Business Insurance

Business Insurance

Determining your Amazon commercial insurance costs in Texas

Business Insurance, Truck Insurance
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Lately, I’ve received a number of calls from budding entrepreneurs across the nation.  Everyone wants to know, how much does it cost to carry insurance for Amazon and Amazon Prime Delivery drivers.  Since I’m getting so many phone calls, I thought it would be a good idea to put post this article.  Before I dive into that, here are few basic disclaimers.

  1. I am an insurance agent licensed to appointed to write insurance in the State of Texas.  If you’re inquiring about other states, find an agent there.
  2. The following information is based on general information and actual clients.  Your could differ a little; your rates could vary tremendously from ones on this article.
  3. Everything is subject to approval by the perspective insurance company.
  4. Questions about Amazon contracting and bidding should be directed to Amazon.  I am in no way affiliated with Amazon, Amazon Prime, Amazon Prime Now, Jeff Bezos, Blue Origin or anything else in that family.

Now for the stuff you’ve been wondering about.  First thing’s first, if you haven’t seen my other video, you need to know their basic requirements.  You can find them at this link here.  If you don’t feel like going there, I’ve taken the liberty to post below.

Part 1:  Train Your Drivers

Amazon wants you to have some type of “written training program that includes safety policies, procedures, and training for your drivers.”  If you’re looking to grow your fleet, this is key in avoiding unnecessary claims.  The last thing you want to do is have drivers causing damage, having motor vehicle accidents, accidents and injuries.  Lots of claims makes your insurance difficult to obtain and afford.  If you can’t keep the insurance you can stay in business.  If you’re a start up, you may be able to get away with not completing this step.  The moment, you get another driver, the game changes.  So you owe it to yourself to put this in place.

Part 2:  Meet The Insurance Requirements

To meet the insurance requirements, understand the following first:

The most common complain I hear is that Amazon doesn’t help guide you through their process.  They ask for insurance first and then they’ll talk to you.  That’s because, they don’t have time to hold your hand in the process.  They’re Amazon!  So the most successful companies have delivered or  currently delivery for other companies.  New ventures beware!  Here’s a tip:  If you can sign up with other companies as well, you probably stand a better chance because you know the ins and outs of being a courier or delivery driver in Texas.

Now the insurance requirements.

  • Commercial General Liability: $1,000,000 per occurrence and $2,000,000 aggregate
  • Business or Commercial Auto Liability:  $1,000,000 combined single limit
  • Cargo Liability: $25,000 per occurrence
  • Workers’ Compensation:  $1,000,000

Part 3:  Vehicle Recommendations

As posted on their logistics site, Amazon wants you to have a cargo van of at least 200 cubic feet of volume.  Keep in mind that in your business auto costs, you should consider physical damage, uninsured motorists coverage, and even towing or rental if your vehicle qualifies for it.  The last thing you’ll want to do is get a policy, have an accident, and not have the money to replace or repair the vehicle after an accident.  This means you’re no longer in business.  We both know that Amazon will find the next person to take your spot if your company cannot fulfill its obligation.

Rate Observations

That’s a loaded question.  Since it depends on so many factors, I’ll try to give you an idea of extremes in North Texas.   The best  bet is to call me if you live in Texas and you have the necessary information.

Scenario 1:  The Solo Delivery Driver

“Delivery/ Courier Service”

Time in Business: New Venture

Estimated Driver Age 33-40  years

Vehicle Type: Cargo Van – Value $36000

Cargo Liability Limit:  $25,000

Estimated Payroll:  $58,000  There are minimum payroll numbers you cannot go below

Radius: 50-100 miles

In this scenario I’ve seen the following rates:

Commercial Auto & Cargo Liability

$300-$700 per month

General Liability

$700 to $1100 per year.

Workers Compensation

$2700 to $5000 per year.

Scenario 2:  Truck Driver that does other Delivery

“Light and Local Trucking”

Time in Business:  3 Years

Estimated Driver Age 35-40  years

Vehicle Type: Straight Truck or Box Truck – Value $50000

Cargo Liability Limit: $100,000

Estimated Payroll:  $40,000 per person

Radius: up to 500 miles (could vary the rates)

In this scenario I’ve seen the following rates:

Commercial Auto & Cargo Liability

$600 – $1000 per month

General Liability

$900 to $1500 per year

Workers Compensation

$7000 to $9000 per year per driver based on payroll audit

Scenario 3:  Trucking Company with Interstate Commerce

“Trucking Company delivering between logistics centers possibly carrying loads across state lines”

Time in Business:  4 Years

Estimated Driver Age 35-40  years or older

Vehicle Type: Truck Tractors with Dry Van Trailers

Cargo Liability Limit:  $100,000

Estimated Payroll:  $40,000 per person

Radius: up to 500 miles (could vary the rates)

In this scenario I’ve seen the following rates:

Commercial Auto & Cargo Liability

$600 – $1000 per month

General Liability

$900 to $1500 per year based on the number of truck and payroll

Workers Compensation

$7000 to  $9000 per year per driver

Business Auto Rating Considerations

For the delivery business, this is the foundation of your plan.  As a result, leasing a vehicle and using the lease company’s insurance will not work.  The companies you contract with want to see that your business has its own commercial auto policy in case you’re stopped or have an accident.  Regarding pricing, a number of factors go into premium calculations.  For the business auto is the most complicated of all the other requirements.  The owner’s insurance score, address, radius, age, and driving record affect business auto insurance rates.  Other considerations that affect the auto rates include the vehicle ages, type, size, operating radius,  value, and whether the owner or driver decides to carry coverages like physical damage (including comprehensive and collision), uninsured motorists, personal injury protection (PIP), towing, rental etc.  While Amazon only requires you to carry $25,000 cargo legal liability, some delivery drivers carry higher limits as they may delivery for multiple companies that have different requirements.

General Liability Coverage and Rating Considerations

More than likely, the general liability coverage is going to be based on either your estimated gross revenue or your estimated payroll.  For that reason, I ask both.  Generally, the rate has returned somewhere in the $1000 range per driver.  As I previously stated, it’s important to have the auto liability in place.  Otherwise, your policy stands the chance of being rejected by the underwriting department.  Personal auto insurance does not count.  Neither Amazon, nor the general liability company will accept it.

Workers’ Compensation Rating Considerations

To get this quote, you will need to provide a social security number or a federal employer identification number.  There are no exceptions to this requirement with any company.  Your rates will be based on the type of business you operate as well as your total payroll exposure.  Also, if you’re to office person or the boss, you can include yourself in the workers comp rate as well.  If you’re the only person, insurance companies dislike rates for one driver with that person excluded as the owner.  They call those ghost policies, and they’re frowned upon.  So, for single person risks, you’ll end up paying for it regardless.  If have employees, officers have the ability to exclude themselves.  However, you have to specify whether you want to exclude officers or owners from coverage.  That’s up to you.  In Texas, you may opt out by filing as a non-subscriber to workers comp.  I don’t know if Amazon will accept the non-subscriber form.   Keep in mind that regardless of whether your drivers are 1099 or W2 employees, you’re responsible as the employer if they’re injured on the job.  So consider carefully before you opt out of workers’ compensation for any business type.

Customize the quote for your company

Ultimately, these numbers are only as good as the information submitted.  As with all insurance policies, rates must be approved by insurance companies before they are finalized.  I hope this helps demystify the Amazon insurance process a little.  As you already know, the company will not talk to you until you show that you have met their minimum requirements.  If this helps, give it a share, thumbs up, or +1 on your favorite social media..   If you’re in Texas and need a quote, feel free to contact me for quotes.  I would love to help you grow your business.

 

Big construction insurance tips for trade contractors

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Dallas is booming if you have an affinity for the construction business.  Insurance requirements have a way spoiling the mood for small business owners.  When it comes to construction trade contractors, it’s much worse.  Most construction trades purchase general liability insurance policies expecting that to be enough to complete a job and get paid.  As construction exposures continue to increase in complexity, contractor insurance now require more complex endorsements and policy changes to match.

What does a smart small business person do to combat ever increasing coverage complexities?  Not be trite, but knowledge is power.  So, I’ve come up with a few tips to help you understand what to look for when you’re negotiating a deal.  This article will help you sign up with more contractors and get paid for the work you do.  If you understand the insurance pitfalls, you can get more jobs, and make more money.  If you’re like most small contractors, more money is a good thing.  So read on.

General liability is a good start

Remember the Oldsmobile slogan, “It’s not your father’s Oldsmobile”?  Consider that the slogan for today’s insurance requirements.  “It’s not your father’s general liability”.   In the past, you could simply provide your liability certificate of insurance and move on right?  While obtaining liability might be a good start for most small businesses, for many this policy type is only a starting point.  If you expect to perform recurring services, you can expect your contractor to add them as additional insured by way of policy endorsement.

Aside from the additional insured policy, we’re seeing other endorsements including waivers of subrogation, primary and contributory endorsements, and several others.  Ultimately,  The addition of these endorsements to your liability are important in several key ways including:

  • Special endorsements must come from the insurance carrier.
  • Contractors can contractually withhold payment for failing to meet requirements.
  • These endorsements quite often lead to increased insurance costs.

While General Liability is a good start for you business, always review your contract’s insurance requirements to ensure you have the right additions to your general liability policy.

Consider commercial auto insurance for job site driving exposures.

While most small subcontractors starting out attempt operate business with liability, many businesses now require their trade contractors to carry general liability and commercial auto liability.  We’ve noticed an increased number of construction management, general contractors, and property management companies require either personal auto liability limits or commercial auto liability with combined single limits of $1,000,000 or more.

If you’re like most small trades, you’re probably thinking, “Why do I need commercial auto liability?”  The truth is our society has become complex enough that one could be sued for a slip and fall in a parking lot.  As a result, larger companies want to ensure that all contractors working for them have a standardized minimum amount of coverage; just in case. Aside from increasing contractual requirements, commercial auto policies extend liability to employees and vehicles whether your business owns the vehicles or not.  On a personal policy, if an employee or contractor has an accident your vehicle, it is not covered.  Imagine this happening on a job site.  I’ll let you fill in the blanks.  Besides, all the contracts that pay money require some sort of business auto liability.

Tax status has nothing to do with Workers Compensation

When it comes to workers compensation, the common mistake small businesses make is to not consider 1099 contractors as employees.  In Texas, because the state does not mandate workers compensation, many small businesses ignore this coverage all together.  With many construction trades, this is a recipe for disaster.  So, with workers comp, consider the following before you consider omitting this from your insurance portfolio

You’re still liability for job-related injuries

If a subcontractor has an injury on your job site or under your contract, you are liability.  While they are working for you, a court would consider them to be your employee.  The fact that chose not to pay payroll taxes is a matter of contract and tax law.  It has nothing to do with financial responsibility.

Make sure someone gets it workers comp

If you decide that your business is too small to obtain workers compensation, make sure that all subcontractors obtain workers compensation and provide copies of their insurance certificate.  Not only does this send a strong message, but it also ensures the guys on your job site have the necessary protections in place in case of injury.  If you are the subcontractor, consider getting workers compensation.  An injury could close your business’ doors for good.

Review your contract before pricing your product or service

While it may seem to be a hassle, reading job contracts is one of the most important things you can do as a small business owner.  Signing a contractor prior to reading it could make difference between making and losing money; just because of the insurance requirements.  Also, it could make the difference between getting paid and being placed on vendor hold due to insufficient insurance requirements.

Have your insurance agent review your contract

We suggest our clients send us a copy of any contract that has insurance requirements.  This gives us the opportunity to review the contract for unnecessary insurance coverage endorsements.  We also have the opportunity to discuss any added exposures due to the type of work being completed.  In the end, if the insurance goes awry, at least you can blame your agent and call him to make it right.

Everybody is doing it

For example, a large number of national home builders require subcontractors to add them as additional insured for completed and ongoing operations.  In this case, the subcontractor’s coverage provides coverage for the contractor after the product is completed and job is done.  What about the spray wash guy or the person that fills in a cracked tub?  These types of businesses are service related.  As a result, the completed operations endorsement would be a bit unnecessary since a concrete power washer is simply servicing the finished concrete.

The previous example is one of many examples we witness when dealing with small construction insurance requirements.  The key is to catch them and address them before you start work.  The last thing we want to do is perform work and not get paid; right!

To Sum it all up

There you have it.  4 things tips for trade contractors that will make your insurance life much easier.

  1. Start with General Liability and expect more requirements
  2. If you drive to a job-site, you and your employees or subcontractors may need commercial auto
  3. Consider workers compensation for your employees or subcontractors; tax status does not matter.
  4. Review insurance requirements in every contract with your insurance agent

Have questions, contact my office at 214-717-4326 or comment below!  We’re ready to assist you and answer your questions.

Insurance requirements for Amazon Delivery Drivers

Tags: , Business Insurance, Truck Insurance
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Drivers that are looking to get started delivering for Amazon Prime have to meet their requirements.  In checking their website, Amazon requires that all delivery companies meet the following basic requirements:

Driver Training

As a company owner or owner-operator, you and your company are required to have a written safety program that includes your policies, procedures, and training for your drivers.

Vehicle Recommendations

While I have noticed that Amazon has small vehicles delivering for them, their site suggests vehicles with at least 200 cubic feet of volume.  With those types of measurements, you could be looking at something along the size of a cargo van or larger.  The size of the vehicle could lead to other considerations regarding state and federal regulations.

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Insurance Requirements

As far as insurance requirements, Amazon’s requirements are very similar to a number of logistic companies.  Amazon’s basic insurance requirements include the following:

  1. Commercial General Liability of $1,000,000 per occurrence / $2,000,000 aggregate
  2. Workers Compensation – $1,000,000 limit
  3. Business or Commercial Auto Liability – $1,000,000 combined single limit
  4. Cargo Liability $25,000 (or higher, may need reefer coverage for Amazon Fresh)

Keep in mind that these are Amazon’s national delivery requirements.  Requirements could differ in the state of Texas.  It is possible that Amazon may allow workers compensation waivers for  individual owner operators.   As an insurance agent, I suggest carefully considering waiving workers compensation especially if you have plans to grow your business in Texas.   Waiving their requirements does no waive your liability under the law in case a driver is injured in the course of delivering packages.  Who’s responsible for gaps in coverages?

As a business owner, you are responsible for any driver injured on the site.  Amazon’s requirements only account for their liability exposure.  Since business owners are probably classified as a independent contractors, you should probably consider the following coverages:

  • Physical Damage Liability
  • Health and Supplemental Insurance
  • Life Insurance
  • Retirement

Physical damage liability can be added to most commercial auto policies for vehicles under 54,000 lb gvw.  For health, life, and retirement benefits, consider discussing these benefits unless you think you can work as a delivery driver forever.  We are fortunate enough to have plans that address the coverage needs of today’s delivery and transportation companies.  These plans start around $75 to $100 per week.

Aside from insurance coverage considerations, I previously mentioned the possibility of state and federal regulatory needs.  If your vehicle ultimately is required to get a USDOT number and MC number or TXDMV number  (formerly TXDOT number), then you may fall under federal motor carrier regulation.  I contacted Amazon and will update this blog post if they change their insurance or other regulatory requirements.

 

What if I cancel my insurance policy early?

Auto Insurance, Business Insurance
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Inevitably, not all insurance policies remain in force for the entire policy period.  Let’s face it, insurance policies are cancelled early by the consumer for all sorts of reasons.  Due to economic conditions, a small business could be forced to close its doors.  An individual family could find a cheaper alternative to an existing auto or home policy.  Whatever your reason for cancelling a policy here are a few tips to ensure your voluntary cancellation is in your best interest.

Never cancel an insurance policy when you still need policy

Cancelling a policy while the need still exists can be very dangerous; especially for auto policies.  Recently, we had a new client call and ask to remove a child’s vehicle from the policy.  However, this vehicle titled in dad’s name.  We asked if his daughter obtained insurance and whether he could prove the existence of a replacement policy. Once he stated he could provide proof of new coverage for his daughter’s car, we processed the removal of the extra vehicle and documented the details of the call in our system.

This can also happen in the case of divorce-separations.  Once a divorce is finalized, the first named insured may request to removal of a  spouse.  In cases like these, insurance requires the agent (with good reason) to obtain some type of documentation confirming that we’ve spoken to both parties. In this case we must either write the former spouse a new policy or confirm the existence of insurance coverage elsewhere.

In both cases, this  prevents us from pulling the proverbial rug from underneath a client.  If the spouse being removed has neglected purchasing a replacement policy, removing them prematurely could cause an unnecessary gap in coverage.  What would happen if that spouse had an accident?  In the case of the daughter, if dad still has a car titled in his name, he could still be considered liability if a car titled in his name is improperly covered or uninsured.  What would happen if this case?

Make sure replacement policies cover the same exposures

Many times, consumers look a lower rates only.  As a result, as a result, some companies or agents will provide lower rates by reducing or removing coverage on auto and home policies.   As a result, the reduction of premium could open exposures to loss that one had not consider.  This can also be very costly.

Imagine having an auto insurance policy that has everything you could possibly ask for.  Imagine having a policy with high liability limits, personal injury protection, uninsured motorists, physical damage for the car, towing, rental reimbursement, death and indemnity coverages included.  After having this policy, you see a commercial for “no-credit check insurance policy” that will save your $30 per month.  In purchasing that policy, you’re convinced that you only need state minimum liability and physical damage coverage with a $500 deductible.

After switching policies, you have an accident in which you’re severely injured.  Aside from missing time from work,  you’re left with paying your deductibles for both auto insurance, and health insurance while living on less money due to unpaid sick or lost business time.  In this case, was $30 per month or $360 per year worth removing the personal injury protection?  What if this was a claim with an uninsured driver.  Was it worth the lost uninsured motorist bodily injury coverage?  After a claim is the worst time to find out that you purchased a worthless policy.

Policy and agency fees are generally non-refundable.

If the insurance company charges you a fee and you cancel before the end of a policy period, you will not get the fees back.  That includes my agency as well.  This is especially important when it comes to business policies.  As an insurance agent, I am very careful in charging fees.  I understand that there are a number of people that would love to do business with you.  So, we only charge fees when it is absolutely necessary.

We charge fees for specialty cases that require a high deal of special handling or manual processing.  Since the insurance agency has to refund commissions to the insurance company if your policy cancels for any reason, we charge fees to offset early cancellations on specialty policies.  This helps ensure that we remain profitable in our agency.

You may be required to provide other documentation or signatures.

Our insurance providers require a signed cancellation letter on all early cancellations.  In personal auto and home insurance, we also require a copy of the replacement declarations on filed along with the signed cancellation letter.  This ensures that we help prevent causing an unnecessary gap in insurance coverage.

Some policies have portions which are non-refundable.  (Minimum earned requirement)

Because some commercial insurance policies require that we apply for coverage in residual (high risk/surplus) markets, we come across strange policy requirements.  For business policies, we see a 25% minimum earned requirement.  This means even if your policy one day after your policy starts, you are still liability for 25% of the policy’s annual premium along with any fees associated with the policy.

Policies with regulatory filings may have different cancellation requirements.

One thing that makes it difficult to cancel a policy is the presence of state or federal filings.  This is most common with transportation (trucking) policies which require Form E filings.  Even if you stop paying for a transportation policy, having filings requires the insurance company to cover you for an additional 30 days or so.  As a result, you continue to incur charges that can be sent to a collections department.

In cases like these, in order to immediately cancel a transportation policy, you will have to completely shutdown your business and provide that proof along with a signed cancellation letter for the insurance company to cancel your insurance policy.

Cancelling insurance is serious business

In the end, cancelling an insurance policy is serious business.  We understand that stuff happens.  If you have to cancel a policy, make sure that you’re doing for all the right reasons.  When replacing a policy, make you understand the differences in coverage.  If you’re a business, keep in mind that there may be other requirements prior to completing your cancellation request.  In all cases, understand we will require details regarding your new insurance along with a signed statement requesting your cancellation.

 

Properly insuring tree trimming and landscaping risks

Tags: , , Business Insurance
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curb appeal imageWhat does it take to properly insure a tree trimming or landscaping companies?  If you’re a highly physical business like these, then properly insuring your business means more than just getting general liability, a few guys, and a truck.  Protecting your business financially means, protecting you, your employees, your vehicles and more.

Statistics from 2011 show that landscaping pros like yourself, saw a 25% increase in work fatalities.  How does that affect you?  That means that your landscaping or tree trimming employees, vehicles, and along with their work are your responsibility.  Doesn’t that make sense?  Consider the following:

Scenario 1:  Your employee working on a sprinkler system spends a number of hours working on a large yard.  In the course of the work day, he bends over, slips on into a trench and breaks a leg.  Who is responsible for his injuries?

Answer:  While most people would say, that since he’s a 1099 employee, his injuries are his own.  However that couldn’t be further from the truth.  The truth is that your company is liability for the employees injury and illness due to work related injuries.  In fact, if you have more than 5 employees, you have to report illness or injuries to the state of Texas.  Aside from that, by not carrying workers compensation, you open yourself to lawsuits from your employees.

Did you know that you had report work related illnesses or injuries that result in more than 3 missed work days?  Di you realize that even family employees can file lawsuits against your business for work related injuries?  Most people don’t consider these scenarios.  How about the next scenario.

Scenario 2:  In your landscaping business, you purchase two pickup trucks and have a foreman to drive your vehicles.  Because you already have personal auto insurance, you decide to add those to your personal policy with a business usage rating.  After adding the pickup truck, your crew leader has an accident in the pickup truck.  Will your personal auto insurance policy provide protection for an employee?

 

Answer:  No.  If your personal insurance company finds out that your employee drives your vehicle in business, they could and probably would deny any claims.  That means, your company would have to pay for any damages caused by the employee’s car accident.  What’s the solution to the this problem?  In this case the, your company should have a commercial auto policy for the vehicles used in your landscaping business. That way you have the option of coverage any vehicle whether you it’s hired, owned, non-owned or leased.  Also with the business auto policy you can add special coverage any driver you give permission to drive.

How about scenario 2, what are your thoughts?  It’s a fact that most personal lines insurance companies will insure your personal owned vehicle for business use.  However, adding a business use rating normally does not extend to employees.  While they will cover YOU as the vehicle’s owner in your business, your employees are another story.  They could deny any claim resulting in an accident caused by or involving your employees.  That could mean,  personal injury protection or bodily injury due to work related injuries or accidents caused by your employees while driving your car.  What about the final scenario.

Scenario 3:  Imagine while mowing yards, one of your mowers strikes a rock and sends it hurling towards a nearby kid.  The child is hurt in the process and needs stitches.  How do you provide protection for your business against this type of occurrence without having to pull out the checkbook and pay for the child’s injuries?

 

Answer:  You probably realize that commercial auto, and workers compensation would not provide this type of protection.  In this case, your general liability policy could provide protection against bodily injury, property damage, and even medical payments in the course of working in your business.

As you can see, correctly insuring your business has many layers.  Whether you’re protecting yourself, your business, or your employees takes different policy types.  Whether you get all your policies inside a business owners policy, or you purchase individual policies, protecting your business is paramount.  Since we live in the day and age where you can be sued for anything and everything, why not protect yourself.  You’ve worked hard to get where you are and protecting your landscaping or tree trimming business can go a long way if you get the right insurance coverage.

 

Do you think you know your insurance agent

Tags: Agents, Auto Insurance, Blogs, Business Insurance
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In my opinion, insurance agents are entirely too nice to consumers.   Normally, my insurance blog posts are warm and fuzzy.  However, the public needs to know that being an insurance agent is more than filling out a few forms and saying, “Please sign on the dotted line.”  In fact, being an insurance agent is more about service, duty, honor, and respect.  If this is starting to sound like a military job, then read on.

 

Every day, I arrive and immediately follow up on a ton of leads. In many cases that involves fighting with a commercial underwriter that has taken a week to return a rate for a business insurance quote.  Regardless, just as most insurance agents, I start my day refreshed and ready to go.  I check my social media circles to see if there are any new birthdays, deaths, or illnesses.  After responding to my clients requests, I study the insurance industry in order to stay abreast of the changes in the personal and commercial insurance world.  Then the phone rings or an email lead comes from this very website.

Usually, the potential client has performed some type of Google search, and maybe they have even gotten a rate or two.  As a result of their watching Allstate and Geico commercials, they feel like they know what hey want and need.  For the prospects looking for personal auto or home insurance, their goal is to get a lower rate than they had last year.   In today’s environment, if you’re like most insurance agents, you know writing an insurance an insurance policy at a lower rate without compromising coverage is more difficult than ever.  To make it more difficult, we write lowe rates only to wait 30 to 45 days in order to get paid the $100 commission on that policy.  In many cases, a prospect’s single focus of saving money goes contrary to everything an insurance agent believes in.  Insurance agents understand that a client’s desire of saving money even if it means rejecting coverages that are vital to properly covering a client goes contrary to everything an agent believes in. Most insurance agents worth his (or her) salt believe their job to vital to helping live safe and secure lives. To help you understand, consider the following scenario:

In 2011, a referral client called me to discuss her auto insurance rates. Ultimately, she chose a policy that removed the personal injury protection from her auto insurance.  On several occasions, I asked (even begged) her to reconsider her choice of saving $5 per month.  She based her decision solely on the fact that she considered herself a safe driver.  While this client has never caused an accident, what is preventing someone else from causing a severe accident?  This is where the story gets hairy.

Shortly after purchasing her auto insurance policy, my new lcient was involved in a severe caused by another driver.  As a result, I got the nightmare call.  She asked me what coverage she had for her medical injuries because she injury in an accident caused by another driver.  Once again, I explained that because she rejected personal injury protection in order to save $5 per month, she was unable to file a claim for personal injury protection while she waited for the other insuracne company to handle her claim.  Again, I explained the benefits of the coverage she rejected.  Luckily, she remembered the conversation.  Upon realizing that her saving $5 per month cost her $10,000 in benefits, she added personal injury protection after the fact.

Once things settled, we later joked about the accident.  One day, she called herself a cheapskate.  Lightly responded with the following question, “Did you think I wanted to make $6 in extra commission that badly?” Remember, my job is to protect my clients, my carriers, and my agency.  She realized that my sole purpose for explaining coverage was to ensure that I adequately protected her.  I hate she learned the hard way.  Now she is a client for life.

While I have cases that worked out the other way, the mantra of every insurance agent should be to protect our clients, the insurance carriers, and their insurance agency.  We protect our clients regardless of the rate they pay for insurance.  In fact, I often joke about protecting my clients from their bad decisions.   Placing our clients in a position that compromises their protection is our worst nightmare.  I never want to get a call from a client asking, “Why didn’t you tell me that?”   If I someone asks me to define an insurance agent’s job in one word, I would use the word, “SERVICE”.

So, the next time you talk to your insurance agent, consider this.  Most of us remain in the insurance business because of an overriding sense of duty to our clients.   In property casualty, we hope to collect enough policies at $100 commission in order to one day retire knowing we did a good job providing great coverage, great rates, and great service.  Therefore, the next time you talk to an insurance agent asking him to find you a lower rate, remember the hours spent finding your lower rates on your car insurance.  When that agent comes back with a lower rate with better coverage, remember that insurance agent took a pay cut to earn your business.

I love each and every insurance client.  Next time your agent answers a question, please say, “Thanks”.  That goes a long way.

An Editorial on Navigating Business Healthcare

Tags: , , Agents, Business Insurance, commercial insurance, Health Insurance

As business owners we are asked to move and operate in many spheres that we may not have any formal training in but are vital to our businesses.  Many mechanics have to also be accountants.  Many doctors have to become collections agents.  There are construction contractors that have to make themselves aware of the latest H.R. policies.  In all of the madness that comes with running a business doing what we love to do, there is one thing that may in the near future become the most critical issue in determining the financial health and even the existance of our businesses.  HEALTHCARE. 

Obamacare has become a lightning rod issue for most americans.  Either you are for it or you hate it.  Yet if you are a business owner, I submit to you that in Obamacare lies an opportunity to make your business grow.  As small business owners of being self employed, when we are faced with a challenge we can either allow it to be a stumbling block or a stepping stone to elevate our businesses.  There are plans and programs in the marketplace that supply healthcare coverage to self emplyed, small to medium sized businesses that is affordable, makes you compliant with the healthcare reform act and can actually increase hour bottom line… 

The first step is to find an agent that is willing to answer the questions and concerns that you may have about obtaining healthcare for your business.  You also want an agent that you will be confident that has the ability to be clear, concise and explain al nuances of any policy that it may be understood by anyone.  Questions, questions and questions are the key to YOU and your employees understanding your policy.  A policy that is understood by all, reduces your stress, makes employees happy and polishes the profile of your business and makes you a more desireable employer.

Written by contributing author Rodney Pauley.

The Changing Face of Texas Property Insurance

Tags: , , , , , Business Insurance, commercial insurance, dallas homeowners insurance, Homeowners Insurance, texas business insurance, Texas Property Insurance

If you think it's been hard to track the weather patterns in Texas, try tracking property insurance rates and coverages.  Since 2011, rates across the U.S. continue to fluctuating in the face of changes in markets, technology, and weather patterns.  Texas personal and commercial property insurance are faced with the difficult proposition of remaining competitive and profitable in a state exposed to risks including: hurricanes, wild fires, flood, wind, hail, and even earthquakes;

Texas 3 largest homeowners insurance companies,  State Farm, Allstate, and Farmers announced double digit rate increases to one or more of their property companies.  Most recently, State Farm announced an average rate increase of 20% in it's State Farm Lloyds company.  According to the Texas Department of Insurance data, State Farm Lloyds accounted for 29% of the Texas homeowners insurance market.  

As a homeowner or commercial property owner, you have no control of the weather patterns.  However, you can do a few things to remain ahead of the madness and uncertainty in today's environment.  At your next homeowners or commerical property renewal, here are a few things to consider:

1.  Evaluate your deductibles carefully.   The higher your property deductible, the lower your premium.  In Texas is this is especially important considering the massive number of wind & hail claims.  As market conditions continue to harden, insurance companies are looking at deductible combintations on properties to determine which clients perform the best (file the least number of claims).  As a result, by voluntarily increasing your deductible, your rates could drop.  

2.  Review your valuations for special items and inventory.  Some homeowners and commercial properties alike provide limited coverage for items like TVs, and consumer electronics.  If the price to replace your specially scheduled items have dropped, then perhaps you look to reduce the coverage on those items if you can.

3.  Give your agent time to review and shop.   In the past, people spent 15 minutes on their car insurance, 10 minutes on homeowners insurance, and 1 hour on commercial insurance.  With insurance companies changine their pricing and underwriting models from experience based models to predictive scoring models, the insurance industry will continue to be somewhat unpredictable.  The advents of insurance, and catastrophe scoring will make your agent work harder and do more homework for the same policies that use to take 15 minutes to quote.  In this case, time is your agent's ally.  Give them the time they need to properly protect your assets.

4.  Bundle insurance for maximized savings.    In many cases, personal and commercial insurance underwriting departments are more willing to accept a risk if the risk has more than one piece of business with the company.  In personal lines, with a clean driving record and good claims experience, a person will save more money over time by insuring their home and auto insurance with the same provider.  On commercial risks, completely insuring your business could provide more preferred pricing.  So, including your commercial auto, workers comp, along with your property and general liability could lower your overall insurance costs.

5.  Look to fill in coverage gaps.  Generally, gaps in coverage occur with someone purchases their insurance through multiple outlets.  Purchasing auto insurance from a call center, and homeowners insurance through your mortgage broker can be a recipe for disaster.  The same holds true for commercial insurance.  Insurance companies have done a good job convincing you to buy insurance through call centers and online.  Generally, these types of operations are geared to handling the simplest risks.  As a result, the resulting gaps in coverage could cost you money in the future.  

5 Reasons for Business Life Insurance

Business Insurance, Life Insurance

Protecting your Business?

Business Life insurance is perhaps one of the most overlooked items in the portfolios I review.  For whatever reason, small business people tend to ignore the fact that something could happen to one of the lives in the organization.  For a small business person, even the loss of a receptionist could mean disaster for that business.  Knowing this made me realize, that business insurance agents are not having the discussion.  In an effort to spread the word, I’ve come up 5 reasons your business should purchase life insurance.  On the other hand, someone could have already had this discussion, but you didn't listen the first time. 

Here's the plain and simple truth.  If you can afford life insurance for your business, get it!  If you're a small business person, your life insurance does double duty.     For sole proprietors and family owned businesses, life insurance can be used to payoff business debt while providing extra income to leave for your family.  For some reason, business people ignore this.  Oh well, let's talk about a few business reasons to buy life insurance for your business.

 

Keyman Life Insurance 

The loss of your executive assistant, a project lead, or person vital to your business could be devastating.  What if your lead person were to die prematurely?  Have you considered the costs associated with recruiting, hiring, and training your key employee?  Could your business continue the same without that person?  That person could be you. Would your vendors continue working with your company if you were to die prematurely?  If you value your business’ continuation,insuring the key employee  through life insurance is a good way to insure your business’ future success.
 
 

Deferred Compensation 

Many times, the cost of recruiting and hiring top level talent make it very difficult for smaller businesses to compete with larger companies.  Let’s face it, top level talent require’s top level benefits.  A business could use life insurance to guaranty a payments at retirement.  This could allow an employee to remain at a lower tax bracket and provide life insurance for his family at the same time.  At the same time, using life insurance as deferred compensation has a way of levelling the playing field, enabling businesses to recruit and retain high level employees.
 

Executive Bonus Plans

Aside from the normal group life insurance policy that companies provide, the executive bonus plan is a way in which a business provides personal life insurance for an employee.  The life insurance is treated and taxed as a bonus.  This enables the company a method of paying for an executive’s personal life insurance; giving the executive high levels of life insurance with little or no personal money out of pocket.
 

Business Perpetuation

If you’ve worked hard to build your business.  Do you have a staff that depends on your leadership and guidance?   What happens to your business after your death?  Do you have liabilities that need to be paid?  Are you a co-owner with a business partner?  Business continuation requires planning with the right professionals.  You should work closely with your attorney and tax consultant to plan to best plan for your business. 

Life insurance can be used for your business to fund all types of business continuation requirements. Whether you need a buy-sell agreement between two partners or a cross-purchase plan for several owners and investors; life insurance can be used to provide cash can to assist with orderly, the impact following the death of a business owner or key employee.

 

Is Your Business Protected against Electronic Vandalism?

Business Insurance

As a business owner that wants to make sure you’re covered, you have a lot to worry about without trying to figure it all out.  Most businesses generally ask for the same coverages.  For buildings, they ask for commercial property insurance.  For automobiles, most people ask for commercial auto or some type of trucking insurance.  As a business owner, have you ever considered whether your website operations are insurable?  Better yet, have looked for “Website Insurance” and had a difficult time finding coverage?

With the improvements and advances in technology, your company’s website could be considered one of your most valuable assets.  Surprisingly enough, most businesses don’t even ask about their websites.   What if your small consulting firm or ecommerce store was suddenly hacked?  Does your commercial insurance policy cover a DOS attack? What if a problem with your hosting company causes an outage?  A long term outage could spell doom for your business reputation and livelihood.  What can you do to cover yourself in case of a website outage?  Is there a such thing as a website insurance policy?

In January 2012, the group, Anonymous, successfully took down the websites of the Department of Justice (DOJ), the Recording Industry Association of America (RIAA),and the Motion Picture Association of America (MPAA).  While  these organizations have large enough backings to quickly recover from a Denial of Service Attack, would you?  Luckily, you can update your commercial insurance policy to provide protection, just in case.

To combat this new problem, insurance carriers offer an “Electronic Vandalism” endorsement that provides additional protection coverage gaps caused by today’s new digital world.  This coverage endorsement applies only when your policy has business income and extra expense coverage.  So if you only have general liability, you’re out of luck.  If your policy covers more than liability then your business may be able get coverage that provides coverage for the following:

“Actual loss of Business Income and reasonable and necessary Extra Expense you sustain due to the necessary interruption of your internet business operations caused by direct physcial loss or physical damage by a covered cause of loss to property that you depend on for ‘website and internet services.”

While this endorsement (or additional coverage) is not  a true website insurance policy and is subject to limitations of the policy; adding the Electronic Vandalism coverage to your business policy will also provide protection for Denial of Service, Website Vandalism, and Good Faith Advertising Expense.  That way, if your site is taken down due to a covered loss, your business has money to get the site running again.  As with any coverage, this coverage is subject to the limitations of the policy.  As I always advise my clients, after a loss is the wrong time to find out that you coverage needs improving.  So, next time you’re reviewing your business owners insurance policy, if depend on your website to generate traffic, you might inquire about Electronic Vandalim coverage.