Contractor Insurance And Risk Management Blog » Business Auto

Contractors’ Insurance Annual Checkup – What Is It And Why Do I Need It?

admin — Mon, 26 Jan 2009 17:43:23 +0000

Our agency conducts annual insurance checkups for our contractor clients, and I am often asked “Why is this necessary or recommended since updated information has already been provided in the renewal applications and over numerous phone conversations that occur throughout the year?”

The purpose of the contractor annual insurance checkup is to review your current coverages; to determine if your coverages and limits are adequate (example: have you signed a contract that requires higher limits?); to determine if your key employee structure has changed, and to find out if anything new is going on with your business.

Your insurance agent is not necessarily the first contact you think about when you change your operations or buy something new (unless you need proof of insurance). The time to discover you forgot to let us know is NOT after you’ve had a loss.

During the annual insurance checkup, we will review your Workers Compensation, General Liability, Business Auto, Contractors Equipment, Bonds, Umbrella and Builders Risk (if applicable) and make risk management recommendations using our custom checklist tool. We can also provide you with quotes for Life Insurance, Key Man Life Insurance and Group Health Insurance.

As your business grows, or you downsize your operation, your insurance needs change. Also, the education that you receive will likely result in maximum premium savings.

In addition to meeting with your agent to discuss your business changes and needs, it’s also a good idea to do an annual checkup with the agent who handles your personal insurance.

Working together, we can help you protect your valuable assets by providing the right coverage at the lowest possible cost.

Rental Cars and Hired Car Physical Damage

admin — Thu, 06 Nov 2008 18:22:03 +0000

Dave, a client of mine, called the other day to let me know he was going on a business trip, and asked about whether or not he should buy the rental car company’s Physical Damage Waiver, or just add Hired Car Physical Damage to his business auto policy. I explained to Dave that while the Hired Car Physical Damage would provide coverage if the rental car sustained damage, it would not address three key provisions of the rental car contract – replace cost valuation, loss of use and diminution of value.

The commercial auto policy uses the Actual Cash Value method if a car is totaled, which is cost new less depreciation. This can be a significant difference from the replacement cost of the vehicle.

With regard to loss of use, I’ve never seen an insurance company pay for this as there is no provision in the business automobile policy that would grant such coverage. Loss of use means the rental car company would have to have every other car they have in that category rented in order to suffer a monetary loss by not being able to rent the vehicle damaged in the collision.

With regard to diminution of value, most rental car contracts want to recoup the loss they will incur upon sale of the rental car when it is time to remove it from the fleet. The fact that the car was involved in a crash must be disclosed to the buyer, and the sales price will be reduced as a result.

Due to the above uncertainties, the safest course of action is to always purchase the Physical Damage Waiver from the rental car company.

Non Owned And Hired Auto Liability: Do I Really Need It?

admin — Mon, 20 Oct 2008 12:27:40 +0000

Our home builder clients often ask if they really need to pay $225 a year for Non Owned And Hired Auto Liability coverage. They reason that this coverage is not needed if they don’t have many employees or if their subs have their own auto liability insurance.

First of all, what is Non Owned Auto Liability? Non Owned Auto Liability protects the named insured (home builder) in the event that they are sued as a result of an accident involving a vehicle that is not owned by the company. For example, such accidents could arise from vehicles that are owned by employees such as executive supervisors to run errands on behalf of the company. Such errands could be a trip to the post office or supply house. Under the law, the home builder has vicarious liability under these circumstances.

In addition, it is possible that similar liability could arise from auto accidents involving vehicles owned by so called “subs” while running an errand for the home builder. It is possible that under some circumstances that the “sub” would be reclassified as an employee by a court resulting in vicarious liability for the home builder.

Even if the employee or so called “sub” does carry their own liability insurance, their limits of coverage may be inadequate to cover the amount of the damages and as a result the home builder may be shot gunned into the lawsuit.

It is important to note that Non Owned Auto Liability does not cover the driver himself. It only covers the business entity that is a named insured.

Second, what is Hired Auto Liability? A hired auto is one that is rented, leased, or borrowed by the named insured. For example, a home builder may fly into an airport for a business trip and may rent a vehicle from Hertz. If this is the case, the Hired Auto Liability will respond to auto accidents arising from the negligence of the insured driver. Unlike Non Owned Auto, Hired Auto Liability does cover the driver. Hired Auto Liability does not cover damage to the vehicle itself.

Another critical issue is whether or not the home builder should purchase the Collision Damage Waiver from the rental car company? This issue will be explored in a subsequent posting.