Frequently our clients resent the fact that they have to fill in the questionnaire of insurance company to get quote for peculiar types of liability insurance.
I have to admit that such questionnaire is indeed the red tape attribute taking up much of clients’ time. However, there are a few questions out of dozens contained in the surveys, which are actually of great importance.
“Isn’t it obvious what we do?”
Description of company’s nature of business seems to be the meaningless task. The truth is, though, that while you know your operations inside and out, the insurer doesn’t. Of course, it would be easier to put “trade center” in the description of the insured object when negotiating the insurance policy for trade and entertainment center. In that case be ready to face the indemnity denial if something happens to the office premises that you happen to lease or the warehouses you equipped in the underground floor. What is more, you risk leaving your TEC parking or concerts usually held on its roof without insurance coverage at all.
“What if I do not want to disclose confidential information?”
A lot of companies are doubtful regarding showing their financial statements for the last couple of years. The thing is that those numbers reflect the actual frequency of company’s interactions with its counterparts. The more intense the company’s activity is, the higher the chances are for some errors or omissions to happen during the year
“Why does the insurer need to know the number of my employees, as well as their experience and salary?”
For insuring property you really can do without providing this kind of information. For liability insurance such data is a must since the policy is to cover the losses caused by employees’ errors, in the first place.
The price for product liability insurance as well as for D&O insurance or any other type of liability policy depends mainly on experience and motivation of your employees. Their diplomas, practical experience and frequency of changing jobs/positions are the core parameters considered when appraising the level of professionalism.
“Why does the insurer need to know the organizational structure of your holding?”
Imagine that a final product needs to undergo several stages of manufacturing, assembly and packaging before it comes on the market. Usually in large corporations all these processes are run by different legal entities within the holding.
I bet you wouldn’t want your insurer to indemnify your distributor company only to exercise its right for regress to your manufacturer. However, such situation is quite possible given insurance company having no idea about the actual structure of your holding and associated companies.
Finally, all the information submitted to the insurance company is confidential and is not to be disclosed without your permission. Insurance is actually business run by managers who do not want to waste your time as well as theirs, to answer the questions no one really needs to know the answers to. So if you find yourself being asked a question by the insurance company, most likely, it is really important. Unless, of course, you cannot get a clear answer why exactly this or that information is required of you.