More than providing insurance coverage
When Edwin Scott, CEO of TCS Event Rentals and Piedmont Portables, opened his businesses in 1985, he naturally purchased business insurance. At the time, however, he confesses that he took a rather one-dimensional approach towards insurance, viewing it as mere coverage.
As his Burlington, N.C.-based company grew, expanding to two locations, his exposure to risk and liability increased as well. When the company began experiencing a bump up in the number of minor vehicle accidents involving its trucks and drivers, Scott realized he needed some help. He turned to John Ketner, partner with ECM Solutions, a business insurance company located in Charlotte, N.C.
Ketner, a certified risk manager, provided assistance and suggestions that over the years have “tightened up the fabric” of his business, says Scott. In addition to identifying overlooked risks, Ketner advised Scott to create employee handbooks, start holding regular safety meetings, conduct defensive-driving training and do random drug testing.
Other controls Ketner suggested and Scott put in place included checking DMV records before hiring drivers, doing random after-hire DMV checks and implementing a strict cell phone usage policy for drivers — processes that have resulted in vehicle accidents nearly disappearing.
“I don’t look at John as an insurance agent, I look at him as a partner, an integral part of making our business work,” says Scott, mentioning that Ketner also advises him when he’s over-insured. “He helps us head off problems before they start,” he says.
Ketner would like this attitude towards utilizing insurance agents as risk management advisors to be more universal. “We have an abundant resource and alliance base that I feel should be tapped for all major and minor business decisions,” Ketner says. “I feel we (the risk management advisors) should be the first call, not the CPA or lawyer.”
It’s a sentiment likely shared by Emmett Long, an agent with Rome, Ga.-based Jowers-Sklar Insurance Agency. Risks he’s identified recently for clients and prospects include:
- Too low or nonexistent business income coverage limits. “This is a major reason businesses fail after a large loss and it is very inexpensive coverage to buy,” he says.
- The need to strengthen a rental contract to better protect against lawsuits.
- Helping a company revise its hiring practices related to drivers and seasonal employees, resulting in better qualified personnel and turnover reduction.
- Implementing a safety program and training meetings to reduce accidents/injuries.
Yet insurance customers who fail to take advantage of the many risk-management tools agents have available, ignore their input or purchase coverage based solely on price are common frustrations for agents. It’s unfortunate, because local insurance agents are a valuable asset, able to use their industry knowledge to better protect their clients’ businesses.
For example, a local agent should have an understanding of construction costs in the area, which can help assess the correct insurance limits. Leon Kothmann, president of Leon Kothmann Insurance Agency, Arlington, Texas, suggested raising the building coverage of one of his insured customers by $100,000. The owner agreed. Later that year, a fire completely destroyed the building. “The owner thanked me the day of the fire for [that suggestion],” Kothman recalls.
Mistakes are often made when setting the correct limit and choosing the right coverage for buildings. Those mistakes can force a rental store out of business if they find they don’t have the correct coverage at the time of a claim.
A local specialized agent familiar with the equipment rental industry also will have a network of contacts that can provide advice to business owners on vendors, suppliers and new products to the rental industry. Another situation involving one of Kothmann’s clients,
a company that has a concrete batch plant with the rental store, illustrates the value of these network relationships.
As Kothmann explains, the rental store owner was using a type of hitch on its concrete trailers that people had to close by turning. Two trailers had come loose from vehicles, resulting in minor damage each time.
“I suggested that he replace all the hitches with new bulldog hitches and we’ve not had another trailer come loose since,” Kothmann says.
Agents are paid for more than just bringing a quote to your office. Advice on risk management includes accident avoidance and information about transferring risk to insurance policies, but agents also can help their clients make sound business decisions that may help a rental company thrive. Get your money’s worth and work on building an open and trusted relationship with your insurance professional.
Alastair Jones, CIC, is vice president, sales and marketing for ARA Insurance, Kansas City, Mo. For more information, call 800-821-6580 or visit ARAinsure.com.