Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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business insurance group

Group insurance was created to reduce the administration costs for the insurance company when large groups were provided with similar coverage. Businesses fall under many definitions and categories that require certain types of business insurance coverage against loss.

Employee-related insurance is not part of the insurance coverage for the property and liability belonging to the business entity. Insurance companies base annual premiums on the perceive risk of loss in various categories and specialized businesses pay higher insurance rates.

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One method of reducing the cost of special coverage is for an insurance company to offer rates to groups of customers that fall into a certain profile. Business owners are wise to compare rates and coverage to optimize every dollar in the budget that is designated for insurance.

Prerequisites for a Business Insurance Group

Instead of individuals being grouped together, companies are offered the opportunity to become a member of a business insurance group. Before an insurance company can create group insurance products and companies purchase the coverage, certain prerequisites must be in place.

Favorable laws – Every state legislature decides the acceptable insurance products that can be sold in the state. If the state does not offer business group insurance, the insurers cannot offer these products.

Willing insurers – Insurance companies that offer group insurance in one state are more likely to offer similar products in other states when the legislature provides laws that support the offerings. Insurers are careful to calculate the actual risks of loss so groups are assembled to reduce risk.

Group participants – Companies that qualify for the defined groups must be present in the state. Certain states have higher concentrations of certain types of companies, so insurance companies may elect to offer only certain types of insurance in a given state.

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Commercial Insurance

Business coverage against loss is called commercial insurance by insurers. This category of insurance is separated from residential insurance because the risk of loss is more costly and when claims are filed the dollar amounts are substantially higher. Every company has specific insurance needs for their business property that is used to conduct services and provide goods to customers. Loss must be addressed quickly and money provided to allow the business to recover and return to normal operations.

Builder’s risk – Construction companies are required to carry insurance against loss of materials and the damage that storms can inflict on a construction site. When builders of various size are allowed to purchase

buidlers risk insurance

insurance as part of a group, the rates are lower and the insurance company can accurately apply actuarial formulas to the risks.

Umbrella/excess liability – Very large liability policies can be extremely expensive for companies in high-risk industries. Group rates lower the cost of customers and reduce the risk of loss for insurers. A group of insurers can be assembled to share the risk without extreme financial burden.

Directors and officers liability – Companies depend on the expertise provided by people in critical decision-making positions. If poor decisions are implemented and the company suffers loss, the company can receive compensation from the insurance company. Insuring individuals is more risky than grouping companies with similar characteristics into insurance pools to reduce the number of claims filed.

Employment practices liability – Technicians can make expensive mistakes when providing services on the customer’s property. This category of insurance will cover the cost of repairs associated with improper procedures that cause damage. A business insurance group of service professionals can be created by the insurer to provide cost savings and collect actual statistics of incidents that occur.

Environmental coverage – Certain types of companies have operations that will pose a direct threat to the environment by the nature of their business. Chemical companies will purchase this coverage to mitigate the risk of extreme costs associated with cleaning up chemical spills. Insurance companies create groups of companies with similar needs for coverage to reduce the cost of coverage.

Cargo coverage – Ships, trains and planes move goods around the globe to be available to the consumer in retail outlets of every size. When those goods are being transported, the risk of loss is higher. Shipping companies and manufacturers will purchase insurance for the goods until they arrive at the distributor’s warehouse. A policy to cover one company would be extremely expensive, but group rates for cargo coverage can be made affordable by spreading the risk across multiple policyholders bundled together.

Aviation coverage – Companies that own airplanes require sufficient coverage for the planes, airport facilities and liability. This coverage can be extremely expensive if the insurance companies do not create group coverage for similar companies.

Final Evaluation

One of the best ways to find out which insurance groups have been assembled is to ask questions of each insurance company during the process of finding the best coverage and rates. Some business owners in the same business

business group

sector are willing to share their experiences with business insurance groups, which can save time and effort.

Participating in business insurance groups is a good way to save money while receiving higher levels of coverage. Each insurer will specialize in various types of insurance and will offer discounts for certain efforts to reduce risk. Questions about offered discounts must be asked because many insurers do not voluntarily offer this information.

If group business insurance is not available in the state, the state insurance commissioner can provide a history of the efforts to bring group business insurance products to the state. State representatives and senators are additional groups of people that will listen to the request to initiate the process of introducing a bill.

Major insurers in the state are influential players when insurance needs are raised as a concern for businesses. Even if previous attempts have been made to introduce the legislation to allow business group insurance in the state, times change and so does the balance of power. Business owners should not be afraid to find out why business group insurance is not available. Enter your zip code below to compare insurance quotes and save!