5 Commercial Insurance Best Practices to Help Lower Your Premiums

What is the best kept business secret in America?

Over the years I’ve picked up nuggets of business insights. Some like the use of business ratios were introduced formally in school, some informally from media, interviews, or other sources.

When I was young, Shell oil hit struck oil on the family farm (Taratuta 34A) in the north-east corner of what is known in geologic terms as the Michigan Basin. We were going to be rich!

Unfortunately, after several drilling attempts, due to high gas pressures and the likelihood of a blowout, the well was sealed off, capped, and cemented, and life became ordinary again. But it was a nice dream while it lasted.

One thing I did learn, at that time from a wildcatter, was that more money went into the ground searching for oil, then came out of the ground, in the form of profits. Yes, back in the day, the oil business could be quite speculative.

I later heard this same concept from a stockbroker: investors can easily put more money into stocks then they ever take out—not a good strategy to build wealth. This same theme would emerge, again and again. Other examples run the span from the airline to biotech industries.

For example, in 2007 Warren Buffett mentioned in one of his famous letters to stockholders, that the airline industry, as a whole, is unprofitable, saying, “if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down.” He then later forgot his own foresight, buying billions of dollars airline stocks in 2016, only to quickly dump all of them at the onset of the Covid pandemic.

The fact that many businesses are marginal and struggle to break even is no secret. Most famers, for example, need to work full time jobs outside of the farm. The book publishing industry gambles on dozens of new authors, before one might hit the bestseller list.

The real secret, the best kept business secret in America, I believe, is that profitable businesses strive to incorporate proven best practices in their operations. 

Are there best practices for commercial business insurance? From my experience, I would say, yes, there are. There are proven ways that will help lower or at least stabilize the cash outlays for your insurance, without sacrificing coverage. And many don’t take a lot of time or effort to implement.

The cost of insurance is not fixed. They are things you can do to make the cost go up. And there are things you can do to lower or stabilize the cost. Here are five more commercial insurance best practices, in our continuing series.

5 Commercial Insurance Best Practices to Help Lower Premiums

2021 Insurance Saving Tip #20

Retain legal counsel who can provide you with proactive legal services.

What are proactive legal services?

If you own an asset like a building, machine, or vehicle, you likely do your fair share of preventative maintenance (PM). PMs are seen as a good investment, not an expense.

Likewise, proactive legal services are preventive, providing legal guidance to avoid potential legal issues from happening, or having plans in place to mitigate conflict, if such issues arise.

Proactive legal services can help with:
• Regulatory issues
• Reviews of contracts
• Risk reduction

For example, some insurance companies may have “Lawsuit Limitations” in the policy (in a provision labeled “Suit Against Us”) of one year from the time of the event in question, while a claim is being adjusted. Proactive legal counsel could help preserve your rights before the deadline expires.

The end goal of proactive legal services is to avoid potential conflicts and costly litigation. Ask your legal counsel if they can provide you with proactive legal services or recommend someone who does.

Disclaimer: This is not legal advice, only insurance-savings information. Seek any legal advice from qualified legal counsel.

2021 Insurance Saving Tip #21

Firm up your insurance firmographics.

What in the heck are firmographics?

Yes—firmographics is a real word. Firmographics describe businesses and organizations like demographics describe people. Firmographics help insurance underwriters and actuaries to stratify risk by grouping it together, resulting in competitive quotes.

‘Firm up your insurance firmographics’ means to verify the information your insurance company has is correct.

For example, some businesses have several lines, which can fall under different industry codes. Fact: According to Verisk, a firmographics provider, “52 percent of high-level industry codes (defined by 2-digit NAICS) are typically inaccurate in an insurer’s book.” (July 2020 ISO survey)

Bad codes can result in under or over-charges of premiums. If you are undercharged, upon discovery, insurance companies can go back several years later and recoup the money. Overcharges directly affect your bottom line.

  • Be sure to check how your organization is coded. Update the information, if necessary.
  • Carefully go over any confirmation paperwork. Sometimes property, equipment, or vehicles can be listed on the policy for years after having been taken out of service.
  • Look at your list of drivers. Is it up to date and current?
  • Does your website or Facebook page reflect current operations? Insurance companies get information from many different sources. Update them, if necessary.

Some previous tips to ensure accurate insurance information include: (#4) Verify loss runs every six months, (5) Read the policy/dec sheet, and (12) Make reasonable disclosure to all insurance inquiries.

2021 Insurance Saving Tip #22

Hire drivers based on their driving experience.

According to a recent study driving experience is more important than a driver’s age when considering risk. Over 9,000 drivers were studied to determine how age and experience affect driving safety and performance.

The study noted, inexperienced drivers (with one year or less experience) have higher “crash rates, crash involvement, and moving violations, regardless of age.” And inexperienced over age 55, in fact, have even higher crash rates and greater “odds of being involved in a crash than their younger, inexperienced counterparts.”

The study recommended companies have a training strategy, mentor inexperienced drivers, and use technology as Lytx DriveCam system to coach and train drivers.

Many insurance companies require one or more years of driving experience. Some (for example, Protective) require proof of attending a CDL school, with at least 24 hours of in-cab training.

Underwriters have known this for years: experience matters, and drivers with at least one year of verifiable driving experience at hire can help reduce your premiums.

2021 Insurance Saving Tip #23

Choose a real human over a bot when interacting with insurance companies.

Consulting firms are currently pushing the concept to insurance companies that, ideally, 50% of their business should be totally automated. This is sold as another business best practice.

Part and parcel to insurance automation and digitization is the deployment of so-called digital employees, electronic avatars, or ‘bots,’ which are apps using conversational artificial intelligence (AI) or natural language processing. The apps or bots can gather information and perform certain tasks, saving labor costs.

Can a bot be deposed in court? What can a bot recall under cross-examination? And in this age of rolling brownouts and blackouts, and failed backups, what happens if critical information is lost or insurance policies cancelled? By then, likely the consultants will be long gone. Who will be left holding the bag?

For critical insurance information and tasks, make it your policy to deal primarily with humans as much as practically possible. This can help in keeping misunderstandings from happening and your insurance premiums from rising.

2021 Insurance Saving Tip #24

Have a driver pet policy.

Pets in a cab are seen by plaintiff attorneys as a possible driver distraction in a post-crash investigation, according to transportation counsel and legal expert Cassandra “Mad” Gaines, Esq.

This suggestion doesn’t mean pets in truck cabs should be outright banned, according to Gaines. Drivers keep pets as companions, sometimes as early-warning systems at night when parked in peripheral or unlit locations. In most cases, the benefits outweigh the risks.

Gaines advises a driver’s pet policy should:

  • Favor smaller pets over larger pets.
  • Include a barrier to the driver cockpit area so the pet cannot become a driver distraction when the vehicle is in motion.
  • Deploy outward/inward facing cameras

Driver pets are a reality in transportation. A sensible pet policy can help keep your insurance premiums from rising. ■

Thank you for reading this. What ways have you found best to save money on your insurance?


5 More Ways to Lower Your Commercial Insurance Premiums

Why? Why? Why?

Many fleet owners have come to dread opening that email or envelope showing their upcoming commercial auto insurance premiums. Especially if they have not had any major claims, have good equipment and drivers, low turnover and strong financials.

Why are rates so high? Why do premiums keep rising? Why is this happening to me?

Bottom line: rate increases almost always are due to increased insurance risk. The parameters of insurance risk vary by region, kind of operations, and predictability, among others.

If most companies are average, then, on average, everyone would expect about an average year-to-year premium increase of about five per cent. This would seem reasonable, practical, and easily affordable.

The world, however, is cyclical in nature, and so is the world of insurance. Insurance is affected by economic cycles, weather patterns, regional trends, technology, and so on. All of these factors will have some effect, sometimes large, sometimes small, on premiums.

The key thing, then, to keep insurance premiums stable or from rising to an unreasonable level, is to control those things you have direct control over.

I have worked on the loss-control side with many operations in a number of industries and have found it is always helpful to differentiate yourself. Differentiation means doing the few extra things which will improve your risk profile and make your organization stand out from the others.

In some cases, it means doing a few more things that you probably should be doing anyway. In other cases, it might mean adopting an new attitude or mindset, taking a fresh look at things with an eye to improvement.

I grew up in trucking. I’ve owned trucks. Looking back, I can say this with certitude: there were some things we did well, there were some things we did the hard way—not from a lack of trying, but from simply not knowing what we didn’t know.

So we continue on with our series of proven ways to level up your insurance game.

Five More Insurance Saving Tips

2021 Insurance Saving Tip #15

Ask your agent if you can get a discount for being a member of a business, professional, or trade association.

If you operate speciality equipment like cranes, concrete pumpers, oversized-load hauling equipment, and the like, that requires adhering to standards beyond the norm (usually requiring special riders or endorsements to your policy), chances are the insurance company may offer a membership discount, if you join the representative association for your industry.

Sometimes this question will be in the insurance application.

Bonus Tip 1: Pay attention to all of the questions on the insurance application. The insurance underwriters do. The questions will tell you what things are important. No questions are there to fill up space. And be accurate in your responses. Never simply turn in an old application.

Bonus Tip 2: And always ask your agent for a list of available or perhaps new discounts. The insurance industry is changing and is in the midst of a huge turnover in staffing, combined with digitization of business processes. Don’t let any possible discounts fall through the cracks because of this change.

As successful fitness entrepreneur Jennifer Cohen says: “Be bold. You need to ask for what you want. Period.”

2021 Insurance Saving Tip #16

Move up the insurance food chain: Work with a broker instead of an agent

If it’s time to do some serious cost-containment on your commercial insurance, and you are looking to change agents (or your agent has moved on, retired, etc.), consider working with a broker, not another agent.

Why work with a broker?

One primary difference is that the agent works for the insurance company, while the broker works directly for you. The broker uses their expertise and experience to get you the best possible rates. The broker’s recommendations are unbiased and favor the buyer, the insured, not the insurance company, Brokers can provide you with best value in insurance coverage.

Insurance brokers represent multiple insurance companies. The broker cannot “bind” a policy but will connect you with an insurer or insurance agent to complete the process. And likely a better rate.

You can ask your agent if this would be helpful, or contact your insurance company directly for a list of brokers they deal with.

2021 Insurance Saving Tip #17

Here’s a big ‘don’t’ when getting an insurance quote: Never ask more than one agent or broker for a quote.

(The only exception is having another agent/broker for highly specialized insurance your regular agent/broker cannot provide. But this same rule always applies . . .)

Why is that?

Attempting to utilize several agents at a time, or, if get your insurance through a broker, several brokers at a time, is not at all helpful in getting a good, solid quote. Most agents and brokers pride themselves on their relationships with customers. They will do everything in their power to make sure you get their best possible quote. Attempting to play one against another is a zero-sum game that will strain the relationship, and indeed can work against you in the long run.

It’s best to always follow the time-honored tradition in insurance of having only one agent or one broker at a time. A good agent or broker is worth their weight in gold and an asset to your organization.

As Napoléon Bonaparte said, “If you issue an order, then a reorder, you will end up with disorder.” This same observation applies when procuring insurance. Be strategic. Stay in the long game.

2021 Insurance Saving Tip #18

Never finance your insurance policy directly though the insurance company.

Why is that?

Here are some good and valid reasons to arrange outside financing for commercial insurance:

  1. Outside financing will generally cost you less, saving money.
  2. If a payment is late, you can be cancelled. I’ve seen some companies in Excess & Surplus lines (E&S) add on a 25% penalty for early policy cancellations. (Read all the paperwork!)
  3. If you do get cancelled, this can make it harder (more expensive) and more difficult to find insurance. Every insurance company asks if you have been cancelled. It’s a red flag!
  4. If you do get cancelled for nonpayment, the insurance company will very likely not continue the policy.
  5. If you drop vehicles due to a change in operations, you might be paying the finance company for months before everything gets all sorted out. This can really impact your cash flow.
  6. Breakdowns, loss of a good customer, and other factors can push any company into a hard place, making the monthly commitment to the insurance finance company very difficult.

If at all possible, do your best to keep insurance and the financing of the insurance separate and apart from each other. It will save money and could even save the business . . .

2021 Insurance Saving Tip #19

Do not haul cannabis. Period. Even if it is considered state “legal”

Now, why would that be?

We’re talking about the insurance angle here. Most commercial insurance policies clearly state they will NOT underwrite any illegal activities. A policy is simply a contract.

The sale and distribution of cannabis is federally illegal in the U.S. For some, perhaps 15% of the population, cannabis is known to be an addictive substance and sales are exploding.

It’s a fact: insurance companies are finding they can walk away from cannabis-related claims due to the federal illegality of cannabis and the courts will stand behind them.

It’s perhaps best to simply avoid problems: Stay away from hauling cannabis.

See: Why Your Cannabis Contracts May Be Unenforceable Even if State Law Says Otherwise

Disclaimer: This is not legal advice, only insurance-savings information. Seek any legal advice from qualified legal counsel.

Thank you for reading this.

Five Tips for Saving on Commercial Insurance

Can one really save on commercial insurance? Is this for real?

Insurance savings are real and can be had, but like anything else worthwhile, require both time and effort. Larger companies devote departments full of risk managers to help lower their risks (and costs) of doing business.

But there are things smaller operations can do to lower their insurance premiums. These are neither extraordinary nor extraneous actions, but usually things you don’t know about, things no one has told you about, or things one learns after repeated batterings or sometimes failures.

These tips are from a series published on LinkedIn. Their purpose is to help save you money (if that’s your goal).

Please note: I am not an insurance agent. I do not sell insurance. This blog is for information purposes only. I am not an attorney. This blog is not legal advice. Please use your discretion in applying any information to your particular situation and circumstances. Results may vary. 

Today’s Five Insurance Saving Tips

2021 Insurance Saving Tip #9

Have a safety “elevator speech” for your company or organization.

An elevator speech is a brief overview of what you or your organization are about, short enough to present during an elevator ride. It is a means to introduce yourself or organization to new career and/or business connections

A safety elevator speech is talking points about what you or your organization are currently doing in the area of safety. It could include activities in the last year, current initiatives, or those planned for the near future.

Many times company representatives or owners are:
—shy or hesitant when talking about their safety program(s)
—often forget to bring up key points they would like to present

Use your brief safety elevator speech with:
■ Insurance agents, brokers, loss control inspectors or risk management representatives, Underwriters
■ Your staff, safety personnel, company superiors, and others

Memorize your safety elevator speech. It can come in handy when you least expect it.

New: Digi-Tip

This next one is a new insurance tip for our digital age. Insurance companies are streamlining operations, dropping agents, or selling directly. As such, what is missing is the human touch. Beware! In this tip I cover a potential risk you need to be aware of in filling out online electronic forms.

2021 Insurance Saving Tip #10

Use Extreme Caution When Filling Out or Using Online Insurance Forms

There is a big push by insurance companies to automate and digitize their business processes. As there is less and less face contact, insurance companies are using a new suite of tools to determine, when filling out online forms, if their customers are lying or engaging in fraud.

It’s called behavioral signaling. It’s not only what you put down, but how you do it.

Do you hover over a question before answering it? Do you cut and paste information? Is information later changed or deleted?

When filling out e-forms I recommend to first read the form, gather the required information, then fill out the form as accurately (and quickly) as possible. Then proof read it, again, and make any necessary changes.

Anything else could result in potential additional scrutiny or even a possible decline in issuing a quote.

2021 Insurance Saving Tip #11

Investigate all accidents and incidents, no matter how small.

Accident/incident investigation can identify workplace hazards and help in creating corrective action plans to prevent future occurrences. In some jurisdictions, it’s the law.

In today’s safety environment, the terms accident and incident are used interchangeably, as it is felt most accidents are preventable.

We want to investigate the small stuff because: a.) it can be an indicator or predictor of future events, and, b.) staff needs to be made aware of the importance of workplace safety.

Be sure to follow a checklist. Your insurance agent may have an investigation checklist and/or other helpful forms. A generic checklist can be found in the link below.

If a safety event happens, don’t wait. Get as much information as soon as possible. Try to determine the root cause. Then follow up with any corrective action, if appropriate.

2021 Insurance Saving Tip #12

Make a good-faith effort to answer all of your insurance company’s questions and keep them informed of any changes.

Sometimes things change quickly. Assets are added or deleted. New drivers are hired. Losses occur. The list goes on.

A policyholder (insured) has a duty and obligation to disclose any information a reasonable person should have known would have been relevant to the decision of the the insurance company (insurer) whether to accept the risk.

For example, when filling out an application, if it is known that a company driver has lost their driving privileges, but the company doesn’t inform the insurance company (or continues keeps the the driver on the road), this could be considered a failure to make a reasonable disclosure.

For serious non-disclosures, insurance companies have a provision in their policy to add on additional premiums on past or future policy years, or even cancel the policy outright.

Always make a ‘reasonable disclosure’ when providing insurance information.

2021 Insurance Saving Tip #13

Have an organizational policy which encompasses safety events from start to end.

What’s in a good company “accident policy?”

■ Staff need to be trained what to do in the event of an accident.
■ There should be accident kits in all vehicles and updated first aid kits on site or on location.
■ Staff should know what to do or not do when taking photos.
■ Annual refresher training is a must.
■ Keep a list of regulatory contacts, if any government reports are later required.
■ Some companies immediately do a legal review with their counsel, if appropriate. From time to time this possibility should be reviewed with counsel, as well as your policy.
■ Accident policies should aim to preserve life, property, and evidence.
■ When others are at fault, know what your insurance company needs to pursue a possible subrogation claim, so your insurance does not go up.

2021 Insurance Saving Tip #14

Check with your agent if you can get a “shareholder discount” on your insurance for owning any stock in the insurance company or its subsidiaries.

It could be worth your time and effort to buy a share or two.

Bonus Tip 1: It’s always a good idea to check with your agent and broker for any and all available discounts. Sometimes, in the wacky world of insurance, doing little things like this can result in huge savings over time.

Bonus Tip 2: Sometimes you can get discounts for doing things that seem counterintuitive, like adding drivers to get into a different category. For example, a key driver has some points and you can’t fire him. Adding additional drivers to your driver pool with stellar driving records might actually lower your premiums.

Thank you for reading this. What ways have you found to save money on your insurance?

More Insurance Savings Tips for 2021

Up, Up, and Away . . .

Rates in 2021 for commercial insurance seem to be rising faster than a runaway balloon.

But all is not lost. There are things you can do to help lower your insurance premiums. I’ve been posting a few on LinkedIn. I’ve owned a small fleet of large vehicles and probably overpaid for my insurance like everyone else.

But after doing loss control reviews for a number of years, I’ve talked with scores of top fleet owners in various industries about their best practices. These are things I wish someone had told me.

Please note: I am not an insurance agent. I do not sell insurance. This blog is for information purposes only. Please use your discretion in applying any information to your particular situation and circumstances. Results may vary. 

More Insurance Saving Tips

Here are some more random insurance savings tips.

2021 Insurance Saving Tip #5.

Read the insurance policy.

Okay, it’s pages and pages of gobbledygook, part legalese, part esoteric insurance terms. But the policy is a contract . . . a contract which specifies what the parties need to do to remain in good standing with each other.

Some insurance policies follow a standard format. Some, like Inland Marine, covering property or attached equipment, which is mobile, can have their own idiosyncrasies, specific to that insurance company, and should be carefully reviewed. Never skip reviewing an Inland Marine policy.

If you don’t read the policy right away, be sure to always review the “dec sheet” or “Declarations Page” which is a one or two page summary of the policy, names the insurer and insured, and indicates the type of coverage in that particular policy. Make sure all of the information is correct.

Contact your agent immediately, if you have any questions about your policy. It will be too late after a claim . . .

2021 Insurance Saving Tip #7

Expand your “network.”

Networking with personal and business contacts and acquaintances is the number one way people exchange valuable information . . . information that matters.

Track your contacts. Reach out to them and help them, if you can. It’s not about you—it’s about them and building good will by helping them meet their goals and objectives.

Be a joiner. Join any association which represents your interests. Become a member and stay active.

What does any of this have to do with insurance? Some insurance companies will ask you point blank: What associations is your business affiliated with? Membership does have its # benefits . . . like staying aware of coming industry changes, new regulations, new standards . . .

Bottom line: Your network is your “net worth.” But it doesn’t happen overnight. Start building your network now!

021 Insurance Saving Tip #8

Take advantage of expert help to lower risk and improve your safety profile.

Some of the safest companies I have reviewed (close to perfect risk profiles), sourced their safety needs to specialized safety experts. If they had trucks, they used a DOT expert to guide their safety and compliance program. If they worked in construction, they hired an OSHA expert. If they had employees, they either provided in-house training or hired a safety-training expert.

Such experts can sometimes be found at local, state or national associations, dedicated to your respective industry or sector.

Your insurance company may provide these expert safety services at no cost through their loss-control department or outside contractors. In Texas, for example, this is the law.

Be sure to ask your insurance agent what “loss-control” expert assistance they can provide or safety and training resources they have available.

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