Previous Blog: Equipment Dealers and Insurance Decisions: How to Avoid Blind Spots (Part 1)
By now, we have established that insurance is complex and confusing. So, what do we do now?
The good news is that help is available. Insurance advisors like us exist and can help equipment dealers like you. However, knowing what to look for in an advisor before retaining one is helpful. Below are key indicators to help you find the right insurance advising partner.
As stated earlier, all insurance agents are limited in what they can offer their clients. Insurance advisors are unique because they have access to all insurance programs. They can connect with a vast array of agents and programs, so you have the option to choose what’s best for you.
Obtaining a surplus of proposals usually results in lower premiums, increased coverages, or both.
We asked one of our long-time clients, “Why do they continue to work for us year after year.” They responded, “Ricker & Associates is our insurance interpreter.” Their response caused us to realize that most dealerships do not have the time to learn about their specific insurance needs because they’re too busy with their daily operations. This learning leads us to the next thing that dealers should look for.
Dealerships need an unbiased advocate in their corner. An advisor should help you sift through the details of every proposal. You don’t have to be the expert because advisors have the necessary knowledge. Advisors are contracted by the dealer and thus are not biased toward a particular policy.
Note* This is the insurance equivalent to a parent joining a teenager as they buy their first used car. It’s helpful to have someone in the room that won’t get bullied or manipulated.
When evaluating who you want advising you on your insurance needs, a helpful question is, “How much time will you save me?”
Everything that an advisor does should decrease the time and effort you need to spend on insurance-related matters. They typically compile the proposals from the agents and help you sift through them. They will evaluate your business to discover what specific coverages you need. Additionally, they will help you interpret and mediate the decision process during renewals.
All this will ensure that your business and time are protected.
Case Studies
Below we have included some practical examples of how agents can be assets during insurance decisions.
We recently reviewed a Worker’s Compensation policy and discovered an error in the code of a category, which impacts the total dollar amount of the premium. The error was carried over from year to year for over five years and cost the dealer more than $400,000 in total unneeded premiums. Without critically checking the coverage and building a plan based on the dealer’s needs, this error could have continued indefinitely, racking up unnecessary expenses for the dealer. After reviewing the policy and eliminating the error, we saved the dealer $90,000 in the first year.
Insurance premiums are primarily based on the inventory’s total value. All state laws require at least 80% coinsurance or valuing the inventory for at least 80% of the actual value. At the advice of an agent trying to win the business deal, a dealer was underreporting the inventory’s value by more than 65% to pay lower premiums. In other words, less than 35% of the inventory value was reported. Under-reporting of 80% requires the dealer to participate in the loss. Under-reporting at 65% may require the dealer to pay 65% of the claim or, in the worst case, be fined, or the insurance company may refuse to pay the claim entirely, and the client risks cancellation.
Firstly, we hope that you have a better grasp of the overall health of your dealership’s insurance status. Peace of mind can be a powerful and freeing thing that benefits every company employee.
Secondly, if you do not have peace of mind after reading this, we encourage you to reach out to an insurance advisor so your questions can be answered. They will be your unbiased advocate and strive to serve your dealership when vital insurance decisions need to be made.
If you have any nagging questions, our team at Ricker & Associates would love the opportunity to help find the answer. (Contact information is below)
If you’ve responded “yes” to two or more of the questions, we recommend reaching out to an insurance advisor.
Contact Information:
Email: Jim Ricker | jgripro@gmail.com
Phone: Ricker & Associates | (512) 359-9736 (option 4)