The Bull Stops Here Blog

If you are ever approached by an insurance agent/broker who wants you to sign a broker of record letter, understand one key thing.

You are FIRING your current agent.

A broker of record letter instructs your insurance company (ex. Safeco, Travelers, Firemans Fund) that you are firing your current agent and authorizing them to deal with the agent for which you are signing the letter for.  Plain and simple.  If you are unhappy with your current agent and wish to change, this is the avenue you take.  However, never sig one under the pretense that the broker needs it to procure proposals.  That is not true.

Only sign a broker of record letter if you are intent on firing your agent.  A “best practice” would be to call your terminated agent before they get word from the company. It saves you getting a call from them and is the courteous thing to do.

© 2010 Dan Weedin. All Rights Reserved

Sterling Financial Corporation was hit with a lawsuit due to pension plan losses, according to the Kitsap Business Journal.  This is EXACTLY why you need an ERISA bond.  This is a coverage that protects the board of directors from lawsuits like this one.

Read the full story.

I know I blogged on this recently but I just had a client ask me about the viability of earthquake insurance. Her questions was, “I don’t feel we get much for the price we pay…”

My response…

1. What do you expect to get in return? Earthquake insurance returns your investment in only two ways.  First, in the event of an earthquake, your damaged property gets fixed. Second is peace of mind. It sounds like you are questioning paying premium for something that may never happen.  However, if it does, will you be unhappy you dropped it?
2. You can certainly shop your coverage for a competitive quote; you can increase your deductible to lower your premium; or you can decide that you are willing to self-insure the risk.  Those are the three options.
3. Earthquake premium is derived from age of the building, type of construction, location, total area, and value of the building.  Any one of these with a high risk (i.e. Brick construction or old building) can significantly affect the premium.
   

My recommendation to any of you is to first decide if you want to self-insure the risk.  If your risk tolerance can withstand an earthquake loss, then don’t but it.  If it can’t, then shop around to find the best possible option.

© 2010 Dan Weedin - All Rights Reserved

What small businesses can  do right now to start 2010 with the upper hand?

Small businesses  notoriously overpay for their insurance due to lack of risk management  strategy.  If you were to commit to a strong approach to your  insurance, safety practices, risk management and forecasting, you would  be able to save money in 2010 on your premiums, as well as improve efficiency  and profitability.

Here are a few tips that you can implement today that will minimize risk and maximize profit:

1 – Get a  complete diagnostic of your safety program.  Injured employees cost  small businesses money in increased workers compensation premiums, loss of  time, and hiring or moving people to replace the injured worker.  Offices  have a huge issue with ergonomics, as this accounts for 50% of workers comp  claims in the country.  Being able to identify exposures and put safety  practices into place to alleviate them will have a direct impact on their  bottom line.

2 – Bid out insurance.  The insurance market is still  “soft,” meaning that premiums are down and competition for business among insurers is up.  Not looking at all possibilities is simply not prudent  and can be expensive.  Regardless of when their renewal is, they should  make a commitment to aggressively bid out their insurance.

3 – Get a  complete diagnostic on your property and casualty insurance.  I rarely  find a policy that can’t be adjusted to save money.  Normally, business owners leave the programming of their policies to the agent or broker without  getting involved.  This is an area that with proper attention could  immediately improve the program by cutting costs and/or preventing uncovered  claims.

4 – Consider Health Savings Accounts (HSA) for medical  insurance.  The programs will vary among states and insurers, but this is  a real option to save money for the employer and actually provide a flexible  policy for the employee.  I had a client that saved $6,000 a month making  the switch last year.

Start off this new year and decade the right way for your business. Minimize your risk and maximize your profit by implementing these strategies today!

© 2010 Dan Weedin - All Rights Reserved

Upcoming Insurance Go2Guy Teleconference:

Friday, January 8, 2010 11:00 AM Pacific / 2:00 PM Eastern

All Teleconferences are recorded and an MP3 audio download will be e-mailed.

Risky Business: How to minimize risk and maximize profit

This one-hour teleconference will provide you with:

• Five steps to save money on your insurance today
• Questions you should be asking your insurance agent
• Strategies to avoid the traps when purchasing insurance
• Risk management strategies that are simple to implement
• Ways to avoid the BIG mistakes that cost you money and time
  

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Start your new year off by protecting your business while saving time, money, and frustration on your insurance.

Register now

This is an article in today’s Scottrade Stock Market News where I am interviewed on the Tiger Woods fiasco. Companies that hire celebrities to endorse their “brand” face liability issues. Insurance companies are not in the moment if they miss this opportunity to protect their clients. Insurance buyers who engage in hiring celebrities are missing the boat if they don’t look into transferring all or part of the risk.

Read the article

I’m working on a manual for business owners, risk managers, and professionals on liability associated with social media marketing. One of the chapters is slated to be “Questions from Readers.”  To that end, I’m in need of questions.  That’s where you come in.

Please send me your questions on anything dealing with social media - your concerns, challenges, privacy issues, best practices, etc. I will do my best to answer them on whatever forum you ask, and use them in my manual which will be published (no names - just questions). Perhaps you have clients that have questions.

You can ask me questions via e-mail (dan@danweedin.com), Facebook, Twitter, or Linked In, or on this blog. Your help is greatly appreciated!

Five items you can do to do to make sure your audit goes smoothly:

1 - Make sure you know the class codes that are being used to rate you for liability.  They will be a description of your operation.  You will find them on the General Liability section of your insurance policy.  Ascertain if they are correct and complete.

2 - Make sure you know what your rating basis is for liability.  The options will be gross sales, payroll, cost of materials, or area (sq. feet). Determine if the correct basis amount was chosen.  If it’s too low, you will owe money at the end of the policy period.  If it’s too high, you are paying too much and can improve your cash flow.  Depending on the policy, you might not even get it back!

3 - If you’re a contractor, understand the maximum limit you can be rated for on payroll.  It may vary per state.  In Washington State, it’s $600/week or $31,200/year maximum for any laborer.  Ask your agent if you don’t know.

4 - Ask your agent or consultant to attend an audit meeting with you.  If it’s done by mail, ask them to help you complete the forms.

5 - If in doubt about your rates at any time, ask!  It’s better than being surprised.

Be safe…

According to a report by the Kitsap Business Journal this morning, if you are in the State of Washington, your workers compensation rates are going up.

Read the article

Best,

I recently had a lengthy conversation with a client regarding certificates of insurance and being named as an additional insured.  Here are a few bullet points that came out of our conversation where you might benefit…

• A certificate of insurance isn’t worth very much to the holder.  It simply states that the insured had coverage at the limit shown on the day the certificate is dated.  That’s it, that’s all.  For all the holder knows, the insured canceled their policy the next day.  Certificates are nice to have (I guess) for the recipient, but they really are limited in scope and time sensitive.  You can’t bank on them.
• If you are an additional insured, the insured’s insurance company is obligated to defend and pay for you in the event of a claim where you are named.  You will be notified if the policy cancels or is set up to non-renew.  That’s the good news.  Make sure any certificate shows you listed as an additional insured.
• Certificate holders can receive a certificate at no cost to the insured.  After all, there is no risk.  Some insurance companies charge insured’s a fee for adding additional insureds because they are adding risk.
• Additional insureds never increase the limit, so the more additional insureds, the more quickly the limit can be exhausted.  In most cases, defense costs are in addition to the limit.  If you have a surplus lines company involved, make sure that is the case.

I’m a big believer that if you have a risk exposure (i.e. landlord-tenant, contractor) then you should be named as an additional insured and receive proof that this occurred.  Otherwise, being a certificate holder means nothing because it gives you no rights and little information.

Be safe,