The Insurance Review - July 2009
YOUR TWO MAIN CONCERNS
By Roland L. Enz - President, California Plus Insurance
For more than thirty long years, I have been sitting behind my desk, asking and answering the same questions, concerning truck insurance. The information exchanged between myself and the insured has not changed, except for one thing – the price of the premiums. In 1979, we could insure the liability for a tractor-trailer, running locally, for $850. Today, the rates run from $2,700 to $4,500, give or take a few dollars. In defense of the insurance industry, rates have stabilized, and in some cases they have even been reduced. Never the less, your insurance premium is a major cost of doing business.
For most of you, cost is the only prerequisite. But, should it be the only factor in your decision to put up the downpayment and spend the next eight or nine months paying for your coverages based on the lowest premium that you have been able to secure? Time will only tell. The policy that you received in the mail, after several weeks, is just a pile of papers, secured by a staple, until you need it.
You should be concerned about two main things when purchasing your insurance coverages: the insurance company itself and the agent you will be working with. When looking at the insurance company, you should analyze their financial strength. The best rating indicator out there is the services provided by A.M. Best. They rate each insurance company doing business in the United States – their rating includes financial strength as well as financial size. Companies are rated using an alphabet system. You should also inquire as to their claims handling ability – do they have in-house claims capability, or do they use outside sources.
I am sure that the agent that is selling you the insurance policy will give the company that they are selling a thumbs-up, but try to find out from others what their experience with the company has been like. Claims are never a pleasant experience, but you have to look at the end result as to the fairness of the settlement. The insurance policy is a contract between you and the insurance company, and the terms of their responsibility are specifically outlined in the policy. Many problems that arise from a claim are created by the agent and not the insurance company.
One question that should be asked and answered about your possible new insurance company is if they are “admitted” in California. California provides a safety net for those companies that are admitted if they fail financially. In the event of a failed insurance company, the state, through a guaranteed fund, will have money available to settle claims. Your insurance agent has to disclose this information to you. The way things are out there, in regards to large corporations and their stability, it may be good to know this before signing on the dotted line.
The second concern you should have when acquiring new insurance is the agent that you will be placing your faith and trust in. The agent and the agency that you are purchasing your insurance coverages through is the team that everything revolves around. When you purchase your insurance coverage, some of the costs that you incur provide the service necessary in the administration of the policy. As I have said many times, the most important part of the process is your understanding of the insurance product that you have purchased.
When purchasing insurance, two things have to take place: the first is that you understand the coverages that you have purchased and the second is the ability of the agent to convey that knowledge to you. Nothing can overshadow a claim, if there is a misunderstanding of the coverages, or in the worst case, coverage is denied. If you understand the policy going in, you will eliminate many of the problems associated with a future claim. Just as a side note, the most complex and misunderstood coverage is that of cargo. I have covered cargo extensively in the past, but I will just highlight some of the areas that you should be aware of when purchasing coverage.
There are several forms and variations that insurance companies use in their cargo policies. Price does not always mean that coverage exists. Instead of going through the various forms, it is necessary that you ask questions as to what is and what is not covered. Does coverage include theft? If so, know what constitutes a theft? Be sure to look at the exclusions as well as the conditions that are applicable to the cargo coverage. Things that you should be aware of that may or may not be in the policy such as unattended vehicle, locked truck warranty, locked and secure location, and forcible entry.
The number one cargo claim problem is vehicles left unattended. If your truck is left unattended and then stolen, does coverage exist? Other cargo coverages may include such things as refrigeration breakdown. There are conditions associated with every policy and those conditions lay out what your responsibility is in the event of a loss. Be sure that you understand these conditions fully. After a loss has occurred, it will be too late to be thinking about these things.
Your agent is also the connecting link in getting out Certificates of Insurance, as well as any necessary filings, for your trucking operation. Certificates of Insurance have the highest priority in our agency – they are always processed as they are received. Your ability to work, for the most part, depends on the insurance information that is in the hands of your broker or shipper. No certificate, no business.
When you purchase insurance for your truck or business, cost should not be the only consideration – you should also consider the strength of the company as well as the quality of service that you get from your broker or agent. Your business and its ability to survive, in the event of a loss or claim, is dependent on the insurance company that you have contracted with and your understanding of the coverages purchased. If you have any comments or questions, I can be reached through California Plus Insurance Service in Modesto, California at 1-800-699-7101.