurers offer accident, health, and life insurance to individuals or to businesses on a group basis for their employees. Policies may be sold to customers directly by phone or the internet, by employees, agents, or through other financial institutions such as banks or credit companies.
Insurance companies earn their income through policy premiums paid by customers and profits on investments. Insurers are regulated at both the federal and state level and are limited as to the type and kinds of insurance that can be sold, the premiums charged, the underwriting rules determining eligibility for each type of coverage, and the wording of contracts.
Financial regulations require adequate capital to fund losses and unearned premium reserves. Insurance companies may offer a variety of support services to their customers, such as financial planning, loss control inspections, premium financing, risk management, and safety programs.
Some offer services such as health screenings at public venues such as street fairs or festivals, highway roadside services, or sponsoring of public events to gain name recognition.
While some insurers offer a wide spectrum of coverage options, others specialize in certain types of insurance, such as life insurance, health insurance, or excess and surplus insurance policies.
Despite what many who are unfamiliar with this branch of commerce believe, the insurance industry is a relatively predictable, safe, and stable one - both investment strategies and pooled funds from policyholders who do not need to make claims ensure that making insurance payments to those who fulfill the requirements does not stand in the way of making a profit.
Insurance companies still, however, face many of the same risks that any other business would. As such, they too need to be insured. What types of Michigan insurance company insurance might insurers require? Discover more in this brief guide.
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Why Do MI Insurance Companies Need Insurance?
Insurers need insurance for the same reason any other company does - to meet their legal requirements and to protect their business interests as well as their staff, their property, and third parties who might suffer a harm.
The commercial properties of MI insurance companies can be impacted by acts of nature - ranging from storms and hailstorms that cause fairly minor damage to earthquakes or hurricanes that devastate the entire locality - just like any other building can. Like other companies, insurers, too, face the risk of theft in all its forms, including cyber theft, theft and fraud on the part of an employee, and burglary or robbery.
Like other businesses, insurance companies may face lawsuits. Personal injury or property damage claims are one example, along with allegations of professional negligence or malfeasance. Employees may be injured in the workplace, or fall victim to auto collisions in company vehicles on their way to a meeting.
Insurance companies are no different than any other financial institution, or any business for that matter, in that they operate in the shadow of hazards that may on any day translate to perils. For that reason, insurers companies, too, need to shield themselves with Michigan insurance company insurance.
What Type Of Insurance Do Michigan Insurance Companies Need?
Insurance companies of any type would need to equip themselves with similar insurance coverage as any other financial institution.
The exact nature of the policies an insurer would carry depends on variables that include the MI jurisdiction within which their premises are based, the size of their business, their number of employees, and the value of their assets. Even for insurance companies, commercial insurance brokers can play a role in designing the perfect coverage.
Examples of the types of Michigan insurance company insurance needed are:
- Commercial Property: In the event that the commercial venue of an insurer is impacted by perils such as acts of nature, theft, vandalism, or fire, commercial property insurance helps to mitigate the resulting costs. Insurance professionals will already know that flood coverage typically needs to be purchased separately.
- Commercial General Liability: Third party bodily injury or property damage claims can arise from mishaps that occurred on the premises or as a result of the company's activities, and this type of Michigan insurance company insurance reduces the legal costs the company will have to pay out of pocket.
- Errors And Omissions: This form of professional liability insurance safeguards financial professionals if they are accused of negligence or wrongful acts, by covering legal costs.
- Cyber Liability: In the event that an insurance company's sensitive digital data are breached or stolen, cyber liability insurance helps manage the resulting expenses.
- Workers Compensation: When an employee sustains a workplace injury or occupational illness, whether resulting from a physical trauma or exposure to harmful substances or dire mental stress, workers' comp steps in to cover the costs if the company could have been held responsible for the injury.
- Commercial Auto: Any company that owns and uses vehicles for professional purposes further needs to obtain commercial auto insurance.
Insurance professionals will be aware that these examples of Michigan insurance company insurance policies insurers might need do not represent an exhaustive list, and they will be better placed than anyone to assess their risk profile.
MI Insurance Companies' Risks & Exposures
Premises liability exposure is limited as most transactions are carried out by the internet, mail, phone, or at the customer's or claimant's business or home. If clients visit the premises, they should be confined to designated areas to reduce the potential for injury from slips or falls. Floors, stairs, and elevators need to be in good condition, with steps and uneven floor surfaces prominently marked.
The number of exits must be sufficient and well-marked, with backup lighting in the event of a power failure. Steps should have handrails, be well-lighted, marked, and in good repair. Parking lots and sidewalks need to be in good repair with snow and ice removed, and generally level and free of exposure to slips and falls.
There should be security in the parking lot equal to or better than the surrounding area. Off-site exposures are extensive as claims adjusters and inspectors visit customers' premises and job sites, including access to sensitive areas. They may be involved with customers of the client to understand all aspects of the operations.
There must be training, procedures, and policies regarding appropriate off-site conduct and methods of ensuring confidentiality. Complaints about adjusters and inspectors should be dealt with quickly.
Personal injury exposure arises from breaches of customers' privacy and release of confidential information and discrimination in underwriting practices.
Product liability exposure is very low as insurance products sold to customers are intangible. There may be some minor exposure if the company sells items like tee shirts or advertising novelties to agents or customers.
Directors' and officers' exposures can be substantial due to competing priorities of numerous stakeholders such as stockholders, policyholders, claimants, employees, and regulators. Directors and officers are more likely to be sued for results of their decisions in times of economic downturn and well-publicized excesses within the financial services industry.
Officers must be thoroughly knowledgeable about the insurance business, able to operate competitively while maintaining profitability, and able to oversee ongoing operations effectively. Directors should include representation from a wide variety of business interests with no conflicts of interest.
Professional liability exposures can be high for insurance companies from their accountants, actuaries, attorneys, auditors, claims adjusters, and inspectors. There must be checks and balances in place to quickly catch and fix errors that are made.
The educational background, training, and licensing (if required) of all professional-level employees must be thorough and continual to keep up-to-date with industry changes.
Workers compensation exposures are moderate due to the wide variety of positions in an insurance company. Office employees spend most of their time on computers and are subject to eye strain, neck strain, and repetitive motion injuries such as carpal tunnel syndrome. All workstations should be ergonomically designed to reduce the chance of such injuries.
Employees traveling outside the office encounter over-the-road exposures, particularly in high-density traffic areas. Claim representatives and inspectors are subject to a variety of unknown exposures from the operations of customers and claimants that they service.
Loss sites may be particularly hazardous due to work in damaged buildings or under compromised conditions. Safety equipment, such as eye or ear protection, hard hats, or non-skid ladders, may be necessary.
Property exposures are primarily from fire due to the electrical wiring for computers, printers, mail sorters, and other electronic office equipment, heating, and air conditioning systems. All wiring must meet current codes, be well maintained, and adequate for the company's operations. Circuit breakers must not be accessible to be overridden.
Circuitry for electronic equipment may be easily damaged from smoke, water, and heat, which will cause a total loss even with a small fire. Although most insurance companies now use paperless record systems, any paper files should be kept in fireproof file cabinets. Fire suppression systems designed for the equipment and paper should be in place.
If the company has an on-site cafeteria for employees, cooking surfaces should be protected with automatic extinguishing agents, alarms, and shut-off valves. Grease filters should be regularly cleaned. Protective equipment should be maintained and serviced on a regular basis.
Appropriate security measures should be taken, including physical barriers to prevent entrance to the premises after hours and an alarm system that reports directly to a central station or the police department. Customers expect prompt service after a claim, so disaster planning for potential interruptions is vital.
Extra expense coverage should be considered as the insurer must continue operations after a loss.
Crime exposures are primarily from employee dishonesty. There may be a money and securities exposure if the insurer accepts premium payments on premises. Insurers need a Financial Institutions Bond to cover these exposures. Background checks should be conducted for anyone who will have access to the company's accounts.
There should be a division of duties between persons handling monetary deposits and receipts and reconciling bank statements. There must be regular monitoring and auditing of the books by outside auditors to prevent and identify problems. Controls and programming to prevent computer fraud should be reviewed.
Extortion is a growing concern due to the large financial assets held by most insurers.
Inland marine exposure is from accounts receivable as premium payments may be spread out over the life of policies, computers for processing policies and claims, and valuable papers and records for customers', claimants', and regulatory information. Backup copies of all records, including computer records, should be made and stored off premises for ease of restoration in the event of a loss.
If adjusters take a claimant's property for salvage, bailees coverage should be considered. Fine arts coverage may be needed if there are paintings or statuary in key areas such as conference rooms or lobbies. There may be signs requiring more comprehensive coverage than available on property forms.
Property in transit coverage will be needed for items claims adjusters or inspectors take to inspection or loss sites such as a catastrophe area.
Business auto exposures may be limited to hired and non-owned for employees running errands. If employees drive their own vehicles for business activities, the company should annually verify that the employee has insurance with adequate limits of coverage.
Larger insurers will have fleets of vehicles regularly assigned to officers, inspectors, claims and sales representatives. There may be pool cars available for employees who are not assigned a company vehicle.
Policies should be in place for personal and permitted use of any owned vehicles by employees and their family members. Any driver must have a valid driver's license and acceptable MVR. Vehicles must be well maintained with records kept in a central location.
Michigan Insurance Company Insurance - The Bottom Line
To learn more about the specific types of Michigan insurance company insurance policies insurers need, and how much coverage to have and the premiums, consult with a reputable broker that is experienced in commercial insurance.
Michigan Economic Data And Business Insurance Requirements
Business owners who are interested in establishing operations Michigan must have a thorough understanding of the state's economy. They should also familiarize themselves with any regulations and limits that state may have in place for commercial insurance.
Any entrepreneur who is thinking about starting a business in the Great Lake State first needs to determine if it's a feasible location for business operations. As such, it's important to have a keen understanding of pertinent details regarding the economy of Michigan, in addition to the types of insurance coverage that are mandatory for corporations that operate within the state.
Economic Trends for Businesses In Michigan
After a long period of stagnant job growth in the early part of the 21st century, MI has been experiencing a steady increase in employment gains. Between 2009 and 2018, the state has enjoyed a period of uninterrupted job growth; the longest stretch of job growth since World War II. According to economists at the University of Michigan. While there has been a slight decline in the rate of job growth, job creation continues and forecasters say will continue for the next two years, into 2021.
In 2018, an estimated 55,200 jobs were created; in 2019, it's expected that 35,800 jobs will be created, and in 2020, economists believe that there will be a total of 39,300 jobs created in Michigan. While that rate of growth is 1.9 percent slower than the job growth rate between 2011 and 2016, it is still a steady increase overall. In total, approximate 683,200 jobs will be created in MI between 2099 and 2020; almost four out of the five jobs that were lost during the early part of the 21st century will be recovered.
While the unemployment rate has steadily improved, it is still above the national average. In March of 2019, the national unemployment rate was 3.8 percent, while in the state of Michigan, it was 4.0 percent. Mid-Michigan has experienced the largest growth rate in the state, and according to forecasters, it looks like that trend will continue, moving forward. Industries that are expected to see the most growth include:
- Energy, due largely to research and development in clean energy
- Food and agriculture
- Transportation and mobility
- Healthcare industry
- Information and technology
In the state of MI, business owners are not legally required to carry liability insurance; but most entrepreneurs opt to invest in a General Liability or Business Owner's Policy (BOP). A commercial auto insurance policy is also required for any businesses that use motor vehicles to conduct any aspect of their business operations. Workers' compensation insurance is also required for any businesses with non-owner employees. While the following forms of coverage are not required, depending on the type of business you operate, they are recommended:
- Data breach insurance
- Business income insurance
- Commercial Umbrella insurance
Additional Resources For Financial Institutions Insurance
Discover the types of commercial insurance that banks, finance companies and other financial institutions need to protect their asset management, deposit, lending, investment and other operations.
- Check Cashing
- Credit Union
- Currency Exchanges
- Finance Companies
- Insurance Company
- Mortgage Broker
Financial institutions handle, receive, disburse, and invest money of others.
They are subject to regulations specific to their operation but they are also subject to legal and moral obligations for their customers.
Customers entrust their funds to these institutions because of their confidence in the management's ability.
Insurance is a necessary means to protect the financial institutions and their customers against various types of losses.
The financial services offered and the personal relationships created by the institution can only be protected through the use of a sound insurance program and appropriate bonding practices.
Minimum recommended small business insurance coverage: Business Personal Property, Extra Expense, Equipment Breakdown, Financial Institutions Bond, Accounts Receivable, Computers, Valuable Papers and Records, General Liability, Directors' and Officers' Liability, Employee Benefits, Fiduciary Liability, Professional, Umbrella, Hired and Non-Owned Auto, Workers Compensation & Surety Bonds.
Other commercial insurance policies to consider: Buildings, Earthquake, Flood, Leasehold Interest, Real Property Legal Liability, Computer Fraud, Extortion, Fine Arts, Signs, Cyber Liability, Employment-related Practices, Law Enforcement Professional, Business Auto Liability and Physical Damage And Stop Gap Liability.
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