The 5 shopping steps for your professional liability insurance

The timeline for shopping your professional liability insurance is the bedrock foundation of the shopping process.  Waiting to start shopping until you receive your renewal quotes can be disastrous.  Therefore, philosophy number one is ASSUME that your renewal quote will be terrible.  Be prepared for the worst case scenario.  Many times, your renewal quote will be competitive for your consideration, but just in case you need to be ready for the worst.  Below, we summarize the five steps in the timeline that your broker must coach you through for effective shopping.  Each step summarizes your role and your broker coach’s role:

Step 1 – 90 days prior to your policy expiration

Your broker should apprise you of any major changes that you will need to anticipate.  For example, is your current insurer leaving the market, becoming pickier than in the past?  Is your claims history now better or worse than it was in the last application cycle?  Armed with this information, you will start completing an application: renewal or new business application where applicable.  Note: do not go to next step with a limited renewal application.  Some renewal applications do not contain enough information for other insurance companies to provide quotes.

Step 2 – 60 days prior to your policy expiration

Your rough draft of the application should now be reviewed by your broker.  They should be reviewing it for mistakes, missing information, and broad evaluations if the completed application puts your firm in the best light possible.  The broker / client conversation here should improve your application.  It is important that you relate efficiently (email is good for working together on documents) and timely with your coach to move on to the next step.

Step 3 – 45 days prior to your policy expiration

Final application should be submitted to all of the insurance companies.  Remember, the broker needs to shop the policy ASSUMING that the current insurer will not be competitive.  Therefore, you will need a plan B, C, and D in order to be prepared for that possibility.  As in the previous step, you might be contacted by your broker to provide quick answers and follow up documentation that is requested by each insurance company during their underwriting process.

This is the important time when your broker needs to work hardest.  All insurance companies need to be negotiated with simultaneously.  It is currently a great market for law firms purchasing insurance.  Fierce competition from insurance companies has led to the lowest premiums and the most beneficial terms in 10 years.  But a true competitive market needs to be created by your broker.  Your current insurer needs to know that the broker is shopping the policy aggressively.  Sometimes your current insurer will match the market and sometimes they will not.

Step 4 – Two weeks prior to your policy expiration

Your broker will meet with you to discuss your options.  If switching insurance companies is prudent, new applications or other paperwork might need to be provided.  Policy options need be scrutinized for the obvious and not so obvious terms that differ among policies.  Each potential policy language needs to be read and compared by your broker to properly advise you.

Step 5- One week prior to your policy expiration

Your decisions need to be made and the coverage bound by your broker.

Like any good coach, your broker isn’t doing their best job, if they “let you” slack off.  Together with your coach, follow these five steps to shop effectively.   In our next post, we’ll discuss the most common mistakes in applications and how to fix them to put your best foot forward.

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