I am quite irked by this….when the premium for my Commercial General Liability Policy came due I was told the above. My/Company credit it spotless. I was further aggravated when the Broker told me, that I could finance through Him if I did not pay the “lump sum”…Premium is $25,000.apx. Easy way to profit at my expense !!! When you buy an insurance policy for a motor vehicle you are most always offered a payment plan, through the underwriter. And, they are significantly less expensive policies !!
Is this a standard practice with Commercial General Liability Packages…Or Did I Just end up with a “Creative Broker”
November 28th, 2009 at 4:04 pm
Most CGL policies can be paid in installments. This sounds unusual. I would not finance through your broker. In fact, I’d shop around for another policy and another broker.
November 28th, 2009 at 4:57 pm
Some states require that, for personal auto and homeowners, a company offers payments.
NO states require that for commercial insurance. MOST companies, once you hit $25,000, will offer a payment plan, if it’s through an admitted carrier. NONE will, if it’s a surplus lines carrier. Most of the time, that payment plan, is contingent on you’re paying EFT, or it’s quarterly instead of monthly payments.
Bottom line – if your policy has a “100% fully earned” clause, you can’t get financing unless the agent is guaranteeing you, to the company. It’s probably not going to happen, for a new venture, or an agent that you don’t personally know, because what it means is HE pays the premium up front – and if you cancel mid term, you don’t get a refund, so HE is out $12,500 or whatever the balance you didn’t pay, comes out to be.
Premium financing is EXTREMELY expensive, with aprs running between 15% and 29%. And frequently the broker gets a percentage of THAT.
But bottom line – if you don’t trust your broker, don’t buy a policy through him. AND, when you’re comparing coverages for a cgl policy, you need to compare the RATE and the EXPOSURE basis, NOT the bottom line premium – as these policies are pretty much ALWAYS auditable.