A few months ago, we reviewed different insurance coverage issues for not-for-profits. (Go to "Nonprofit Directors and Officers Insurance: The Good, the Bad, and the Ugly" and "Insurance Trips and Traps for Nonprofits" if you missed the first two installments.) How about the administrative burden insurance causes an organization? Here are some tips for making your insurance program easier to manage.
Have One Agent for All Your CoverageYou'll have a better insurance program if one agent handles your entire insurance account. Using one agent will save you time and aggravation. You'll only have to make one call when you have a problem or a change in your operation. Having one agent also helps prevent gaps and overlaps in coverage.
In the past, I've worked with several insurance buyers who thought that it was best to split the business up. Their idea was to let the two (or three) agents fight it out, scrapping for the business. I have never found that such arrangements work very well. Come claim time, it can be a nightmare when each insurer points to the other for coverage.
If you currently have two agents, you know which one is the better service provider. Pick that agent and have him or her handle your entire insurance account.
Have a Common Expiration Date for All Your PoliciesHaving all your policies renew at the same time makes life simpler. All the issues are considered at one time. All the information is conveyed to your agent at the same time. There are fewer chances for misunderstandings and oversights.
One cautionary note: If you have a workers' compensation policy with a premium over $5,000, you probably have a rate factor called an experience modification, which adjusts your premium based on your losses compared to similar companies. I rarely recommend changing the dates of workers' compensation policies that have experience modifications. The new date can skew claims used in the calculation, increasing your costs. Talk with your insurance advisor before changing the date of your workers' compensation insurance policy.
Review Your Coverage with Your Agent on a Regular BasisMeet with your insurance agent at least once a year to review your coverage, catch up on changes, and talk about hazards. The best time to do this is usually four months before your policy expires.
Your agent should provide you with a summary of coverage and a listing of your losses. Talk about where your organization has been and where you plan to go in the near future. Are you considering mergers or acquisitions? Is a new product line being considered? New locations? New equipment? Are you discontinuing any operations?
Let your agent be a part of your nonprofit. Let him or her know about risks you're concerned with. Look at your loss record. What can your agent do to help? Find out what services he or she offers that can assist with problem areas. Learn what services your insurer offers.
Simplify the Administrative ProcessWhom do you call to change vehicles, add equipment, or check a driver's record? Have your insurance agent prepare a call sheet that outlines who does what for you. Some agencies have the salesperson handle all administrative issues. Other agencies have a team approach.
- Coverage concern contact–Whom do you call with a coverage question?
- Claims contact–You have an accident or fire; whom do you call?
- Policy change contact–You're adding a vehicle or changing your mailing address. Whom do you call?
- After-hours emergency contact–you have a fire on Sunday morning. Whom do you call?
- Alternate emergency contact–If the primary contact isn't available, whom do you call?
Prevent ClaimsAccidents happen, but do they really need to? With training, thought, and analysis you can reduce and prevent accidents and claims. Having no accidents makes life easier for everyone!
Review past incidents for clues as to what happened. Build a safety team to help identify hazards and offer solutions. Your employees should also be comfortable pointing out issues and making recommendations.
Use your insurance company's loss-control experts. Look at all areas of potential losses:
- Property losses such as fire and windstorm
- Workers' compensation claims
- Product liability issues, including packaging and instruction sheets
- Prevention of slip-and-fall accidents by customers and employees
- Employment practices
- Intellectual property issues—unfair trade, violating patent or trademark
© 2005, Insurance Consultants of Maine, Inc.
Scott Simmonds, CPCU, is president of Insurance Consultants of Maine, Inc., a "fee-only" provider of insurance advice and counsel. He can be reached by phone at (207) 284-0085 or by e-mail. For more information, go to his Web site, www.endwimpyinsurance.com.