Commercial Auto Insurance Coverage Symbols

Commercial auto policies specify the extent of coverage provided by using symbols to indicate the breadth of the protection. The declarations page of your auto policy outlines coverage areas (liability, uninsured motorist, medical payments, etc.) with coverage symbols that apply to the type of insurance. The applicable symbols are numbers 1 through 9. Symbol "1" is the broadest - "any auto". Symbol "9" provides coverage for non-owned vehicles only. Using symbol "7" reduces the coverage to claims from vehicles listed on the policy only. Insurers sometimes use combination of symbols - 8 and 9, for example, to provide coverage for hired and non-owned autos. Symbol 1 in the liability section would provide coverage for any auto liability claim brought against an insured. Symbol 7 in the liability section would limit liability coverage to claims that come from a vehicle listed on the policy - significantly restricting the coverage.

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Public Bid Openings

I've been working on more than my share of bid projects for schools and municipalities lately. Every time I receive bids I confirm my idea that public bid openings are not a good idea. Inevitably there are issues that need to be addressed and alternative quotes that are needed to perform an accurate analysis. If I had provided the bid info at a public bid opening I would not be able to get the info I need in a fair manner. Public bid openings may be good for road projects and buying pencils. Not in buying insurance though. Scott Simmonds, CPCU, ARM, CMC "The Guy With the Big Insurance Brain" Providing Unbiased Insurance Assurance℠

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Lightning Damage

Lightning is one of the most frequent causes of homeowner insurance claims.

177,000 claims in 2007

278,000 in 2004

While the number of claims went down, the average cost per claim went from $2,646 to $5,321, according to the Insurance Information Institute.

The increase in cost is attributed to an increase in sensitive electronics like flat screen TVs.  Surge protectors could make a difference.

Frankly, I never thought of a surge protector for my TVs.  I have one on my computers but not the other electronics.  I'll fix that with the next trip to the hardware store.

Scott Simmonds, CPCU, ARM, CMC "The Guy With the Big Insurance Brain" Providing Unbiased Insurance Assurance℠

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Collision Damage Coverage for Rental Cars

Never rent a car (Hertz, Avis, etc.) without buying the collision damage waiver. Either buy it from the rental car company or use a credit card that includes the coverage. Call your credit card company. Most “gold” or preferred cards offer the protection. Don't depend on your personal or commercial auto insurance. The rental agreements contractually obligate the renter to costs not covered by "normal" insurance. Issues like “loss of use” and “replacement cost” are a major source of trouble that can be avoided by purchasing the coverage from the rental car company or using the right credit card. Short-term leasing of a commercial vehicle (Ryder Truck, etc.) presents unique exposures. Most commercial auto insurance policies provide coverage for non-owned auto liability (check with your agent). However, few provide comprehensive or collision coverage. My general advice, again, is to buy the coverage provided by the rental company. When renting trucks or vans you probably won’t be able to use the coverage offered by credit card companies.

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Employee Dishonesty

It's been a while since I ranted on this...

How much coverage do you have for employee dishonesty?  

Employee theft accounts for a huge percentage of business theft losses.  Yet, business owners have a mental block about buying enough coverage.  

My readers seem to like rules.  Here goes.

Rule 1: $100,000 of coverage is a minimum for any business with employees.

Rule 2: $250,000 of coverage is a minimum if you have more that 20 employees.

Rule 3: $500,000 is a minimum if you have more than 50 employees

Rule 4: Ignore the above and tell me how much an employee (or a group of employees) is going to steal from you and I will tell you how much more coverage to buy.

Start with the above minimums and get quotes up to $1,000,000 of coverage.  Review the cost of the extra coverage compared to the value of the additional protection.  Make a value judgement: coverage vs. premium.

Scott Simmonds, CPCU, ARM, CMC "The Guy With the Big Insurance Brain" Providing Unbiased Insurance Assurance℠

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The Value I bring to My Clients

Two projects I am finishing up on prove my value to my clients.  

One got a premium reduced by 20% keeping the coverage the same.

The other got a client's premium reduced by 30% improving coverage dramatically.

Knowing how to negotiate with insurance companies and agents is part of the value I bring to my clients.

In the two cases above my total project fees are dwarfed by the reduction in my client's premiums.

For every dollar they spent with me they saved $10 in premiums.

Scott Simmonds, CPCU, ARM, CMC

"The Guy With the Big Insurance Brain" Providing Unbiased Insurance Assurance℠

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Insurance Review - Coverage, Service, Price

Your business insurance program is determined by three components:

1) Your appetite for risk

2) The insurance marketplace

3) Your loss exposures

Those three variables determine the insurance program that protects your business.

Let's go deeper though...

--Who assesses the overall quality of your insurance plan?  

--What biases and conflicts does the quality assessment include?

--What is the program's combination of coverage, service, and price?

You can certainly have your agent evaluate your insurance program.  The results are rather predictable.

You can have a competing agent evaluate your insurance program.  Now we have set up a situation where the vested interest is in finding everything wrong!  However, I think we all know what the ultimate recommendation will be.  Somehow the reviewing agent will have all the answers.

How about an unbiased review by a professional insurance consultant?  Yep, that's me!

I'll do an amazing job and uncover every issue and problem.  I'll work through the holes in your coverage and fix the overlaps.  I'll stand next to you while we retool your insurance.

My minimum fee is $5,500.

When I'm involved in an account review my fees are small compared to the issues I usually uncover.  What is the cost of a $150,000 uninsured loss?

Some companies see my fee and gulp hard.  So, I developed my Insurance Assurance Toolbox.  For $99 you get everything you need to work through your insurance  - avoiding the bias of a new agent while pulling your agent through a comprehensive process where you have knowledge.  

My toolkit lets you know what questions to ask so you get a fair, comprehensive review of your insurance.

I even offer a money back guarantee - If this tool does not meet your expectations just send it back to me with the reasons why within 7 days. You'll get a full and immediate refund. (Insurance agents, insurance consultants, or insurers are not eligible for the refund.)

This workbook will improve your coverage and get you better value for your premium or your money back.

Go to my bookshop for details

Scott Simmonds, CPCU, ARM, CMC

"The Guy With the Big Insurance Brain" Providing Unbiased Insurance Assurance℠

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Why are Exclusions Excluded

A well written piece on exclusions - http://www.mynewmarkets.com/article_view.php?id=99788 Scott Simmonds, CPCU, ARM, CMC "The Guy With the Big Insurance Brain" Providing Unbiased Insurance Assurance℠

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Ongoing Insurance Consulting Case Study

I'm frequently asked by prospective clients about the steps that my insurance review projects go through. I've posted an ongoing case study (names changed) of a current project with a bank. I've really only just started. Check back often. Follow my progress here. Scott Simmonds, CPCU, ARM, CMC "The Guy With the Big Insurance Brain" Providing Unbiased Insurance Assurance℠

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Property Insurance - Agreed Amount

I am in the middle of about 150 different insurance bids and one thing is standing out, agreed amount.

First, agreed amount is an endorsement to property insurance that removes the coinsurance penalty. Coinsurance is a penalty. Agreed amount removes the penalty. It is a good thing for insurance buyers.

I am amazed at how many agents deliver proposals with a coinsurance penalty. There are maybe one in 1,000 accounts that should not have agreed amount - from the insureds perspective. I no longer provide bid specifications when I am getting competitive quotes for a client. I let the agent design the insurance program so I can see what kind of insurance brain an agent has.

Proposing a policy with a coinsurance penalty does not impress me. Call your agent. Ask if your property insurance has a coinsurance penalty. If the answer is yes, ask why. This single mistake is so basic as to be almost a litmus test to determine if an agent is looking out for his client.

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Flood

I just realized that it has been some time since I talked about flood insurance. There are many new readers who may have missed past rants. Here goes... -Home insurance policies do not cover damage caused by a flood. -Business property insurance do not cover damage caused by a flood -The only way to find flood coverage (for most) is to get protection through the National Flood Insurance Plan. -Even with flood insurance through the NFIP, you won't have coverage for the loss of business income that comes from being shut down due to a flood. In short, the peril of flood is a risk management challenge for most people and most businesses. Talk with your insurance advisor for more information. Scott Simmonds, CPCU, ARM, CMC "The Guy With the Big Insurance Brain" Providing Unbiased Insurance Assurance℠

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Smart Money Article - Insurance Issues of Laid-Off Workers

A writer from Smart Money magazine called yesterday with some questions about insurance for people who have lost their jobs. Article Here. Scott Simmonds, CPCU, ARM, CMC "The Guy With the Big Insurance Brain" Providing Unbiased Insurance Assurance℠

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H1N1 Flu and Insurance

The staff at the National Underwriter just put out a paper that outlines insurance issues relative to the current concern the flu. I am not jumping up and down about this whole thing. More than 30,000 Americans die each year from the seasonal flu. That fact is getting lost in the news reports of cases in the hundreds. Here is the link for those who are interested. The short answer? If someone can prove you gave them the flu you may have insurance coverage. However, I dare say that your time is better spent looking at your building insurance limit and making sure you have enough business income coverage. However... Scott Simmonds, CPCU, ARM, CMC "The Guy with the Big Insurance Brain" Providing Unbiased Insurance Assurance℠

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General Liability and Mental Anguish

General liability policies that protect most American businesses are designed to provide coverage for bodily injury and property damage to a customer or visitor.

Examples of bodily injury... A customer slips on your walkway. A product you sell causes a person to become ill. An employee causes a fire that burns down the hotel they are staying at. Faulty construction causes a collapse and ten people are killed.

The policy defines bodily injury as "bodily injury including death." Yes, bodily injury is really defined as bodily injury. In most states bodily injury does not include emotional distress or mental anguish. Some insurers have special endorsements to the policy that adds emotional distress and anguish. Some, not all. This could be a significant coverage hole in your insurance program. Talk with your insurance adviser.

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Insurance Regulation

The following is a letter I wrote that has been published in the insurance publication, The Standard, May 1 edition. (Reprinted by permission.) This outlines my feelings on government regulation of all kinds - not just insurance. To The Editor, Your April 24th article on the UConn panel of regulators points to the fatal flaw of government regulation. Nowhere was there any mention made of the downside of regulation. The costs are high and many. First, there is the cost to the taxpayers. Millions and millions of dollars are spent to staff and run the state departments of insurance. These are dollars that could be in taxpayer's pockets. Next is the cost to industry. Again, huge. These are direct, in the fees charged, and indirect in the expenses of following the regulations while trying to stay in the good grace of the regulators. These costs increase the cost of insurance to the public. There is also a cost to consumers in that regulation keeps new products and services from entering the marketplace quickly. Further, insurers cannot react promptly to changes in consumer demand for innovative extensions of current products. How much innovation have we seen lately in the most widely regulated insurance product - health insurance? These costs are overshadowed by the cost of freedom. Capitalism and freedom are like pregnancy. You can not be a little pregnant, a little capitalistic, or a little free. A free market allows willing buyers and willing sellers to deal together without interference - each to their own self interest. Getting and giving is based on the best value the parties can obtain. The rare dishonest or fraudulent transaction is well handled by a court system responding to facts and evidence. The article states the arrogant regulatory premise that insurance consumers are too stupid to understand what they are buying. It follows that regulators see the industry as evil in that without regulation the Snidely Whiplashs of the insurance industry will cheat and dupe the public. Those of us who have been in the industry for any time know the opposite is true. We are an honorable industry that serves the needs of the insurance buying public. Sure, we are out to make a profit. However, we know that profit only comes from providing value. If we don't provide value our clients will leave us in search of others who are eager to provide it. We also know that our industry is not immune to bad apples. The initiation of force and fraud is always wrong. The courts should be used to take care of such acts. Poor performance in the marketplace is also punished by a bad reputation. In our society of freely available information and empowered consumers a stellar reputation is required for success. Those who perform well will be rewarded by the market. Bad actors will be punished. Some will comment that the current economic maelstrom is caused by too little regulation. From what I see, regulation caused the current problems with its overly protective processes that lead to a whirlwind of unintended consequences, the cost of which are never born by or recognized by the regulators. Our industry and our economy is not helped by regulation. Regulation is an unnecessary friction in commerce and a impingement of our freedoms. Scott Simmonds, CPCU, ARM, CMC

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Insurance Assurance℠

It's now official. Insurance Assurance℠ is in the process of being trademarked. The application is on its way to Washington. Now, the correct spelling of the phrase is "Insurance Assurance℠." Scott Simmonds, CPCU,ARM,CMC "The Guy with the Big Insurance Brain" Providing Insurance Assurance℠

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