Business bankruptcies are up over 64% in 2009 over 2008. We are on track to have over 60,000 businesses in the United States file for bankruptcy by the end of 2009. When personal and business bankruptcies are combined we are seeing over 1.4 million by the end of 2009.
Bankruptcies regarding general liability insurance can be both a positive and a negative experience.
The good news about bankruptcy with respect to your general liability insurance is that there are provisions in almost all policies that protect the consumer from having their insurance canceled by the insurance company due to bankruptcy. What that means for you as a consumer is that the insurance company will continue to pay claims until the end of the policy year. That’s it for the good news. The bad news is that you have very little chance of continuing your insurance while you’re bankrupt.
Most insurance companies today perform financial credit checks on the companies they insure. Maintaining strong business practices and good D&B reporting and having above-average FICO scores can help ensure you receive the most competitive prices possible for your insurance portfolio.
Especially in business, there tend to be many more claims and losses in a bankrupt company than in a company that is not bankrupt. Making sure you have a provision in your general liability policy to protect you from having your insurance canceled during bankruptcy is equal to the success of your small business.
