Insurance Coverage: Ideas, Hints & Tips

July-August 2008

EVERY BUSINESS OWNER KNOWS that arranging insurance can be some what of a daunting task. It can be confusing, time consuming and especially frustrating if coverage is not securely in place when unfortunate circumstances arise. The following few paragraphs will share a few ideas, hints and tips on what to look for.

1. Shop for what you need, not what you have! In my own effort to help with insurance coverage, it is very disconcerning when asked, “Give me an apples to apples quote.” This likely happens with insurance because it is a product that can be challenging to understand and is something we don’t use every day (thus don’t find out whether it is right tool for the job). Using trucks as an example; imagine a business that has evolved to the point where a bucket truck is now needed to fulfill a line clearing contract. The business owner jumps into his older model one-ton pickup and heads off to compare by asking dealers to give him their best price on one-ton pickups. He is shopping for what he has, not what he needs!

2. In shopping for what insurance you need, start by understanding your risk exposures. Recognize that risk goes far beyond superficial concerns. Ask your insurance advisor to brainstorm with you about matters such as the consequential monetary losses that would occur alongside tangible losses. Here are just a few good questions to ask:

a) If equipment is damaged and is to be repaired by insurance, is there also coverage for the cost of renting a temporary substitute while the repair is being made?

b) If a catastrophe strikes the office or shop and rebuilding is going to take a while, where will the business operate from and how will the additional costs of temporary relocation be paid?

c) If income is lost because a major damage situation distracts from the number of estimates and work that can be done, will this be compensated?

d) If extra help such as forensic accountants, temporary personnel or overtime to existing staff is necessary, will the insurance company pay for this?

e) What types and amounts of liability coverage should be carried in this ‘day & age’?

Remember, insurance is purchased for security benefits. Be sure to get the best protection you can from your insurance budget. There is no sense buying coverage if it is not going to keep you afloat if it comes time to make a claim.

3. Be sure information is up-to-date and accurate. Insurance companies expect ‘full disclosure’ including notification of relevant details that change over time. If your business started out as a part-time operation but has since grown, have the annual sales revenues been adjusted accordingly? Is your list of drivers on the automobile insurance correct? Claims can be adversely affected by an insurance company that feels slighted by out-of-date facts.

4. Ensure that your classifications are correct. Recently I helped a client save considerably in part simply because vehicle categories were inappropriate. This client previously had a small pickup incorrectly assigned as a heavy vehicle. Other common issues include towable equipment such as chippers being insured as ‘trailers’ on automobile insurance. Similarly, all terrain vehicles are sometimes inappropriately insured as mobile equipment rather than as off-road vehicles under an automobile policy. These ‘mistakes’ can be very costly in insurance expense and worse, may result in uninsured losses.

5. Choose an agent or broker who will work to understand you and the industry. Someone curious will uncover things that you might not think to ask or know to point out. An agent or broker who just acts on what you suggest is merely taking dictation. An inquisitive representative will look things up and better notice potential issues. Someone proactive might say, “I see on the website that the stump grinder you called to add on the equipment insurance is not towable, should we also be adding a trailer to your automobile insurance”? Someone who takes an interest in you as a client as well as your industry will be thinking ‘outside the box’ reading between the lines and truly working with your best interests in mind.

Insurance is probably not the most exciting of the business matters that you attend to; however it can be one of the most important. Take the few extra minutes needed to carefully look things over. Better yet, get us to look at it for you!

— Scott McEachern, Program Executive, TREESURE provided by: Hugh Wood Canada Ltd.,

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