For equipment dealers, a proactive approach to risk management is necessary to control costs and keep the business running smoothly. Reviewing insurance policies each year with an insurance adviser is a great way to prepare in advance for the most common, or perhaps the most costly, losses. Reviews are time-consuming, so enlisting the help of a trusted insurance adviser is a great time-saver and disaster check. No dealership wants to discover an oversight or shortcoming of an insurance policy after a loss occurs.
A knowledgeable adviser will guide clients to work with an insurance carrier that is familiar with the equipment industry. Look for carriers that insure multiple equipment dealers and will get to know your business well. These carriers can be strategic partners for a dealership and can help to trim costs without sacrificing protection.
A good insurance adviser can also help you close insurance-program loopholes that cost thousands of dollars in physical losses, lost time, and costly legal fees. It is important to find an insurance adviser who works for the equipment dealer, not for the insurance company. An insurance agent cannot be an adviser unless the companies he represents are not the providing carrier. Likewise, large insurance firms that claim to be consultants cannot be unbiased because they simply do not reach the entire marketplace. A true adviser will not benefit from which carrier the dealership chooses for insurance coverage and will help the client make a decision that most benefits the client. Insurance agents and brokers are rewarded when their clients pay higher premiums, but insurance advisers are incentivized to lower premiums, keep premiums low and make sure insurance coverage is designed to meet the needs of the dealers. An experienced carrier will write appropriate policies with the right amount of coverage so that dealers will not be over- or under-insured.
An equipment insurance adviser must be knowledgeable about insurance in order to build an effective insurance program and should be able to answer any questions a dealer may have about proper coverage for the dealership. An insurance adviser will save your dealership thousands of dollars in premiums as well as protect your company from catastrophic losses. The savings from an adviser are realized year over year at renewal time and compounded over the duration of the adviser-client relationship. To determine if your business would benefit from an adviser, ask yourself the following questions:
- Do you know the benefits of an occurrence policy versus a claims-made policy?
- Do you know the pros and cons of admitted paper and non-admitted paper?
- Do you know the pitfalls of self-insuring and the legal issues that may result from doing so?
- What do you know about maritime W/C and how it could affect you even if your locations are in the middle of the country?
- What do you know about aggregate limits and how important they may be to you in the event of a serious loss?
- Do you know how legal fees are paid when a liability claim occurs?
- Do you know about hammer clauses?
- Do you know how severability clauses may affect you personally as an individual and not just as a corporation?
- Does your insurance agent make you aware of the tax advantages that will affect your insurance program as well as your bottom line?
- Do you know the benefits and pitfalls of a captive insurance program?
- Do you have a proper cyber policy?
What you don’t know about your insurance program could cost you thousands of dollars or, worse, the loss of your business. For a free examination of your insurance program, contact this author.