Allison McGreal, Assistant Vice President, Underwriting Division
We all keep hearing we’re in a soft market, but then, aren’t we always? With the entrance of many new markets, pricing has become so depressed that pretty soon, we will be paying the clients to take our policies! All kidding aside, competition is as tough as it has ever been and there will always be someone who will try to come in cheaper. Premium is certainly an important consideration, but to set you apart as an agent, and to better protect your client, it is far more beneficial to sell broad and correct coverage.
An important factor in making the insurance buying process successful is for an agent to truly understand their insured’s business. Clients don’t always know what is covered by their insurance policy and do not always know where they have liability in the course of their daily business operations. For example, your flower shop client may only request insurance coverage to protect their business personal property and premises. They are relying on you, the agent, to know what exposures they may have and to offer coverage to fill any gaps. You might suggest to them the need for crime coverage, or to add their landlord as an additional insured on the GL policy. A flower shop would certainly have some pollutants on the premises such as fertilizers, weed killers, and other potential contaminants. If they have a greenhouse on the premises, you might consider offering Site Pollution for any runoff of the soils, etc.
What if your client is an excavation contractor with a storage yard for their heavy equipment and trucks? They certainly have a premises exposure for both GL and Site Pollution, but have you offered them Inland Marine coverage for their equipment? Perhaps they have storage tanks at the site, either above or underground. Have you discussed their pollution exposures at the jobsites where they perform excavation operations? What about transportation coverage as they haul soil, which may be contaminated, for disposal? As you walk the yard, you may notice uncovered exposures that the insured has not even considered.
When a carrier offers the cheapest premium, it may be a more stripped down coverage so it is important to review the terms and ask about coverages you don’t see listed. Some carriers include certain coverages in their policy form while others may add them by endorsement. It’s up to you, the expert, to ask for the coverages your client needs. Some of the more common endorsements that may be included in the premium or added for a small additional premium, include:
Mold/Microbial Substance: If your insured performs operations that could disturb existing mold growth or services that could lead to mold growth, it is important to ensure they have Mold coverage. This coverage is not just for remediation contractors, but also for the electrical, plumbing, carpentry, construction, HVAC, and other non-environmental industries.
Transportation of Pollutants: If your insured is responsible for the transportation of pollutants from a jobsite (soil/groundwater remediation, vacuum truck services, grease trap cleaning, used oil recycling, etc.) they have an obvious exposure. Other risks with TPL exposures include industrial cleaners bringing potential pollutants to the jobsite, painting contractors, medical waste pickup/disposal, landscapers, and contractors who bring tanks to the jobsite to refuel the equipment are just a few examples of risks with a transportation exposure. Coverage may be offered for 1st party (owned vehicles) or 3rd party (vehicles hired by the Named Insured).
Non-Owned Disposal Sites (NODS): Remediation contractors are often responsible for the disposal of waste and materials removed from the jobsite. Therefore, they have an exposure when depositing waste at a non-owned facility. Coverage may be offered on a 1st or 3rd party basis. First party coverage protects your insured for onsite cleanup at the facility while third party coverage protects the insured should a 3rd party be impacted by contamination emanating from the non-owned facility. If your client has ever disposed of waste, they may have some liability.
Bailees Customers Coverage: If your insured takes possession of their client’s personal property during the course of their operations, they have exposure that may not be covered, as most policies have exclusion for care, custody, and control. Bailees coverage offers some limited coverage for damage to property in the care, custody, or control of the insured. Risks that would benefit from this type of endorsement are fire/water restoration contractors, painting contractors, and any other contractor taking possession of the client’s property for safekeeping during operations.
Site Pollution Coverages: Site pollution provides coverage for property owned by the insured and may be addressed in a variety of ways, depending on the site. Separate Site Pollution policies may be purchased, but for contractors whose exposure is often away at a jobsite, they may still have some site exposures that can be addressed by adding endorsements to their Contractors Pollution Policy, including 1st party, 3rd party, Sudden and Accidental, and Temporary Storage coverage. Any contractor who stores chemicals, solvents, fertilizers, fuel, or any other materials at their owned site would benefit from a 1st party Site Pollution policy (which would pay for onsite cleanup in the event of a spill at the scheduled property) or 3rd party coverage should the pollutants migrate offsite causing damage to a 3rd party. Other options include a Sudden and Accidental (Time Element) or Temporary Storage endorsement. If your insured brings materials back to their owned site for a short time, temporary coverage is available. For example, this would apply to contractors picking up materials such as used oil, bagged asbestos, construction materials in a roll off container, etc.
Storage Tanks (underground and above ground): If your insured has a location where they store their equipment and/or vehicles, they may also have tanks for re-fueling. If so, they have an exposure that would be easily protected by purchasing a Storage Tank policy. Other types of entities with tank exposures include car washes, golf courses, marinas, and hotels.
Inland Marine: Most contractors have equipment used in their daily operations. An Inland Marine policy may be an appropriate coverage in the event they suffer a loss to their owned property.
It is also important to make sure your insured has correct Additional Insured endorsements that protect them for ongoing and completed operations. Ask if your insured is domiciled in a monopolistic state; if so, offer Employers Liability Coverage (Stop Gap). Offer insureds a Hired/Non-Owned Auto endorsement to protect them if their employees are using their vehicles in the course of their business operations or if they hire vehicles. If your insured offers a benefit package for their staff, it is important to offer them an Employee Benefits endorsement. If your insured operates under multiple names, it is critical to confirm all are listed either on the declarations page or by adding a Named Insured endorsement.
This is by no means a comprehensive list of the considerations and endorsements that will benefit your insured. The bottom line is that it is not only your responsibility to offer these coverages but it is in your best interest for your client to be well informed. Some carriers are using an automated rating system in which the potential insured inputs data into the system and gets a premium for the coverage―this eliminates the agent walking the client through their exposures and coverage needs and simply offers the cheapest coverage route. As an agent, if you are only offering the least expensive coverage, you are doing a disservice to your insured. Even after you present all options, they may go with the lesser coverage at a more cost effective premium, but it is important to give them the choice. As you meet with your insureds, bring them claim examples that relate to their business or information on where they may have exposures. Many carriers will provide you with some of this information so be sure to partner with the right ones. – not sure how to make this last sentence a little stronger? Maybe “Many carriers will provide you with these examples. A pro-active agent, quality carrier, and an informed insured is usually a recipe for success!
Please contact a PartnerOne underwriter or visit our website at www.p1enviro.com to obtain more information on available products, coverages, claims examples, and other tools to assist you in placing your insurance coverages.