Seth Kahan and I are active members of a consulting community founded and run by Alan Weiss.
Several months ago he started a project of interviewing some of us.
Here is the recording of his interview with me.
We talk about my practice, how I started, some of the tools I have used, and some of my breakthroughs that have helped me succeed.
I was recently asked about the issues with insuring a personal vehicle on a business auto policy. Here's what I said:
The name on the title/lease should be the name on the insurance policy.
A personal auto policy is for a person.
A business auto policy is for a business (corp, LLC, partnership...).
Messing with any of the above is asking for insurance trouble.
Two issues - Coverage and Pricing:
Coverage -- Your personal auto policy allows you to use your personal vehicle in the conduct of your business - unless you are racing or a taxi service. Ride-sharing / car-pooling is not a taxi service.
Underwriting / Pricing -- Personal auto policy premiums are partially based on usage - personal use, commuting, business use. I drive 10,000 miles a year - about 3,500 of which is business use. My policy is rated for personal use - I told my agent how much I drive for business and he rated the policy as personal use. Some would rate this as business use.
Most property insurance programs limit coverage for loss of business income to 12 months.
Is that long enough for you? In many areas the time it takes to get permits and meet regulations can eat away 3 months or more. You need a contractor who can move quickly, and you may deal with labor and material shortages if your building is destroyed in a wide-area disaster.
Think about extending your business income insurance to 18 months.
Insurance rating org AM Best is predicting that the commercial insurance market will start a move to higher prices, according to the Insurance Journal.
I don't know if their prediction is right or not. I do know that the insurance marketplace right now is competitive for good risks. There are a great number of insurers chasing renewals and new business.
In any market insurance buyers do better when there is competition for their business. If you have not tested the market recently, consider getting alternate quotes now.
Recent bid project:
- expiring premium $60,000
- renewal offer from current insurer $55,000
- offer from another agent $26,000 - higher property limits and an extra $2m umbrella
I'm working with a client who has upwards of 50 different insurance policies. When I did my first review of coverage, I suggested that the premium on one policy looked high to me.
I was assured that the agent was a good guy, and took great care of my client. I continued my review only to find several indications that my client was being taken advantage of. I pushed to get alternative quotes on a few policies, including the one mentioned above.
Another agent was given a chance and came up with a policy with all the coverage of the original, plus a $2,000,000 umbrella.
Old Premium $60,000
New Premium $25,000
Your impression of your agent is just that, an impression. Until you get competitive quotes, you do not know if you are paying a reasonable premium for adequate coverage.
A few days ago I was interviewed by Seth Kahan for his website. Seth is a master marketer and business advisor - www.VisionaryLeadership.com.
He complimented me on my website, its organization, and the content I provide. Then he said that this blog was a virtual stream of consciousness collection. I think he was trying to compliment me. I'm not sure it hit me that way.
This blog was started years ago as a way for me to put my thoughts, opinions, and advice on insurance and risk management out there. I know of no other website where there is this much information on a wide variety of insurance topics written by someone who does not have a policy to sell.
Seth, I know you meant well, and frankly I'm not offended. Next time you need insurance info come here and use the search box. If what you need is not here, I owe you a beer.
An insurance buyer emailed me last week saying that she had asked her insurance agent to provide an objective review of their insurance.
I wrote back that she was asking the agent to judge his own work.
That, my Dad used to say, is like shipping lettuce by rabbit.
I think it was Warren Buffet who said, "Never ask your barber if you need a haircut."
I'm participating in a few insurance industry Internet forums discussions over how often a business should bid their insurance.
One agent answered honestly (wink) when he said, "Every year until they hire me as their broker, then they should stop!!!!!"
Naturally the answers are diverse and many are not unexpected. The old standard of not more than every three years is often repeated. Many insurance people take the position that an insurance buyer should never bid - unless they are unhappy.
I'm wrestling with my experience over the past few years. What I have seen is that insurance buyers who do not bid their insurance do not get treated to the discounting and policy enhancements that come out of a competitive bid.
Certainly price is not the only factor in the insurance transaction. It is important though.
Here are the responses from all forums so far.
I have been spending a fair amount of time thinking about the commercial insurance bid process.
Lately I have posted to several insurance discussion websites looking for input and comments on the current market and traditions.
Here are some of the comments so far.
I'd like to open it up here too.
Insurance buyers, when you bid your insurance what is your experience? How can the process be improved?
Insurance people, what advice do you give your clients? Do you give different advice to prospects? How do you like to see the process set up?
Respond here or to me privately - Scott@ScottSimmonds.com.
I have some ideas on some changes I plan to make when I take a client out to bid. More here after I have assimilated what has been said so far.
I just finished reading Rick Dacri's Maine Employment Law Guide. It is excellent. Simple and straightforward information well organized and delivered. A must for any employer.
He has a Massachusetts version too.
http://www.dacri.com/store.htm
Insurance buyers will soon see the new certificate of insurance forms recently issued by ACORD.
The biggest change is a change in the cancellation language. The new forms will read,
"Should any of the above described policies be cancelled before the expiration date thereof, notice will be delivered in accordance with the policy provisions."
Basic liability insurance policies like the general liability and umbrella liability policies do not cover pollution.
Want to test to see if your agent is any good? Ask her what insurance companies she will go to to get you a quote on pollution liability insurance.
Here is the answer for most US businesses: Zurich, ACE, Chubb, Chartis, Zurich, XL, Philadelphia, and Evanston.
There are certainly others. These are the big players though.
If it takes your agent more than a day to get back to you with the above list of companies or they only name one or two of the above, start asking questions.
A strange insurance term to be sure. Seems like an oxymoron.
Marine insurance was defined by the National Association of Insurance Commissioners in 1953 and revised in 1976. Being a group of bureaucrats, the definition is long, ambiguous, and completely useless. Imagine holding a series of meetings on this in 1956 then doing it again in 1976. Me thinks they had too much time on their hands.
In effect, marine insurance is a class of insurance dealing with property involved in transportation.
Inland marine is property dealing with transportation that does not involve the ocean. Ocean property is, naturally, called ocean marine.
Moving a piece of property from fire insurance onto a marine insurance policy can mean more pricing flexibility for the underwriter as the rates are not as regulated. There is also more flexibility in coverage forms used.
Class dismissed.
Not long ago I read about a tanker truck that overturned causing neighborhoods to be evacuated.
We are not too far from the Maine Turnpike. When the wind is right, we can hear the traffic noise.
Of course, if the wind was wrong, at the wrong time, we would be impacted by a tanker spill.
Yesterday I was thinking about how we would get out if we had to evacuate. I pulled up Google maps and looked for alternative ways away from the turnpike. It would bring us to roads we do not use and are not familiar with - back country.
Im going to drive those roads sometime soon. I am also going to put together a plastic bin with some basic stuff we can just grab if we have to go.
When being prepared is so easy, why not do it?
Many states have volunteer immunity statutes that offer protection for liability while doing charitable work.
Google your state name and "volunteer immunity."
Such laws can not be depended on to provide protection for directors and officers in the non-profit world.
Such laws only protect volunteers for state issues - no protection from federal law and rules - ADA, EEOC, discrimination laws, etc.
I say again, these laws are not a replacement for directors and officers insurance.
According to Ray Burnham's Insurance Dictionary (www.BurnhamSystem.com), a hold harmless agreement is a "contractual provision in which one party assumes another's legal liability, as a contractor may assume an owner's liability based on the contractor's actions; is another term for indemnity agreement."
I use the phrasing, "When one party agrees to take the bullet for another party," when describing hold harmless and indemnity clauses."
Use caution when agreeing to assume liability for someone else. While many insurance contracts will follow you in such agreements, some will not. Further, if the agreement is too broad, you could be assuming liabilities that your insurance does not cover. For example, pollution is excluded from most liability insurance policies. However, your indemnification agreement may may you liable for pollution liabilities.
In the past two days I have received two catalogs of video security equipement.
The technology is at a point (as is the price) that I cannot understand why any business would not have a video system monitoring the parking lot, sensitive areas such as cash registers, and exits. For $600, you can have a full system of DVR, 8 cameras, software, cables, internet hookup, etc. For $300, you can get everything you need in 4 cameras.
I'm wondering why people are not buying these for their houses and neighborhood.
Consider a drug testing policy for your employees. There are testing labs in almost every community that can help with the process.
There are also DIY kits you can buy at many drug stores. Drug and alcohol abuse can be the cause of huge expenses for businesses - impaired driving, workplace accidents, theft losses...
Check with your employment lawyer before implementing a policy. State laws vary.
Broker Of Record Letter is form letter used to indicate to an insurance company a policyholder’s preference as to which insurance agent will have exclusive rights to the insured.
When you submit a "BOR" you fire your current agent for that insurer and exclude all other agents/brokers from accessing that insurance company.
Most commercial insurers will only work with a single agent for a particular insured. The BOR process is how you, as the insurance buyer, can move from one agent to another.
Typical BOR language: "By this letter we appoint XYZ Insurance Agency as our broker of record. This letter supersedes all past notifications and is effective immediately."
Some agents have started adding language to limit "BOR Wars." "This assignment of broker will not be rescinded and is effective from now until February 15, 2011." Some insurers will not accept such declarations.
I get calls every week from readers of this blog. Frankly, it's fun and an ego boost.
A caller today asked the difference between how I approach insurance and what an agent does.
Agents (usually) work for an insurance company and are paid on a commission basis - bigger premiums = bigger commissions.
I work for the insurance buyer - they pay my fee. My fee is not dependent on buying or not buying a policy. My only interest is getting my client the best coverage at the best price with the best service.
-I never sell insurance.
-I don't care if a client buys a policy or not.
-I don't have to worry about how a recommendation will impact an insurance company.
Reminder!
OSHA 300A Summary logs must be posted today.
They must be up today and left up until April 30
Everything you'd want to know about OSHA - http://www.osha.gov/.
If you provide a car to an employee who does not own a car insured by a personal auto policy, that employee has an insurance problem.
Under a personal auto policy coverage is extended to protect the insured when she is driving a friend or neighbor's car - or any non-owned vehicle.
That coverage is not provided on a commercial auto policy.
Talk with your insurance advisor about adding "drive-other-car" coverage to your commercial auto policy.
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Scott lives in Maine and runs a successful consulting firm. He has worked with over 1,500 businesses in his 30 year career.
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