2006 was a record year for the insurance industry. $60 billion in profits were recorded, one of the industry’s highest grossing years in history. A primary contributing factor to these record returns was a 2006 hurricane season that was uneventful in comparison to the few years that preceded it. In contrast, insurance companies had been compelled to raise premiums for coastal and earthquake insurance after witnessing the damaging impact of numerous hurricanes and other natural disasters in 2004 and 2005. This shift resulted in the profit windfall of 2006.

Subsequently, the commercial insurance market has been flooded with capital looking to get a piece of future returns. This has created new carriers, new capacity, and alternatives that are itching to get in on the action.

For apartment owners, the result is that commercial insurance carriers will be stepping over themselves to win your business. Growth for these carriers is imperative, thanks to shareholder demand, despite the impossibility of them maintaining the record profit pace of 2006 or the inflated premiums for another year. To expand, these commercial insurance carriers will be forced to enter industries that may have previously been considered too risky. Writing new lines of coverage is their only way to grow. To win your business, they will have to increase coverage or lower premiums to undercut the competition.

The end result is that you, as an apartment owner seeking multifamily insurance, will win with more favorable insurance terms. The carriers have to deal with the influx of new capital, new carriers, and new capacity in the marketplace. Any first year Economics student can tell us that when demand stays constant but supply increases, prices are going to drop. In this case, with these particular conditions in the commercial insurance market, the prices will be falling quickly.

Unfortunately, buyers are usually the last ones to know where the market stands at any particular point in time. Most commercial insurance clients only review their policies once each year, but the market can change significantly in the interim. Additionally, many of the reports that are generated by the large brokerage firms and insurance carriers are inaccurate. This creates “sticky” pricing on the downward side of the market cycle.

Understanding the market, with a foundation of accurate information as a basis for that understanding, is an imperative first step towards getting a good deal on a policy. Many commercial insurance brokers and agents, however, do not have enough experience in the multifamily insurance business to accurately assess the market. Even some of the larger brokerage firms, who do have the requisite experience and knowledge, are just as bloated and slow to react as the market itself.

Typically, information about the commercial insurance market comes from select industry groups and the carriers themselves. What commonly occurs is that statements are issued and information is distributed that is six months behind what is actually attainable in the marketplace at that particular time. The result is that multifamily owners end up renewing their policies at lower rates thinking that they are getting favorable deals; however, the reality is that they are leaving money on the table.

The oversupply of capital in the marketplace favors multifamily owners, if they are armed with the knowledge to take advantage. What might your commercial insurance agent or broker not be telling you that he or she should be to avoid common errors?

1. Choose the right broker and meet your carriers. Working with a broker who is an expert in multifamily insurance, and who works with multiple properties, can ensure you are getting a favorable deal. If you are your broker’s only client, the chances that you are getting the best terms possible are slim. Working with an experienced multifamily broker who is backed by a solid team will allow you to efficiently manage claims, know the latest trends in pricing, understand the best timing for a renewal, and know which carriers offer the best deals. Plus, if your broker handles large dollar amounts worth of coverage, he or she can exercise more leverage on your behalf. Having a relationship with your carrier is important as well; if they know your expectations and know you, garnering favorable terms and the occasional favor will be much more likely.

2. Have a renewal strategy and renew early. If the market softens, you may want to cancel a current policy and grab one that gives you lower rates, depending on how much you have already paid in premiums. Lowering premiums mid-term could also release money being held in escrow, freeing up more cash for you. In addition, consider other timing factors such as planning to renew near quarter’s end when carriers are looking to make their numbers, or before hurricane hype sets in if you manage coastal properties. The last thing you want to do is not have a strategy and end up renewing too late. You may be held hostage by last-minute quotes, and not give yourself enough time to shop your business in the market for the best deal.

3. Know your replacement cost per square foot. You cannot simply reduce your insured valued or replacement costs with the expectation that it will result in lower premiums. Most multifamily insurance carriers will run your insurance schedule through their own model and then price you based on their replacement cost estimates. If you underestimate yours, you could wind up paying the same price for less coverage.

4. Do not over-insure. The odds of every property you own being decimated by a natural disaster are small. Why buy coverage to protect against that very event? In tough markets, you are costing yourself money by paying for limits you will almost certainly never meet. However, by effectively planning a probable maximum loss (PMSL), you can more accurately estimate how much coverage you should have. Then you can sleep a little easier knowing you are adequately covered and saving money at the same time.

By: Morgan McMillan

About the Author:
Morgan McMillan is a commercial insurance expert and Vice President at McGriff, Seibels & Williams in Dallas, Texas, one of the largest insurance companies in the U.S.

Morgan McMillan has has been honored by Risk Finance Quarterly for his expertise and experience in creating successful risk management solutions for his clients.

Follow the links to learn more about probable maximum loss and the 2005 Atlantic hurricane season, the most active in history.

Commercial auto insurance policy can give you coverage for your fleet of vehicles and drivers (for you and qualified employees) against injury, loss or damage to vehicles or cargo, in addition to damage to other property. In general, it offers convenient, unified billing, and a whole lot of optional coverage to meet your firm’s expectations and vehicle characteristics.

Who Needs Commercial Auto Insurance?

Commercial auto insurance can turn out to be extremely beneficial if you are the owner of a small-or-medium sized business firm as it gives you coverage on your firm’s vehicles, not just on one but an entire fleet. In addition, it protects your business against potentially devastating liability costs arising from an accident involving your vehicles.

How Does It Work?

Commercial Auto Insurance is normally offered with respect to the premium coverage’s like general liability or commercial packages. More often than not policies consist of multiple-vehicle and claim-free premium discounts, in addition to direct billing and other payment options. On the basis of your business, available coverage’s normally include bodily injury, property damage and medical payments.

Commercial Auto Insurance Policy Components:

Commercial auto insurance policy can sometimes be treated as six-in-one policy as it gives an impression of offering six separate policies at a time. While, some types of coverage are mandatory because of the state law, depending on where you live. Other types of coverage are optional. But one thing for sure, it’s your responsibility to analyze each one of them and comes to a decision how much you need. Always remember that each type of coverage has its own premium. Just add them up and you are bound to get the price of your auto insurance policy. Subtract the ones you are not interested and you will minimize the cost.

How do I read my auto insurance policy?

Always remember that policy is a legal contract so it can be little tricky at a first glance. But, if you are smart enough and know what you are looking for and where you are bound to get that information, then its easier to understand. Every insurance policy has three main components: Declaration page, insuring agreement and terms and conditions of the policy.

As a businessman, you require the same kind of insurance coverage for the car you use in your business as you do for a car you use personally. Whether you need to purchase a commercial auto insurance policy depends solely on the kind of driving you do. But make sure you know the difference between commercial auto insurance policy and personal auto policy.

By: Alexander Gordon

About the Author:
Alexander Gordon is a writer for http://www.smallbusinessconsulting.com – The Small Business Consulting Community. Sign-up for the free success steps newsletter and get our booklet valued at $24.95 for free as a special bonus. The newsletter provides daily strategies on starting and significantly growing a business.

Business Owners all across the country are joining “The Community of Small Business Owners” to receive and provide strategies, insight, tips, support and more on starting, managing, growing, and selling their businesses. As a member, you will have access to true Millionaire Business Owners who will provide strategies and tips from their real-life experiences.

The commercial building you own is completely protected by insurance, right? Your insurance limit matches the building’s replacement cost, right? You sleep peacefully at night knowing that in the event of a catastrophic fire, the limit you and your agent agreed on will be more than enough to cover a total loss, right? But you have a nagging thought…IS it enough? How can you be sure?

No matter the age of your building, you need to be concerned about Building Ordinance Coverage. This important coverage, which is too often regarded as necessary only for older buildings that might not meet newer building codes, should be a key part of your property insurance. And you should be especially concerned about the insurance-to-value ratio (ITV for you insurance geeks), because inadequate limits and uncovered costs of rebuilding can be catastrophic to your wallet!

Let’s discuss the components of Building Ordinance Coverage and how they protect you and your business in three distinct and separate ways:

Coverage A protects the undamaged portion of your building – Your property insurance policy pays only for actual damage, so who pays for the undamaged part of your building when the city or county says it has to come down? You do, unless you have adequate limits for Coverage A. My rule of thumb is that if you can get a limit set at 100% of the value of your building, do it.

Coverage B protects against the cost of demolition – Hey, someone has to pay to demolish a building, right? But oops, it’s not covered on your property insurance policy. Your limit for Coverage B should reflect the size and complexity of your building. As a starting point, ask a local contractor what it would cost to demolish the building.

Coverage C anticipates the increased cost of new construction – When you rebuild, what will you have to add or upgrade to meet code? A new sprinkler system? Wheelchair-accessible bathrooms? How about an elevator? None of these items will be covered by your property insurance if they weren’t part of the building to start with they are paid for from this coverage. Determining an adequate limit for Coverage C is difficult, but again, a contractor might be able to give you some sound advice.

Remember, just because your building is newer does not mean you are exempt from potential building ordinance problems. County and city building codes change all the time, and when they do, you could be stuck. I’ve seen it happen. All building owners need to make sure they are adequately protected.

And be careful, don’t be lulled by the built-in limits for Building Ordinance that some insurance companies include in their property insurance policies. In most cases, the built-in limit will not be adequate. At a typical sub-limit of $25,000 to $50,000, the built-in amount might not even cover the cost of demolishing your building. Raising the limit to meet your actual exposure is well worth the extra money in premiums.

Are you a building owner? Then take the time to dust off your insurance policy today and look at your property coverage. Do you see Building Ordinance Coverage listed on your declarations page along with a premium amount? That means you have bought and paid for this added protection. If not, call your agent to find out whether Building Ordinance Coverage is built in and, if so, for how much. Then you’ll really be able to sleep well at night!

By: Dan Weedin

About the Author:
Dan Weedin, CIC is a fee-based insurance consultant. In other words, he’s a reformed insurance agent! He helps business owners to save time, money, and frustration on your insurance by providing unbiased solutions to the insurance and risk management challenges you face every day. To learn more how Dan can help you, go to http://www.ToroIc.com You can also read his blog at http://www.wwwtoroic.blogspot.com to get up to date information to help your insurance experience easier and simpler.