by Heather Cournoyer | May 9, 2023 | Broker Advantage, Business Insurance, Coinsurance, Commercial Liability, Commercial Property, Premiums
Inflation is hitting us everywhere, so how can you save money on your insurance?
Here are 5 Critical things you must know when buying your business insurance
- Premiums are based on the amount of insurance you would need to put you back in business in case of a loss. Don’t cheap out on coverage. Pay a few dollars now to ensure you recover the total amount in the event of a loss.
- Insurance companies have clauses encouraging you to buy the right amount of protection. If you don’t, you WILL pay for part of your claim.
- Loss control, loss control, loss control. If you can show that you are proactively working to prevent losses, it can positively affect your premium. Your broker can help you manage that risk.
- Have your broker shop around but not every year. Every three years is normally sufficient. If you shop every year, most insurers will see that and put your file to the bottom of the pile. Nobody likes tire-kickers. Do you?
- Thoroughly review your values, limits, and business operations with your insurance provider every year. Remember, as your business changes, so should your insurance.
Your insurance is not just an expense! It’s an investment in the long-term viability of your company, the company you have worked so hard to build. The company provides for you, your family and your employee’s livelihoods.
For more information on how to manage your risk and purchase the right amount of insurance, call Heather at 587-597-5478 or email heather@thorinsurance.ca
by Heather Cournoyer | Feb 18, 2023 | Business Insurance, Claims, Coinsurance, Commercial Liability, Commercial Property, Cyber Insurance, Deductibles, Premiums
Why on earth would someone spend time writing a “primer” for business owners on commercial insurance?
I mean, think about it. What do we usually hear about insurance?
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“Insurance is like marriage. You pay, pay, pay, and you never get anything back.” Al Bundy
- Or,
“It’s a rip-off, and insurance companies are just out to make money.”
And finally,
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“The wordings are so confusing and full of fine print.”
Every one of those statements does hold some truth. Sometimes you do pay and never get anything back. That makes some sense. The whole premise of insurance is that “the premiums of the many go to pay the losses of the few.” You may go through your lifetime and never have a claim. You didn’t receive any money from the insurer. However, the insurer was there for you in case you did. Is that different from paying Employment Insurance all your life and never being out of a job?
As for insurance companies, out to make money that makes sense too. Aren’t you in business for the same reason?
The last statement about confusion is almost bang on. The contracts can be confusing, so you must understand the wording of that policy. It’s a contract between you and the insurer. You pay a premium to transfer some business risks to the insurance company.
There is no doubt that insurance can be confusing, and therein lies the reason why you need to take some time and learn more about how you can protect your business.
Help is here!
Join me once a month to keep pace with news and views about protecting your business. Sign up for the newsletter and then download your free copy of “Taking the Mystery out of Commercial Insurance.” Oh, and I promise I won’t be spamming your inbox.
by Heather Cournoyer | Apr 13, 2022 | Business Insurance, Coinsurance, Commercial Liability, Commercial Property, Premiums
Insurance companies are starting to see profits after several years of disastrous results. Maybe now we consumers will start to save money on our insurance.
“The 2021 industry combined ratio was 85.2%,” PACICC chief economist Grant Kelly and research assistant Zhe (Judy) Peng write in the latest Solvency Matters quarterly report, released Wednesday. “This is the lowest combined ratio ever recorded by Canada’s insurance industry, beating the previous best of 87.5% recorded in 2006.”
Not so fast!
Inflation – that ugly word we all hate. You ask, how on earth could inflation affect insurance rates?
Here’s a few reasons why we won’t be seeing much rate relief.
The CPI (Consumer Price Index) is at 5.7% which is close to a 30-year high. That means costs to us are increasing.
- Labour costs are on the rise due to one of the lowest unemployment rates Canada has seen in many years.
- The supply chain disruptions have led to limits in production which means higher costs.
- Consumer demand has also driven prices up – the standard supply and demand curve.
- Prices for new and used vehicles has increased and repair costs are also on the rise.
What can you do?
There are several ways you can save money on your insurance. Here are three of them!
Review the values on your property
With costs rising, you must increase the amount of insurance to reflect those costs. Most policies provide replacement cost coverage which means if you replace the property or your contents that have been destroyed you will be compensated accordingly. If you don’t review your values, you may find yourself under-insured. Coinsurance Penalties Yes, you may pay a bit more in premium but you could save thousands of dollars in the event of a claim.
Practice loss prevention.
Having a loss is not fun. It creates stress, loss of income, impacts the time you have to spend on your business. Many of those costs are recovered because of your insurance however you will not be covered for your stress or your time. For more information check out some of the recommendations at the Insurance Bureau of Canada Risk Management and Loss Prevention For more information, please reach out to heather@thinkinsure.ca
Save money on your insurance premiums
You will notice that I put this last. Many consumers say they want to save money on their insurance and that becomes their first priority. However, if you haven’t completed steps one and two, you are putting yourself at risk. Speak to me about how implementing loss control measures, increasing deductibles and self-insuring might help you save money on your premiums. Reducing Premiums not Protection
Your insurance protection needs to keep pace with the changes – economic, political, competitive and insurance company results. An annual review with a qualified insurance professional should be part of your business plan.
For more information and a no-obligation, no-pressure review, please reach out. I’m always happy to provide information to help you and your business survive in the event of a loss.
by Heather Cournoyer | Jun 27, 2018 | Coinsurance, Commercial Property
We have all seen the commercial about the Twix candy bar and the competition between Right Twix and Left Twix.
Both factories are identical and produce the right and left halves of a single product. Yet, there is a sinister difference between the two. In order to save money on Insurance, Right Twix only insures for one half the value that Left Twix does. That’s right, Left Twix insures for 100% of Replacement Cost Value and pays twice the premium that Right Twix does.
Right Twix has determined that with all of the safeguards in place it is very unlikely the whole factory will burn down. Maybe half of it at the most.
It turns out their estimate was correct because when the fire started in one facility and eventually spread to the other, the fire was brought under control with only partial damage to both Right and Left Twix.
Right Twix called their Insurance company to file a claim fully expecting they would pay for all of the damage. Left Twix did the same.
Since Right Twix only insured for half their value and paid half the premium that Left Twix did, does it seem fair to you that Right Twix should receive the same benefit as Left Twix, who paid twice the premium for twice the amount of insurance?
It isn’t fair at all, not to all the business owners who pay their full share of premium or to the insurance companies who collect the premiums of the many to pay the losses of the few.
For this reason, Fire Insurance policies usually contains a premium levelling mechanism referred to as the Co-Insurance Clause. The Insurance Broker for Left Twix took the time to explain this important condition. For a Replacement Cost Policy, Coinsurance is usually set at 90% of the Replacement Value. Failure to do so will result in a penalty if there is a claim, and the following is an example of how it works;
The Twix factories both had Replacement values of $1,000,000.00. The minimum amount required by the Coinsurance Clause is therefore $900,000.00. It is of course best to insure for 100% of Replacement Value, but that is another story.
The formula is best explained as Did, divided by Should, multiplied by the amount of the damage to the factory. In this case each factory had $250,000 in damage.
That means that Right Twix was paid;
DID. SHOULD. DAMAGE. SETTLEMENT
$500,000 \ $900,000 X $250,000 = $138,000 and became a Co-Insurer for the difference of $112,000.00
Left Twix promptly received the full settlement of their claim and was soon back in operation.
Right Twix needed to obtain additional financing to rebuild causing delays in resuming operations and went eventually went out of business leaving Left Twix making both halves of the chocolate bar.
The moral of this story is that the right Insurance Broker will tell you what you need to know, not just what you want to hear, or;
You can’t expect to get both halves of the Twix if you only pay for one.