Big Insurance Brain

I introduced myself to someone recently. The guy greeted me with, "Oh, I know you. You're the guy with the big insurance brain. I read your blog." I guess so. This July will be 30 years since I started in the insurance business. In that time I have been a student of the insurance business and of business. It has been a great career working in a great industry. I hope to stick around for another 30 years. As a reminder, this blog has over 290 posts. My website www.ScottSimmonds.com has articles, definitions, ebooks, videos, checklists, and charts. I know of no other website or blog that provides the amount of unbiased insurance information I do. It's all available to anyone, for free, at any time. In the column to the right is a search box that searches this blog and my other websites to help you find what you want. Of course, you can always hire my big insurance brain. Just call or email. Scott Simmonds, CPCU, ARM, CMC Guy With The Big Insurance Brain Providing Insurance Assurance

Read more...

Covering Volunteers Under Workers Compensation

A friend contacted me asking how a nonprofit can cover volunteers on a workers' compensation policy. Volunteers and workers' comp are usually mutually exclusive - employees are covered, volunteers are not. I'm not sure why you would want to cover anyone extra on a work comp policy. The coverage isnt that great (lost wages coverage is pretty low for many workers) and any losses would cause the premiums to be higher in future years. Issues of injury due to negligence should be taken care of using the general liability and auto policy - not to mention the umbrella. Most liability policies do not exclude injuries to volunteers. (If yours does get a new policy.) Medical payments may provide coverage to injuries on premises. However, policies that exclude volunteers for med pay are more common. If you are really concerned, from a feeling of obligation to your volunteers, you can buy an accident insurance policy to provide some small level of coverage. The cost is usually lower and its easier to administer. Scott Simmonds, CPCU, ARM, CMC The Insurance Assurance Consultant

Read more...

Vacant Building Insurance Issues

Insurance companies do not like vacant buildings. First, what is a vacant building? Here is a common definition used in the ISO property insurance policy: When this policy is issued to a tenant, and with respect to that tenant’s interest in Covered Property, building means the unit or suite rented or leased to the tenant. Such building is vacant when it does not contain enough business personal property to conduct customary operations. When this policy is issued to the owner or general lessee of a building, building means the entire building. Such building is vacant unless at least 31% of its total square footage is: (i) Rented to a lessee or sub-lessee and used by the lessee or sublessee to conduct its customary operations; and/or (ii) Used by the building owner to conduct customary operations. Buildings under construction or renovation are not considered vacant. Now, how are vacant buildings covered? Not well. First, after the building has been vacant for 60 consecutive days there is no coverage for vandalism, sprinkler leakage (unless you have protected the system from freezing), building glass breakage, theft or attempted theft. Second, any loss that is paid will be reduced by 15%. Special coverage is available. Talk with your insurance advisor about how your coverage works and what your options are. Scott Simmonds, CPCU, ARM, CMC The Insurance Assurance Consultant

Read more...

Progressive Bank Program to Change

Many of my readers are bankers who manage their bank insurance program... The American Bankers Association and Progressive Insurance announced major changes to their bank insurance program. In short, Progressive's share of the program is being bought out. It seems that all current staff and operations will stay the same. Coverage forms and the program structure will apparently stay the same. Here is the press release - http://banks.progressive.com/Main/ABPFIC_announcement.asp. Scott Simmonds, CPCU, ARM, CMC The Insurance Assurance Consultant

Read more...

Restaurant Insurance Issues

Here are some key insurance issues for restaurants to consider: -Review your business interruption insurance. Restaurants with large seasonal fluctuations in sales will want to be sure they have coverage that will go beyond 12 months if the loss happens at the wrong time. -Check the adequacy of your extra expense coverage. -Consider mechanical breakdown coverage for your refrigeration equipment. Include food spoilage coverage. -Check your employee dishonest insurance. Limits of $100,000 are a minimum for employee dishonesty. -Check your coverage for cash on premises. -Ask your agent how your insurance responds to a power failure or loss of your water supply. -Review your liquor liability insurance including coverage in your umbrella. -Check your systems for workers' comp loss prevention and claim management. -Understand how coverage works for vandalism damage to your plate glass windows. -Blanket property coverage with agreed amount to remove any coinsurance penalty. -Check to be sure you have adequate property coverage. Tell your agent to remove coinsurance penalties. -Watch for coverage limitations on computer equipment. -Consider a $5,000 or $10,000 property deductible to control your premium. You take care of the small stuff. Let your insurance company take care of the big stuff. The above is typical of the information in my new Business Insurance Toolkit. Go to my bookstore for info. Pre-publication pricing and free shipping too. A modest investment to assure that you have the right insurance. Scott Simmonds, CPCU, ARM, CMC The Insurance Assurance Consultant

Read more...

Boiler and Machinery Insurance

A reader recently asked me to post on boiler and machinery coverage. I was amazed that I had not done so in the past. I thought I had posted on every policy out there. Nope! This will fix that.

The property insurance policy excludes damage from a pressure vessel, artificial electrical currents, or mechanical breakdown - unless fire ensues. In the "olden days" the big coverage exposure was from steam boiler explosions. Over the last twenty years or so, more and more insurers started offering coverage for mechanical breakdown and other "perils of motion and power."

Here are some of the events not covered by most property insurance policies that are covered by machinery policies or by policies that include the peril of mechanical breakdown:

-Boiler loses its water and cracks.

-Boiler explosion

-Lightning strikes down the power line, travels to your building and blows out your power panel.

-A part breaks on a motor causing a compressor failure and "down-stream" damage to your equipment.

-A gearing system fails destroying a conveyor system.

Here is some of the equipment covered by machinery insurance:

-Pressure vessels
-Refrigeration systems
-Pumps and compressors
-Heating and air conditioning systems
-Turbines
-Electronic data processing systems
-Telephone and alarm systems
-Elevator systems
-Engines that utilize electrical or mechanical energy or are under steam pressure

Insurers often provide inspection services along with the insurance coverage. Sophisticated tests can be run to alert you to future failures. Many policies also include coverage for the loss of business income that results from the accident.

Product spoilage can also be included.

Read more...

Recession Increasing Insurance Fraud

Interesting article from Insurance Journal... Insurance fraud is a huge problem for my industry. I'm no longer surprised at the ingenuity of people in the schemes to steal. Scott Simmonds, CPCU, ARM, CMC Providing Insurance Assurance

Read more...

Small Property Insurance Policies

My own business insurance policy is tiny. It's just me here with my computer, my books and some furniture. The renewal of my policy just came up. My insurance company decided to increase their policy minimum premium. I was going to pay more for the same coverage. As I was paying the premium anyway, I asked the agent to increase my property coverage to "use up" the minimum premium. I thought I had enough coverage before. Now I am sure. Scott Simmonds, CPCU, ARM, CMC Providing Insurance Assurance

Read more...

Proactive Insurance Management

I just got off the phone with a reporter. We were talking about business insurance renewals. Major Point: It is best to start working on your renewal about 5 months before expiration. In that way you can move deliberately and proactively rather than re-actively. Scott Simmonds, CPCU, ARM, CMC Providing Insurance Assurance

Read more...

MEMIC Gets Better Best Rating

(Note, I try to keep this blog universal in appeal. However, many of my readers are from Maine. So...) Congratulations to Maine Employers Mutual on the award of a rating of A from A-. I have long been a fan of the leadership of MEMIC. It is, overall, a fine insurer who innovates and leads in the market. Insurance Journal article here. Scott Simmonds, CPCU, ARM, CMC Providing Insurance Assurance

Read more...

Privilege Underwriters Reciprocal Exchange

A client called me yesterday asking about home insurance in Florida. His agent has suggested Privilege Underwriters Reciprocal Exchange, PURE for short. I had not heard of the company. Initially I thought it was a FL pooling arrangement due to insurers backing off the FL market. No, it is a true reciprocal exchange. I reviewed the website and what I found was very interesting. They specialize in high valued homes and are apparently very selective. I was not impressed by their financial statement. However AM Best gave them an A-. More eye opening is the Weiss/TheStreet rating of B-. Weiss is not an easy rater. This strikes me as a very entrepreneurial company formed to fill a real market need. I wish them well.

Read more...

NonProfit Dangers

I'm starting to hear rumblings that some not-for-profits are letting their directors and officers insurance expire to save money. Many are working on misinformation. Here are facts: -D&O policies pay for wrongful acts - bad decisions. -D&O policies exclude bodily injury, property damage, and usually personal injury. -The commercial liability policy covers bodily injury, property damage, and usually personal injury. -There are no overlap in coverage between D&O and the general liability policy. -The homeowners policy and the personal umbrella are no substitute for D&O - both provide bodily injury and property damage coverage - not coverage for bad decisions. -While many states have volunteer immunity laws that offer protection, the acts do not provide a prohibition against a lawsuit. Directors can still spend thousands on defense costs. (Thanks Texican.) Such immunity laws also provide no protection for lawsuits brought based on federal law. -True D&O insurance only covers individuals (no entity coverage). Some policies extend to pick up the entity, usually in regards to employment practices liability coverage. -No two D&O policies are the same. Detailed analysis is required of any policy proposed as each has different terms, definitions, and exclusions. I personally would never serve on a nonprofit board without D&O insurance. There is just too much at risk. Directors are personally liable for their actions on a board. Scott Simmonds, CPCU, ARM, CMC Providing Insurance Assurance

Read more...

Tag Line

I have struggled for 9 years with different tag lines for my marketing. Here is the newest. This one will stick. Providing Insurance Assurance

Read more...

Instant Insurance Premium Savings!

Much of the premiums paid by a business are determined by payroll and sales. Specifically, If your sales go up, your general liability premium goes up. Same with payroll and workers compensation (and some liability policies). Call your agent and find out what sales and payroll numbers are being used to rate your policies. If you estimate lower numbers than what is on your policy, have your agent make the change. You should see an instant reduction in your premiums. Scott Simmonds, CPCU, ARM, CMC Protecting Profits By Fixing Broken Insurance

Read more...

Claim Check - Work Comp Experience Mod

Check Loss Reserves at the Policy Five-Month Point

Your workers' compensation experience modification is calculated based on three years of experience (payrolls and losses). Your modification for 2009 is based upon payrolls and losses in 2005, 2006, and 2007.

The calculation is based on losses at, approximately, the halfway (six month) point in the policy.

Losses include what has been paid and any reserves on an open claim. (Recall that reserves are an amount the insurer expects to pay during the life of the claim.)

Insurance carriers report loss information to the rating authority, The National Council On Compensation Insurance (NCCI).

If you can reduce reserves prior to when loss valuations are reported, you can reduce the impact of the losses that go into your experience mod calculation. This reduces your mod and therefore, your premium.

Read more...