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Finding the Best Deal on the Necessary Evil: Insurance |
Insurance is a necessary evil for every limousine business.? Since insurance is such a large part of an operator's budget, is there a way to save money?? There is, and it's really quite simple.? The following are five simple tactics? which will allow you to become skilled and capable of buying the right coverage at the best prices.
Use a Professional
An agent typically represents one company while a broker often works independantly and "shops" several companies at once.? Don't? underestimate the importance of getting professional insurance advice.? Everyone knows someone or has a family member in the insurance business.?? This is not qualification enough to protect your business and your clientele.? Public transportation specialitsts know the markets, understand the requirements of your local government, and can relate to your business needs.? Interview several brokers or agents and find one that fits your requests and can deliver on promises.? Many talk the talk, but you need one who will make it happen.
Know What You Need Before You Sing on the Dotted Line
You should understand the coverage available and how it will fit your company's individual requirements.?? spending money for unnecessary coverage is almost as bad as not buying the coverage you truly call for.? Carefully consider the coverage before you sign and start making payments on a plicy that doesn't completely 'insure' you.? The wrong time to figure this out is after you have a claim and there is no coverage for your specific needs.
Find the Right Option
The insurance marketplace is full of companies.? Some have been in business for a long time, some are just getting in, and some are on their way out.? Some offer comprehensive package policies, others offer 'special programs' and most offer the basic commercial auto forms which are used by trucking companies and other commercial vehicles.? Very few have specific underwriting guidelines designed for public transporation.? The responsibility to understandthe coverage differences is yours and your broker's (or agent's).? Once again, use a professional.
Paint a Pretty Picture
It is critical to provide the insurance company with the best possible impression of your business.? ONce you have decided on who will represent your business to the insurance companies, you must then prepare your presentation for the insurance company's underwriter.? The underwriter making the decision for the insurance company has the responsiblity to protect the company's assets by critical review of the submitted written documentation.? The underwriter will not meet you in person.? He/she will review the written submission and research information on your company regards to advertising (including your website) public records, and your loss history.
Underwriters are trained to ask specific questions.? These questions and the research are used to apply 'debits' ?and 'credits' to rate your company's risk, where debits are bad answers and credits are good answers that earn you points.? If your broker or agent understands these questions, then he/she can answer? them before they become a concern.? If there are too many unanswered, then the outlook will not be favorable.??If the questions are answered upfront and are favorable, then the underwriter will proceed in providing the competitive proposal your br oker or agent is looking for.? Again, a professional public transportation specialist will understand this industry and the insu;rance market, and willl provide a comfort level for the underwriter to allow your company to get the best coverage for the lowest price.
No Rushing
Start to interview prospective brokers and agents 120-180 days before you need insurance or change insurance providers, especially if your policy is going to expire.? Understand that you will need to complete submission to get the best rates from the best companies.? Waiting until the last minute only results in frustration, a poor submission, and normally a price war where you coverage becomes less important.? Details will be missed, I promise.? It does no good to get a cheap price on one shoe.? If your decision is price-driven only, that mistake will become apparent when you have a claim situation without coverage.
Some Quick Thoughts to Consider:
A $5,000,000 liability policy typically costs only 14-20 percent more than a $1,000,000 one - in most cases.? If you or your company has a net worth in excess of $1,000,000, it m ay be the best 20 per cent you ever spent.? This is critical to those operating larger vehicles of 8-plux passengers or those who deal with high-end clientele.? Aprofessioanl will help to determine your needs and make recommendations accordingly.
There is an emormous difference in coverage.? Specified Cause of Loss is less expensive than Comprehensive, but it also?offers less coverage.? Make sure you buy what you need, even increasing the deductible to reduce the cost if necessary.? Review your current policy with your chosen?professional broker or agent.
Review your vehicle lists and get a cost per vehicle for all coverage.? Make smart business decisions regarding values and the use of deductibles to control costs.? Chauffeurs' driving histories also will affect cost.? You must review motor vehicle records and be aware of your potential increases due to a poor?driving record or recent accident.? If an employee is worth the increased cost (i.e. he/she is an otherwise good employee who is well liked by your clients, etc.) then you can make that decision based on your knowledge.? It can be embarrassing for your underwriter to make you aware of this when you are responsible to maintain driver information internally.? Plus, you don't want any surprises when you could have easily checked these records before hand.
Have a written employee manual and a formal safety and training program for all your chauffeurs.? These are items that underwriters ask about on their application and also items which answer management questions and help paint the picture of your business.
Most businesses have an insurance expense of 6-8 per cent of gross revenue.? This is a good rule of thumb to use, but it is also important to make sure you have covered needs such as general liability, workers' compensation, adequate excess liability or umbrella coverage, crime business interfuption, directors and officers liability and employment practices liability, to name a few.
I have used the 'professional' throughout this article.? A professional will have verifiale references, tenure in the industry, and the ability to offer? valuable advice.? A professional charges for the advice and is responsible for this advice and is responsible for the advice given.? Professional Liability is also a coverage you should consider when picking your broker or agent.? A professional will carry a ppolicy to protect cleints in case of a mistake, which hopefully you won't have to face.? Take your time, shop around, and find someone you trust - it will be worth the effort.
Lee Martinez
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