Allison McGreal is assistant vice president with PartnerOne Environmental, the underwriting division at Charlottseville, Va.-based Beacon Hill Associates, Inc.
In this era of free agency, what if the insurance industry operated like the National Football League? When the “contract” (insurance policy) expires, will your “free agent” (insured) take their business out to the marketplace to try for a better deal or have you locked them up for the long term? Have you made them value your services as an agent and more importantly, have you made them feel valued?
We often assume an insured is only concerned with premiums, but in the event of a loss, all they care about is whether or not the claim is covered. Most insureds don’t understand the intricacies of their insurance policy and which exclusions apply. But that’s why they have an agent. They expect their agent to find the broadest coverage for the best premium and make sure all gaps are filled. It’s quite a challenge, but one that most agents are up for. The key is to have conversations with their clients, early and often, about expectations.
The first place to start this long term relationship with the client is during the initial contact. If a client completes an application, that may be enough to get a quote, but will it offer the correct coverage needed? Agents should be talking to the client about the day-to-day operations, the duties of the employees, and how the business works. Even before discussing insurance, do you, the agent, understand their business? Have you visited the client’s premises or a jobsite to see firsthand what’s going on? Because your client doesn’t always understand the policy language, they may complete the application and assume the entire business is covered.
Let’s say your client completes an application as a soil remediation contractor. You procure a quotation for the CGL/CPL and present it, bind it, and move on. But did you ask if they transport the contaminated soils away from the jobsite? Do they hire a third party to transport the materials? Do they have exposures for the liability arising from hazardous materials they deliver to a disposal site? Do their employees use their own vehicles to drive to jobsites? These are all potential coverage gaps for the client and subsequently, potential E&O claims for you. The client may opt for a stripped down, less expensive policy, but they key is, are you offering the coverage and allowing them to decide?
By discussing these potential gaps with your client, you show them that you actually do care that they have proper coverage at the time of a loss. You empower them to make the decisions about their own business and help them understand the risks involved with purchasing one policy vs. another. Enhancements may be included in the overall premium or may have an additional charge associated, but that can often be negotiated with the underwriter. The key is: are you having these coverage discussions with the client?
Most insurers will offer endorsements that will address the various exposures the client might have, including the following:
Transportation of Pollutants:
Does your client transport pollutants beyond the boundaries of a jobsite? What if they are hauling contaminated soil to a disposal facility and have a collision causing the hazardous material to spill into a river alongside the road?
Contingent Transportation of Pollutants:
Does your client hire a third party for transportation of pollutants beyond the boundaries of a jobsite? What if the hired carrier has an accident causing used oil to spill from the truck?
Non-Owned Disposal Site (NODS):
Is your insured responsible for the disposal of hazardous waste or hazardous materials to a disposal facility? What would happen if the government requires cleanup at the site and all who have deposited waste there must contribute to the clean up? What if contaminants migrate offsite, causing a third party claim?
Do your employees use their own vehicles to drive to jobsites or do you rent trucks in the course of your business? What if your employee, on the way to a jobsite, has an at-fault accident and injures another party?
Employee Benefits Liability:
Does your client offer a benefit program (medical, 401K, etc.) to their employees? What would happen if you forget to sign up a new employee for medical coverage and they fall ill?
Microbial Substance Coverage (Mold): Regardless of whether your client does mold remediation operations, do they have a mold exposure? What if your plumbing contractor breaks a pipe that causes water damage that subsequently causes a mold loss?
Employers Liability (Stop Gap):
Is your client domiciled in or performing operations in a monopolistic state? Have you offered stop gap coverage to pick up the employers liability coverage not provided by the WC policy?
Additionally, it’s important to examine the exclusions to ensure you aren’t inadvertently removing an integral coverage your client may need:
Subcontractor Warranty Exclusion:
Does your client hire subcontractors to work on their behalf? Does the policy you are offering have a subcontractor warranty exclusion which in essence nullifies your clients insurance coverage should they hire an uninsured sub? What if at the time of the loss, the subcontractor had failed to pay his own policy premium and the coverage has been cancelled?
Does your client perform contracting operations within 50 feet of a railroad? What if during a drilling project adjacent to a railroad line, your client damages the tracks causing a derailment?
Owned Premises Pollution Exposures:
Does your client bring pollutants or hazardous materials back to their owned property? Do they garage their trucks at their premises? What if your client has a vacuum truck with used waste oil and parks that truck on their owned premises for disposal of the oil the next day? Do they have coverage for Site Pollution in the event of a leak or spill?
Bodily injury, property damage, clean up costs, and defense costs associated with the above examples could be catastrophic to a business if not properly insured. These are just a few areas that you, as the agent, will want to investigate when discussing coverage with the client. There are many available endorsements to fill the policy gaps. The most important point to be made is that you must be having these discussions with the insureds before a loss. By doing so, you will show the client that you value them and their business, that you want them to have the broadest coverage that will address the exposures specific to their business, and to show them their business matters to you. You will be showing the client how valuable you are to them. Sure they can become a “free agent” and go out to the marketplace when the contract expires, but why would they want to? You are a knowledgeable agent looking out for them and helping protect their business for the long haul.
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