Getting off to a good start in any endeavor gives you a great feeling of accomplishment. Staying aheadof your competitors during the course of events makes your feel better. But, coming in the winner is a feeling you just can’t explain. Being declared the Gold Medalist lasts a lifetime. Just ask those who finished with a gold medal at the recent 2014 Winter Olympics held in Sochi, Russia.
How about you and your business? Are you off to a good start? Whether you are new in business or have been in business a long time, are you keeping up with your competitors? How about going for the gold in your business as well?
Somewhere along the way in the course of your business, you may run into obstacles. Many business owners perceive insurance as one of those obstacles. Based on years of experience in the insurance business, and understanding ofthe car wash industry, this article is geared toward helping youeliminate insurance as an obstacle and to help build the endurance needed to win gold in the car wash business.
Use the management services offered by your insurance professional. For example, your workers’ compensation insurer should be able to provide (at no additional cost) a wide variety of safety programs. They usually can provide literature, posters, videos, and accident kits that would cost hundreds, if not thousands of dollars, were you to research and produce them on your own. Some of these items are required by state and/or federal regulations andmay result in fines if you do not have them available. In addition, your insurer can help keep youup to date on OSHA changes, rules, etc.
Your commercial automobile insurer may have useful kits available to keep in your vehicle that you can use in the event of an automobile accident. Also, keeping a list of questions to askfollowing an accident may provide the opportunity to secure information that will be important in the processing of any claims that may ensue. Simple steps like keeping a disposable camera in each of your vehicles so photos can be taken at the time of the accident will help to validate your version of what happened. A picture in this case really is worth a thousand words.
For insurance purposes, duplicate records (disks, photos, inventories, etc.) are necessary to maintain and in some cases may be stored for free at your agent orbroker’s office. Electronic media should also be kept in your safety deposit box. This would make it easier for you and your agent or broker to track values, not to mention just how much help it might be if you needed to prove a loss.
Keeping your expired commercial insurance policies can take up a lot of file space. You can eliminate some of this extra paper by discarding all of the policies except the typed pages that list yourpolicy number, policy period,limits, forms, etc. Typically this will mean only two or three sheets per policy. Your agent and/or the insurance carrier can keep a copy of the forms on file for reference. Regulations require them to retain this information for several years.
You may also want to scan a copy of the policy into an electronic file, which can give you access to the entire document. Be sure to make a backup of your files on a regular basis and store them off premises so you can reproduce the file if your system crashes or is damaged in a loss.
Any time you suffer an accidental, or unexpected loss, you should call your agent and report theincident. You may be pleasantly surprised at the assistance you receive. For example, the insurance carrier may provide legal defense on your behalf, even if the liability claim is not believed to be covered.
While the company is investigating and answering plaintiffs petitions, if any, you could receive a Reservation of Rights letter from the company setting out the reasons why they may deny the claim and, if the claim is denied, that you may have to reimburse them for their expenses.
The bright side of this procedure is that while the coverage question is being decided you will not have to hire an attorney initially.
PURCHASEINSURANCE IN PACKAGES
It is best not to try to purchase your insurance one coverage at a time. However, certain specialized coverage like workers’ compensation may only be available separately. You should buy other coverage in combination policies provided by a single source whenever possible. Your agent or company may use words like package or business owners policy to describe these policies. Look for property insurance (buildings, equipment, inventory, etc.), business income, and public liability in a single package. You will, in most cases, receive better insurance protection at a lower cost. Also, if you purchase everything from a single source there is less chance of a gap or overlap in your insurance protection.
SHOP WITH CARE
Have you ever heard anyone say, “Don’t buy from a stranger”? This applies particularly to your business insurance. Always try to deal with someone who comes from a known reference or a known leader in your particular business. You wouldn’t want to purchase something that determines the financial survival of your business without asking for and checking references.
Obtaining bids for your insurance is arguably wise, but taken to an extreme may actually backfire. In addition to having several agents or brokers asking you for virtually the same information, an insurance company underwriter may be annoyed by receiving requests on the same business from more than one agent and refuse to quote for anyone. The number of insurance companies who are willing to write your class of business is much smaller than you might think.
You may get the best results by trying an independent agent familiar with your particular type ofbusiness operation and let them shop the coverage for you. They represent several different companies each with different underwriters.
CHEAPESTMAY NOT BE BEST
Don’t fall for something that sounds too good to be true. It may save you money today and cost you your business tomorrow if you have a loss. The insurance policy you bought is just a piece of worthless paper unless it responds in the event of a claim by reimbursing you for your damages or pays on your behalf the damages that you are found legally responsible to pay as a result of bodily injury or property damage to others.
When you discuss your risk with your insurance agent, always give complete information regarding your exposures to loss. You can’t expect your agent to be a mind reader. They can’t protect you unless they know of the exposures to loss faced by your particular business. Further, if your situation changes, remember to call and tell your agent so he/she can assist you with keeping your insurance program up to date.
Insurance policy wording requires your cooperation with the insurance company (and adjusters) regarding proving a loss or responding tolawsuits, etc. Should you fail to cooperate, the insurance company may have grounds to withdraw their defense and/or void your insurance policy.
In liability claims, the insurance carrier usually has the exclusive right to settle claims against you, and your influence is limited to whatever persuasion you can exercise on the adjuster. A few liability policies such as professional liability insurance require the insured’s consent to settle. But even then, if they refuse to settle, they may be responsible for any final settlement that is more than the original offer to settle.
INSURE FORADEQUATE AMOUNTS
Amounts of insurance required on your property for insurance purposes can be entirely different from any other values you may have available. For example, the accounting or book value is notthe same as the insurable value. Insurance limits should reflectthe actual amount you would need to replace the damaged property at current prices at the time of the loss.
DON’T GIVE YOUR INSURANCECOVERAGE AWAY
You have probably been asked at some time in your business activities to name a customer or others as an additional insured or even an additional named insured. Thistypically takes place when there is a considerable power imbalancein the business relationship. This is a business decision you will have to make on an individual basis. Keep in mind, however, that when you give preferences in your insurance to others, you risk potentially having your own protection given over to them and being without the protection you paid for. Remember, insurance limits can be used up by an additional insured leaving you with limited or no protection.
There are several commonsense steps you can take when buying your business insurance. For example, buy guaranteed-cost policies, and avoid audits whenever possible. If the original policy is based on past experience and is subject to adjustment, you may have a large additional premium to pay at the expiration of your policy should business conditions change or you have increased sales and/or payroll.
If you lease your building, the owner can provide a waiver of subrogation that prevents you from being sued if you (or one of your employees) cause fire damage to the building. This is normally available at no cost and is common practice.
You can sometimes save premium dollars by taking large deductibles. Check the potential loss costs and loss frequency against the premium savings when making this decision, and be careful not to give up too much for too little.
THINK ABOUTWHY YOU BUY INSURANCE
It is easy to forget what you are trying to accomplish when you buy insurance. Do you know any business owners who buy insurance just because they want to? Somewhere there may be a person who wants to buy insurance protection against every conceivable loss and is willing to spend whatever it takes to get it, but that’s highly doubtful.
Most business people want to protect against the losses they don’t believe they could pay without putting the financial wellbeingof their business at risk. But howdo you know what that amount is? Generally, business owners make good decisions regarding the amount they can afford to lose. However, many times this issimply just good luck. Considerthe following example and thendo the math regarding your own exposures to loss.
After you determine the amount you may want to self-insure (the amount you will pay in the event of a loss), look at your property with values up to that amount and that you expect to last five years or more. With help from your agent, determine what the estimated premium might be were you to purchase insurance to protect that property for the next five years. If the amount of the premium plus any applicable deductible exceeds the cost of replacing it, you may want to consider self-insurance. By self-funding the risk (setting aside the money in your operatingbudget to pay for the property) you prepare for the means for replacement following a loss or at a time when you want to replace the item.
There are exceptions, of course, if there is a high risk for fire, theft, or other loss. However, property at higher risk is likely to be morecostly to insure. You are taking a higher potential risk in the early years. Also, you must factor in your discipline to create funding. Will you actually save the money you would have paid in premiums or will it create a financial burdenthat can adversely affect yourability to survive an unexpected additional expense created by an uninsured loss?
Going for the gold as a business owner means you are going to be there for your customers when they need you. You will be able to continue to meet payroll for others and yourself. You will have the financial capabilities not only to replace your assets and protect your financial future from the unknowns of property and liability losses, but you will also be able to be the valued member of your community doing your part to keep it strong.
Summer Cole is the car wash program director of Joplin, MO-based The Insurancenter. The Insurancenter has been insuring the car wash industry for over 25 years, and is the largest writer of car wash insurance nationwide.