Young Agents Assets: How to Leverage LinkedIn for Prospecting

Do you have a LinkedIn profile? If yes, great! Sixty percent of brokers named it as their social network of choice to prospect for new clients in a 2015 survey, a clear winner over Facebook — which came in second at 14 percent. If you don’t have a LinkedIn profile, create one.

The bigger question is, “How hard is your LinkedIn profile working for you?” LinkedIn is an incredibly powerful tool for insurance brokers, especially when it comes to prospecting for new clients. However, simply having a presence on LinkedIn is not enough. You have to actively engage with potential clients.

So whether you are new to the network or are looking for a way to improve your LinkedIn presence, here are 4 strategies to help you out:

Optimize Your Profile

If you’re new to LinkedIn or have a passive presence, your profile may not seem like a difference maker, but the opposite is true. The first thing potential clients do when they’re interested in your services is click on your profile to learn more. When that happens, you want to be sure to convey a professional and credible presence that entices them to get in touch with you.

A successful LinkedIn profile is more than just a resume. In addition to your work experience and expertise — which builds credibility — you also need an enticing summary about yourself and insurance services. Adding skills, certifications and volunteer experience helps make you more relatable in the eyes of potential clients.

Check out these insights on broker profiles, compiled by LinkedIn, to see how other insurance brokers represent themselves on the network.

Join and Engage in Groups

One of LinkedIn’s major distinguishing features is the ability to join groups and engage with like-minded professionals. For insurance brokers, this also presents an invaluable opportunity to engage with potential clients about their insurance.

You can find groups relevant to the industries of your clients by simply typing potential group names into the search box, or searching groups by industry from the Interests > Groups > Discover page. You can even create your own group, like the UIG Agent’s Assets Resource Group, and invite your current connections to join.

Once you’ve joined a few groups it’s time to start participating. It’s important to note that you should rarely, if ever, post straight sales pitches. Instead, offer your expertise related to currently discussed topics. This will allow you to build credibility, and eventually lead to potential clients clicking on your name to visit your profile.

Use Advanced Search

You can also seek out potential clients directly. Using the network’s advanced search feature, you can find members of your target industry to connect with. And then you can filter the results based on the location and industry relevant to you.

Once you’ve found potential clients, it’s time to connect. As stated earlier, many users don’t appreciate ‘cold’ connecting. Instead, seek out those users with whom you share a connection, past work history, or at least a common group. Then, see what groups they’re in.

If you belong to that group too, engage them in a conversation by commenting on a discussion they’ve started or commented on. Build a relationship from there. Don’t forget about InMail too.

Write Long Form Posts

Building credibility is not limited to participating in industry groups. On LinkedIn, you can also write long-form posts that act much like native blog posts, but with the benefit of added exposure. Not sure what kind of content to create, take a look at the UIG blog section for ideas or feel free to share.

Write several paragraphs about new developments within the insurance industry, your professional journey to this point, or even a current sales offer. Then, tag it with relevant tags, and watch it gain exposure. Publish a White Paper that’s on your website. This is a great way to develop trust and credibility and drive traffic to your website.

You can share completed posts with your followers and clients, both on and off the network. Thanks to the tags you add, they will also appear on LinkedIn’s Pulse section, where they gain exposure to professionals within your target industries. And, to bring it full circle, any post you publish will be added to your LinkedIn profile for future visitors.

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Coinsurance Part II: Business Income & Other Tools

Earlier this year, we unpacked an article written by William Austin, principal, Austin & Stanovich Risk Managers, LLC, about the importance of arriving at a fairly accurate property valuation in order to avoid a coinsurance penalty. We’re resuming our conversation to examine coinsurance as it relates to business income commercial insurance and a couple of other specialty areas including coinsurance tools.

The process to establish the coinsurance minimum limit for business income is more complicated than that used for building and contents direct damage. The reason is that the insured must determine net income and operating expense expected for the policy year and then deduct operating expenses that would not be expected to continue during the period of interruption (prepaid freight for outgoing shipments, cost of materials that would otherwise be consumed during the manufacturing process, power that is not consumed, ordinary payroll if it is not to be continued, etc.).

Extra expense coverage is not subject to a coinsurance clause. The insured can ask the insurer to quote any limit that is deemed appropriate. Extra expense coverage, when offered as coverage separate from business income, may contain certain percentages such as 40/80/100. These percentages are not coinsurance, but a means to limit the payout of the coverage: up to 40 percent for the first month of recovery; up to 80 percent for the next month of recovery; and no more than 100 percent for the final month of recovery. It is important for the risk management professional to review any percentage used in extra expense coverage to ensure that the coverage provided meets the extra expense needs of the insured.

Example: Business Income

A manufacturer completed a business income worksheet for the recent policy period based on operating 240 days per year (after plant summer shutdown and usual employee paid holidays). The annual business income value is $8 million with an 80 percent coinsurance clause. The insured limit is $6.4 million, excludes ordinary payroll, and is subject to a one daily average value (ADV) deductible.

Scenario 1

A fire occurs and damages key equipment, and the plant must shut down for three months. A business income claim of $2.7 million is filed with the property insurer. What is the net insurance recovery after the deductible?

Scenario 2

Three months after renewal, the company lands three large contracts, and net income surges to an additional $3 million in five months. A fire occurs and damages key equipment, and the plant must shut down for 3 months. A business income claim of $2.7 million is filed with the property insurer. What is the net insurance recovery after the deductible?

Coinsurance issues can occur quickly if an organization experiences net profit growth that had not been expected at the time the business income worksheet was completed. This is what happened in Scenario 2. The risk management professional should compare actual net income to that forecast for the policy year on a regular basis.

Commercial Insurance Coinsurance Tools

A property insurer may waive the coinsurance requirements of the policy if requested by the insured and if the insurer believes the limit to be purchased is sufficient. This is often done by use of an agreed amount endorsement where the insurer will waive coinsurance for the policy coverage period. Sometimes insurers will provide an inflation guard endorsement to the policy in which the building and/or contents limit is increased a certain percentage at each renewal. Educating an insured on how coinsurance works may result in better selection of insured limits and lessen the potential for errors and omissions claim against the agent or broker.

Homeowners Insurance (HO 2 and HO 3)

Some insureds may be surprised to learn that a homeowners policy, especially if based on ISO policy forms, has a coinsurance clause that can impact coverage. In ISO forms, if the damaged home is 80 percent or more of the full replacement cost, then replacement cost valuation will be used subject to the lesser of policy limit or repair or replacement cost. If the insured home fails the 80 percent coinsurance requirement, then loss is settled on actual cash value.

National Flood Insurance Program (NFIP)

The NFIP Dwelling Form (ed. 5/08) provides replacement cost valuation if the dwelling is the insured’s principal residence and either the amount of insurance is at least 80 percent of the actual replacement cost value prior to loss, or the coverage limit is the maximum amount available from the NFIP.

The risk management professional needs to understand and point out to insureds that even an HO form and NFIP dwelling form have coinsurance requirements that can affect coverage.

 

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It can get hot in the kitchen in more ways than one

foodfire

Food plus fire can be an expensive combination. Nearly 8,000 eating and drinking establishments report a fire each year. These fires cause an annual average of $246 million in direct property damage. A fire can devastate your client’s business, leading to lost revenues and even permanent closure. We’ve provided some tips for you to share to help them prevent fires and minimize the damage.

Believe it or not, Thanksgiving Day is the number one fire insurance claim day in America. The biggest culprits: leaving cooking appliances unattended and the beloved turkey fryer. According to the National Fire Protection Association (NFPA), fryers alone result in about 1,000 emergency fire calls each year, causing about $15 million in damage annually — and that’s just on the residential side.

Now, flip the switch to the commercial side of things. Restaurants! With open flames, hot equipment, electrical connections, cooking oils, cleaning chemicals and paper products — our favorite eating establishments have all the ingredients for a fire to flame out of control. And, this is every day of the year, not just Nov. 26.

Restaurants pose a unique fire risk because of the large number of people congregating in one building where cooking is present, which is the No. 1 cause of restaurant fires. Nearly 8,000 eating and drinking establishments report a fire each year, according to NFPA 2006-2010 data. These fires cause an annual average of $246 million in direct property damage. The majority of the fires begin in the kitchen or cooking area, and four in 10 fires are reportedly ignited by food.

A fire can devastate your client’s business, leading to lost revenues and even permanent closure. But, there are steps they can take to prevent fires and minimize the damage.

Along with regularly reviewing UIG’s Hospitality program with your clients to help ensure they have the right coverage for all of their needs, here are some “Fire Prevention 101” tips from the National Restaurant Association to share:

Preventative maintenance

— Install an automatic fire-suppression system in the kitchen.

This is crucial because 57 percent of restaurant fires involve cooking equipment. These systems automatically dispense chemicals to suppress the flames and also have a manual switch. Activating the system automatically shuts down the fuel or electric supply to nearby cooking equipment. Have your fire-suppression system professionally inspected semiannually. The manufacturer can refer you to an authorized distributor for inspection and maintenance.

— Keep portable fire extinguishers as a backup.

You’ll need Class K extinguishers for kitchen fires involving grease, fats and oils that burn at high temperatures. Class K fire extinguishers are only intended to be used after the activation of a built-in hood suppression system. Keep Class ABC extinguishers elsewhere for all other fires (paper, wood, plastic, electrical, etc.).

— Schedule regular maintenance on electrical equipment.

And watch for hazards like frayed cords or wiring, cracked or broken switch plates and combustible items near power sources.

— Have your exhaust system inspected for grease buildup.

The NFPA Fire Code calls for quarterly inspections of systems in high-volume operations and semiannual inspections in moderate-volume operations. Monthly inspections are required for exhaust systems serving solid-fuel cooking equipment, like wood- or charcoal-burning ovens.

Staff training

Train your staff to:

— Find and use a fire extinguisher appropriately.

An acronym you may find helpful is PAST – pull out the pin, aim at the base, make a sweeping motion, (be) ten feet away.

— Clean up the grease.

Cleaning exhaust hoods is especially important, since grease buildup can restrict airflow. Be sure to clean walls and work surfaces, ranges, fryers, broilers, grills and convection ovens, vents and filters.

— Never throw water on a grease fire.

Water tossed into grease will cause grease to splatter, spread and likely erupt into a larger fire.

— Remove ashes.

From wood- and charcoal-burning ovens at least once a day. Store outside in metal containers at least 10 feet from any buildings or combustible materials.

— Make sure cigarettes are out.

Before dumping them in a trash receptacle. Never smoke in or near storage areas.

— Store flammable liquids properly.

Keep them in their original containers or puncture-resistant, tightly sealed containers. Store containers in well-ventilated areas away from supplies, food, food-preparation areas or any source of flames.

— Tidy up to avoid fire hazards.

Store paper products, linens, boxes and food away from heat and cooking sources. Properly dispose of soiled rags, trash, cardboard boxes and wooden pallets at least once a day.

— Use chemical solutions properly.

Use chemicals in well-ventilated areas, and never mix chemicals unless directions call for mixing. Immediately clean up chemical spills.

— Be prepared: Have an emergency plan.

If a fire breaks out in your restaurant, your staff must take control of the situation and lead customers to safety.

— Be prepared to power down.

Train at least one worker per shift how to shut off gas and electrical power in case of emergency.

— Have an evacuation plan.

Designate one staff member per shift to be evacuation manager. That person should be in charge of calling 911, determining when an evacuation is necessary and ensuring that everyone exits the restaurant safely. Train your staff to know where the closest exits are, depending on their location in the restaurant. Remember that the front door is an emergency exit.

— Offer emergency training.

Teach new employees about evacuation procedures and the usage of fire-safety equipment. Give veteran staff members a refresher course at least annually.

DOWNLOAD THE PDF

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Let UIG Put a Damper On Fire Risks

UIG is committed to being your finest resource and your most valuable partner. That’s why we’re continually developing better programs — like our dwelling fire coverage — so that you can provide your customers the best options at a competitive price. With the fall season around the corner, your clients will be turning their furnaces on. Make sure they’re ready for the unexpected.

Fire

UIG’s Dwelling Fire program gives agents and insured many benefits:

  • Service to a real market need
  • Competitively price
  • Exceptional commissions
  • Instant coverage options and price indications
  • Immediate binding and policy issuance
  • Coverage even available for swimming pools with diving boards up to 3 feet high

Eligibility:

  • One to four family tenant-occupied dwellings
  • No coverage for buildings with existing damage
  • No coverage for properties situated on more than 25 acres
  • All subject to satisfactory photos

Coverage Options Include:

  • Monoline Property, Package (Property and Liability), Contents, and Multiple Locations including schedules available
  • Residential forms ISO DP1 & DP3
  • Coverage A values from $75,000 to $500,000
  • Coverage B 10% of coverage A automatically included
  • Coverage C 10% of coverage available
  • Coverage D 20% of coverage A automatically included
  • Residential Premises Liability Limits: up to $1,000,000
  • Residential Premises Liability includes “Partnerships, Joint Ventures, Limited Liability Companies & Trusts”

To find out exactly how UIG can help, please send your Acord app and loss information to your UIG underwriter. Don’t have a UIG underwriter? Send the information to info@uigusa.com and we will get you one!

Also feel free to connect with us on LinkedIn and join our Young Agent’s Group.

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Commercial Insurance: Special Events 101

When it comes to special events, you never know when the worst-case scenario could become reality. Even with the most careful planning, unexpected situations do occur. Will you clients be prepared?

Whether your they’re planning a corporate event, holding a large rock concert, community festival, car show or convention, odds are insurance is the last thing on your clients’ minds. Help them protect themselves and their investment by doing the thinking for them.

Any time a major holiday or seasonal change is drawing near, like St. Patrick’s Day (March, 17, 2015. Gosh & begorrah!), is the right time to reach out to your clients and ask if they have any special events on their calendars. Offer to review their insurance policies to help identify any weak areas and options for filling those gaps.

To help educate your clients/prospects on special events insurance, here is a list of possible questions that you could use to develop a Q&A, make sell sheets, post to your website or use in social media posts:

What is Special Event General Liability Insurance?

Special Event Liability Insurance (also referred to as CGL, Commercial General Liability or Spectator Liability) is an insurance policy designed to provide broad protection for situations in which an event holder or concessionaire must defend itself against lawsuits or pay damages for bodily injury or property damage to third parties. Host liquor liability is included if there is no transfer of money for alcohol. This policy also gives protection to the venue and or sponsors of the event by adding them to the policy as an additional insured. Examples, such as a slip and fall or damaged floors are covered by this type of policy. Exclusions do apply.

What is an event holder?

The person, organization or company responsible for the organization and promotion of the special event and typically the signer of the rental facility use agreement.

What is a vendor/exhibitor/concessionaire?

A vendor/exhibitor/concessionaire is a person or firm that operates a business within the premises belonging to another under a concession, usually as the only seller of certain goods or services during a short duration special event such as a carnival, convention, concert or flea market. An example of a concessionaire would be a jewelry salesman at a swap meet or an artist selling their art at an arts and crafts show.

My venue has asked for a certificate of insurance with them added as an Additional Insured. What does this mean and how do I add them?

You, the special event holder, will most likely be required to provide proof of liability insurance to the facility/venue where you have decided to hold your special event. In addition to providing proof (in the form of a piece of paper known as a Certificate of Insurance) to the facility/venue that you have secured a liability insurance policy, you may also be required to add the facility/venue to this required liability insurance policy as an insured. This is known as adding the facility/venue as an Additional Insured to this liability insurance policy, which the facility/venue requires you to purchase before you will be allowed to hold your special event.

The practice of a facility/venue requiring that all persons or entities renting or using the site name them as an Additional Insured on a General Liability insurance policy is quite common. It is so common, in fact, that the required Additional Insured wording or language is generally contained within the Insurance Requirement section of the Facility Rental Agreement or Facility Use Agreement.

Other questions you may want to address could include:

  • My venue has specific wording to be added to the certificate of liability. Can Event Liability Insurance accommodate this?
  • During the online application process, you can enter your venue’s required wording. You will receive your policy documents and certificate of liability instantly online.
  • What is liquor liability? Do I need it?
  • How far in advance must I purchase a Special Event General Liability Policy for my event to be covered?
  • Additional questions:
  • What types of events are covered?
  • What limits of insurance do you offer?
  • What are the insurance coverages available for Event Liability Insurance?
  • Who is protected under a Special Event General Liability Insurance policy?
  • Does the policy cover alcohol-related accidents?
  • What is Host Liquor Liability?
  • How do I make changes to my policy?
  • What is your cancellation/refund policy?
  • Do you offer an Annual Event Liability Policy?
  • Does the policy have a deductible?
  • How do I report a claim?

Having the proper insurance for a special event can make the difference between experiencing a minor bump in the road when challenges arise and a complete detour. Help your clients stay on course by helping them make the most educated decisions possible.

 

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Young Agent Assets: Your Opening Line

What you say during the first interaction with your prospects will have more influence on your success than anything else. It sets the stage for all future interactions.

For this reason, it is imperative that you start off on the right foot.

Your goal should be to pique their curiosity and build enough momentum to spur continued conversation.

For example, if you’re cold-calling a prospect, do you immediately introduce yourself and your company? According to an article in Entrepreneur, that’s a big don’t because you’re preemptively telling your prospect to hang up immediately.

Instead, be pleasant and thank the prospect on the other end of the line for their time, like so:

“It’s an honor to finally speak with you!”
“Thanks for picking up the phone!”
“Thanks for taking my call.”
“Your time is important. Let me cut to the chase.”

You could use real-life comparisons:

“How much money can you save weekly? Can you save the cost of that daily cup of coffee, which could come to about $10 per week, or roughly $40 per month?”

Or, you could just be honest:

“[Prospect’s name], we haven’t met, and to be honest I don’t know if what I have to say will be of benefit to you. But if you have 3–5 minutes right now, can I suggest that we discuss why you might be interested in speaking with me?”

Regardless of your approach, work to exude confidence, using intuition, wit and a solid sense of timing to your advantage, Remember that you only have about eight seconds of someone’s attention span to work with, according to a recent article in Time. In those eight seconds, the language you use matters.

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Forest, Wood and Lumber Program

UIG has recently launched a Forest, Wood and Lumber program, supporting the lumber and building materials industry across the U.S. While a niche market, there is great potential to help you excel in servicing these clients in the way that UIG works best – quality products, competitive pricing.

Chainsaw

Let’s “cut” to the chase. How can UIG help?

Our new Forest, Wood & Lumber program is available for agents and brokers across North America. UIG companies can insure:  sawmills, veneer mills, pallet mills, plywood plants, wood preserving operations, all types of woodworking plants, as well as the manufacturers of timbers, cants, railroad ties, building materials, and other panel products.

UIG provides competitive coverages on a mono-line or package basis including: Property from $1 M to $250 M TIV risks and higher, Inland Marine, General Liability, Commercial Auto, Workers Compensation and Employers Liability, Commercial Umbrella, Employment Practices Liability, Equipment Breakdown Coverage and Crime Coverage for:

In addition, as many of you may be new to this market, we also wanted to provide some industry insights:

How big is the opportunity

Lumber yards play a critical role in the building industry. They supply contractors, homebuilders and individuals with the raw materials needed to construct a number of different types of structures. This business can be quite lucrative when administered properly, and an important part of managing this business is protecting it with a sound commercial insurance package.

  • There are approximately 10,161 lumber wholesalers operating in the United States.
  • These businesses employ nearly 114,000 people.
  • The lumber wholesale industry is responsible for about $84 billion in revenue each year.
  • In 2016, the top four companies generated less than 10 percent of industry revenue, signaling that the industry is composed of mostly small- and medium-sized operators.

Common Insurance Needs

Property and Equipment Coverage
• Building
• Contents
• Equipment breakdown
• Flood

Liability
• Premise liability
• Product liability
• Commercial auto liability
• Hired or non-hired auto liability
• Umbrella

General
• Business income
• Worker’s comp

* A completed submission is required 20 working days prior to the requested quote date.  We must have a complete and thorough submission to start underwriting. Once we have received all information, we will make every effort to meet your requested quotation date.

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Get Ready For National Insurance Awareness Day

June 28, 2017 is National Insurance Awareness Day. A day set aside every year to encourage folks to review their insurance policies. The crazy thing about it is, nobody is quite sure why. Aside from various blog entries referencing this notable industry date, there doesn’t seem to be any one person or group that we can thank for the creation of this landmark celebration.

A Google search will confirm June 28th as National Insurance Day, but the closest documentation of its origin, that we could find, comes from HolidayInsights.com, which shares, “…you can be certain that insurance companies had a little something to do with the origination of this day.” Hmmm. They might be a little confused with Valentine’s Day and greeting card, candy companies…

Regardless of its origin, if you’re willing to take credit for the birth of National Insurance Day, or just an agency that’s celebrated it in the past, we’d love to know what activities make this day special?

If you’re never celebrated National Insurance Day, now is the time to jump on board. Here are a couple of ideas to get your creative juices flowing!

  • Host an Insurance Awareness Day line dance or flash mob
  • Sponsor a safe driving course
  • Coordinate an insurance awareness scavenger hunt
  • Set up a wrecked car with some kind of commercial business reference, e.g., pizza delivery, outside the agency with a sign, “Are you insured?”
  • Get a pizza place to tape your business card or a flyer on every pizza boxy they deliver and offer to promote them to your clients or list them as a partner on your website
  • Shoot a humorous video highlighting overlooked insurance tips clients should know
  • Host an agency contest — whoever adds the most policies in a week, gets a paid day off
  • Support a local non-profit that you are passionate about and encourage locals to match
  • Dress like an insurance agent day — play up the stereotype, the less stylish the better
  • Deliver baked goods or branded swag to VIP commercial insurance partners around town
  • Blog about some of the oddest insurance claims your agency has ever received
  • Do a publicity stunt with a partner or town (fire drill) to draw awareness to insurance
  • Send out an email blast, notifying people of the date with a seasonal call to action
  • Host a “junk the junker” car demolition fundraiser while promoting auto insurance

With a little creativity and a keen grasp of your community, the ideas are really endless.

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Property Valuations & Coinsurance

Property valuation. An important necessity for many reasons, including: real estate financing, listing real estate for sale, investment analysis, property insurance and the taxation of real estate. You may not think a lot about it, but it is important for agents to attain proper valuations in order to make certain their clients have adequate coverage in place at the time of loss. If not, they could be faced with what is called a coinsurance penalty – when the insured receives less money from a claim than what the property is worth.

For the purposes of this article, we’re going to spend the bulk of our time on the coinsurance aspect of property insurance.

The following is an adapted version of an article written by William Austin, principal, Austin & Stanovich Risk Managers, LLC, with some good examples of different property coinsurance scenarios to help shed some light on the subject and how it could impact your clients.

Property Insurance: Coinsurance

Pop quiz. Answer true or false to the following statements:

  • Coinsurance is a condition that may be found in more than one type of insurance policy.
  • The need for a coinsurance provision in all insurance policies is the same.
  • The use of a coinsurance provision in an insurance policy is universally understood.

The answers are true, false, and false. How did you do?

Coinsurance clauses are found in many insurance policies, such as commercial property, dwelling forms, homeowners, federal flood, health insurance, and at times even directors and officers liability policies. But, while the clause or requirement is called “coinsurance” in each type of policy, the use and effect on the insured may be very different. The coinsurance requirement in a property insurance policy may become a significant reason for insurance recovery that is less than the insured expected.

COINSURANCE CONCEPT

Coinsurance in property insurance is a means for insurers to obtain rate and premium equality. Property insurers must have a standard in which to apply expected losses based on past loss experience over an entire underwriting book. This is accomplished by getting the exposure base (total insured value for building, contents, and business income) on a common basis for all property insurance insureds: replacement cost, actual cash value, and actual loss sustained. Rates are applied against a specified percentage (100, 90, or 80 percent, for example) of the value to the insured: building, contents, or business income. Rate deviations are applied against the base (manual) rate to reflect size of deductible, construction, occupancy, and loss control standards.

A “coinsurance” condition in a property insurance policy is analogous to the need for a standard definition of “payroll” to compute workers compensation premium. All workers compensation insurers use the same “payroll” definition established by workers compensation rating bureaus such as the National Council on Compensation Insurance. This way, all workers compensation insureds report their insurable exposure (payroll) on the same basis. This allows an insurer to start its premium rating basis on an equal basis for all of its insureds—expected losses can be applied to develop a payroll rate. Rate deviations are then applied to reflect deductible (if any), premium discount, and other factors, including adequacy of loss control (rate credit or debit).

HOW IT WORKS

Property coinsurance clauses may differ by insurer, especially if using an independently filed policy form, although coverage intent may be the same. The examples used in this article are based on current Insurance Services Office, Inc. (ISO), policy forms. The reader is cautioned to read the property insurance policy to ensure that the coinsurance clause is the same as that expected and understood by the insured and the broker/agent.

DIRECT DAMAGE: COMMERCIAL INSURANCE

First, the insured must set the direct damage coverage limit, which is based on how loss is to be settled: replacement cost or actual cash value (replacement cost less depreciation equals actual cash value). Next, the coinsurance percentage for building and contents must be determined since coinsurance requirements start at 100 percent and provide the greatest rate credit at this percentage of limit to value, but the insurer may allow the insured to go as low as 80 percent. The best ways to establish insurable value is by use of a recent appraisal or by use of a construction cost estimator such as Marshall & Swift/Boeckh. It is important to get a firm value on the building and contents. A “guestimate” process may not provide the accuracy needed to establish credible value and the insured limit, which may result in a coinsurance penalty, as will be explained later.

To settle a loss, the insurer will compare the policy limit (depending on the actual policy, it may be a location-specific limit for building or contents) to the minimum limit required by the coinsurance clause.

The formula is fairly simple.

Figure 1: Loss Recovery Formula

Chances are most tree trimming services will have a special vehicle along with tree trimming equipment and tools. Any business that owns or operates a vehicle for commercial purposes should invest in commercial auto insurance. This type of insurance can protect clients from a lawsuit or medical liability if their company vehicle is involved in an accident. Along with commercial automotive insurance, the right equipment insurance can help ensure that the business will be able to continue operations even if it needs to repair or replace equipment.

Example: Direct Damage

An insured owns a 25,000 square foot building that is 10 years old. He asks the builder to give him an estimate of what it would cost in 2012 to build the same structure from the ground up. He is told $80/square foot for total estimated replacement cost of $2 million. He decides to insure the building to 90 percent of its estimated replacement cost value.

Scenario 1. A few months into the policy year, the building suffers a substantial fire loss, and the insured files a claim for $800,000. What is the insurance recovery after a $5,000 deductible?

Scenario 2. The insured decided at each renewal since 2012 that his building can remain insured for $2 million. The loss settlement clause remains replacement cost. The insured does not seek any independent counsel on the building’s estimated replacement cost in 2016. The building is damaged by fire in mid-2016, and repairs total $500,000. The replacement cost of the building is determined to be $2.4 million. What is the insurance recovery after a $5,000 deductible?

Scenario 3. The insured decided at each renewal since 2012 that his building can remain insured for $2 million. The loss settlement clause remains replacement cost. The insured does not seek any independent counsel on the building’s estimated replacement cost in 2016. The building has a fire in mid-2016, and the building is a total loss. The replacement cost of the building is determined to be $2.4 million. What is the insurance recovery after a $5,000 deductible?

In our next blog, we’ll pick-up Austin’s article as he dives into business income commercial insurance and a couple of other specialty areas including coinsurance tools.

In the meantime, if you have questions or would like to submit a submission, send a message to info@uigusa.com or call 800.385.9978.

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Tree Trimming

Spring storms can mean pruning tree branches and removing limbs from rooftops and power lines as well as dead trees and shrubbery — a very busy time for tree trimming services.

ChainsawRegardless of the nature of the job, or if a tree service business has employees or not, there is a certain amount of liability inherent in the work. The right insurance can make the difference in protecting a tree service owner from a bevy of liability issues as well as their bottom line.

The bottom line is important for several reasons, but one in particular is when it comes to cost-cutting. Unfortunately, one thing that UIG has witnessed is that — when things get tough financially — business insurance policies tend to be one of the first areas that get cut in order to save money. This cost-cutting measure could cost the business owner more than what they saved if an accident were to happen.

This is why it’s especially important that agents take the time to educate tree service clients and prospects about the value of their insurance coverage and all of the different options they should be considering.

Liability Insurance

Liability insurance is one of the most important and all-encompassing insurance options for any business owner. It is critical where activities could result in a lawsuit for potential damages: such as property damage and injury, which someone may suffer as a result of the service provider’s actions. If your client provides tree trimming or tree removal services, there is a high possibility they could cause damage to a building, car or other property, and/or bodily injury to an unsuspecting person in the area, due to a falling branch, tree trunk or equipment. In addition, many states will not allow a tree trimming service to operate without the proper liability insurance.

Equipment Insurance

Chances are most tree trimming services will have a special vehicle along with tree trimming equipment and tools. Any business that owns or operates a vehicle for commercial purposes should invest in commercial auto insurance. This type of insurance can protect clients from a lawsuit or medical liability if their company vehicle is involved in an accident. Along with commercial automotive insurance, the right equipment insurance can help ensure that the business will be able to continue operations even if it needs to repair or replace equipment.

Worker’s Compensation

If a worker becomes injured on the job, worker’s compensation insurance provides funds to pay for the worker’s medical expenses and salary while he/she is unable to work. If a tree trimming service has at least one employee, they should check the laws in their state to verify whether or not they are required to maintain worker’s compensation insurance.

Personal Accident Policy

If working as a sole proprietor or independent contractor, personal accident coverage may be a better solution than worker’s compensation. In a personal accident policy the insured is protected for injuries and loss of revenue.

Employment Practices Liability

UIG also recommends a tree trimming business invest in employment practices liability insurance (EPLI). This coverage can help protect a business and the business owner from litigation resulting from improper workplace behavior, including, but not limited to, sexual harassment, discrimination or wrongful termination.

While all of this may seem like “business as usual,” odds are that many tree service owners have not sorted through all of their options, if any of them. It is better to reiterate and remind than to assume that your clients and prospects are aware of all the rules, regs and amounts of coverage they need.

And, of course, once you’ve presented the options, be sure to have them sign off that they have declined any of these coverage lines, if they choose to do so, and keep it on file.

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