01 Aug This is where Premium Financing comes into play
What exactly is Premium Financing? It may seem like a big and complicated word in the business world, but really it is something that we are all familiar with. Most people have a homeowners or auto insurance policy, correct? Well sometimes people pay their premiums in full, and sometimes they make monthly payments toward their policy. It usually does end up costing you a little more in the long run. Most insurance companies will give you a discount if the policy is paid in full. This idea of making payments toward a policy is basically the same concept as premium financing.
But commercial insurance companies don’t typically offer this type of option to their clients who are business owners. These agencies want their money up front. They consider themselves in the insurance business and aren’t interested in being a lender. And most commercial businesses have a higher insurance premium, making it difficult to pay for the entire year in one payment. It also can restrict the business’ cash flow if they tried the pay the premium all at once.
This is where Premium Financing comes into play. We are a company that acts very similar to how a bank or credit union would operate. We would loan the business owner the funds that are required to pay for the insurance premium. The business owner would then be required to pay us back over a 9 month period or until the loan is paid off. Now with these types of loans, there is a 25% down payment that is required. The insured would pay this directly to the insurance company, and the rest of the policy amount would be what is financed with us.
Obtaining a loan for your insurance premium is a fairly painless process. Your agent has contacts with various Premium Financing Companies, and it turns out that we just happen to be the best Premium Finance Company out there. So your agent has already done the hard work on securing your loan. The paperwork that needs to be completed for the loan will also be completed when the policy is bound. It is a different type of loan, being that we don’t pull credit scores. This isn’t needed because it is a different loan in that you aren’t requesting money for an asset. You are requesting money to pay for insurance, which if you fail to make a payment, we have the authorization to cancel your insurance policy. This can result in your business being shut down, fines, etc. From the cancelled policy a check will be mailed from the Insurance Company to our company. Allowing us to take any fees and payments that are owed before seeing if there is any refund for the insured. These loans are set up in a way to ensure that as a finance company, we aren’t putting ourselves at risk of losing thousands and thousands of dollars.
Now obviously we are in business to make money. So there is interest attached to the loans. Finance Companies are not federally regulated, so we are able to charge what we deem necessary. We like to make sure the insured is getting a good rate, but still being able to keep our business running. We are easy to work with, and provide our clients with different payment options that suit their needs. We promise you won’t find another finance company that is as easy to work with as us.