A few weeks ago Ed Poll of LawBiz Management interviewed me on insurance issues faced by lawy firms. Listen to the podcast here.
Hints For Reading Your Insurance Policies
The mere thought of reading an insurance policy can make your head hurt. Here are some hints to make it less painful.
Start with an Understanding of the Purpose of the Policy
An auto policy is designed to cover vehicle accidents. General liability insurance is purchased to protect the insured from liability arising out of bodily injury, property damage, personal injury, and advertising injury. Directors' and officers' insurance indemnifies the key people for errors in judgment and bad decisions. Professional liability is designed to pay for poor advice and doing your work improperly.
Read the Declarations Page
The declarations page is usually the first few pages of the policy. It will have information specific to the policy being reviewed, such as: policy effective and cancellation dates; name of insured; the subject of the insurance policy (list of vehicles, buildings, description of property, etc.); premiums charged; policy form numbers and edition dates.
Review the Definitions
In most insurance policies, words that are defined by the policy are in bold type or are within quotation marks. Find the definition section of the policy and browse the terms.
Read the Insuring Agreement
The insuring agreement is usually the first part of the actual policy wording. It will tell you what is covered by the policy. For property insurance, learn what causes of loss (perils) are insured. For a directors' and officers' insurance policy, look at the definition of "wrongful act."
Review the Exclusions
Exclusions tell you what is not covered by the policy. Most policies start with broad insuring agreements, then whittle away at the coverage with the use of exclusions. Broad exclusions are not necessarily bad. For example, a general liability policy will exclude auto accidents. No problem. That's why you buy an auto insurance policy.
While reviewing exclusions, look for exceptions to the exclusion. Look for wording like, "This exclusion does not apply to..." For example, the general liability policy excludes watercraft. There is an exception to the exclusion in most policies for watercraft less than 26 feet in length that you do not own.
Review the Endorsements
The endorsements are usually found at the end of the policy. They amend the standard policy language. It is not unusual to have more than ten endorsements to the policy. The title of the endorsement usually gives you a good idea of what is trying to be accomplished with the form. If an endorsement deletes a section of the policy, mark that section in the policy document for future reference.
Review Policy Conditions
The policy conditions will show you the general "rules of the road" for the contract. Issues like cancellation, arbitration, and claims reporting are usually covered in this section.
Read the Policy With A Pencil
I read insurance policies with a pencil in hand. I mark sections and summarize the contents of a particular clause in two or three words. It helps me find sections later and makes sure that I am not wasting time looking at a section that is amended by an exclusion.
Start with an Understanding of the Purpose of the Policy
An auto policy is designed to cover vehicle accidents. General liability insurance is purchased to protect the insured from liability arising out of bodily injury, property damage, personal injury, and advertising injury. Directors' and officers' insurance indemnifies the key people for errors in judgment and bad decisions. Professional liability is designed to pay for poor advice and doing your work improperly.
Read the Declarations Page
The declarations page is usually the first few pages of the policy. It will have information specific to the policy being reviewed, such as: policy effective and cancellation dates; name of insured; the subject of the insurance policy (list of vehicles, buildings, description of property, etc.); premiums charged; policy form numbers and edition dates.
Review the Definitions
In most insurance policies, words that are defined by the policy are in bold type or are within quotation marks. Find the definition section of the policy and browse the terms.
Read the Insuring Agreement
The insuring agreement is usually the first part of the actual policy wording. It will tell you what is covered by the policy. For property insurance, learn what causes of loss (perils) are insured. For a directors' and officers' insurance policy, look at the definition of "wrongful act."
Review the Exclusions
Exclusions tell you what is not covered by the policy. Most policies start with broad insuring agreements, then whittle away at the coverage with the use of exclusions. Broad exclusions are not necessarily bad. For example, a general liability policy will exclude auto accidents. No problem. That's why you buy an auto insurance policy.
While reviewing exclusions, look for exceptions to the exclusion. Look for wording like, "This exclusion does not apply to..." For example, the general liability policy excludes watercraft. There is an exception to the exclusion in most policies for watercraft less than 26 feet in length that you do not own.
Review the Endorsements
The endorsements are usually found at the end of the policy. They amend the standard policy language. It is not unusual to have more than ten endorsements to the policy. The title of the endorsement usually gives you a good idea of what is trying to be accomplished with the form. If an endorsement deletes a section of the policy, mark that section in the policy document for future reference.
Review Policy Conditions
The policy conditions will show you the general "rules of the road" for the contract. Issues like cancellation, arbitration, and claims reporting are usually covered in this section.
Read the Policy With A Pencil
I read insurance policies with a pencil in hand. I mark sections and summarize the contents of a particular clause in two or three words. It helps me find sections later and makes sure that I am not wasting time looking at a section that is amended by an exclusion.
Problems with Computer Insurance Coverage
In years past many business owners and their insurance agents added specific computer coverage to their insurance plans. That may have been the right path at the time - it may not be right now.
A separate coverage part means a separate limit of coverage that may or may not be correct. A company that has $575,000 of coverage for business personal property and $125,000 of computer equipment coverage could be under-insured in one area and over insured in another, leaving gaps at the time of a claim. This risk was outweighed by the coverage provided by computer insurance, namely, mechanical breakdown and power surges. Many insurers now provide these perils as part of property insurance - you may not need separate computer coverage to get the extra protection.
A separate coverage section also may mean two deductibles assessed at the time of a loss. There could also be coinsurance penalties.
A separate coverage part means a separate limit of coverage that may or may not be correct. A company that has $575,000 of coverage for business personal property and $125,000 of computer equipment coverage could be under-insured in one area and over insured in another, leaving gaps at the time of a claim. This risk was outweighed by the coverage provided by computer insurance, namely, mechanical breakdown and power surges. Many insurers now provide these perils as part of property insurance - you may not need separate computer coverage to get the extra protection.
A separate coverage section also may mean two deductibles assessed at the time of a loss. There could also be coinsurance penalties.
Insurance Newsletter - June - Work Comp Focus
June, 2007 Issue 85 - Since 2000
This Month, a Workers Compensation Focus!!!
Learn the Rating Plan of Your Work Comp Policy
Each insurance company has several workers' compensation plans. Many have three - Preferred, Standard, and Sub-Standard. Some insurers have only Standard and Preferred. The difference is in the rates. Preferred rates are, naturally, lower than standard. Find out what plan you're in. Find out what you have to do to get moved into a lower rated plan.
The current insurance marketplace is as competitive as any in 15 years. Push your insurer to provide you with the best rate.
Learn the Credit Structure of Your Work Comp Policy
Insurers include discretionary credits or debits in the pricing of your w/c policy - discretionary by the underwriter. These factors can increase or decrease your premiums by as much as 25%. They're used as competitive tools by insurers - reduce the premium to be more competitive - increase the premium when they can get it. The factors are loosely tied to loss control and management programs. In reality, they are entirely subjective.
Review your policy to learn if you've been debited or credited. Track your factors at renewal. Ask for a better rating to reward good loss experience.
Control Your Work Comp Costs - Get a Copy of Your Audit Worksheets
Ask your insurer to provide you with a copy of the Audit Worksheet prepared for your most recently expired policy. This document provides the details of how the insurance company determined your final premium. It lists employees, classifications and payrolls. Look for errors such as the inclusion of overtime and incorrect classification of employees.
Having an employee classified in a higher rate code could cost you big premium dollars.
Workers Comp Tool - Looking for Guinea Pigs
The experience modification is a big part of the final premium you pay for your workers' compensation. I've developed a simple tool that will evaluate the inner workings of your mod. I'm looking for a few employers to test this out on. I've used it with several clients. I'd like some outside feedback. Let me know if you're interested - Scott@insurance-coveragelaw.com. For helping me out, I'd be glad to spend some time with you on how you can improve your experience modification in the future.
Informative Insurance Teleseminars
I hold regular teleseminars to help insurance buyers with their insurance. My goal is to provide useful, easy-to-implement ideas. These are not sales presentations, but solid info you can use to make better insurance decisions.
Email me to register or for more information - Scott@insurance-coveragelaw.com.
June 20 - For BMW Dealers - Through special arrangement with BMW this is part of a special series of teleseminars for BMW dealers only.
June 28 - Simmonds on Bank Insurance - Property Insurance, General Liability, and Work Comp Issues for Banks
(These sessions are free to insurance buyers. Insurance people are welcome at a $75 fee.)
All sessions start at 10:00 am Eastern and last for 45 minutes. If you have a topic suggestion for future teleseminars, let me know.
Maine and Other Stuff
While spring may be here, it certainly isn't warm. We've had the heat on several times over the past two weeks. The fireplace has been in use often.
We graduated two kids from school in the past month. Christine from college, and Jarred from high school. Christine already has a teaching position lined up in Mexico, Maine (2 hours northwest from here).
Time To Brag... I have recently been recognized with "Board Approved" status by the Society for Advancement of Consulting, an organization accepting only the top 1% of consultants nationwide. I'm the fourteenth consultant to be so honored worldwide and the first in the insurance business.
Wildlife Report: Humming birds at the feeder all day long. the finches are everywhere. No bears this spring. Plenty of squirrels. Turkeys every so often.
Do You Have The Right Insurance?
Contact me to discuss an unbiased review of your insurance program. Do you have the right coverage? Can your policies be fine-tuned to improve the protection? Can changes be made to ease the administrative burden insurance causes? Are you getting the service you should from your broker? I can help. Remember, I don't sell insurance so I'm unbiased.
Need A Speaker?
I'm pleased to speak to trade, business, or service associations about insurance topics. See my speaker's page.
Please Forward This Newsletter To Your Business Associates
Scott Simmonds, CPCU, ARM Insurance Consulting Phone 207-284-0085 Fax 802-992-4027 Scott@insurance-coveragelaw.comwww.insurance-coveragelaw.com
See My Insurance Blog - www.InsuranceBuzzer.com
Comments regarding insurance policies or products in this newsletter do not constitute an endorsement. I accept no fees of any kind from any company mentioned in this newsletter.
© 2007 Insurance Consultants of Maine, Inc. All Rights Reserved. We encourage sharing this newsletter if copyright and attribution (including my web address) are always included.
This Month, a Workers Compensation Focus!!!
Learn the Rating Plan of Your Work Comp Policy
Each insurance company has several workers' compensation plans. Many have three - Preferred, Standard, and Sub-Standard. Some insurers have only Standard and Preferred. The difference is in the rates. Preferred rates are, naturally, lower than standard. Find out what plan you're in. Find out what you have to do to get moved into a lower rated plan.
The current insurance marketplace is as competitive as any in 15 years. Push your insurer to provide you with the best rate.
Learn the Credit Structure of Your Work Comp Policy
Insurers include discretionary credits or debits in the pricing of your w/c policy - discretionary by the underwriter. These factors can increase or decrease your premiums by as much as 25%. They're used as competitive tools by insurers - reduce the premium to be more competitive - increase the premium when they can get it. The factors are loosely tied to loss control and management programs. In reality, they are entirely subjective.
Review your policy to learn if you've been debited or credited. Track your factors at renewal. Ask for a better rating to reward good loss experience.
Control Your Work Comp Costs - Get a Copy of Your Audit Worksheets
Ask your insurer to provide you with a copy of the Audit Worksheet prepared for your most recently expired policy. This document provides the details of how the insurance company determined your final premium. It lists employees, classifications and payrolls. Look for errors such as the inclusion of overtime and incorrect classification of employees.
Having an employee classified in a higher rate code could cost you big premium dollars.
Workers Comp Tool - Looking for Guinea Pigs
The experience modification is a big part of the final premium you pay for your workers' compensation. I've developed a simple tool that will evaluate the inner workings of your mod. I'm looking for a few employers to test this out on. I've used it with several clients. I'd like some outside feedback. Let me know if you're interested - Scott@insurance-coveragelaw.com. For helping me out, I'd be glad to spend some time with you on how you can improve your experience modification in the future.
Informative Insurance Teleseminars
I hold regular teleseminars to help insurance buyers with their insurance. My goal is to provide useful, easy-to-implement ideas. These are not sales presentations, but solid info you can use to make better insurance decisions.
Email me to register or for more information - Scott@insurance-coveragelaw.com.
June 20 - For BMW Dealers - Through special arrangement with BMW this is part of a special series of teleseminars for BMW dealers only.
June 28 - Simmonds on Bank Insurance - Property Insurance, General Liability, and Work Comp Issues for Banks
(These sessions are free to insurance buyers. Insurance people are welcome at a $75 fee.)
All sessions start at 10:00 am Eastern and last for 45 minutes. If you have a topic suggestion for future teleseminars, let me know.
Maine and Other Stuff
While spring may be here, it certainly isn't warm. We've had the heat on several times over the past two weeks. The fireplace has been in use often.
We graduated two kids from school in the past month. Christine from college, and Jarred from high school. Christine already has a teaching position lined up in Mexico, Maine (2 hours northwest from here).
Time To Brag... I have recently been recognized with "Board Approved" status by the Society for Advancement of Consulting, an organization accepting only the top 1% of consultants nationwide. I'm the fourteenth consultant to be so honored worldwide and the first in the insurance business.
Wildlife Report: Humming birds at the feeder all day long. the finches are everywhere. No bears this spring. Plenty of squirrels. Turkeys every so often.
Do You Have The Right Insurance?
Contact me to discuss an unbiased review of your insurance program. Do you have the right coverage? Can your policies be fine-tuned to improve the protection? Can changes be made to ease the administrative burden insurance causes? Are you getting the service you should from your broker? I can help. Remember, I don't sell insurance so I'm unbiased.
Need A Speaker?
I'm pleased to speak to trade, business, or service associations about insurance topics. See my speaker's page.
Please Forward This Newsletter To Your Business Associates
Scott Simmonds, CPCU, ARM Insurance Consulting Phone 207-284-0085 Fax 802-992-4027 Scott@insurance-coveragelaw.comwww.insurance-coveragelaw.com
See My Insurance Blog - www.InsuranceBuzzer.com
Comments regarding insurance policies or products in this newsletter do not constitute an endorsement. I accept no fees of any kind from any company mentioned in this newsletter.
© 2007 Insurance Consultants of Maine, Inc. All Rights Reserved. We encourage sharing this newsletter if copyright and attribution (including my web address) are always included.
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