Avoid the Insurance Quoting Trap

by | Oct 31, 2018 | Risk Management | 0 comments

Avoid The Insurance Quoting Trap

By Eric Petersen, CIC

Shopping for insurance coverage can be an exhausting task. Starting with your phone ringing off the hook three to four months before your renewal from agents trying to “quote” your policy, to gathering equipment lists and insurance loss runs to listening to final presentations for hours on end, the traditional way to get an insurance quote will leave you frustrated and worn out. And worst of all, at the end of it, you probably will stay with your current agent and insurance company because most quotes will be very similar in price anyway. That my friend, is what I call, the Quoting Trap.

So how do you avoid the Quoting Trap yet still secure the best possible insurance program for your business? You must first start with an understanding of the following facts about the current insurance industry.

Fact #1 – Not Many Options

Unfortunately, there are only a handful of insurance companies that truly have the proper knowledge of the tree care industry to offer the best protection at the lowest price. Because of this you will see agents scramble to submit your information to those insurance companies. The first agent that submits the account is the one that has authority to get the quote from them.

Fact #2 – Prove it

To offer the lowest price, insurance companies need proof of why you will not have an accident or injury. This typically means providing loss runs from your prior policies to the quoting insurance company to show what your incident history has been and answering a few questions regarding your safety program.

Fact #3 – Not all Agencies are Created Equal

I’m sure you are sick of explaining how an arborist is much more than a tree trimmer to insurance agents looking to give you a quote. Because the vast majority of insurance agencies do not specialize in working with tree services, their knowledge of your industry is very basic and therefore they feel their only value is to place coverage and do the minimal amount of work on your account so that you renew your coverage the next year. The good news is that there are agencies that have dedicated themselves to the tree care industry and offer many more services than just insurance policy issuance to help your business.

Considering the above facts, when you allow a few agents to earn your business by giving them the minimal information needed to get a quote, you shortchange yourself. You create a race to see which agent can get the submission to the insurance companies the quickest versus actually showing the insurance company how you will be a profitable account. Many agents skip gathering vital information about your company that would dramatically improve your chances of lowering the insurance cost just so they can be the first agent in. On top of it all, you have done nothing to guarantee that the fastest agent is actually the best agent that can help you well beyond insurance.

The Solution to the Quoting Trap is to select the best agent for your company first and have them find you the best possible insurance program. I know what you are thinking, “Wait, that’s not a competitive situation!” But it is. Instead of asking the agencies to compete for your business based on who can submit the information to the insurance companies the fastest, you are asking them to compete on a much tougher level; “What are you going to do for me?”

It is then the agent of your choice that submits your information to all of the available insurance companies for quotes on your behalf. It is remarkable how much more effective at securing lower insurance premiums it is when only one agent is submitting for quotes. I recently was asked to quote a policy for a tree care service. Since I knew they were using other agents to get quotes, I asked my insurance companies if they have received a submission for this account before. Their response was astounding, “This may be one of the most shopped accounts out there. This year we received it from one agency and had calls from another. Last year it came in from 2 different agencies than this year.” Guess what? The insurance company did not want to spend time quoting this account unless they knew they had a real opportunity to win.

If you need help with your insurance or are interested in a FREE coverage review, contact ArboRisk. Our Thrive Risk Management program, specifically our New Heights Package, can help address some of these pain points and help steer your insurance in the right direction!

The graphic below depicts the Quoting Trap:

Is my Business Compliant with the DOT?

by | Oct 10, 2018 | Risk Management | 0 comments

Is My Business Compliant with The Dot?

It’s safe to say we are familiar with the DOT…but are we aware of the impacts it can have on our business if we are not compliant? In 2017, the U.S. Federal Motor Carrier Safety Administration changed the schedule of fines for DOT violations, dramatically increasing the penalties. Falsification of required inspection records can result in fines up to $12,000+. Granted each state will vary relative to the Federal DOT requirements, but we wanted to take a closer look at the most common violations and run through details that can help avoid issues. Simply put, the penalties stem from two different areas. Fleet compliance and Driver Compliance.

Fleet Compliance

– Vehicles not properly maintained/inspected
– Failure to maintain 12 month accident log

Similar to safety standards, many of the maintenance compliance issues can be resolved with proper documentation. Depending on the size of your business, you may want to delegate that responsibility to someone other than yourself (i.e. fleet manager or mechanic). If you are a TCIA member, check their safety resources for a maintenance schedule log, or look for one in the owner’s manual. If you do delegate that task to someone else, make sure you are scheduling reviews to ensure everything is being properly logged.

Vehicle inspections are key for both compliance, and more importantly, safety of your employees. I recently sat in on a presentation by one of our insurance carriers that stressed the importance of detailed inspections. The carrier had received applications for a trucking company that, on paper, had looked like a more than profitable account to insure. No auto losses and few worker’s compensation claims. Due to the size and operations, the carrier performed an inspection prior to quoting. What they found was a fully operating truck that had a crack right in the middle of the axle. This business had been successful on driving strategies, yet they were one trip away from a serious accident due to poor inspections. You can meet inspection requirements by stopping at a state roadside inspection program, or a third party inspection of your choice. Be sure you are filing the reports for your records and maintaining a copy in the vehicle if you have had the vehicle for more than 30 days. Also, remember the BLT sandwich! Brakes, lights, tires. Click here for a vehicle inspection checklist from the DOT website.

Accident logs should be pretty straight forward. Document the who, what, where, etc. of each incident, and even close calls just to be safe. There isn’t a standard reporting form, so you’re welcome to create your own or there is one on the TCIA website if you are a member. In general, the DOT considers an accident to be any occurrence in which there is bodily injury or property damage.

Driver Compliance

– Driver not in possession of required qualifications or licensing
– Failure to test or follow up on testing of driver for drug or alcohol use while on duty
– Lack of or defects in required documentation

If the DOT is to perform an on-site review for driver compliance, they’ll first look into your drivers qualifications and up to date licensing. Check out our Driver Qualification Criteria to be sure your potential and current employees meet the standards for being on the road. You should be conducting annual MVR reviews and have an accident disclosure agreement in your employee handbook.

One of the biggest causalities for fines from the DOT is business owners mishandling drug and alcohol abuse situations. If you, the owner, have “reasonable suspicion” that there is substance abuse, you are obligated to perform and record training/testing on substance use. It then needs to be followed up with a series of random tests for up to 60 months following an incident(depends on the severity). For more information on substance abuse and testing obligations, please reach out to an ArboRisk team member!

Business owners should keep files of all active drivers. The files should contain original applications, MVR records, previous employment records, training documentation, any incident reports involving the driver, and medical information.

Notice the trend? Everything needs to be documented and kept for records. Documentation will not only help in the case of an audit from the DOT, but with ensuring everyone gets home safe each night. There are a number of resources available through the TCIA and DOT that we’d be happy to provide for you. Feel free to reach out with any questions!

Written by: Malcolm Jeffris, CTSP

Reduce the Risk of Losing a Lawsuit by 1/3rd

by | Sep 18, 2018 | Risk Management | 0 comments

Reduce the Risk Of Losing a LAwsuit by 1/3rd

Written by Eric Petersen, CIC

While attending an advanced insurance seminar recently, I learned that of all of the lawsuits that end in a jury or judicial award, 35% of them come from auto accidents (Bureau of Justice Statistics). When analyzing the incidents from our insured tree services we see the same pattern, where vehicular accidents are the leading cause of all claims.

This probably is not that surprising to you. Tree care companies obviously drive large trucks and equipment all day, every day to get to their work done. A small fender bender in a large truck typically produces more damage and more severe injuries than the same accident with a private passenger vehicle. Unfortunately, a lot of companies do not focus on limiting this huge exposure because it is just seen as a fact of doing business.

Below are the three most common ways to reduce your risk of losing a lawsuit by one third.

Hire the Right Drivers – Do you have a process in place to hire the best drivers? Start by developing a guideline for driving records and review the potential employee’s record at the start of the hiring process. It is not a secret why drivers with bad driving records pay more for their personal insurance, they are more likely to have another incident in the future. Once the applicant passes your written guidelines for their record, have them take a driving test with one of your vehicles. Assess their physical ability to operate your equipment safely. This not only can eliminate the risk of hiring a bad driver, it can also give you a starting point for training the individual.

Maintain Your Fleet – Are your trucks operating as safely as possible? Clearly, a well maintained vehicle is less likely to have a failure and cause an accident. So, create a maintenance schedule for each vehicle based off of the manufacturer’s recommendation. Whether your mechanic is in house or owns a separate business across town, make sure you keep a written record of the maintenance done to each truck and trailer so that you can prove the steps you took to minimize an accident from mechanical or equipment failure.

DOT Compliance – Do you know what you are required to have in place from a Department of Transportation perspective? If you are operating out of compliance and a serious accident occurs, judges and juries will have an easier time awarding a large settlement. Look for a separate article specifically on DOT compliance in a few weeks.

If one of your team members is involved in a serious accident, the judge and jury will look at what types of measures your company took to prevent the accident in the first place. If you can prove all three of these points above, your company will have a much better chance at winning the lawsuit or minimizing the settlement. And speaking about the settlement, make sure you purchase adequate liability limits on your Business Auto policy that will allow you to remain in business if a terrible accident does occur.

For more help with your safety program and/or tree care company, contact ArboRisk to learn more about our Thrive Safety Package!

Do you Have the Right Work Comp Policy?

by | Aug 30, 2018 | Risk Management | 0 comments

Do You Have The Right Work Comp Policy?

Written by Eric Petersen, CIC

Almost every day we are asked, “How can I lower my Work Comp cost?” While the answer for each tree care company is specific to their situation, examining the type of the Work Comp policy is one way to lower the cost. Below are the most common types of policies that are available for tree services.

Now because Work Comp is regulated at the state level, each state operates a little differently, so unfortunately, some of these policy types may not be available in your state.

Guaranteed Cost – The vast majority of tree services have this type of WC policy. A Guaranteed Cost policy gives the insured company confidence in the total cost of the policy. The rate is set at the beginning of the policy period, payments are made, then the premium is adjusted at the end of the policy term according to the actual payroll the tree service incurred during the policy. Injuries only affect future policy premiums, not the current policy year.

Dividend – A Dividend policy acts exactly like a Guaranteed Cost policy throughout the year except the policy holder has a chance to earn some of the premium back after the policy year is over. This premium that is given back to the policyholder is called a dividend. Dividends can be either a set percentage of the final premium (called a Flat Dividend) or a sliding scale percentage based on the claims that happened throughout the year (called a Variable Dividend). The dividend amount is negotiated with the insurance company before the start of the policy.

Depending on the size of your company and the strength of your safety program and financials, you may want to consider the following Work Comp options. These plans are much more sophisticated and require a strong understanding of the risk/reward involved with them.

Deductible – Deductible Work Comp policies also utilize the Guaranteed Cost policy format except they contain a provision for a deductible. The Work Comp deductible works just like any other insurance deductible, where the insured tree service pays the first amount of a claim and the insurance company pays the rest. This can be a small dollar figure like $1,000 or a large amount like $100,000. An aggregate (per year) deductible can be negotiated at the beginning of the policy to cap the out of pocket expenses.

Retrospectively Rated – With a Retrospectively Rated Work Comp policy, the insured tree service pays a fixed cost throughout the policy period and then the premium is adjusted at the end based on the claims that occurred. This plan setup offers the greatest potential savings but also could be the most expensive depending on how the injuries unfold for the year. There is a minimum and maximum premium assigned at the start. A common minimum premium would be 50% of the Guaranteed Cost while the maximum could be 150%.

All types of Work Comp policies are designed to finance the injuries that occur within your organization. Selecting the type that fits your company best can be complex, however, the rewards of better cash flow and lower cost can be well worth it. For more assistance with your Work Comp policy, please contact an ArboRisk team member today!

Take Control of Your Insurance Cost

by | Aug 24, 2018 | Risk Management | 0 comments

Take Control Of Your insurance Cost

Many tree care companies feel like they are at the mercy of the insurance company’s pricing structure. However, while insurance options are limited for tree services, there are a few simple things that you can do to take control of your insurance cost.

The first step is to understand the insurance company’s goal is to, unfortunately, make a profit. They do this simply by collecting more premium than what they have to pay out in claims. Have less claims and you’ll pay less. But being able to show the insurance company how you will have less claims and you’ll cut your cost even more. Most of the time the insurance company doesn’t understand everything about your business and how you strive to do a professional job.

Rather, they set their insurance rates based on volumes of data that includes illegitimate businesses, homeowner’s trying to do tree work and non-professional tree services. To truly control your insurance cost you must always try to provide the proof to the insurance company on why you are different. Here’s how…

Insurance is NOT Risk Management. A successful business owner understands that insurance is not risk management and therefore focuses on preventative, proactive business decisions that will help lower the chances of a loss and therefore the cost of their insurance. Risk management entails actively looking at your business to avoid, reduce, retain or transfer the exposures of your operations. Insurance comes into play during the last step in the risk management process. To lower your insurance cost, direct your attention on these four parts of risk management:

Avoid – It goes without saying, but the best way to lower your insurance cost is to not have any insurance claims. Avoid claims by looking at all of your operations and determining which ones are necessary and which ones are just creating more potential liability to your organization. Have you started to do more hardscape construction jobs, but don’t really have the proper equipment or expertise to do these correctly? How about snow removal? Does this help your operation survive during winter or is it a filler service to your customers that actually causes more issues to deal with? Look at your operations and stop doing the ones that create unnecessary exposures to potential accidents or injuries. There will be plenty of hazards that you cannot avoid within your business, for these, the following three parts will be vital.

Reduce – With every accident or injury, you have the ability to minimize the impact of that incident by being prepared for it before it happens. Creating written policies and procedures for how your company will handle an unfortunate event will better your chances at reducing the overall cost to your company. Contingency plans for equipment breakdowns get your crews back on the job-site faster, standardized reporting procedures and available light duty activities help on getting the injured employee back to work quicker, and written employee handbooks stating your company’s internal policies are all examples of how preventative focus can reduce the cost of an incident. Think about all aspects of your company and how being prepared can lower the cost of disruption to you or your insurance company.

Retain – Simply put, this risk management tool is better known as self-insuring. Companies self-insure all of the time, however, most do not know what they are retaining. Actively work with your insurance agent to look at the premium you are paying and the deductible you’ve chosen for your coverage and then decide what you can insure on your own. Think about how many property or equipment insurance claims you’ve actually had in your career? Why give your hard earned dollars to an insurance company when chances are you won’t be filing claims for certain items anyways. Keep those dollars in your bank account by self-insuring more of your equipment and property.

Transfer – This is the last step in the risk management process and the part where insurance comes into play. Because you cannot avoid, reduce and retain every exposure to you company, you must transfer that risk by purchasing insurance coverage. Purchasing insurance should be reserved for only for the high severity exposures to your company; like injuries, auto accidents or a shop fire. It is also very important to work with an agent or agency that understands the tree care industry and the unique characteristics about your business. They must be able to explain why you are different than other tree services in the insurance company’s statistical models.

There you have it. The way to take back control of your tree service insurance cost! By implementing a risk management mindset into your business you will not only see your insurance premiums shrink, you will see your profit margin increase due to minimizing the disruption caused by incidents and their effect on your entire business.

Written by: Malcolm Jeffris, CTSP

7 Deadly Sins of Work Comp

by | Aug 17, 2018 | Risk Management | 0 comments

7 Deadly Sins of Work Comp

Is your work comp program not working for you? Read the 7 Deadly Sins of Work Comp from ArboRisk Insurance, the experts for tree service insurance: 7. Allowing injured workers to stay at home 6. Assuming your classifications are correct 5. Not monitoring your claims 4. Not being prepared for your premium audit 3. Thinking that your Experience modification cannot be controlled 2. Accepting the fact that injuries are a cost of doing business 1. Believing all work comp programs are equal! Need help to avoid the 7 Deadly Sins of Work Comp? Contact ArboRisk to have a free work comp cost analysis with a Certified Work Comp Counselor!

Written by: Eric Petersen