I’m Heather Cournoyer, your commercial insurance expert and I’m coming to you from “sunny” Alberta where the temperature here has risen to a balmy -25 with a windchill of -31. Gotta love Alberta!
In my last video we talked about what to expect in the insurance market for 2020 and the 3 steps to take to prepare.
Review your operation – find ways to manage the risks and exposures in your business to prevent losses.
Review your insurance – Have you changed your operation, have your values changes. Is your business interruption coverage up to date? Do you have cyber and privacy insurance protection.
Lastly – meet with your broker to make sure that your insurance is updated.
So, what happens if you have a claim? That’s why you bought insurance in the first place. I spoke with several claims experts and asked them this question?
What is your best advice to an insured who has had a claim? Here’s what they had to say.
Before you have a loss – Have an adequate inventory and update it on a regular basis. Perhaps you might want to send a copy to your broker or at least keep a copy somewhere safe. Proving your loss is your responsibility and having an inventory of all of your stock and equipment is invaluable.
Minimize the loss to the best of your ability. For example is it’s a water-related claim (which are so common these days) Start cleaning up the water, Rent dehumidifiers help to reduce downtime. Pretend you don’t have insurance. The expert claims manager I spoke to said that not once has he denied reasonable costs to mitigate the claim
Another expert agreed with that and also added that if there is any evidence, retain it! Let’s say you just had a plumber in to fix a piece of equipment and that equipment may have caused the problem. Make sure you keep any parts, take pictures. Your insurer may have the right to subrogate – in other words, perhaps the plumbers negligence caused the loss and he should be held accountable.
Let’s talk about down time. More than likely, a loss can cause a disruption in your business which either reduces or eliminates your income for a period of time. Business interruption is much more common now. And although that is the case, it is still very misunderstood. You need to have good financial records that have monitored the trends in your business. Work with your adjuster and your accountant to help you determine what the amount of recovery may be.
In the event of a third-party claim remember to Be Patient It takes time to get all the facts in. The Adjuster will assess those facts. In auto and liability claims there are two sides to every story and somewhere in the middle lies the truth. Make notes as soon as you can. Pictures are always good too! Peoples memories change over time.
And finally, perhaps some of the best advise
Remember ……. The three C’s
Help your insurer to help you!
Bottom line – insurance is a contract. And if you’ve ever watched Judge Judy she always says – “Everything is in the four corners of the agreement.” In your case it’s an insurance policy.
I know what you’re thinking…whoever reads the policy anyway. It’s too complicated and it’s legal mumbo jumbo.
In our next video, we are going to give you some tips about how that policy is set up and some of the things to look for.
A special thanks to all my “experts” for their input. Great tips for the consumer.
If a member of a farming community lost his barn to fire, the other community members would pool their resources and help that family rebuild. In some cases, it was not voluntary, but required. There are other applications similar where the loss of horses, equipment etc. for one community member would bring the rest of the community together to help. We see a form of that today on social media with ‘Go Fund Me’ campaigns to help those in need of financial assistance after a loss or a medical emergency. A lot of people contributing a small amount each often makes the life saving difference.
People form social groups because there is safety in numbers. As society became more complex the concept of banding together to help people and businesses in their time of loss has evolved. It’s become a financial transaction in a contract of indemnity, which transfers the cost of risk to a third party for a fee. Rather than share time and resources, consumers now pay a premium to an insurance company. In return, the insurance company manages the pool of funds and assumes the risk. Some of us have insured losses and the insurer pays to make us whole, hence the term ‘Indemnity’. Others, who are fortunate enough to have no losses, are secure in the fact that they would be indemnified in the event of a loss, be it property damage or for damages sought as the result of our negligence, alleged or otherwise.
The losses of the few are paid by the premiums of the many.
Insurance rates are currently on the increase for many classes of business across Canada, and consumers are justifiably upset. Many believe it is just another money grab, a way to increase the insurance industry profits at the expense of the consumer. As an insurance industry member, I know how tough it is when costs go up and our income from our business or from our employment is down.
What if insurance as we know it, didn’t exist. Take a look at some facts!
In 2018 Canadian Property & Casualty Insurers (Source IBC Facts Book*)
Paid $39.1 BILLION in claims.
They employed 128,300 individuals
Paid $9.4 BILLION in taxes and levies to federal and provincial governments
Helped recover $23 Million in stolen vehicles
If insurance didn’t exist, would it still be possible to;
Get a mortgage on your home?
Borrow money to buy a new car?
Borrow money to buy stock and equipment for your new business?
Lease space for your new business?
Import/Export and sell goods from/to other countries?
The short answer is NO.
Bottom line is this. The insurance industry and the people in it underpin the economy by financing risk. In any industry there will be dissatisfied customers, people who are confused and need a little extra assistance or education. A little knowledge is a dangerous thing. A more in depth understanding of how the insurance industry works would be helpful in defusing some of that anger and dissatisfaction. The problem is….. where to begin with that explanation? The rules and regulations under which insurers world wide are required to operate add a significant cost element. A good example is in the automobile insurance segment. Government interference in what has become a political issue has resulted in a tide of red ink. No other private or public business suffers this level of interference in their operations. Return on equity figures for the insurance industry would not be acceptable in any other business facing the same degree of risk. An Example? Nobody criticizes the Chartered Banks for their huge profits.
As mentioned above, a little knowledge is dangerous, and that is because it is often out of context. If you want a little more knowledge that is relevant and tailored to your needs and level of understanding an independent broker is your best option. More important is a broker willing to spend the time to provide you with information that is relevant to you. Heather Cournoyer is that kind of broker. Call me and find out. There is no charge for a consultation!
Overall the majority of individuals serving the consumers are doing their best.
If you want to know more check out my previous blogs:
At this special time of year, I would like to say THANK YOU! I’m thankful and honored to have such amazing friends, trusted business associates and the best clients in the world!
As we approach 2020 I thought I would share some thoughts to take into the New Year.
“Never look back in regret–move on to the next thing.”
What’s done is done and the only thing we can do is learn the lesson and move on….hopefully wiser.
“Invest in yourself. The one easy way to become worth 50% more than you are now at least is to hone your communication skills — both written and verbal.”
Humans have the ability to communicate yet somehow true, open communication is becoming a lost art. And Remember God gave us two years and one mouth. We should listen more than we talk.
“Embrace the power of your flaws”
Here’s what she has to say about that…. “When I first started my own show in Chicago, I was talking to a bunch of models,” she said. “They were all these skinny, pretty girls and they were talking about their cellulite. I was like, girl, I can show you some cellulite!”
“I think that moment, and then the rest of the audience relating to that moment, I started to realise that being yourself, allowing yourself to be vulnerable, embracing your faults, that everybody has them, that’s what gives you power.”
“Stop being so afraid.”
Fear tends to hold us back and many times that fear is unfounded. Don’t just step out of the box, blow it up!
And here is my personal favorite…..
“Life is not about what happens to you, it’s how you react.”
Epictetus was a Greek philosopher who spent his youth as a slave. After becoming crippled he was banished from Rome, he lived in Greece the rest of his life.
We can only control our own thoughts and behavior. So, before you react, take a breath and remember that whatever you see or hear is through the filters you have developed in your lifetime.
May 2020 be a productive, prosperous and happy one!
In May we talked about the “Hard Insurance Market” and we are certainly feeling it more and more. Affordability and availability in certain classes are a huge issue. We are getting more requests for “quotes”. “How much would you charge for my insurance?”
Well that depends. How much protection do you want? Are you prepared to spend some time figuring that out? When was the last time you sat down with your insurance provider and reviewed your business operations, property values, values of stock and equipment? Are you at risk for a cyber-attack? Can you afford to operate if your website is subject to a ransom?
We don’t object to going to our medical doctor to have our annual checkup. In many ways, insurance shouldn’t be any different. Although it does seem to be standard practice to get the renewal, check the price and then move on. That’s unless the price has increased. Then we want a “quote”.
As a broker, it’s my responsibility to ensure that I understand enough about my client’s business to recommend adequate and suitable insurance protection.
Sadly, in the majority of cases with my new clients I deal with, we find out that there are gaps in their insurance that they were not aware of.
Let’s look at some examples:
General Contractor had leased a $150,000 piece of equipment on a short-term basis and advised his insurance provider. The broker told him it was covered. Upon review of their existing coverage, there was no endorsement or policy change reflecting that coverage.
· My advice – get everything in writing!
Wholesaler had ordered additional stock and had it stored at another location as he had no space at his premises. He failed to notify his insurer and assumed that it would be automatically covered as he had a sufficient amount of insurance to cover all his stock.
· My advice – Sometimes there may be a clause in the policy which will extend the cover for a short period of time. If so, it will be clearly stated in your contract. In my new client’s case, it was not included in the contracts. When in doubt call your insurance broker. It can be added for a small additional premium.
Home-based business – Caller operates an esthetics business from her home in the corporate name. She has Professional Liability Insurance for her business but no Commercial General Liability. If any of her clients are injured e.g. (slip and fall on the ice or snow) she has no insurance protection.
· My advice – She should have been advised to see if her home insurer will provide her with a home-based business liability extension on her home insurance. If not, she should purchase a Commercial General Liability policy.
These are just a few examples of situations that can lead to a costly claim with no insurance coverage.
Benjamin Franklin said there were only two things certain in life: death and taxes. But I’d like to add a third certainty: Insurance.
We can’t do much about death although advances in medical technology and better nutrition has done a great deal to prolong life.
As for taxes, they are imposed on us. Do the following comments sound familiar?
“Why do I have to pay school taxes.I don’t even have any kids?”
“I think the government should pay for it.They have lots of money.”
“I’ve paid into employment insurance all these years so I’m not going to look for a job until my benefits run out”
When it comes to insurance, these are just a few of the comments I’ve heard over the years.
“I’ve never had a claim why are my premiums going up?”
“I’ve been paying insurance for years and it’s my turn to collect”
“The insurance companies have lots of money so why shouldn’t I pad my claim?”
“Insurance companies are always just looking for a way to deny my claim and rip me off!”
Taxes and insurance both often feel like another $$cash grab$$, just a hand in our wallets for no perceptible return. As far as taxes go the waste is in the way in which governments spend. We do need to have some way to fund social infrastructure even if we think government should only be responsible for taking out the garbage and making sure sewage always runs downhill. Add to that our social responsibility says to set aside a little bit for those who are in need. So yes, some taxes make sense.
Insurance premiums come right out of our pockets and if a claim is never made, it does seem like a wasted expenditure. Purchasing insurance is not always voluntary. Mandatory automobile insurance is a good example although purchasing the minimum statutory requirement is not a good idea. (As a side note, the statutory minimum auto insurance is not insurance at all, but a financial responsibility certificate. But that’s another story.) It is a personal choice as far as physical damage insurance is concerned, unless your vehicle is financed. The banks need to secure their risk, be it for a loan or mortgage or lease on real property. The choice is to walk everywhere and live in a tent, or buy/lease a vehicle and a house.
When we think about insurance or taxes there is a perception that this seemingly endless supply of money is coming from “them” when in fact every dollar actually comes from our contributions to “them” in the form of premiums or taxes. There is one major difference between the two, and it’s huge. Insurance companies are typically privately-held or public companies that must operate at a profit. Unlike governments, Insurers are not allowed to borrow money to pay for increased costs and must meet a series of tests in order to remain licensed.
The basic principle states that the premiums of the many pay the losses of the few. In order to remain viable and in compliance with solvency regulations insurers therefore need to set premium levels accordingly. An insurer going broke is not in a position to pay your claims when you do have one.
How are the dollars that you pay for your insurance every year spent?
Whether it’s taking your kids to school, driving on the roads, collecting employment insurance, or going to the hospital, the money has to come from somewhere. This also includes such things as repairing your car after a collision, redoing your basement after a flood, rebuilding your business after a fire or being sued and having your insurance defend you and pay for the consequences of your negligence.
The fact is that insurance in general makes it possible for members of society to be financially responsible in the event of unforeseen disaster. For this reason we are all protected, not just by the insurance we choose to purchase for ourselves, but by the insurance purchased by others in our society who share our roads, provide our services, and who manufacture and ship all of the myriad goods and commodities society requires.
Without insurance to backstop the risk, nothing would be built, manufactured, sold or shipped. The houses we live in, the roads we drive on, or the getting the sewage directed downhill and the clothes on our backs would not be provided. We would indeed be walking everywhere and living in tents, assuming we could make them ourselves.
The next time your insurance premium comes due, by all means complain, grit your teeth and call your broker to inquire about the best way to reduce the cost. An experienced broker will educate you and help you make an informed decision about how to best manage and finance your risk.
When your tax bill comes due, complain and grit your teeth, then just pay it and appreciate the privilege of living in this country. Unlike with Insurance, there is nobody to really talk to who can be of much help.