What is company culture and why is it important?

Written by Kevin Martlage

Austrian American management consultant, educator, author, and leader in the development of management education Peter Drucker once coined the phrase, “culture eats strategy for breakfast.”

While that statement could be discussed, argued, and debated based on your thoughts and approach to leadership and strategy, the essence of what Drucker is trying to say is extremely important for you to consider as a leader and business owner. So, what is company culture anyway?

Your company culture is your brand and what makes you unique in a variety of different areas. It can be defined by your company values, attitudes, and beliefs which lead to you providing a supportive and nurturing environment for your employees, your customers, and your stakeholders.

As a business professional turned consultant who has spent the last 30+ years developing, building, supporting, and leading teams in both non-profit and for-profit organizations around the world, I have had the opportunity to work in a variety of different business cultures and with a lot of simply amazing people. Some of those business cultures have been more supportive and productive than others, but the companies that have had their culture defined as the ‘DNA’ of what they were about were the ones that I remember the most. To me, a defined and supportive business culture is the true X factor of what makes some organizations exceptional vs just being great. Culture is all about defining how you are serving each other and your customers and then making sure that everything you do is based on the culture and those things that you have identified as being important.

I spent 15+ years of my professional career working for one of the greatest companies in the world. FedEx and specifically FedexOffice. During my time with FedexOffice, I had the opportunity to advance to various levels of the company and was able to work alongside countless driven and influential people who were all extremely talented at what they did and brought to the table.

As you may or may not know, FedEx is also one of the largest companies in the world and in 2020 was #50 on the Forbes Top 500 list. In 2020 FedEx had over 850,000+ employees worldwide who were responsible for $69.217 billion in annual revenue. To work in that business culture and alongside so many diverse and great people is something that continues to have a significant impact on my view of the value of culture in any company.

With that many people working in locations all over the world, having their own values, beliefs, backgrounds, and personalities, you can imagine how difficult it may be to ensure that FedEx delivered upon the corporate strategy every day. With so many moving parts, divisions, trucks, packages, opportunities, and responsibilities it could be quite easy for things to go off track unless you have a great support mechanism to ensure each employee understands what is important. The FedEx support mechanism I want to share with you supports Drucker’s quote, “culture eats strategy for breakfast” and is something I feel strongly can help take you and your team to the next level.

FedEx has one sentence that defines their culture and their approach to that culture. It is known as the Purple Promise which has the purpose of building and earning trust and loyalty of the FedEx team members, their customers, and the communities in which they support.

The Purple Promise is simply this:

“I will make every FedEx experience outstanding.” 

The Purple Promise is something that is taught to every employee on their first day and remains an important part of how FedEx conducts their business around the world. The Purple Promise can be used in any situation, any decision, and any action you may be taking as an employee. Whether you are the most entry level package handler or the President of the Board, the Purple Promise is the life blood of FedEx and is evident in everything they do.

As you begin to understand the true meaning of the Purple Promise you understand that every action matters. Whether that action involves business conduct, integrity, decisions, your team, each employee, each package, every location, every driver, every truck, every plane, and even every individual shipping label, your actions, and the experiences you create are the most important part of what FedEx does. Regardless the gravity of a situation, the unhappy customer you may be dealing with, or the decision you must make, if you can honestly say you did everything you could do to make that FedEx Experience outstanding then chances are you made the right decision.

The Purple Promise illustrates Drucker’s point perfectly by saying it is the experience that is the most important, not the strategy. As a tree care company owner, if you were to approach everything you do by ensuring that the experience will be outstanding then how can you go wrong in your strategic planning, team member training, customer interactions, completion of your work, and most importantly how you approach your business as an owner and the support of your most valuable asset, your team.  

So, the real question comes down to this. What is your company’s ‘Purple Promise’ and how can you enhance your current work culture to ensure that your team is supported with outstanding experiences? Over the next 4 weeks, we will be investigating how important it is to have a supportive company culture as we dive into the financial and operational impact it can have on your organization.

As part of the Thrive family, we are offering a free business culture self-assessment to help you begin to identify some ways in which you can continue to enhance your company’s culture. The assessment is extremely easy to complete and will take you less than 5 minutes. Following the completion of your assessment, you will receive a summary of recommended areas of impact to consider as you continue to enhance your company culture.

 ArboRisk Insurance Thrive Program Free Culture Assessment

Insuring Permanently Attached Equipment

Written by Eric Petersen, CIC

It’s no secret, the vehicles that tree services are utilizing today are becoming more specialized and more important to the overall success of the company. Almost every vehicle that a tree service operates has some form of permanently attached equipment now. Whether that is the traditional forestry unit or a knuckleboom crane, the value of that truck with the attached equipment is obviously much different than what it was when the cab and chassis was rolled off the assembly line. Because of this, you should know what options you have on how that truck can be insured.   

To begin with, your standard Business Auto insurance policy is designed to pay Actual Cash Value (ACV) for Comprehensive and Collision coverage on your insured vehicles. This means the insurance company will calculate what the current value of the vehicle is at the time of the loss. They will look at comparable vehicles with similar equipment, take into consideration mileage and general wear and tear to determine the amount they will pay for the claim. 

That might be a fine way to insure the majority of your fleet, however, for a very unique or important truck, you may want to consider using your Inland Marine policy to insure some or all of the truck on Replacement Cost (RC). 

There is a new trend in the insurance industry where insurance companies are allowing tree services to separate out the coverage on a truck with permanently attached equipment between your Inland Marine policy and your Business Auto policy. Each insurance company will have different rules on this, but the most common approach is that the insurance company will insure the cab and chassis on the Business Auto policy for ACV and let you place the permanently attached equipment on the Inland Marine policy with a RC limit. 

With Replacement Cost, you will get the amount needed to replace the permanently attached equipment with a brand new attachment of like kind and quality, subject to the limit of insurance or Catastrophe limit of your Inland Marine policy. When thinking about the value of a knuckleboom crane attachment this can be a huge difference on your claim payout versus only getting Actual Cash Value. 

Other things to consider with splitting out coverage between the Business Auto and Inland Marine policies are the fact that you will have two claims and two deductibles for that one truck. You also may have two different claims adjusters to work with. Depending on the insurance company, many times you can only get RC on items that are five model years and newer, which can limit the number of items in your fleet that will qualify. Lastly, because the RC will be a higher value, insuring the permanently attached equipment on the Inland Marine policy for RC, the premium cost will likely be quite a bit higher. 

And while we are discussing very unique and important vehicles for your business, I’d like to remind you that you can purchase Business Income for those vehicles as well. We wrote a separate article on that topic that you can find here.

Because of the nuances and options of insuring vehicles within your fleet, it is important to work with your insurance agent to understand how your insurance company will handle the situation. While, it definitely takes more detailed effort and attention, to properly breakout the permanently attached equipment onto your Inland Marine policy, it has the benefit to truly help your company survive a bad accident with your prized vehicle.

Cost New – Business Auto Insurance

Written by Eric Petersen, CIC

A common question we get asked is what does the “Cost New” value mean on my Business Auto policy?

If you look on your Business Auto insurance declaration page you will see a dollar value listed for each of your trucks and trailers under the heading of “Cost New”.

This number is an important underwriting guide for the insurance company from an insurance pricing and claims standpoint. It does not set the limit of coverage for the vehicle but can cause problems with a claim and on your renewal if the amounts are drastically off. I’ll explain more on this at the end of the article.

First, let’s discuss what Cost New is and how it is calculated. 

The Cost New value should reflect the amount that truck cost when it first was manufactured.

This value is initially filled in by the insurance company with information they have on the vehicle according to the Vehicle Identification Number (VIN). It applies to only what would have been included from the manufacturer and does not account for any aftermarket parts or permanently attached items.

Many of the trucks and trailers that tree care companies own and operate have aftermarket parts/equipment added that dramatically changes the value of the truck. Think about the traditional forestry unit where a dump body and aerial lift or knuckleboom crane attachment are added onto a bare cab and chassis. That completely changes the value of the truck and it is so important to ensure that your Cost New values on your policy reflect the total value of the truck and attachments when it was first manufactured.

For example, (please note I’m making these numbers up!) let’s take a 2018 International 4700 with a forestry package (dump body and aerial lift) on it. The VIN of the truck will pull the Cost New of the cab and chassis. For this example we’ll say that number is $90,000, but the truck didn’t come off of the International assembly line with the dump body and aerial lift. Those parts were added afterwards. For the dump body and aerial lift components, we’ll assume they were $70,000 together. The value that should be listed on your insurance policy for Cost New will be $160,000. It doesn’t matter if you got a good deal for this unit in 2020 and only paid $100,000 for it as the Cost New is going to reflect the cost at the time it was manufactured and has nothing to do with what you paid for it. 

So how does Cost New affect the price you pay for insurance on the unit and will it affect how a claim is resolved?

The premium for physical damage coverage (Comprehensive and Collision) that the insurance company charges factors in the Cost New. So a higher Cost New will produce a higher premium and vice versa. That said, many tree care owners try to lower the Cost New to lower their premium. However, when a claim is filed for a vehicle the claims adjuster will look at the insurance policy to see the Cost New and any description of permanently attached equipment, in addition to the mileage and overall physical condition of the vehicle as well as finding the value of comparable vehicles to help determine what the appropriate value of that vehicle is. Having the most accurate Cost New, will help the claims adjuster give you the best value for the vehicle. To reiterate, the Cost New is not the coverage limit placed on the vehicle, but rather a factor that the claims adjuster will use to determine the amount they will pay for your vehicle. 

Lastly, we have seen insurance companies want to non-renew business auto policies with intentionally undervalued Cost New amounts. The insurance companies need to collect adequate premium for the exposure that they are insuring so they can be financially strong enough to pay the claims that they have promised to their policyholders. Since the Cost New plays a role in determining the price of your policy, the insurance company will want a reasonable value listed. 

To avoid any issues with claims or the renewal of your business auto policy, we always recommend to go through your vehicle list with your agent and ensure that not only are the vehicles listed correctly, but that they have proper descriptions of any permanently attached equipment and the Cost New accurately reflects a realistic amount.

What to Expect from Your Business Insurance Agent and Agency

Written by Eric Petersen, CIC

Many times we hear tree services refer to their business insurance as a “necessary evil”. And while there may be some truth to that, the tree care companies that actively engage with their insurance agent quickly realize that having the right insurance partner is actually a “necessity” for the future success of their company.

I’ve often advocated for tree care companies to think of their insurance agent as a member of their company’s board of directors. A person who is an integral member of their team to help steer their company in the proper direction, much like their accountant, business attorney or financial planner.

Understanding that your insurance agent is a key member of your business team, I want to also make sure to highlight the difference between the types of insurance agents as well as the distinction between the agent and the agency. There are two different types of insurance agents that tree services can purchase coverage through. Captive Agents will typically represent only one insurance company (think State Farm, Allstate, American Family). Independent Agents who represent more than one insurance company. There are benefits to both types of agents, however, the vast majority of tree care companies will use an Independent Agent as they will have many more options available to secure the best insurance program for their clients.

Side note: ArboRisk’s roots came from the Captive Agent side (back in 2000, my father made the decision to switch from being a Captive Agent with Allstate to being an Independent Agent), so we have had experience in both areas and are very proud to be able to provide the value as Independent Agents to the tree care industry.

It is also important to understand the role of the agent and the agency. Every insurance agent will either be an employee or contractor of an insurance agency. Therefore, the insurance agency is the entity who is responsible for obtaining the insurance company relationships and developing resources for the agents to utilize with their clients. Most insurance agencies rely on their insurance companies to provide specific risk management help for their clients instead of developing services internally. 

With all of that said, what should a tree service expect from their insurance partner? There are five areas of knowledge that your insurance agent and agency should excel at and make no mistake about it, number 3 is the most important!

1. Insurance – First and foremost, your insurance agent needs to have a great understanding of the insurance coverages important to the tree care industry. This knowledge enables them to be more than just a salesperson and allows them to serve your company as a true trusted advisor to guide you through decisions.

2. Claims – Your agent should have a good understanding of the claims process as well as the most common type of claims within the tree care industry. They are your advocate during the claim process to guide you through the challenging time to ensure you get a prompt and fair resolution from the insurance company.

3. Risk Management – This is the most important one! The amount of premium you pay for your insurance coverage is directly related to the number and severity of your past insurance claims. In order to help you control your insurance cost in the long run and help you build a profitable business today, your agent MUST bring a risk management focus to your insurance program to help you do everything you can to eliminate or reduce injuries and accidents. They should have resources and a proven process established for you to implement easily and effectively.

4. Tree Care Industry – The more your agent knows about the tree care industry, the better they will be able to serve your company. Your agent should understand the unique service operations and equipment that tree services across the country use in order to build an effective risk management focused insurance program. You shouldn’t have to teach your agent about the tree care industry every time you call to add a piece of equipment or need an insurance certificate. Bonus Points go to the agents that are actually involved in the tree care industry, volunteering with associations, presenting at conferences and sponsoring events.

5. General Business – Lastly, your insurance agent should have some degree of general business knowledge. They should understand the basics of running a business and how you, as the business owner, get pulled in a million directions daily. This understanding of business acumen will help your agent craft the best risk management based insurance solutions for your organization that will minimize downtime and disruption caused by injuries and accidents.

Unfortunately, not all insurance agents and agencies will be proficient in the five areas of knowledge above and you will have to make a switch to better your company. If you are looking to switch, here are a few simple points to help you transition from your current agent seamlessly.

– Communicate Clearly – Once you’ve made the decision to switch, communicate your intentions clearly and directly to your current agent or agency. Expect them to try to win you back with promises of better service or by offering additional resources or by tugging at your heart strings by using a personal story of why they need to keep you as a client or example of a past situation they’ve helped you with.

– Three Reasons – Be ready to explain your reasoning by using the points above to create at least three reasons why you need to make this change for the betterment of your business.

– Prepare for Objections – For every reason that you have to move your insurance program to a new agency, your current insurance agent will have an objection ready to respond with. Prepare in advance by thinking through what they will say and how you can handle their response. As mentioned above, prepare for them to get personal with you in their attempts to retain your business. This can be uncomfortable for some, but will highlight how some agents will try to put their own needs above your company’s needs.

–          Remember Why You Need to Change – This has already been stated above, but it is so important that it needs to be stated again. Never let your current agent distract you with their attempt to keep you as a client when they have been letting you and your business down in the important areas that you need your insurance partner to be proficient in.

Insurance coverages alone can be a tricky subject to deal with as a business owner, so now you know how the right insurance agent and agency can help eliminate this as a potential threat to your business.

Vehicle Title and Liability

Written by Eric Petersen, CIC

Do you know how your vehicles are titled? I know that sounds like a silly question, but you wouldn’t believe the number of times we hear tree care owners being unsure about how each vehicle is titled and any mistakes could cause a major issue with your insurance coverage. 

Simply put, the owner of the vehicle assumes the liability of that vehicle. If the Named Insured on the insurance policy doesn’t match the owner that is listed on the vehicle’s title, coverage for a claim could easily be denied by the insurance company. 

If your company is well established as a Limited Liability Company (LLC) or Corporation, you probably have over time transitioned the titles of each vehicle into the business’s name, however, it only takes one vehicle to be incorrect to have an issue. Many times it is the vehicle that the owner drives. Whether they initially bought a truck in their personal name or they knew it was going to be the truck that they and their family will be driving, owner’s tend to not be as careful getting these trucks into their company’s name as they should be. 

Remember, you started the legal entity (LLC or Corporation) for a reason, to separate your business’s liability from your personal assets. You need to put all vehicles used for business into the business’s name to properly separate that liability. Besides, no business owner wants to have his or her personal assets on the line if an employee loses control of the vehicle and injures someone in a car accident. 

If you just started your business, or bought a vehicle right when you opened up your company, chances are you were not be able to buy it in the new LLC’s name because the new business did not have any credit built up. If that is the case, you can still insure the vehicle on your Business Auto policy, but you need to make sure that your personal name is listed as an Additional Insured and Loss Payee for that vehicle. 

The same thing goes for leased or long-term rented/borrowed vehicles. If you do not own the vehicle, but have an agreement to use it for an extended period of time, make sure your insurance agent knows so you can get the proper Additional Insured and Loss Payee language on the policy and ensure there will not be a problem if that vehicle is involved in an accident. 

To verify the name on the vehicle’s title, take a look at each vehicle’s registration paperwork. The name on the registration will be the same that is on the title as both the registration and title are legal documents. If you find a truck that is not in your business’s name, immediately work on getting that switched or talk to your insurance agent to add the proper insurance language.

If you want to have some guidance on the points mentioned above, reach out to an ArboRisk team member today or be sure to check out our Thrive program at: https://arboriskinsurance.com/arborisks-thrive/

4 Ways to Lower Business Auto Insurance Cost

Written by Eric Petersen, CIC

Ooof! Is your Business Auto Insurance cost skyrocketing? We consistently hear that the largest insurance issue for tree care companies right now is the cost of their business auto insurance. 

And to make matters worse, the cost is not the only thing that is frustrating in today’s Business Auto insurance environment. Tree care companies are also having trouble adding vehicles due to the value or size as well as dealing with tighter driving record requirements from the insurance companies.

So how do you gain some control of your Business Auto insurance? 

To start, remember that the insurance industry needs to make a profit to be able to pay for the claims that they’ve promised to pay on the policies that they’ve sold. To do this, they analyze (underwrite) their policyholders and determine the price they feel is necessary to achieve this goal. If you, as the policyholder, can show the insurance company why you will be a profitable account for them (having less claims than expected), you will receive a lower premium. 

There are many things you can do to lower your Business Auto cost, but below are what I feel are the four most impactful ways. 

1) Driver Management – Your largest exposure to your fleet are your drivers. Having solid driver management procedures is the only way to begin to lessen this exposure. There are three important aspects of driver management:

a. Hiring Process – The best way to avoid hiring a bad driver is to have a process in place to identify what is required of your employees. Ensuring that your written job descriptions state the driving requirement of the position is the first step. Then run background and Motor Vehicle Record (MVR) checks to verify the information that the applicant gave you on the application is correct. Lastly, establish a set of MVR guidelines that a person must meet before they can be hired for a position with driving responsibilities.

b. Driving Test – After someone qualifies to drive your vehicles on paper, make sure they can drive in real life. Create a driving test for each type of vehicle within your fleet and make all drivers prove their driving ability before allowing them to go out onto the road for you. Remember to include the following items in your driving test: pre-trip inspection, starting, stopping, turning both directions, backing up and parking. Many companies also include trailers and operation of permanently attached equipment (aerial lift, dump body, etc.) into their driving tests.

c. Annual MVR Checks – An often forgotten part of driver management is checking the driving records of current employees. Obviously, your employees do not stop getting into accidents or earning traffic violations the moment they begin to work for you. Create an internal system to run the driving records of every driver at least once per year.

2) Fleet Management – The second way to lower your Business Auto cost is to ensure the vehicles in your fleet are used correctly, properly stored and maintained and free of any compliance issues. You can accomplish this by focusing on these four elements of Fleet Management.

a. Vehicle Inspection – Having a solid pre/post trip procedure in place, creates the opportunity to eliminate most maintenance issues with your vehicles. Not only is an inspection a compliance requirement, but it is the surest way for your vehicles to stay in tip top shape.

b. Vehicle Use Policy – Create a written policy that sets the expectation of who is allowed to drive the company vehicles and when they are allowed. This can be placed into your employee handbook or your fleet safety program. 

c. Vehicle Storage – Consider where the vehicles will be stored when not in use. Is your garage large enough to store all vehicles inside out of the elements, or do you not want to have all of your trucks in one place in case of a fire or tornado. The answer to the storage question will be different for each tree service, so work through the logistics for your company and be intentional about it.

d. Compliance – Having a truck tagged out of service by a state trooper is a major productivity blow, plus the financial ramifications with a fine and the loss of use for that vehicle while it is out. We recommend having someone in your company be in charge of compliance for your fleet. Make sure you know if your state has their own DOT or if they only follow federal regulation. You can ask your insurance company to run a report (SAFER report) to get a snapshot of your historical compliance to start your effort at improving in this area. 

3) Telematics – You’ve heard the phrase “data is king” right? Well it definitely pertains to your drivers and vehicles as well. There are many different vendors that offer a myriad of choices on what you can track and monitor with your drivers and vehicles. Installing a telematics program can give you so much accurate and individualized data that managing your drivers and vehicles can be very easy.

4) Insurance Policy – The first three ways to lower your cost are all done within your company, however, there are items directly within your insurance policy that can be done to lower the cost as well.

a. Presentation of Proactive Programs – If you’ve worked on the first three items within this article, make sure you let your insurance agent know about them. Give them a copy of the written procedures and a sample of the completed drivers test to prove that you are utilizing these tactics to lower your over-the-road risk. It is then the job of your insurance agent to sell this to the insurance company to get a lower premium at your renewal.

b. Deductibles – Look into what options are available for your physical damage deductibles (Comprehensive and Collision coverage). You can look to raise the deductible or perhaps drop that coverage all together for older vehicles. I strongly believe that there is nothing wrong with self insuring, however, I want you to intentionally choose to self insure versus it happening to you because you did not have the right insurance coverage. 

c. Vehicle Value – The value of your vehicle has a significant impact on your insurance cost. You want to make sure the value of the vehicle and any permanently attached equipment is accurate. 

If you are struggling with the cost of your Business Auto policy and want to have some guidance on the points mentioned above, reach out to an ArboRisk team member today or be sure to check out our Thrive program at: https://arboriskinsurance.com/arborisks-thrive/