How to Compare Quotes Properly: Beyond Price — Limits, Deductibles, Exclusions and Endorsements

Content pillar: Procurement: Brokers, Agents, Marketplaces & Direct Carriers
Context: Business insurance essentials (United States)
Length: Ultimate guide — comprehensive, practical, and procurement-ready

Table of contents

Introduction: Why “cheapest premium” is the wrong KPI
The four pillars of a meaningful quote comparison
- Limits: not just numbers — structure matters
- Deductibles and retentions: cash flow, expected loss and behavior
- Exclusions: what eats your coverage at the worst time
- Endorsements: the customizations that change the deal
Step-by-step method to compare commercial insurance quotes
- Standardize inputs before you solicit quotes
- Build a normalized comparison matrix
- Scenario testing and expected loss calculations
- Weighting and scoring: how procurement teams should decide
Practical examples and real-world walkthroughs
- Example: General Liability — two competing quotes
- Example: Cyber — sublimits, waiting periods and retro dates
- Example: Property/fleet — coinsurance and supply-chain exclusions
Due diligence on carriers and intermediaries
- Financial strength, claims handling and appetite
- Broker/agent checks: commissions, binding authority and KPIs
Negotiation playbook: what to ask, what to push, and scripts
Red flags, common pitfalls and how to avoid them
Post-award controls and servicing: from binder to renewal
Quick procurement checklist (copyable)
Further reading / references

Table of Contents

Introduction: Why “cheapest premium” is the wrong KPI

Many procurement teams treat insurance quotes like commodity bids — lowest sticker price wins. That approach is costly. Insurance is a contract: the real value is the coverage you actually get when something goes wrong. Premium is only one component of Total Cost of Risk (TCOR). To purchase effectively you must compare:

What the policy promises (limits, insuring agreements)
What it excludes or sub-limits (exclusions & sublimits)
How losses will be paid (deductibles/retentions, coinsurance)
What custom terms or endorsements alter the contract

This guide gives you a repeatable, procurement-grade framework for comparing quotes beyond price: a defensible process you can use in RFPs, broker evaluations and direct negotiations.

The four pillars of a meaningful quote comparison

1) Limits — not just numbers, but structure and exposure matching

A limit is the maximum amount an insurer will pay under a particular insuring agreement. But limits come in many shapes:

Per-occurrence vs per-claim vs aggregate — e.g., GL typically per-occurrence with an annual aggregate for certain lines; errors & omissions (E&O) can be aggregate-limited.
Sublimits — lower caps inside the main limit (e.g., cyber ransom, regulatory fines, pollution cleanup).
Commodity exposures — some industries need increased limits for specific exposures (pollution, pollution legal liability, environmental impairment).
Shared limits — policies that share a single limit across multiple insuring agreements can create coverage squeezes.

What to check:

Match limits to worst-plausible single-event and frequent-loss scenarios.
Confirm whether limits are per location, per occurrence, or aggregate.
Verify if subcontractors or additional insureds reduce available limits.

2) Deductibles and retentions — cash-flow, loss tolerance and moral hazard

Two quotes with identical limits but different deductibles present different economics:

Deductible: The policyholder’s out-of-pocket payment before insurer contribution.
Retention: Often used in large accounts — insurer may only reimburse above a retained layer.
Self-insured retention (SIR): Requires insured to manage initial claim handling before insurer steps in.

Considerations:

Higher deductibles often yield lower premiums but raise retained-loss volatility.
Large SIRs transfer administrative burden and require strong claims capability.
For procurement, compute premium plus expected retained losses (frequency × average severity above deductible).

3) Exclusions — the silent deal-breakers

Exclusions can void recovery on the exact event you fear. Examples that often surprise buyers:

Pollution / contaminant exclusions
Data breach / cyber exclusions or narrow cyber endorsements
Communicable disease exclusions
Supply-chain and contingent business interruption limits
Contractual liability carve-outs
War/terrorism and nuclear exclusions

Best practice:

Read policy exclusions side-by-side. Look for carve-outs and complex cross-references.
Ask for sample policy forms and explain hypothetical claims to underwriters.

4) Endorsements — how the policy is customized

Endorsements (also called riders) modify the base policy: add coverages, remove exclusions, or change definitions. They are where the “real” policy lives.

Common endorsements to request/review:

Additional insured and waiver of subrogation endorsements (important for contracts)
Primary vs non-contributory wording
Broadening endorsements (e.g., full prior acts, contractual liability)
Sublimit removals or increases via endorsements
Policyholder-specific endorsements required by lenders or clients

Key point: endorsements may carry additional premiums or conditions. Always get endorsed wording as part of your quote package.

Step-by-step method to compare commercial insurance quotes

Below is a procurement-ready process your team can run in an RFP or when comparing broker quotes.

Step 1 — Standardize inputs before you solicit quotes

Create a single consolidated exposure document and policy specifications:

Company description, revenues, locations, payroll and # of employees
Historical claims summary (last 5 years) with severity and cause
Desired limits and deductible options
Contractual obligations requiring endorsements (e.g., indemnity clauses)
Preferred policy form types (occurrence vs claims-made, ISO vs manuscript)
Desired service SLAs for claims and certificates

Why it matters: inconsistent inputs are the most common reason quotes are not comparable.

Step 2 — Request complete quote packages (not just binders)

Ask for:

Premium breakdown by line and by insured entity
Sample policy forms and all endorsements (wording matters)
Coverage summaries and the insurer’s supplemental conditions
Commission and fee disclosure (broker remuneration)
Retroactive dates for claims-made policies
A binder or letter of intent for the selected carrier

If a broker refuses to share full forms, treat as a red flag.

Step 3 — Build a normalized comparison matrix

Create a table with rows for each line of coverage and columns for standardized fields.

Example columns:

Carrier name / A.M. Best rating
Premium / taxes / fees
Policy period
Policy form (occurrence/claims-made)
Limits: per-occurrence / aggregate / sublimits
Deductible / retention / SIR
Key exclusions & sublimits
Endorsements included / available at additional cost
Services: loss control, risk engineering, claims SLA
Notes (contractual issues, additional insurer conditions)

A Markdown example comparison table is below in the Practical examples section.

Step 4 — Normalize economics: premium + expected retained losses + admin + contingencies

A defensible procurement decision uses TCOR:

TCOR = Premium + Expected Retained Losses + Allocated Loss Adjustment Expenses (ALAE) + Risk Financing Costs + Opportunity Costs

Quick method to approximate expected retained losses:

Use your historical frequency and severity by coverage (claims per year × average severity above deductible).
If you lack data, use industry benchmarks or ask carriers for their loss pick for the deductible chosen.

Example calculation (illustrative):

Historical frequency: 0.2 claims/year for GL
Average severity: $250,000
Deductible A = $10,000 → expected retained loss = 0.2 × min(average severity, deductible?) No — properly, expected payment = probability * expected payment above deductible; use a loss distribution. For procurement simplicity, use the insurer’s premium differential for different deductible options and treat the delta as the break-even.

When exact actuarial modeling is unavailable, use scenario testing (next step).

Step 5 — Scenario testing and stress cases

Run 3–5 scenarios (e.g., single large loss, multiple medium losses, cyber ransom). For each quote, determine:

Whether coverage applies and how much the insurer would pay
Whether sublimits, waiting periods or exclusions limit recovery
Who handles legal defense and outside counsel
Effect on aggregates and future renewals

Scenario testing reveals which quote actually protects the business under stress.

Step 6 — Weighting, scoring and procurement recommendation

Create a scoring rubric (example weights):

Coverage adequacy: 35%
Carrier financial strength & claims service: 20%
Price (TCOR) and premium: 20%
Contractual endorsements (AI, primary/non-contrib): 15%
Fit with company risk appetite/operational needs: 10%

Score each quote and document rationale for procurement decisions. This is critical for audit trails and stakeholder buy-in.

Practical examples and real-world walkthroughs

Below are examples you can copy into your RFP evaluation spreadsheet.

Example comparison table (mock data)

Line / Item	Carrier A (Paper Co.)	Carrier B (Marketplace X)	Notes
A.M. Best / S&P	A (stable)	A- (stable)	Carrier financials similar
Premium (annual)	$120,000	$98,500	B cheaper on face value
Policy form	Occurrence	Claims-made	Claims-made requires retroactive date
GL limit	$2M per occurrence / $4M aggregate	$2M per occurrence / $2M aggregate	B has lower aggregate
GL deductible	$10,000	$50,000	B shifts more loss to insured
GL sublimits	None material	$250k punitive/damages?	B has sublimit for certain damages
Cyber limit	$1M with $100k ransom sublimit	$1M with $250k ransom sublimit	B better on ransom
Property coinsurance	90% coinsurance clause	100% no coinsurance	A exposes to coinsurance penalty
Endorsements	Primary wording for AI provided	AI language: non-standard, additional premium	A stronger for contractual partners
Claims SLA	Dedicated claim adjuster, 48-hr initial response	Market adjuster pool, 5-day initial response	Service difference
Broker fees & commission	12% commission disclosed	Platform fee $5,000 + 8% commission	B hides fee in admin
Total cost (est. TCOR)	$140,000 (premium+expected retained losses)	$133,000	B slightly cheaper but worse on aggregate
Recommendation	Preferred (higher service, better aggregate)	Alternate (costing advantage)	Documented rationale

This table shows how a cheaper premium can hide worse contract structure (lower aggregate, larger deductible, unfavorable endorsements).

Example: General Liability — comparing two quotes (walkthrough)

Quote A

Premium: $50,000
Limit: $1M / $2M aggregate
Deductible: $5,000
Exclusions: None material
Endorsements: Primary additional-insured endorsement (ISO CG 20 10 or equivalent)

Quote B

Premium: $38,000
Limit: $1M / $1M aggregate
Deductible: $25,000
Exclusions: “Contractual liability” carve-out for certain indemnities
Endorsements: AI available but “non-contributory” is limited

Assessment:

If you have a single large claim or multiple claims in one year, Quote B’s aggregate exposes you to exhaustion of limits. The higher deductible increases short-term cash needs and likely increases administrative work. Unless budget limits require B, Quote A provides better protection despite higher premium.

Example: Cyber — sublimits, waiting periods and retro dates

Key items to compare for cyber insurance:

Coverage trigger: first-party vs third-party difference
Sublimits: Ransom payments, regulatory fines, business interruption sublimit vs full limit
Waiting period: BIs often have a waiting period before indemnity starts
Retroactive date: For claims-made policies, matters for prior acts
Forensic & breach response: Who picks vendor, costs outside limits?
Extortion negotiation and payment approvals

Walkthrough: Carrier X offers $2M cyber with $250k ransom sublimit and 24-hour waiting period; Carrier Y offers $1.5M cyber with $1M ransom sublimit and immediate response. For a business heavily exposed to ransomware risk, Carrier Y, though pricier, may be preferable.

Example: Property & Fleet — coinsurance and supply chain exclusions

Watch for:

Coinsurance clauses (e.g., 90% clause): can drastically increase insured’s loss share if property values are underinsured.
Business interruption contingent coverage: sublimits and time element triggers.
Supply chain exclusions for certain perils — critical if you rely on single-source suppliers.

Calculation: If insured property value is $10M but scheduled at $7M with a 90% coinsurance clause, a $2M loss might be partially unrecoverable. Always verify valuation methodology (replacement cost vs actual cash value) and ensure automatic increases in limit or agreed value options.

Due diligence on carriers and intermediaries

Selecting the right insurer and intermediary is as important as comparing policy language.

Carrier checks

Financial strength: A.M. Best, S&P and Moody’s ratings — prefer A-/A2 or better for significant limits.
Claims reputation: Request references from similar-sized policyholders and recent claims examples.
Underwriting appetite: Does the insurer understand your industry and exposures?
Capacity & co-insurance: Confirm lead insurer and reinsurance structure for large placements.
Captives and alternative risk transfer: If available, evaluate impact on TCOR.

Broker/agent checks

Broker performance & KPIs: evaluate responsiveness, renewal retention, claims advocacy success. See our guide: Evaluate Your Broker: Key Performance Metrics, Commissions and Binding Authority to Check.
Channel suitability: Decide whether broker, marketplace or direct carrier is best: see Business Insurance Essentials: Broker vs Agent vs Marketplace — Which Channel Saves You Money?.
Commissions and fees: Require full disclosure; negotiate via RFP.
Binding authority: Confirm who is authorized to bind and under what conditions.

If you’re running a formal RFP for large accounts, use a structured RFP template and scoring approach: How to Run an RFP for Commercial Insurance: Templates and Questions for Large Accounts.

Negotiation playbook: what to ask, what to push, and scripts

Use this playbook in negotiations with underwriters and brokers.

Top negotiation asks

Remove or narrow key exclusions (pollution, cyber, communicable disease).
Increase sublimits for critical exposures (ransom, BI).
Add primary & non-contributory wording and waiver of subrogation for client contracts.
Lower aggregate to per-occurrence increase or provide separate aggregates for key lines.
Add retroactive dates for claims-made policies to include prior acts.
Remove coinsurance clauses or agree to agreed-value endorsements.

Sample negotiation script for broker to underwriter

“We appreciate the competitive premium, but the insured’s contract requirements mandate primary, non-contributory wording and a $1M ransom sublimit. Can you provide an endorsement with these terms without increasing premium, or quantify the cost to add each endorsement separately?”

Procurement tactics

Use parallel quotes to create leverage but document why each ask is business-critical.
Ask for multi-year rate locks or guaranteed renewal terms for industrial accounts to lock pricing volatility.
Negotiate broker fees in exchange for letting the broker manage claims or other services.

Red flags, common pitfalls and how to avoid them

Red flags when comparing quotes:

Refusal to provide full policy forms or endorsements in writing.
Inconsistent numbers between quote summary and policy forms.
Hidden fees (platform fees, admin fees) not disclosed upfront.
Unclear claims handling or no dedicated claims handler.
Unusually low premium for the market — likely narrow forms or hidden sublimits.

Pitfalls to avoid:

Comparing limits without noting aggregate effects.
Ignoring retroactive dates on claims-made policies.
Overlooking coinsurance and valuation methods for property.
Failing to account for expected retained losses when selecting deductibles.

How to avoid:

Require complete quote packages with forms.
Run scenario-testing and TCOR calculations.
Use a scoring matrix and document tradeoffs.

Post-award controls and servicing: from binder to renewal

After selecting:

Obtain binder and final policy forms before relying on coverage.
Review policy word-for-word (not just the quote summary) — engage counsel for unusual endorsements.
Ensure endorsements are issued timely and confirm effective dates and retroactive dates for claims-made policies.
Certificate of Insurance (COI) governance — ensure COIs accurately reflect required endorsements and limits; standard COIs can hide exclusions or missing endorsements.
Claims workflow — identify the claims contact, escalation path, and expected SLAs.
Loss control and risk engineering — request risk improvement programs and premium credits where applicable.
Renewal strategy — set a 120–180 day timetable for high-exposure accounts; start negotiation early.

Weighting and scoring template (copyable)

Use this simple scoring table for RFPs. Assign 1–5 per item, multiply by weight.

Coverage adequacy (weight 35%) — Score 1–5
Carrier strength & claims (20%)
Price / TCOR (20%)
Contractual endorsements (15%)
Service & fit (10%)

Total score = sum(weight × score). Use to defend vendor selection decisions and to compare trade-offs quantitatively.

Quick procurement checklist (one-page)

Standardized exposure document created and validated
3+ full quote packages received (policy forms + endorsements)
Comparison matrix (limits, deductibles, sublimits, exclusions) completed
TCOR calculated (premium + retained losses + admin cost)
Scenario testing for 3 stress cases
Carrier financials and claims references checked
Broker fee and commission disclosure confirmed
Contractual endorsements confirmed for clients/lenders (AI, waiver, primary)
Binder and final policy forms obtained prior to effective date
Claims SLA and loss control services documented
Renewal strategy scheduled (120–180 days before expiry)

Expert insights and best practices (from procurement veterans)

Treat insurance like a strategic service, not a commodity. Insurers bring claims expertise, loss control and capacity — weigh these in procurement scoring.
Require sample claim scenarios to be responded to by each insurer — their narrative reveals appetite and claims approach.
For large deductibles and SIRs, require the insured to demonstrate cash-flow capacity and claims-adjusting capability.
If your business has contractually required insurance (clients or landlords), obtain endorsed language pre-quote to ensure vendor compliance.
Consider a layered approach for large limits: a strong primary insurer with high-quality excess carriers rather than a single mega carrier with narrow forms.
Document everything. Procurement audits often focus on the decision logic and whether the company got the coverage it contracted for.

Reducing ambiguity: definitions you must clarify in every quote

“Occurrence” vs “Claims-made”
“Per occurrence” vs “Per claim” vs “Aggregate”
“Sublimit” vs “Separate limit”
“Deductible” vs “Retention” vs “SIR”
“Additional insured” vs “Additional insured — primary/non-contributory”
“Named insured” — does it include subsidiaries and newly acquired entities?
“Retroactive date” for claims-made policies

Require insurers to define these clearly in the quote package.

Closing: Procurement-friendly decision checklist

When you sign, be able to answer:

Does the policy respond to the largest credible single-event loss?
Does the policy survive multiple related claims in a short period (aggregate)?
Are contractual obligations satisfied via endorsements?
Have you quantified the TCOR and documented tradeoffs?
Do you have a binder and final policy forms in hand?

If you can answer yes to each, you have compared quotes properly.