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Insurance Tips for Lawn Care and Landscaping

There are many aspects to owning a landscaping business. Many aspects that have nothing to do with the actual work itself. Whether a business owner is dealing with finding the right employees, determining the right price to charge their customers or managing the day to day operations; there are always additional responsibilities pulling the business owner in a different direction. One aspect that frequently gets looked over is purchasing commercial insurance for your landscaping business. Here are five tips for finding the best insurance, saving money when purchasing coverage and how best to use your policy when a disaster occurs.

Partner with an independent agent

Independent insurance agents are unique in that they can quote you policies from many different carriers and not just one or a select few. The appetites of the carriers change from year to year for certain coverages and especially for different industries. Some years, your premium may go up simply because the carrier has experienced a lot of losses in your industry of the last year or couple of years. As a result they raise the prices for that classification code. Another carrier may not have experienced the same losses and may be more hungry to quote your policy. An independent insurance agent has the ability to force carriers to compete for your business. In the end this helps you get better coverage at rock bottom prices.

Make sure you are in the right class code

The Lawn Care and Landscaping Industry is an industry that has numerous general liability classification codes. If you do not give enough information to your agent, they are forced to guess exactly how much risk your business takes on. It is in their best interest to always assume more risk. Assuming more risk protects the insurance agency, but may cost your business more in unnecessary premium. These mistakes usually get fixed in the end of term audit, but even when corrected you still have tied up cash in unnecessary premium throughout the year.

What coverages can I do without?

Once you have taken care of finding a good agency to partner with and you have taken the time to make sure you are classified properly, it is important to ask your agent what coverage’s does your business absolutely need and what coverage’s your business may be able to do without. At this point it is important to remember the agent works for you. If you are honest with the agent about how much risk you are willing to take, they should be able to give you the proper information to cover your business as you prefer. It is important to remember that insurance agents not only interact with business owners when they are selling coverage, but also when the worst of the worst has occurred. The agent may be offering you an extra coverage because they have interacted with a business owner in the past who had a claim occur at their business where they were not covered. Those are never easy conversations to have. Depending upon the size and severity of the disaster having the right coverage may be the difference between your business closing the doors for a week and never opening again.

Ask for available credits and debits

The best way to find the best price on coverage is to tell your insurance agent what you value in the buying process. Insurance agents talk with many different people from many different walks of life. One customer may want to get through the insurance buying process as fast as possible so they can get back to running their business. Another business owner may not mind if it takes a day and a half of their time in order to save an additional five percent. Let the agent know early and often what you value.

What do you do when your business has a claim?

It is common for a business owner to think bad things will not happen to their business, but the most successful businesses are those who have a plan in place for when things go wrong. Part of that plan should be having the proper insurance policy in place. When an occurrence eventually takes place, there are several steps you as a business owner can take to speed up the process of getting your claim paid and get your business back up to normal operation.

When you do have to make an insurance claim it is important to inform both your carrier and your agency. Do not be upset if your agency informs you to contact your carrier. It is the job of the carrier to process the claim, not the agency. At the same time, it is equally important to keep your agency in the loop. In the unfortunate case the carrier is not living up to their end of the bargain, the agency can contact them on your behalf. If you have injured workers, make sure they are going to medical facilities that are properly prepared to process the workers’ compensation system within your state. Your carrier can help you find the proper facilities. This can drastically limit the severity of a claim and it can allow your injured worker to get the best care quickly. The better care they get can result in the getting back on the job quicker and with the least amount of doctors’ visits possible. Keeping the injured worker on your side is important. If this process runs smoothly it will make your employee happy and motivated to return to work. It will also help your insurance carrier by limiting the amount of the claim. THis will prevent too much damage from being done to your businesses experience modification rating. The Experience Mod is one of the main ways carriers determine how much they will charge you for premium.

Do not be alarmed if a claim stays open for a period of time after your business has gotten over the claim. Insurance agents do this in order to not have to open a second claim. A second claim will also impact your experience modification rating. The carrier does this because an injured worker may return to work and reinjure themselves. Sometimes this can happen weeks or even months after the injured worker has returned to work. If this causes your business to file a second claim it can have a damaging effect on your rating resulting in a higher rate on premium.

Your Experience Modification Rating Explained

A simple and concise explanation of your businesses Experience Modification Rating.

Understanding your experience modification rating is important, and can help reduce insurance premiums for workers compensation insurance. The experience modification rating goes by a variety of names including experience mod, experience rating, e-mod, EMR, and sometimes just the mod. It is a factor that compares your business’ losses with other businesses in the same classification, and has the ability to increase or decrease your premium cost. The experience rating is used to customize the insured’s premium to better suit the characteristics of a certain employer or risk. It is found on the Experience Modification Rating Worksheet that you will receive each year before your policy effective date. An experience rating of 1 is considered a unity mod, and does not change the cost of premium. A rating that is >1 is called a debit mod, and would increase the cost of premium. On the flip side, a mod that is <1 is referred to as a credit mod, and would reduce the cost of insurance to the employer. So if an employer has a mod of 0.80, their premium would be 20% cheaper. The idea being that an insured with a mod that is >1 is riskier than the average, and should therefore have to pay more. While an insured with a mod that is <1 is less risky than the average, and should be rewarded by paying less.

	Manual Premium	Experience Modification Rate	Premium charged to employer
Employer 1	$250,000	.75	$187,500
Employer 2	$250,000	1.00	$250,000
Employer 3	$250,000	1.25	$312,500

As seen above, a credit mod (E-Mod value is <1) provides the employer with a cheaper premium. While a debit mod causes the employer to pay a higher premium, and the unity mod causes no change in premium at all. This change in premium provides incentive for employers to reduce and control losses in order to lower their experience mod.

Who calculates the employers experience modification rating? The experience mod factor is generated by the National Council on Compensation Insurance (NCCI). The mod is generated 60 to 90 days before the rating effective date, and therefore doesn’t use the current policy in the calculation. The NCCI uses a period of three years of loss experience and compares it to the average losses in the class. The time period that is used for data is determined by the risk’s rating effective date. The data that is used in the experience modification rating calculation will include the policies that have an effective date that is no less than 21 months prior to the rating effective date, and no more than 57 months before the rating effective date. In other words, policies that begin within 21 months and 57 months before the rating effective date will be used in the calculation. For example, a policy that renews on 1/1/17 would include policies with effective dates that fall between 4/1/12 and 4/1/15. Therefore, the policies that would be included in the data for the experience mod would be the 1/1/13-1/1/14, 1/1/14-1/1/15, and 1/1/15-1/1/16 policies.

As of 2017, the NCCI’s Experience Rating Plan manual for Workers Compensation and Employers Liability Insurance (the “Plan”) is currently approved and authorized to use in 39 jurisdictions. Right now the Plan applies to Indiana, Massachusetts, and North Carolina, however these states have bureaus that produce their own intrastate ratings. An “intrastate” rating refers to a risk that is only in one state that uses the Plan. By contrast, an “interstate” rating refers to a risk that is located in two or more states that use the Plan. Minnesota, New York, and Wisconsin have also authorized the use of the Plan, but only on an interstate basis. The Plan does not apply to California, Delaware, Michigan, New Jersey, Pennsylvania, North Dakota, Ohio, Washington, and Wyoming. These states administer their own plans and produce their own rates. However, since insurance is regulated on a state-by-state basis, the states that currently approve or disapprove the Plan are always subject to change.

The experience modification rating is a mandatory plan if the insured is qualified. In order to qualify for an experience rating the insured must have paid a minimum amount of premium determined by the state within the most recent 24 months of the rating period, or have reached an average amount of premium that meets the established threshold over the entire rating period. For example, the state of Florida requires that an employer must pay at least $10,000 in premium within the last two years, or have paid an average of $5,000 over the entire rating period.

Employer 1:	Employer 2:	Employer 3:
2015 – $7,000	2015 – $4,500	2015 – $4,000
2014 – $3,500	2014 – $4,100	2014 – $5,000
2013 – $2,000	2013 – $6,500	2013 – $4,500
Qualification requirements are met in the two most recent years. ($7,000+$3,500= $10,500)	Qualification requirements are met by averaging the premium over 3 years. ($4,500+$4,100+$6,500)/3= $5,033	Qualification requirements are not met.

In this example, Employers 1 and 2 would be required to apply an experience mod to their manual premium, and Employer 3 would not qualify.

The difference between claim severity and frequency. When referring to an employer’s loss history, the terms severity and frequency are often brought up. Severity meaning how severe, or how expensive a single loss is, and frequency meaning how often claims occur. When calculating an experience mod, the NCCI assigns more weight to high frequency claims than it does to high severity claims. The logic being that if the insured has a history of a high frequency of claims, then there is a good chance the insured will continue to have losses. Also, having a high frequency of claims increases the chance that the insured will experience a larger loss in the future. In other words, frequency leads to severity. However, if the insured only has one claim with a high severity, there is a good chance that it was a more uncommon accident or injury that is unlikely to occur again. The NCCI gives more weight to the frequency of claims by using the Split rating system.

Split Rating. NCCI uses split rating to divide losses incurred by a claim into Primary Losses and Excess losses. This is done so that the frequency and severity of claims can be weighted properly. Primary losses represent frequency, whereas excess loses represent severity. In the calculation of the experience modification rating, primary losses are weighted more than excess losses. However, the excess losses shouldn’t be ignored as they can be a very large amount. The NCCI uses a ratio called the Discount Ratio (D Ratio) to find the expected primary losses by multiplying the expected losses by the D Ratio. To find the expected excess loss, they multiply the expected losses by 1 – the D Ratio. When finding the actual primary losses, as of 2017 the NCCI considers the first $16,500 of a claim to be the actual primary loss, and anything leftover to be the excess loss. If the claim is less than $16,500, the entire claim is considered primary loss. The amount of money that is used as the cutoff point for primary losses is referred to as the split point. The split point is a value that is subject to change. In 2013, the split point was increased from $5,000-$10,000, and by 2017 it has climbed to $16,500 where it stands today. The split point will continue to change in the future based on inflation and loss data.

The experience modification factor is calculated by taking the total adjusted actual claims divided by the total adjusted expected claims of your class. So if you have more actual claims than what is expected of your class, the mod will be >1 and you will receive a debit mod. While this seems simple enough, there are many complicated steps that are taken before the final mod is produced.

First, the NCCI collects and records the payroll and loss information on to an experience rating worksheet. Using this information, they calculate the expected losses for each classification using its Expected Loss Rate (ELR). The ELR is the amount of expected losses for the classification per $100 of payroll. So the expected losses equals the ELR x (Payroll/100).

Then they split the expected losses into primary and excess losses using the discount ratio. After that, they must also split the actual losses into primary and excess losses.

To keep the mod from varying too much, the NCCI determines a stabilizing value and adds it to the calculation. This calculation requires the use of the ballast factor and the Wt factor. The ballast factor is a number that is added to help keep the mod from shifting too much, and the Wt factor is the weight assigned to the excess losses. The stabilizing factor is calculated by multiplying the expected excess losses by (1-Wt), and then adding the ballast factor.

Once the primary losses and the stabilizing value has been found, the actual and expected ratable excess losses must be determined. The ratable excess loss is the amount of excess loss that is included in the calculation. This is done simply by multiplying the excess losses by the Wt factor.

Now that we have determined these values, the total adjusted actual losses can be found by adding the actual primary losses + the stabilizing value + the actual ratable excess losses. Likewise, the total adjusted expected losses = expected primary losses + the stabilizing value + the expected ratable excess losses.

Finally, the experience mod can be calculated by dividing the total adjusted actual losses by the total adjusted expected losses.

E-Mod=(Actual Primary Loss+Stabilizing Value+Actual Ratable Excess Loss) ÷ (Expected Primary Loss+Stabilizing Value+Expected Ratable Excess Loss)

E-Mod = Total Adjusted Actual Losses ÷ Total Adjusted Expected Losses

Medical-only claims are not weighted as much in the calculation, and therefore don’t have as much of an impact on the experience mod. Most states have approved an Experience Rating Adjustment (ERA) that limits the amount that medic-only claims are weighted in the experience modification rating. Only 30% of the portion of a medical-only claim is included in the experience mod calculation. This is done in an attempt to decrease the incentive for employers to pay off medical-only claims without reporting it to the carrier.

There are ways for employers to lower their experience mod, and therefore lower their workers compensation costs.

One effective way to do so is to implement a formal safety program, or make meaningful changes to a pre-existing safety program. Having a written safety program in place can help reduce injuries and accidents which will reduce your losses, and lower your experience mod. An employer should train their employees in the proper safety procedures for driving, lifting and other job related duties. As well as the precautions taken to prevent accidents like slips and falls, such as requiring non-slip shoes. An employer can even consider incorporating rewards and disciplinary actions in their safety program, if it seems necessary.
Maintaining good hiring and orientation practices can also help reduce losses. Making sure each employee is mentally and physically fit for the job before hiring them is a good way to lower accidents.
Including a mandatory return to work program can greatly reduce the cost of claims. Having an employee return to work at a light or modified duty will lower the cost of their claim, which can help lower the employer’s losses and will bring their experience modification rating down.
Taking the time to make sure all your employees are placed in the correct class codes can also help reduce costs.

My Insurance Question is a part of the Insurance Shop LLC. The Insurance Shop is an independent insurance agency, founded in 2005. Over a decade and a half, the agents at the Insurance Shop LLC have developed relationships with dozens of insurance carriers who are hungry to offer coverage to businesses operating in many different industries. If you are looking to shop around for a better value when renewing your commercial insurance package, give us a call at 800-800-4864 to speak with one of our insurance specialists today.

Workers Comp Audits

Here is how to best prepare for your businesses for a workers compensation audit.

Each year all businesses must go through a workers compensation audit process. If you are like most small business owners, this is not one of your favorite parts of owning a business. The process can be long and tedious, but the more prepared you are for this process, the more quick and more smooth the process will be. Consulting with your independent insurance agent can help you prepare for the process and make sure the audit is done well the first time through the process. Here are 7 ways to ensure this process goes as painless as possible.

Communicate with your agent.

Open communication with your insurance agent is essential to a successful workers’ compensation audit. This is a reason why it is important to consider an independent insurance agent. An independent agent is not as closely associated to the insurance carrier. They can help you prepare for the audit and negotiate on your behalf if anything does not go in your favor. Open communication throughout your relationship with your insurance agent is essential to a satisfied experience during your small businesses workers comp audit.

Have paperwork prepared in advance

Having all necessary paperwork prepared in advance of your audit will make the process move as smooth as it possibly can. This includes any and all payroll and employee records. Job descriptions need to be included for each employee and their annual weeks, days and hours worked. The more detailed the better.

Payment and cash disbursement records,

Throughout the year it is important to keep a record of all payments and cash disbursement. Not having these available and organized is a good reason to have the auditor dig a little deeper during your businesses workers compensation audit. The more open, honest and organized you are throughout the entire audit process the more smooth the process will be.

Certificates of Insurance

Make sure to keep a detailed record of all needed certificates of insurance for any and all sub-contractors or independent contractors your business used. The primary reason for providing these documents is that if you do not, these contractors will be listed as employees and it can substantially raise what you pay in premium.

Experience Modification Worksheet

The experience modification worksheet is a document that is published annually by the rating bureau in your state. It covers the loss history for your business during the most recent three-year period, not including the most recent year. The most recent year is not included due to overlap from some claims not being closed. If you have had a large claims or a large amount of minor claims during any year it is important to have this worksheet available in order to show the true loss history of your business.

Make yourself available for the exit interview

After a typical workers’ compensation audit there is an exit interview at some time. It usually lasts several hours and is a way for the auditor to ensure they have all the necessary information to accurately audit your business. The more up-front you are with the auditor the more smooth the process will be.

Respond promptly to auditor follow-up questions

There will more than likely be questions you do not have the answer to. The more quick and thorough you respond to these questions the more likely the auditor is to work with you to quickly finish the audit process. The time period after the audit normally takes two to three weeks. There may be additional questions that need clarification and this may be a frustrating part of the process. The more accurate the audit is the better it is for your company. Your agent can help you with any of these questions if you are having a trouble finding the exact information to satisfy the auditor. It is also important to keep in mind that for security purposes, the auditor does not keep your payroll records. You very likely will be asked to provide additional information or records that you have already provided. No this going in to the audit and it can save you a lot of heart ache during the process.

An accurate workers compensation audit is in your best interest, moreso than a fast audit. This process is frustrating even during a good audit. It will take time away from your normal work, but it is within your best interest to ensure your audit is fair and accurate. Keep a positive attitude and consult your independent insurance agent in order to ensure your audit process goes as smoothly as possible.

Have a Work Comp Audit soon?

Here are 7 tips for a Smooth Workers Compensation Audit

Each year all businesses must go through a workers compensation audit process. If you are like most small business owners, this is not one of your favorite parts of owning a business. The process can be long a tidious, but the more prepared you are for this process, the more quick and more smooth the process will be. Consulting with your independent insurance agent can help you prepare for the process and make sure the audit is done well the first time through the process. Here are 7 ways to ensure this process goes as painless as possible.

Communicate with your agent.

Open communication with your insurance agent is essential to a smooth workers compensation audit. This is a reason why it is important to consider an independent insurance agent. An independent agent is not as closely associated to the insurance carrier. They can help you prepare for the audit and negotiate on your behalf if anything does not go in your favor. Open communication throughout your relationship with your insurance agent is essential to a satisfied experience during your small businesses workers comp audit.

Have paperwork prepared in advance

Payment and cash disbursement records,

Throughout the year it is important to keep a record of all payments and cash disbursement. Not having these available and organized is a good reason to have the auditor dig a little deeper. The more open, honest and organized you are throughout the entire audit process the more smooth the process will be.

Certificates of Insurance

In order to ensure a smooth workers compensation audit, make sure to keep a detailed record of all needed certificates of insurance for any and all sub-contractors or independent contractors your business used. The primary reason for providing these documents is that if you do not, these contractors will be listed as employees and it can substantially raise what you pay in premium.

Experience Modification Worksheet

Make yourself available for the exit interview

After a typically smooth workers compensation audit there is an exit interview at some time. It usually lasts several hours and is a way for the auditor to ensure they have all the necessary information to accurately audit your business. The more up-front you are with the auditor the more smooth the process will be.

Respond promptly to auditor follow-up questions

There will more than likely be questions you do not have the answer to, the auditor will have for you during the audit. The more quick and more thorough you respond to these questions the more the auditor will work with you to promptly and accurately finish the audit process. The time period after the audit, before the auditor will finish the process, normally takes two to three weeks. There may be additional questions that need clarification. This may be a frustrating part of the process, but the more accurate the audit is the better it is for your company. Your agent can help you with any of these questions if you are having a trouble finding the exact information to satisfy the auditor. It is also important to keep in mind that for security purposes, the auditor does not keep your payroll records. You very likely will be asked to provide additional information or records that you have already provided.

An Accurate audit is in your best interest, moreso than a fast audit. This process is frustrating even during a good audit. It will take time away from your normal work, but it is within your best interest to ensure your audit is fair and accurate. Keep a positive attitude and consult your independent insurance agent in order to ensure your audit process goes as smoothly as possible.

14.5% Workers Comp Rate Hikes in Florida! What do I do now?

You do what you can to do your business every day and create opportunities for yourself, your employees and your customers. Rates of everything is rising, property cost, materials, shipping, employee wages. The state of Florida has now said its time for workers’ comp insurance to do the same. The rate increase is to be 14.5%! Articles can go into much more detail but ultimately medical costs, legal costs and claims expenses rise over time and Florida workers compensation rates are rising to catch up for the natural changes that have taken place and certain court rulings have made precedence that support the increased cost. There are fair arguments for and against this change but at this point we work with what we have, so as a business owner what can you do?

The state of Florida is a rate mandated state for Workers Compensation which means the starting rate is the same for everyone based on their classification code, so every carrier should be offering the same rate. There are some exceptions that can be helpful for you to keep in mind. Here are a few things that can help benefit you in combating this increase with a more competitive option:

There are some exceptions: Some of our carriers have programs for particular industries that allow for discounted rates(5% below state set rates) one in particular caters to Retail stores, Restaurants and Professional Offices(Law firms, Accountants, Doctors offices, etc.)

Check with appropriate discount programs: The Florida workers compensation system has discount options available if you meet the guidelines and have these policies in place for your business. They do have an application for each and require certain protocols in place but these can save 5% on your Florida workers compensation rate.

Drug Free Workplace Credit
Safety Credit

Divident Plans: Some of our carriers offer dividend plans in Florida that reward businesses that control their claims. One in particular offers a 5% dividend for businesses paying 5-10k in premium and keeping a loss ratio under 5% and for accounts over 30k in annual premium they can qualify for a 20% dividend if they have a loss ratio under 20%. Like anything they do have some basic eligibility criteria but this is a huge way to reward safe business operations and lower your overhead against your competition.

Review loss control Measures: We do understand accidents do happen, however most accidents with better preparation can be prevented. A few areas to focus on:

Hiring Practices: Hiring the right employees that are experienced in the field and vested in your business are your lifeblood. Don’t put that in the hands of just anyone.

Safety Controls: Start with OSHA basics and if you have a unique business you might need more. Keeping your employees safe and preventing workers comp claims is the best way to save money on your workers comp.

Document everything: If you have safety meetings, a safety policy, drug free workplace, make sure this is all in writing and in your employee handbook. Make sure sign offs are in place so your employees are aware of these policies. This can be a great tool to prevent claims and keep a culture of safety that you take seriously in your business.

Manage your workers compensation claims: As you develop an Experience MOD over time for your Florida workers compensation claims history, your premium can go up or down based on this experience. This means your premium is directly affected by claims you had 2-5 years ago. Settling those claims and learning from them can help you combat the rising workers comp costs. This process takes time but you will thank yourself in the next couple years as that MOD drops lower.

Buy in to avoid the increase: If you have not placed your workers comp coverage for your business yet and are in the market, get this coverage before December 1, 2016. This is when the rate change takes place. You will still have to face the rates next year but at least this is one year you are paying 14.5% less on this policy.

Put some skin in the game: Especially if you are paying premiums in excess of $20,000 annual, Deductible plans as well as coinsurance plans can allow you to put some skin in the game and take on a little risk of your own. Some start as small as $500-$1000 deductibles but go up and the savings increases with that. It might not make a lot of sense for the smaller premium amounts but this is a good tool to help save money without putting too much of your business at risk. Pick a deductible that saves you money and you feel comfortable with.

Alternate payment options: Plans like Pay-As-You-GO can be helpful tools which allow you to pay your premium when you run your payroll. This won’t change the price but for companies that have a tough time with premiums in the slow season but still have a year round payroll, this can be a great solution.

In times like these were pricing can have such a direct impact on your business and its livelihood, Rate increases are inevitable, however taking these steps above if you are not already, could show savings of up to 25% below market for some clients but 5-10% is very obtainable for most clients. The increase in Florida is a tough one to swallow, however taking these actions could allow you to offset these increases. Speak with one of our Professional Insurance agents to learn how you can implement and benefit from some of these tools.

12 terms to familiarize yourself with before your next renewal.

Insured

The person, group, or organization whose life or property is covered by an insurance policy.

Insurer

Insurance company that issues a particular insurance policy to an insured. In case of a very large risk, several insurance companies may combine to issue one policy.

Named Insured

Any person, firm, or organization, or any of its members specifically designated by name as an insured(s) in an insurance policy. .

Premium

The price or amount paid for insurance.

Claim

A formal request to an insurance company asking for a payment based on the terms of the insurance policy.

Carrier

A company that offers and underwrites insurance policies.

Policy

A document detailing the terms and conditions of a contract of insurance.

Underwriter

The person who decides whether to provide insurance and under what terms.

Agent/Broker/Producer

A person licensed by a state and employed by an insurance company to sell insurance policies on the company’s behalf.

Umbrella Coverage

Umbrella coverage protects your business when your existing liability insurance policy limits can’t cover all the expenses of a claim.

Hired and Non-owned Auto

A coverage that is commonly added or endorsed onto a commercial auto insurance policy. This endorsement adds additional coverages for the insured in the event there becomes a liability issue for an automobile accident involving a vehicle they don’t directly insure (rentals or employee owned cars).

Experience Modification Rating

An employers’ Experience Modification Rating refers the factor calculated from actual loss experience. It is used to adjust the businesses premiums (higher or lower) based on the businesses loss experience relative to the average underlying manual premiums for workers compensation coverage. The Modifier (Mod) compares the insured experience to the average class experience.

Additional Terms to consider familiarizing yourself with before your nest renewal

Waiver of Subrogation

A Waiver of Subrogation is a contractual provision whereby an insured waives the right of their insurance carrier to seek redress or seek compensation for losses from a negligent third party.

Certificate of Insurance

A certificate of insurance is a document that is used to provide info on specific insurance coverage and provide verification insurance is in place at the time of issuance. The certificate contains the types and limits of coverage, the carrier, policy number, named insured, and the policies’ effective dates.

Certificate Holder

The certificate holder is the person, business, or nonprofit organization who is provided with a certificate of insurance to prove coverage is in place at the time of issuance. The certificate holder will be notified if at any time the policy is cancelled before the listed policy effective date.

Additional Insured

The Additional Insured is the person or organization who is not automatically included as an insured on an insurance policy, but who is included under the policy at the request of the named insured.

Simple Ideas that can Create a Safe Work Environment

There are several safety procedures a business owner can implement into their business without setting up an official safety program. Official safety programs frequently cost a large amount of additional money. As a workers’ compensation professional one common reason for increasing workers comp premiums is bad management or lack of safety procedures causing unnecessary claims. In a society where it’s becoming increasingly difficult to prove a claim to be fraudulent, it’s more important than ever to prevent unnecessary claims from occurring in the first place. When a business has suffered a claim or several claims in the past (frequency or severity), those claims will follow a businesses workers comp experience rating for several years to follow. This factor is referred to as a businesses work comp experience modification rating.

Find out how to provide a Safe Work Environment at your small business via MyInsuranceQuestion.com

Frequent safety meetings are needed to keep this experience modification rating down. Monday morning meetings are typically the easiest for a business owner and they get the employees on the right track for the upcoming week. Actually a large portion of fraudulent claims occur on Monday? Here are a few things many successful businesses require of their employees.

Talk with your employees about proper lifting procedures
Ensure all employees have proper safety gear
Purchase and require employees to wear basic safety gear
Talk with employees about how to handle tools within the trade properly

As far as the weekly meetings go, if you have trouble coming up with topics to discuss simply ask your employees. They may be able to contribute topics based on their day to day job duties. They can help you analyze what areas they think will cause claims and how the organization can minimize the exposure. These meetings can be short, but they do need to be documented. Your employees need to start the work week off on the correct foot. This can also show you care as a business owner about the safety of your employees.

Business owners being active in the day to day operations are important to the success of any safety program. Being present on the job-site and communicating with the employees help the owners to understand what the employees actually do on a day to day. Being active int he day-to-day operations helps to quickly identify when an employee is doing something that increases their chances of being injured. Being an active owner typically results in the employees paying closer attention to doing the job the right way instead of cutting corners.

Identifying reasons for prior claims and correcting those problems going forward can also help your business control the experience modification rating. If your a business that suffered claims in the past, use the insurance carriers loss report to identify all claims (believe it or not some business owners are not aware a claim even occurred.) Think about and discuss with your staff ways that particular injury could be prevented from happening in the future.

Appoint someone on your crew or within each department as the leader or foreman. Have those key employees assist in the monitoring of the safety program within the workplace. Have those key employees assist with safety meetings, but hold them accountable for their responsibilities. Reward them when they make a difference.

Another good tactic to promote safety is to put up a sign within the workplace in a highly visible area. Remind employees daily that the job place is X days injury free. Give the employees an incentive to reach a certain number of days with no job place injuries. These little things make the employees think about being safe and make a difference.

What is Inland Marine Insurance?

Also referred to as “Equipment Coverage”, Inland Marine Coverage is coverage specifically for property that is likely to be moved or in transit. It is a highly specialized type of property that requires a unique valuation. This can include products that you are having shipped across the country, but it can also apply to a tractor. This type of coverage is essential for many business owners and the best way to determine if you need it is to have a strong trusting relationship with your insurance agent and tell them everything about your daily operations.

Now many business owners have an initial reaction to being offered inland marine coverage. That reaction frequently is that this coverage does not apply to my business. In many cases a business owner feels their insurance agent is just trying to tack on an extra coverage. A coverage that they do not really need and in some cases, they might be correct. Again, if you have an insurance agent that you trust they should be able to explain this coverage and help you determine if it is right for you. Any agent worth their weight will not be mentioning a coverage that has no benefit to you the business owner. You might have a difference of opinion about what the risk is, but an agent should never recommend something you do not need.

The best way for an insurance agent to stay in business is to keep you the customer happy. Keeping you happy occurs by saving you money on your policy up front, but also in making sure you are fully covered when incidents do occur. This is where you may differ in opinion about the risks your business faces and about the amount of risk you as a business owner are willing to take. It is the job of the insurance agent to make you aware of these risks and offer the products for you to protect your business to the fullest.

Now I speak about this relationship with your agent, because Inland Marine Coverage is a specialized product in the insurance industry. It is very important for some business owners to have, but many business owners do not carry it and many do not understand how going without it puts their business at risks. First take the example of a construction business who has just a general liability and workers compensation policy. This is typically the bare minimum to get your business up and running. If your construction business is operating away from your business residence than all of your tools are not covered under your either of the policies you have in place. If you were to severely damage a tractor or some other type of expensive equipment than you are responsible for any repairs that might occur. Say you have an expensive piece of machinery that you cannot operate without. If you do not have cash on hand to repair or replace that piece of equipment what is your business going to do? If you have an Inland Marine Policy in place than you can replace that piece of equipment through your insurance policy.

Again having a good relationship with your agent and speaking honestly with them about your daily operations can go a long way towards determining whether you need Inland Marine Coverage. Having open and honest discussions with your agent allow you to determine what risks you have and how much risk you are willing to take as a business owner. The amount of risk a business owner is willing to take is different for every business. Your agent works with all types of business owners on a daily basis. If you are the type of owner who is willing to take on more risk, you should make that known to your agent. At the same time you should partner with an agent you trust and listen to them when they recommend some type of coverage. If they are the type of agent you should be doing business with than they will not be recommending something that is not in your best interest.

Attention: You’re facing a nonrenewal.

Your current insurance policy is being non-renewed due to….

You may have received a notice that starts, sounds or maybe feels something like the title above. Insurance cancellations, despite popular belief are actually more common than you would think. They are very serious and should be responded to with action swiftly, but they are not always an awful “kiss of death” from the insurance industry. Some business owners I have worked with seem to think this is so. On the other side, it is something you need to respond with action to regardless.

We will discuss today most common insurance non-renewal or cancellations we see and how you should respond to the scenarios:

…..Your reason for nonrenewal for underwriting reasons

What? Are you kidding me? Yes this is by far one of the most vague reasons, but more common than you think and as an insurance agent this tells me basically no reason why you are facing a nonrenewal. Generally this does mean one of two things. Either something about your operations (claims history, etc) or something in particular about your business makes the perceived risk for the insurance carrier less than satisfactory in their review. It could mean the company has changed their underwriting guidelines as a whole, which just happens to mean your company doesn’t fit with their strategy. Simply put insurance companies generally know what their company is good at and what they are not. Some insurance companies prefer to write roofing companies, but wont write clerical offices. many are just the opposite. Most companies fall in the middle which is why this becomes very common.

For Example: Transportation claims have been a leading cause of claims for several years, especially relating to workers’ compensation insurance. As a result in the last few years several insurance carriers who in the past would write these types of accounts have now decided they were no longer offering coverage for companies in your industry or class code. For some insured’s its no surprise when their claims have shown them good reason for this, however some trucking companies who have done well at controlling claims would see non-renewal notices for this type of reason. They were not seeing the non-renewal because of their claims or experience, but more because of the industry as a whole not performing well. This can be discouraging for these types of clients. Clients who take pride in controlling their claims and being very marketable risks to insure. These are the types of clients who need an experienced insurance agency on their side. Preferably one with several market alternatives to move to when this happens.

What to do?

Discuss with your independent insurance agent what other carrier options are available. Start this process soon so you can make an informed decision on the direction you want to go without being pushed into a last minute decision. Requesting claims history reports and Experience rating worksheets from companies you have been insured with for the last 5 years is a good start as most companies will need this in order to quote.

Nonrenewal because Agent is no longer representing this insurance carrier…

Insurance companies and agencies have contracts come and go fairly often. More often for some agencies than others. This doesn’t mean your agency is not a good agency or that the carrier you are insured with is not a good carrier to do business with. It just means that one or both of those parties have decided they are not the best partnership at this time. This decision has absolutely nothing to do with you as the business owner with the exception that you are part of the pool. Agents within the industry call this the agents “book of business”. Sometimes, for one reason or another, the agency or carrier has decided that the partnership does not fit one o f their needs at this time.

What to do?

Decide who you like more. If you have not been happy with the agency, call another agency. Especially one who has access to several commercial markets. A lot of times your policy could be moved into another agency book with a just few forms signed.

If you like the agency more than you like the carrier, discuss with your agent the alternatives they have to offer so a replacement option can be found well in advance of your renewal date.

Nonrenewal due to Claims or Non-Renewal Due to payment history issues

Don’t be discouraged. We all have set backs and things come up with payments. Insurance claims are the reason we buy insurance. These statements are not to enable you to continue on your path, don’t beat yourself up, but action and change is needed in these situations. Otherwise you are going to see the same situation in the future.

What to do?

Nonrenewal due to payment issues are a sign that you want to look at things. You might have an accounting back-log or issue that’s delaying your payments (Fix the back log issue and prioritize making payments on time). You might have cash flow issues from high accounts receivables (manage this aggressively-maybe even consider outsourcing to a collections agency if need is to that extent). Your sales are just low throughout the year or part of the year (work to improve sales or drive down costs more aggressively-most importantly budget for your known operating costs like insurance). These are the most common reasons we see cancellation of insurance. The seriousness of this issue extends into all aspects of your business and is a reason why several studies point to poor accounting practices as a leading reason why many small businesses fail.

A Non-Renewal due to claims do happen often. There is really no one answer to how to handle these because the scenarios are always different. Some carriers are more aggressive than others. Some are more reactive while others are more proactive. This is really where having an agent that understands these differences in carriers is vital to helping diagnose the best game plan for your business. For instance, if you had one claim that blew up into a much bigger issue and you have made the necessary corrective actions, most of the time that is not going to be hard to overcome in finding a competitive replacement for coverage.

But when you have shown a trend of several claims, either big or small, corrective action must be taken. If these incidents have similar reasoning than from the carriers perspective it may point to poor claims management. If sufficient corrective actions have not been made than the claims are likely to create the same or worse problems for you in the future. These types of issues must be addressed or the problem with claims and obtaining insurance will get worse over time.

Overall a nonrenewal of your insurance should not be taken with a grain of salt, but are also not a reason to close your business. The issues are sometimes within your control and many times they are something no one could prevent. The key to is to manage and react promptly. Get past the problem with a well thought out game plan. The help of a good agency is crucial to deal with these problems for your business.

What do I need for a Work Comp and GL Quote?

Items needed to get a quote on Workers’ Comp and General Liability Insurance

Many times while talking to a prospect and gathering information I get the question “why do you need that, I just need a quote”. Agents can usually give you a business owner a phone indication depending on the state you are calling in reference to, but that is only an indication and not a formal quote. Any agent can easily go into detail about why they need an address and Employer Identification Number (EIN). Sometimes the business owner on the other end of the phone does not want to give out the information. At that point an agent has to say, unfortunately I cannot get you a quote unless I have your EIN and other needed information. This is a good piece of information to have if you are looking for a quote on workers’ compensation or general liability insurance for the first time. Below are all the basic questions any agent will ask while on a phone quote. These are also the questions you will get frequently via email when an agent needs more information on a submission sent in to me.

It is very important that we have the correct name and spelling of the company. The way the company is formed is also crucial for Officer & Partner Exclusion Regulations per state.
Phone numbers and email addresses are very important for the agent working on your quote and the future insurance carrier. Many carriers require agents to enter an email address upon quoting and or binding an account. This is typically for billing and information delivery.
Mailing and physical addresses: Many times this is a PO Box for a mailing address and that is acceptable. However, a physical address is needed for the application and auditing purposes. In some cases there are multiple states and different mailing addresses. Your agent will need to know where to mail important policy information. Which address it needs to go to needs to be specified.
Years in business: If you have been in business 5 years but are just now needing work comp or liability insurance our insurance carriers are going to want to know why. If you are a new venture and hiring employees for the first time, agents have different options for you than a business that has been in operation with employees and no workers comp coverage. All of this needs to be known to get an accurate quote.
Federal or Employer Identification Number: This number is very important for many reasons. This number acts as the Social Security Number for your business. This number also acts as a way for each agency or agent to identify they are working on your account specifically. For instance if you call four different agents and they all have the same insurance carrier appointments then it’s first come first serve. Meaning the agent that enters in your information first will have the ability to present the quote. The other agents will be “Blocked” from the market. This EIN will also follow you with the National Council on Compensation Insurance (NCCI). This will show what class codes you have used in the past as well as any past audits out for your company. On a side note please give any and all information to your agent. If an agent asks if you have ever had a Work Comp policy and you say no never, the carrier will have record that you have had a policy before. This makes for a very uncomfortable conversation for all involved.
Officer and owner information: I cannot convey in words how important or vital this piece of information is. Depending on the state and how your company is formed determines what officers/ partners & percentage owned will allow some exclusions. I have seen this go many different ways and usually the head ache could have been detoured with correct owner information.
What are the estimated annual wages for each department (office, field, sales): Workers’ Compensation Rates are based solely on Payroll. Your payroll times the rate of the class of business per 100 in payroll. We as agents understand that if you are just starting out this can be a hard number to decide on. Take it with small numbers first for instance how much money per hour?, how many hours a week?, and how many weeks will the employee be working for you? This number will give you a real number that you can give the agent to quote with.
Detailed description of operations: Agents need to understand what your business is doing on a day-to-day basis. Telling your insurance agent I have a construction business does not give us a lot to go on. What kind of construction? Commercial or residential, new build or existing? Are you an artisan contractor? Or maybe you own a machine shop. What are you machining? All of the questions we are asking are so we can get you the most accurate quote.
If you have a Workers Comp policy in place, agents are going to need a copy of your Loss Runs or Claims history along with an Experience Modification Number (if you qualify for one). You can obtain both of these documents from your current carrier and you do not have to call your agent if you do not want to. Along with this information if needed a supplemental application will be sent to you to be filled out, signed and returned.

Always remember insurance agents are here to help you get the coverage you need. If at any point, do not be afraid to ask questions. Many times this is the first time making a call to inquire about work comp insurance and there is a lot to know before actually purchasing a work comp policy.