Short answer
You should describe my business on an insurance application the way the work actually happens, in plain words. Some general liability and professional liability policies limit coverage to the operations described on the application. If you picked a general drafting class but also model for machine control, fly drone topos or prepare layout files, part of your work may sit outside what you told the insurer. Whether a policy responds depends on its wording and the facts.
Why niche firms end up in the wrong class
Online forms offer a short list of occupations, and 3D modeling for machine control is rarely on it. Many niche firms pick the nearest match and move on.
Generalist agents may not know the work either, so the owner gives up explaining. Several declines in a row also push owners toward whatever will bind today. One owner told us, “It’s super niche,” and that was the whole problem. Underwriters could not picture the work, so the policy ended up in a class that did not fit.
What a business description limitation endorsement does
This endorsement adds a condition that injury or damage must result from the operations described in the application. If you do work you did not describe, an insurer may question whether that work is covered. Whether a policy responds depends on its wording and the facts.
Look for it in the forms and endorsements list on your declarations page. It is easy to miss, and our designated professional services exclusion article shows how other endorsements can narrow a policy in similar ways.
Application answers that matter more than they look
A few answers carry more weight than they appear to. Insurers use them to price the policy and judge your experience.
- Revenue: Report your real estimate. Premiums and audits are based on it, and understating it can cause problems at claim time.
- Start date and years in business: Insurers use these to judge experience.
- Every service you offer: Include small ones, such as drone flights, topos, layout, takeoffs and field checks.
- Surveying, staking or layout: If you do any, say so and explain it.
- Your clients: Name the types, such as contractors, engineers, owners and dealers.
Our first professional liability application article covers what new design firms should expect on that form.
Want this looked at for your firm?Tell us what your firm does. A specialist reviews it and comes back with options.
Get a Quote →How to write the description
Use plain words and give the percent of revenue for each service. Say what you do not do as well. Here is a hypothetical example for a machine control modeler:
“Prepare 3D design surfaces and alignments from engineer-supplied plans for GPS machine control (80%). Drone photogrammetry topos (10%). Quantity takeoffs (10%). No design. No site visits.”
If the insurer allows it, attach a short write-up or a sample deliverable. That helps an underwriter picture work they may not have seen before. Our describe operations on an insurance application article goes deeper for AEC tech companies.
When your business changes
If you add a service, drop one or grow a lot, tell your agent before renewal rather than after a claim. Auto-renewing online policies carry forward the old answers unless you change them.
A description that fit three years ago may not fit today. Review it at each renewal, especially if your work now reaches into areas like machine control modeling.
Questions to ask your agent
Use these questions to review how you describe your business on an insurance application:
- What class am I written in, and does it match my work?
- Does my policy limit coverage to the operations on my application?
- Are my revenue and start date correct on the application?
General education, not legal advice. Hardcover is an insurance agency, not a law firm.
What we see at Hardcover
A machine control modeling firm was declined several times when it first looked for insurance, because underwriters could not picture the work. The owner said, “It was hard to articulate exactly what we do.” They bought online in a general drafting class.
When we reviewed the application, the description did not mention machine control, drone work or layout. Some of the answers also needed updating. The full story is in our machine control modeling insurance article.
What happens if my application is wrong?
It depends on the policy and the state. At minimum it can affect premium at audit. In some cases an insurer may question coverage. Correct it with your agent as soon as you notice.
Is it better to describe my work narrowly to keep the price down?
A lower price for a policy that does not fit your work is not a saving. Describe everything you do.
Can I update my description mid-policy?
Usually yes, by asking your agent to request an endorsement. The insurer may adjust the premium.
General information, not legal advice.
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