Many business owners are struggling with decreased revenue and increased costs as a result of COVID. They are asking themselves “Where can I reduce expenses?”
Should I cut staff, reduce wages, downsize my location, reduce marketing and advertising costs? What about insurance? I’ve never had a claim and the premiums keep going up?
When COVID hit in the spring, I was able to save a number of my valued clients money. Many were closed so obviously revenue was down. Because Commercial General Liability premiums are normally rated based on your Gross Revenues and the class of business, reduction in revenue equates to a reduction in risk.
Many business owners are now back in business albeit not at pre-COVID revenue levels. A review of your insurance can help you reduce premiums. Here are some of the things to consider:
- Have your stock levels decreased?
- When was the last time you had a replacement cost appraisal on your building?
- Are there optional add-on coverages that you could do without?
- Are your Gross Sales down considerably?
- Have you changed the use of your automobiles?
- Can you afford higher deductibles?
When and if you do reduce coverage, make sure that you don’t jeopardize your protection. It may be tempting to reduce the amount of coverage on your larger assets. However, remember that most if not all insurance policies have a co-insurance clause. https://heathercournoyer.ca/category/coinsurance/
The few hundred dollars you save could cost you thousands in the event of a claim.
I make it a practice to offer a comprehensive review of any business owners’ insurance at any time. It doesn’t have to be on renewal. In many cases, cancellation fees may outweigh any savings in premium. What I do provide are my recommendation on how to protect yourself by making changes to your existing policy. Because of the value-added provided, many clients choose to utilize my services at the expiry of their insurance.
Reach out anytime! Happy to help.
Heather Cournoyer, CCIB, CIP
In my May article “What’s going on with my Property insurance? Where’s my quotation?” we talked about increased premiums and the number of insurers no longer writing certain classes of business in property insurance.
Is pricing and availability for Liability Insurance any different? No – not really.
There are certain classes of businesses where many insurers who may have offered coverage are lapsing renewals and not offering quotations for new business.
And here’s news hot off the press. Insurance companies are in business to make a profit just like any other business owner. When a certain class of business is not generating enough revenue to pay for the claims, they will stop writing that class. It’s no different than any other business owner who can’t sell a product at a loss.
Is there anything you can do? Yes. Here are a few tips for you and some examples of classes of business that are prone to higher losses.
1. Know your premises. Are there areas that could lead to a slip and fall claim? Stairs, parking lots. Keep maintenance logs that record time, dates, conditions of inspections. Normally you will want to have one person or department responsible and keep those records for up to 5 years!
Lawsuits arising from slip and fall claims continue to increase both in frequency and severity. Building owners and snow removal contractors are feeling the pressure of increased premiums. As recently as six months ago, I was aware of several Lloyd’s Syndicates and a number of domestic insurers who were still providing coverage for snow removal. The premiums were increasing however coverage was still available.
Now there are fewer domestic insurers writing this class and many of the Lloyd’s Syndicates have pulled out as well. This is not the first time and it won’t be the last. In a Canadian Underwriter Article in 2002, https://www.canadianunderwriter.ca/features/snow-no-mercy/ they speak to some of the issues; under-priced premiums, increased claims for slip and falls and loosely-worded contracts.
2. Be careful when preparing or signing any contracts. Are their ways of limiting your liability or perhaps transferring that risk? Are you assuming a risk you shouldn’t be? Does a Hold Harmless Agreement work for or against you?
Recently I went to use the services or firm who wanted me to sign an agreement holding them harmless should they cause damage to my property, whether they were responsible or not? Do you ever read those agreements before signing them? Might be a good idea.
3. Obtain Certificates of Insurance. You want to ensure that all suppliers and sub-contractors carry their own Liability insurance. In some cases, you may wish to explore being an additional insured on their policy.
Whether you are a business owner or homeowner, anyone hired to work on your premises must carry insurance. Let’s take the example of the homeowner who decides to create that awesome “great room”. The contractor removes the bearing wall and without the proper support, the entire structure of the roof is compromised. Without insurance to back up the subsequent property damage, the homeowner can be stuck with a huge repair bill.
Hot Tar Roofing can not only cause fires but also bodily injury as evidenced by an incident at a school where two children were injured by dripping hot tar. https://globalnews.ca/news/4132444/children-injured-hot-tar-school-roof/
Be proactive in protecting yourself from liability claims. Insurance is not a “guaranteed product”. The inability to get affordable insurance coverage could put you out of business.
Heather is a commercial insurance broker with over 35 years of experience and welcomes any questions or comments you may have. Email her at firstname.lastname@example.org