Here are a couple thoughts on the Commercial Umbrella Policy. This is a policy that most businesses carry because some agent told them it was good to have and most of the businesses they communicate with have one as well. But do you know what the purpose of it is? Do you know how big it should be? Do you know how it works? Try to picture in your mind an actual umbrella that protects you from the rain and I think we might use this to paint a mental picture of how this policy functions.
First, you only use it when it rains. When the sprinkles turn to rain drops, then to hail, it's time to pull out the umbrella and protect yourself. When you find your business in the middle of a lawsuit that could settle for far more than your underlying insurance limits, this is where the umbrella policy kicks in. It provides extra limits on top of your standard liability limits (Most commonly $1 million per occurence).
Second, how much do you need to protect? Are you by yourself in the rain or do you have your family of 8 with you? A Commercial Umbrella policy can be as large as you want it to be. The good news is, the first million is always the most expensive. Beyond that, it gets cheaper for each additional million $ in coverage you choose to add. What it comes down to is: What is at stake? How much is the business worth? Beyond what point are you willing to take on the risk? Sometimes I refer to the Umbrella Policy as sleep insurance. You can sleep well at night knowing that whatever claim may be brought against you will be sufficiently covered and settled by your insurance company. Ideally, you would carry an umbrella big enough to protect the whole family.
Last and MOST IMPORTANT...Pay attention here...This is something that is frequently misunderstood. The insurance company that writes the Umbrella policy first looks at what the underlying protection is and requires that the full limits of that underlying protection be in place at the inception of this policy. So, as a business owner, the first thing you should do is have the same annual date on ALL of your commercial policies. This is something that is frequently misunderstood because most agents don't take the time to explain the ramifications of moving an effective date to improve your pricing on one piece of the pie. They just want the pie. I won't go into all the examples of why this could be a problem but I am happy to explain individually in more detail. The other thing is that all of your insurance policies should be with the same insurance carrier whenever possible. One example:
X Insurance Company underwrites a Commercial Umbrella Policy. They agree to write a $5 million umbrella policy over the underlying coverages already quoted by their own company. These underlying coverages might include General Liability, Auto Liability, Employer Benefit Liability, Professional Liability, etc. They have agreed to write the Umbrella policy based on the fact that they know the terms & conditions of the underlying insurance because it is also written by their company. The Umbrella policy is written under the assumption that these specific underlying coverages will be maintained throughout the policy period. Local Business enters into an agreement with X insurance company to provide all this insurance. 6 months later, here comes Stud insurance agent. Stud promises Local Business that he can save them 20% on their Commercial Auto insurance. The owner decides that sounds pretty good and allows Stud to bring them some quotes. The next day, Stud shows up with a quote for the Auto insurance and sure enough, he has lowered the price dramatically. The owner decides it is his best option to cancel his current policy with X Insurance half way through the year and move this piece of the insurance business. Stud is thrilled because he just picked up a piece of business and is walking away with his commission.
Here's what Stud never explained to the owner about moving this policy: The limits may have been slightly modified to bring premiums down, the terms and conditions with his company are different than those written by X Insurance, the financial rating is slightly different, the deductibles have changed a little bit, etc. So what happens when Local Business has a huge Auto claim 3 months later and tries to use the limits of their $5 million Umbrella Policy? Remember the conditions under which the policy was originally written? These additional limits of protection will no longer be available above the limits of the Auto policy.
Unfortunately, these are the types of things that all to often go unexplained to a business owner. The owner gets sucked in by low rates without considering the drawbacks because they don't understand insurance contracts. This is why you have an insurance agent that is a trusted advisor instead of a "Stud". This is why you should look for an agent that will openly discuss and take time to explain these things to you. This is one of the many, many examples of why you shouldn't make decisions about your business insurance solely based on price.
Thursday, January 13, 2011
Wednesday, January 5, 2011
A NEW YEAR
AS FAR AS WORK GOES, THIS IS MY FAVORITE TIME OF YEAR- THE FIRST OF JANUARY. IT MEANS NEW OPPORTUNITIES, NEW GOALS, AND A FRESH MARKET. EVERY BUSINESS WILL DEAL WITH THEIR INSURANCE SOMETIME IN 2011 AND HOPEFULLY THIS MEANS MORE OPPORTUNITIES FOR ME TO DO MY JOB AND PROVIDE ASSISTANCE IN THIS PROCESS. I AM REALLY LOOKING FORWARD TO THIS YEAR AS I AM ENTERING MY FOURTH YEAR IN THE INSURANCE INDUSTRY AND THIRD AS AN AGENT.
I ALSO LOOK FORWARD TO MEETINGS WITH MY CLIENTS AND MORE OPPORTUNITIES TO HELP THEM THROUGHOUT THIS YEAR AS THEY DEAL WITH CHALLENGES AND CHANGES IN THEIR BUSINESSES. I HOPE THAT THOSE OF YOU WHO READ MY BLOG WILL CONTINUE TO DO SO AS I STRIVE TO USE IT AS AN AVENUE OF FEEDING INFORMATION TO YOU AT YOUR CONVENIENCE. I WILL THEN BE ABLE TO BETTER SERVE YOU AS WE DISCUSS ANY QUESTIONS OR TOPICS IN FURTHER DETAIL AT OUR MEETINGS.
I WISH YOU ALL A VERY HAPPY AND SUCCESSFUL NEW YEAR!!
I ALSO LOOK FORWARD TO MEETINGS WITH MY CLIENTS AND MORE OPPORTUNITIES TO HELP THEM THROUGHOUT THIS YEAR AS THEY DEAL WITH CHALLENGES AND CHANGES IN THEIR BUSINESSES. I HOPE THAT THOSE OF YOU WHO READ MY BLOG WILL CONTINUE TO DO SO AS I STRIVE TO USE IT AS AN AVENUE OF FEEDING INFORMATION TO YOU AT YOUR CONVENIENCE. I WILL THEN BE ABLE TO BETTER SERVE YOU AS WE DISCUSS ANY QUESTIONS OR TOPICS IN FURTHER DETAIL AT OUR MEETINGS.
I WISH YOU ALL A VERY HAPPY AND SUCCESSFUL NEW YEAR!!
Tuesday, December 14, 2010
Key Man Insurance
“Key Man” Insurance
Losing an important employee who plays a large role in the company is a very tough ordeal for the whole organization. There is a large risk that the whole operation may be affected or hindered. For these situations there is the “Key Man” Insurance. It is intended to protect the company from a loss of the “key employee”. Unlike the traditional disability insurance wherein the employee is the recipient of the benefits, here in “Key Man” Insurance the company is the one who would reap the benefits. The insurance vehicles for key man insurance can take two forms: Disability insurance or life insurance. Even if you are your company’s only “key man”, you should consider taking out key man insurance on yourself. If there is anyone in your organization that you could not operate without or who's skills and experience drive your profitability then you might want to consider purchasing this type of insurance.
Losing an important employee who plays a large role in the company is a very tough ordeal for the whole organization. There is a large risk that the whole operation may be affected or hindered. For these situations there is the “Key Man” Insurance. It is intended to protect the company from a loss of the “key employee”. Unlike the traditional disability insurance wherein the employee is the recipient of the benefits, here in “Key Man” Insurance the company is the one who would reap the benefits. The insurance vehicles for key man insurance can take two forms: Disability insurance or life insurance. Even if you are your company’s only “key man”, you should consider taking out key man insurance on yourself. If there is anyone in your organization that you could not operate without or who's skills and experience drive your profitability then you might want to consider purchasing this type of insurance.
Thursday, December 2, 2010
A Nice Note From A Client Today
I really appreciate the occasional notes of acknowledgement I get from my insured's. I really need to do a better job of sending the same kind of notes to those who work hard for me.
"Thank you for following up on this. I appreciate the professional manner Blake and yourself handled this with our insurance company. You fought for our little business. In addition, Blake went a long way in educating me (your client) about our coverage, gave me (your client) options on how to go forward, shift coverage and still get the protection we need. In short, I am a grateful customer."
"Thank you for following up on this. I appreciate the professional manner Blake and yourself handled this with our insurance company. You fought for our little business. In addition, Blake went a long way in educating me (your client) about our coverage, gave me (your client) options on how to go forward, shift coverage and still get the protection we need. In short, I am a grateful customer."
GENERAL LIABILITY TO THE "T"
Most business owners and professional service providers purchase General Liability insurance because it is a very common requirement that they have it by the people they do business with. How many people actually understand General Liability insurance and what it is for?? I want to take a minute to walk through an example which will hopefully help us all understand it a little better. I think if we understand it a little better then we might have a greater appreciation for it, which will also help us to know why it can be so dang expensive!
For my made up example, I am going to use John's Manufacturing Co. John manufactures children's toys and ships them to various distribution outlets. EVERYBODY John wants to do business with is requiring him to provide them a certificate of insurance for General Liability which includes Products and Completed Operations. The retail outlets that sell his goods want to be Additional Insureds on John's policy. John has never had any problems with any of his toys and has never had a single complaint. So, let's address some of the questions as to why John needs to have this policy in place.
What does the General Liability policy cover?
This policy protects John's Manufacturing Company againt Bodily Injury or Property Damage arising out of his operations. Generally, defense costs are outside the limits of insurance so any claim or lawsuit that is brought against John's Manufacturing Co. for Bodily Injury or Property Damage will be defended by his insurance company until settled. Any idea how much those defense costs alone can add up to?? Then, any settlements will reduce his limits for the policy year accordingly.
Nothing has ever happened before. What could possibly go wrong? Here are a few scenarios:
A school class visits John's Manufacturing facility on a field trip. While touring the buildings, one of the students is badly burned by a piece of equipment. The students family brings a lawsuit against John's Manufacturing. This type of injury could happen at any business to any visitor. A slip and fall, a negligent employee, failure to block access to a dangerous area, etc. Your premises can be a huge liability exposure for your company.
A child is poisened by a chemical used in the paint on the toys and the family brings a lawsuit against John's Manufacturing because of the unsafe product. Does your business have any products/completed operations that could potentially harm somebody?
John hires an electrician to update some wiring in his building. During the process, the electrician starts a fire which burns a large portion of the neighboring building which belongs to another business. The other business sues the electrician AND John's Manufacturing for their damages. John's insurance company will defend him in this circumstance until a settlement is made. Is what might happen is that the business sues the electrician but finds out that they dont have proper insurance or their insurance is insufficient, then they drag John's Manufacturing into the lawsuit. This is where the importance of hiring quality subcontractors comes into play and getting insurance certificates from them naming you as an Additional Insured if they are going to perform some work or provide some product on your behalf. This is why we are all required by the people we do business with to carry our own insurance!
I hope this helps clarify the General Liability policy a little bit. I am happy to answer any questions or discuss certain circumstances with you individually anytime. Truth is, there is a wide range of exposures for any business or individual that provides a product or service. The examples are endless and some of the lawsuits/settlements that go through an insurance carrier would amaze you. Remember, your business and all of it's assets are at stake and in some instances you can personally be liable in these situations. As a side note, an Umbrella policy provides excess limits to your insurance policy in the event that you have a huge claim or your base limits are exhausted. It is not uncommon for us to insure our business clients with a $5,000,000 Umbrella Policy on top of their $1m/$2m General Liability limits but these Umbrella's can go up to whatever limits make you feel comfortable.
For my made up example, I am going to use John's Manufacturing Co. John manufactures children's toys and ships them to various distribution outlets. EVERYBODY John wants to do business with is requiring him to provide them a certificate of insurance for General Liability which includes Products and Completed Operations. The retail outlets that sell his goods want to be Additional Insureds on John's policy. John has never had any problems with any of his toys and has never had a single complaint. So, let's address some of the questions as to why John needs to have this policy in place.
What does the General Liability policy cover?
This policy protects John's Manufacturing Company againt Bodily Injury or Property Damage arising out of his operations. Generally, defense costs are outside the limits of insurance so any claim or lawsuit that is brought against John's Manufacturing Co. for Bodily Injury or Property Damage will be defended by his insurance company until settled. Any idea how much those defense costs alone can add up to?? Then, any settlements will reduce his limits for the policy year accordingly.
Nothing has ever happened before. What could possibly go wrong? Here are a few scenarios:
A school class visits John's Manufacturing facility on a field trip. While touring the buildings, one of the students is badly burned by a piece of equipment. The students family brings a lawsuit against John's Manufacturing. This type of injury could happen at any business to any visitor. A slip and fall, a negligent employee, failure to block access to a dangerous area, etc. Your premises can be a huge liability exposure for your company.
A child is poisened by a chemical used in the paint on the toys and the family brings a lawsuit against John's Manufacturing because of the unsafe product. Does your business have any products/completed operations that could potentially harm somebody?
John hires an electrician to update some wiring in his building. During the process, the electrician starts a fire which burns a large portion of the neighboring building which belongs to another business. The other business sues the electrician AND John's Manufacturing for their damages. John's insurance company will defend him in this circumstance until a settlement is made. Is what might happen is that the business sues the electrician but finds out that they dont have proper insurance or their insurance is insufficient, then they drag John's Manufacturing into the lawsuit. This is where the importance of hiring quality subcontractors comes into play and getting insurance certificates from them naming you as an Additional Insured if they are going to perform some work or provide some product on your behalf. This is why we are all required by the people we do business with to carry our own insurance!
I hope this helps clarify the General Liability policy a little bit. I am happy to answer any questions or discuss certain circumstances with you individually anytime. Truth is, there is a wide range of exposures for any business or individual that provides a product or service. The examples are endless and some of the lawsuits/settlements that go through an insurance carrier would amaze you. Remember, your business and all of it's assets are at stake and in some instances you can personally be liable in these situations. As a side note, an Umbrella policy provides excess limits to your insurance policy in the event that you have a huge claim or your base limits are exhausted. It is not uncommon for us to insure our business clients with a $5,000,000 Umbrella Policy on top of their $1m/$2m General Liability limits but these Umbrella's can go up to whatever limits make you feel comfortable.
Tuesday, November 30, 2010
Getting To Know Me...
I have read a lot of biographies, self-development and business books over the years and just wanted to put down a few things I have learned and share a little bit about myself. It may not be worth much to you but it is a good way of reminding me of the things I should be doing to build a profitable book of business and create valuable relationships along the way. Also, hopefully by getting to know me a little bit we can find more common ground and it will give me an opportunity to know you better as well. I dont want to be seen as some insurance freak that reads policies all day :) Please feel free to comment and add your business insights and philosophies and share your interests also!
1) "Never Eat Alone" This is a book I read by Keith Ferazzi about building your network. This has been a hard thing for me to do but one way I have been able to use it is by trying to attend a lunch group at least once a week. For me, these groups include Exchange Club, WSU roundball, Rotary, local business presentations, etc. I find that I am able to spend about an hour of quality time with people who have some of my same interests and who are generally eager to stay in contact and help each other in our business endeavors.
2) Never burn bridges. This can be difficult when you get to the end of a conversation with a long-term client who is ending the relationship because they found a better price or some other reason. My theory has been and always will be that I should respect my clients decisions and try my best to continue our relationship whether I get their business or not. For me, it isnt about business so much as it is about people. Nevertheless, I know that a clients business has to be earned each and every year and am committed to doing everything in my power to keep my clients and provide the best price and service possible. Sometimes when you lose a client it is only a matter of time before they come back seeking your help. If you act bitter and upset about their decision then chances are they won't ever be coming back.
3) Apply your knowledge. Many of us spend countless hours studying our trade and trying to become experts in our industry but when it comes down to finding new business we end up doing as little as possible to close the deal. What happens when we apply our knowledge and spend adequate time analyzing and making recommendations for our prospects? We win. The amount of effort you put into a proposal will clearly show during the presentation. Rather than getting the specs and quoting, we need to spend more time analyzing, making recommendations, asking questions, negotiating, and understanding the agreements if we are to truly bring value to our clientele.
4) "The Golden Rule". We all know what it is, but do we apply it in our business transactions? Do we value relationships, service, expertise, and credibility instead of focusing only on the price? I find it difficult when I am buying a new car or a house or negotiating my cable bill to try to suck every dollar I possibly can out of my provider. I understand that they need to make a profit also and I seek a fair price based on the options available to me. I hope that my clients accept this principle as well because I cant always guarantee that there isnt some unknown or overlooked insurance company that will pop up out of nowhere and beat my price. I normally make suggestions to my clients after reviewing a number of viable and competitive options and it may not always be the one with the lowest price.
5) Hard Work. There really is no substitute for putting in the hours, making the phone calls, meticulously reviewing proposals and quotes, responding to emails, making yourself available, seeking others opinions, understanding the marketplace, providing excellent service, going the extra mile, and giving your all. Day in and day out there are no excuses. This is what it takes to be successful in any economy. I am a firm believer that the harder I work the luckier I get. It always takes a little luck but that luck is usually a direct product of doing everything in my power to make it happen.
6) Have Fun. For me, work is fun for the most part but it cannot fill this need. I have decided that I need to take a break every once in a while to go on vacation, spend time with my family, or take an occasional day off so I can be my best self when I am in the office. I like to know what my clients do for fun so we have things to talk about besides insurance when we get together. I find that it is generally pretty easy to find common interests with people and it makes working with them much more enjoyable knowing that they are real people and not 100% business all the time.
Here are a few of my interests you may not be aware of. If you have some of these same interests, let's talk about it the next time we get together!
I am an avid exerciser, I played golf in high school, I served a church mission for 2 years in El Salvador, I lived in Puerto Rico for 5 months selling home security, I like to play/watch any sport, I am a snowboarder and a skiier, I love to boat in the summertime, I love to travel and have been fortunate to visit many states and other countries including: Mexico, Canada, Peru, UAE, and India. I like to hunt and fish. I like to read business books, american history, and biographies. I enjoy Utah and BYU athletics but at heart I am a Weber State Wildcat! Most of all I like spending time with my wife and my 10 nieces and nephews.
I am generally an open book. I like to be completely honest with my clients about who I am and what I can do for them. I do not use shady sales tactics and I would never hesitate to answer a client's phone call. I don't always have every answer immediately but I can always find the answer. I dont overpromise or always say what you want to hear but I can back up my words every time.
1) "Never Eat Alone" This is a book I read by Keith Ferazzi about building your network. This has been a hard thing for me to do but one way I have been able to use it is by trying to attend a lunch group at least once a week. For me, these groups include Exchange Club, WSU roundball, Rotary, local business presentations, etc. I find that I am able to spend about an hour of quality time with people who have some of my same interests and who are generally eager to stay in contact and help each other in our business endeavors.
2) Never burn bridges. This can be difficult when you get to the end of a conversation with a long-term client who is ending the relationship because they found a better price or some other reason. My theory has been and always will be that I should respect my clients decisions and try my best to continue our relationship whether I get their business or not. For me, it isnt about business so much as it is about people. Nevertheless, I know that a clients business has to be earned each and every year and am committed to doing everything in my power to keep my clients and provide the best price and service possible. Sometimes when you lose a client it is only a matter of time before they come back seeking your help. If you act bitter and upset about their decision then chances are they won't ever be coming back.
3) Apply your knowledge. Many of us spend countless hours studying our trade and trying to become experts in our industry but when it comes down to finding new business we end up doing as little as possible to close the deal. What happens when we apply our knowledge and spend adequate time analyzing and making recommendations for our prospects? We win. The amount of effort you put into a proposal will clearly show during the presentation. Rather than getting the specs and quoting, we need to spend more time analyzing, making recommendations, asking questions, negotiating, and understanding the agreements if we are to truly bring value to our clientele.
4) "The Golden Rule". We all know what it is, but do we apply it in our business transactions? Do we value relationships, service, expertise, and credibility instead of focusing only on the price? I find it difficult when I am buying a new car or a house or negotiating my cable bill to try to suck every dollar I possibly can out of my provider. I understand that they need to make a profit also and I seek a fair price based on the options available to me. I hope that my clients accept this principle as well because I cant always guarantee that there isnt some unknown or overlooked insurance company that will pop up out of nowhere and beat my price. I normally make suggestions to my clients after reviewing a number of viable and competitive options and it may not always be the one with the lowest price.
5) Hard Work. There really is no substitute for putting in the hours, making the phone calls, meticulously reviewing proposals and quotes, responding to emails, making yourself available, seeking others opinions, understanding the marketplace, providing excellent service, going the extra mile, and giving your all. Day in and day out there are no excuses. This is what it takes to be successful in any economy. I am a firm believer that the harder I work the luckier I get. It always takes a little luck but that luck is usually a direct product of doing everything in my power to make it happen.
6) Have Fun. For me, work is fun for the most part but it cannot fill this need. I have decided that I need to take a break every once in a while to go on vacation, spend time with my family, or take an occasional day off so I can be my best self when I am in the office. I like to know what my clients do for fun so we have things to talk about besides insurance when we get together. I find that it is generally pretty easy to find common interests with people and it makes working with them much more enjoyable knowing that they are real people and not 100% business all the time.
Here are a few of my interests you may not be aware of. If you have some of these same interests, let's talk about it the next time we get together!
I am an avid exerciser, I played golf in high school, I served a church mission for 2 years in El Salvador, I lived in Puerto Rico for 5 months selling home security, I like to play/watch any sport, I am a snowboarder and a skiier, I love to boat in the summertime, I love to travel and have been fortunate to visit many states and other countries including: Mexico, Canada, Peru, UAE, and India. I like to hunt and fish. I like to read business books, american history, and biographies. I enjoy Utah and BYU athletics but at heart I am a Weber State Wildcat! Most of all I like spending time with my wife and my 10 nieces and nephews.
I am generally an open book. I like to be completely honest with my clients about who I am and what I can do for them. I do not use shady sales tactics and I would never hesitate to answer a client's phone call. I don't always have every answer immediately but I can always find the answer. I dont overpromise or always say what you want to hear but I can back up my words every time.
Friday, November 19, 2010
IMPROVE YOUR INSURABILITY!
One of the things I try to do for each of my clients is to build a positive insurance profile and summary before submitting the account to an Underwriter. Underwriters LOVE information. They like to see details, descriptions, brochures, contracts, updates, etc. Most importantly, they like to see an ongoing Risk Management program. This shows the insurance company that the owner is doing everything in their power to prevent claims. These are the companies that get the credits and have access to more insurance carriers.
Often times, insurance carriers will offer quotes in certain industries based on their definition of “Best in Class.” For example, they may not typically write a Waste Hauler but if they receive a detailed submission showing the things they want to see, then they will likely consider offering a very competitive quote. Why? Because the truth is that most businesses purchase insurance in lieu of implementing proper risk management. The ones that do implement a quality risk management program will reap insurance rewards. Many insurance companies will request an inspection by an outside agency or send their own before deciding whether to provide a quote on something. So, what are they looking for?
Things to make a building look better to an insurance company include:
• Hard-wired smoke detectors
• Proper handrails and fire escapes
• Child-safe window hardware
• Sidewalks free of major cracks
• Closed fire doors with proper panic hardware
• Well-lit hallways and walkways
• Following regulations for elevators and laundry rooms
• Control of all maintenance issues: Practice good maintenance–no wet floors
• Do routine repairs
• Mold eradication
Make sure your risk profile includes all safety-related improvements in the property such as any alarm systems, security cameras, addition of a doorman, improved lighting, and anything else that makes your building more appealing to an insurance underwriter who can then apply credits for the safety measures taken.
Advise your insurance broker of upgrades and repairs to your building. Upgrades to major systems such as heating, electric, and plumbing greatly improve your risk profile and can present your property better to the insurance company. This may lead to better pricing and broader terms when the insurance companies offer you quotes. Insurance companies show their appreciation to those risks that have improved profiles and ongoing risk management by offering them lower rates and policies with broader terms.
Similar risk management principles apply to Auto Insurance, Workers Compensation, and General Liability. Continued maintenance, proper safety restraints and trainings, quality PR and documentation, etc. will greatly improve your insurability.
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