Why do you buy insurance? The main reason is to protect your business against losses and lawsuits (as well as to be able to bid on jobs that require it).
You will probably only think about your insurance four times:
- The first time you buy it
- At Policy Renewal
- When there’s a premium audit
- When you have to submit a claim
But, how are claims actually paid and when are they paid out? It’s important that you know how your insurance company will pay out your claims. Think about how you would feel if you submitted a claim that you are 100% sure is covered and then find out it is not and you’re on the hook for it!
When it comes to claims, your policy is written in one of two ways: occurrence or claims-made. Know the difference between the two.
If your policy is written this way, you are basically covered whenever a claim arises even if it is submitted five years after the policy period. This means if you had a policy effective from 1-1-11 to 1-1-12 but submitted a claim on that policy today, it would be covered. It covers you in the future for any claim as long as it’s submitted in a time period that was once covered.
So, if you get sued for a faulty part, two years after you installed it, the claim would be covered (for the amount the older policy was written for).
Occurrence policies cost more because of this feature.
If you decide on the less expensive claims-made form, you will receive protection for any claims you submit during the period the policy is in force.
But once you stop paying the premiums on that policy for any reason, any claim not yet known but that actually happened during that coverage period would never be covered. With a claims-made policy you accept the risk of an unknown claim coming in later.
If a toilet you installed in 2012 explodes in February of 2013, and you had a claims-made policy from 1-1-2012 to 1-1-2013, you would not be covered if you are sued by the owner of the exploded toilet.
You can get “tail coverage” (which is also called an extended reporting endorsement) which would extend out the claims reporting period after the end of the policy period.
USA Business Insurance For Plumbing Contractors
USA Business Insurance will customize your plumbing insurance program to the type of claims coverage you want and make it as affordable as possible for you. Contact us today for a no obligation quote.