What Happens When You Cancel Your Insurance Policy Midterm?

As your home care agency is growing, you’re also experiencing increasing insurance premium costs, particularly in the area of Workers Compensation, to reflect the growth in your staff and payrolls.  You may be tempted to leave your current carrier, and the rate that was locked in, behind and jump for some savings that a new carrier is offering midterm.  But not so fast… there is a proper way to go about switching carriers so that you don’t get burned in the long-run.

When Not To Switch Carriers

1. Typically when you have less than four months remaining in your current policy, there is really no benefit in switching. Chances are, your existing carrier may have a rate reduction of their own and you’ll be the recipient of that reduction in the upcoming renewal, just be patient and wait it out.

2.Also, don’t switch if your anticipated savings is less than 15%. In this case, just don’t waste your time.  Chances are, there are short-rate penalties and possibly fees associated with the cancellation, so at the end, the numbers may work themselves to a very marginal savings and bunch of headaches from switching.

3.How many different carriers have you been insured with over the past 5 years? If you find yourself switching every year, you’re probably considered a habitual “shopper”.  Underwriters will be less inclined to offer maximum discounts and credits to your business.  If you do fall on hard times and experience a string of Workers Comp claims, carriers will also be less inclined to continue insuring your business as they wouldn’t see the same loyalty out of you

4.Not all carriers are created equal, know who the carrier is and their history. There are some insurance carriers that have no long-term plans for insuring your type of industry, they look for a quick cash grab for a few years, and then poof! and they completely disappear.  Policyholders are then stuck trying to find a replacement carrier and likely paying more at the end.

In other cases, it may be totally okay to look at midterm quotes, especially if the expected reduction could be upwards of 30% or more!  Carriers do refile their rates and the state also has reductions for different class codes, there may be current savings that you agent is simply not telling you about.  At the end, you will also have an audit to go through, so just make sure any audit obligations to prior carriers are fully reconciled.

MPL Risk is an insurance agency working with healthcare organizations. We can provide a complimentary review of your insurance program and obtain quotes, give us a call today at 267-888-4790 or send us a message.

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