Long Term Agreement Clause Insurance
I spoke this morning to a company manager who had entered into a five-year long-term agreement (LTA) on the company`s commercial insurance to save money. In other words, they had signed an agreement promising to stay with the same insurer (and probably the same insurance broker) for at least five years. In exchange for this loyalty, a discount of 5 to 10% was agreed on the insurance premiums due during this period. This means that the company is effectively involved and cannot just switch to another insurer or insurance broker that offers more advantageous terms until the end of these five years, even if they are not satisfied with the service they receive. However, if the insurance company decides that it wants to increase the premium, for example.B. Due to a bad damage experience, she can usually get out of the LTA easily. In today`s market, when insurance companies compete and offer discounts on new transactions, loyalty may not always be rewarded. While I would advise against rewarding your insurance every year — this stifles competition and interest in the market — I strongly advise you to protect your freedom of movement. Your broker should be sure that he can play year after year, not just every 3 years. Is it a good idea to sign a long-term agreement in exchange for a discount on your commercial insurance premium? So before deciding whether a long-term deal is a good idea or not, do you think about who will benefit the most – you, your existing insurance broker or insurance company? This Directive shall apply for a period of three years. The premium is due and payable at the beginning of each insurance year. The insured can choose not to pay a premium for a subsequent year by declaring the business at any time before the anniversary of the insurance. The annual premium is 15% lower than the premium to be paid at the company`s current rates for this year.
In the event that the insured of the above option excludes not paying the premium for a subsequent year, the policy expires at the end of the year for which the premium was paid. In this case, the company charges the insured the 15% discount granted in previous years and this invoice is a legally enforceable debt. By accepting the policy to which this confirmation is attached, the insured accepts the aforementioned conditions. If you`re thinking of making a long-term deal, then it`s important to read the fine print and see exactly what you`re agreeing to. In my opinion, long-term contracts benefit insurers and brokers much more than clients.