Underwriting is the process by which an insurance company gathers data about a potential risk, compares that data to averages and standards related to that risk, and properly calculates the premium it must collect and invest to cover a partial loss or accident. Of course the insurance company spreads out the probability of having to pay a claim over as many risks it can accept. It makes an "underwriting profit" if it can collect more premium than it pays out in claims. In other words, a company makes money if they choose their insureds wisely and don't have to pay any claims.
As commercial auto insurance agents, it's our job to collect the data about the risk and provide it to the insurance company. What or who is the risk? You are. Your company is. The term risk here means you the insured or your company. Your company includes you as a driver, you as a business owner, you as a maintainer of the safety of your vehicles, and your employees as drivers. We gather information about you, your vehicles, how long you've been in business, your driving record, your credit record, your claims and loss record. We also need to get the information about each of your partners and employees.
Help us make the process of gathering easier. It will also help to make the premium quote more accurate. Here is a list of some of the things we will need in order to properly underwrite your business.
Owner Information
Name of business
The name of the business is important to determine whether you act as a sole proprietor and if the vehicles should be titled under your own personal name or if you operate under a legally registered business name. Let us know if you have registered with the State of Oregon a business name under which you operate. This will become important at the time a loss may occur in how the claim will be paid out. Even if you have registered a business name, we also will need to list the name of the principal owner of the business.
Contact Person
If you are a sole proprietor then this is easy. If you're a multiple partner operation or have employees that handle the insurance and risk management part of your business, then we need to know the name and phone number of that person.
Addresses
One of the variables we use to determine the price of your insurance is your zip code. Yes we need to know your zip code to know where to send you the policy and, of course your bill. But we also need to know where each vehicle is typically stored at night. Why is this necessary? The insurance company measures how far you can drive as your operating territory. This territory is usually limited to between 300 and 500 miles. Also some zip codes represent a more populated area than others. So, insurance companies calculate the premium based on the risk of you more likely being in an accident due to heavily congested traffic areas in the State of Oregon. It could be that you store your fleet of vehicles in more than one location or in your driveway at home. Whichever the case, we need to know the address where the vehicle is stored at night.
Identification Number
In this time of high potential of identity theft, we reluctantly ask for social security numbers or tax identification numbers. Since these are high risk target data items that can be used against you, most insurance companies have devised a way of identifying you and your business based on the name and address of your business. Although use of credit in determining insurance rates is still under investigation and debate as to its usefulness, fairness and effectiveness in determining the true risk, it is being used by insurance companies as a major factor in determining the price of your insurance policy. The Department of Consumer and Business Affairs, Insurance Division, of the State of Oregon continues to allow insurance companies to use credit as a rating variable. Until that agency or the Oregon State Legislature passes a law prohibiting an insurance company from using credit, its application is a reality we all must live with. That said, sometimes it may become necessary to ask for your identification number in the event we cannot "find" you in the credit check system.
Driver Information
Commercial auto policies differ slightly than personal auto policies as they relate to covered drivers. Typically, personal car insurance policies allow you to lend your car on a temporary basis to a driver that is not listed on the policy as long as he or she does not reside at the same address as you. This doesn't apply to a commercial auto policy. If you want someone to drive one of your business vehicles covered on an Oregon commercial auto insurance policy, you must list that driver on your policy. Most policies allow a certain number of days after hire before you must place them on the policy. If evidence shows that the driver has been employed for a long period of time and you have failed to list them on the policy, the insurance company might have a legal defense to deny a claim if after checking the driving record they determine the driver to be a higher risk than what was charged or unacceptable over all. It's always a good idea to run all potential employee's driving record before hire to assure eligibility first.
We will need the driver's name, date of birth, and drivers license number. If you have rigs on your policy that exceed 26,000 lbs gross vehicle weight, the driver must be able to provide you with the appropriate class of commercial drivers license. Marital status of each driver is a variable that will raise or lower the premium charged for that driver depending on whether he is single or married. Yes, statistics show that a married driver is more cautious and a more desirable risk than a single operator!
Vehicle Information
To properly price your business auto insurance policy we will need the year, make, model, and complete and correct vehicle identification number (VIN) for each vehicle you would like on your policy. In addition, we prefer a photocopy of the registration of each vehicle to determine how it is titled. As stated above, to properly insure a vehicle that is in the name of a business (e.g. Tony's Trucking, LLC), we need to be sure that the same name that appears on the title or registration of the vehicle also appears as a named insured on the policy. If the car or truck is listed in your personal name, we can properly identify the ownership of the vehicle and make it easier for the claims adjuster's job should a loss occur. We refrain from placing vehicles on your policy that are not titled specifically in you name as owner of the business, a partners name who is also listed as a named insured on the policy, or the legal business name. Why? Putting a vehicle on your policy that is not yet registered to your name or that belongs to another person, say an employee, may cause a claim involving that vehicle to be denied. Coverage for use of employee's vehicles may be endorsed on to the policy but don't need to be listed, just in case you have that employee use his car on occasion to perform business related duties.
In addition to the year, make and model, we will need the gross vehicle weight (GVW) of vehicles that are not standard passenger cars or pickups. Those we can determine their weight by the vehicle identification number. But, if you want to insure a flat bed truck, box truck, large van or tractor truck, we will need the gross vehicle weight to determine the class it fits into and eligibility of the vehicle and driver qualifications.
Loss and Prior Insurance Information
In addition to driving records, marital status, radius of operation, zip code, and credit, an insurance company determines the rate you pay for insurance based on your business' loss history. If you have had any claims in a specified prior period, say, three years, the insurance company will charge your policy a higher price. The length of time of prior insurance with no lapse in coverage will get you a discount. Some companies will discount your policy even further if you carried higher than minimum limits of coverage.
Call us today for a quote and have these bits of information ready. 503-693-2852 in Hillsboro, Oregon and 503-489-3143 in Gresham, Oregon.