It is important to not just meet the needs of your clients, but find ways to exceed them.
Adding value to your client relationships is just as important as understanding their unique set of needs. From independent plumbers and painters to general contractors who manage hundreds of workers, writing coverage for service and artisan contractors is complex. It is critical that brokers check all the boxes when securing insurance for service contractor clients and step in to add value to their client’s business.
The experts at US-Reports, a national provider of premium audits, inspections and risk services, provide a three point list of best practices to add value to relationships with general and artisan contractors who face fluid and substantial risk exposures.
1. Understand the value of a loss control report, and commission one.
“To accurately insure a service contracting business, the underwriter should understand what types of jobs the contractor typically bids on, what kind of jobs they do not pursue and how they handle ‘one-off’ projects,” says Daniel Finn, Vice President, Director of Loss Control & Risk Services for US-Reports. “If a client is unable to complete a project safely and efficiently, they could hire a subcontractor, which will expose them to new risks that might not be accounted for by their insurance policy.”
A loss control report will include risk improvement recommendations which can make a job site safer and ultimately lower premiums by suggesting ways to increase safety culture, limit job site third-party exposures or change how flammable products are stored. Typically, the firm with the authority to write a policy will commission a loss control report to provide the technical information necessary to properly write coverage.
However, Finn says that brokers and agents who proactively commission a loss control report for clients are usually referred in high regard by the insured. “They see that the broker is adding value to their relationship. If a report is underwriter-driven, then the insured sees it as an inspection, but when it is broker driven, then the insured sees it as a consultative value add.”
2. Prepare for the annual premium audit.
The word “audit” can conjure up images from movies where the FBI raids an office and carts off boxes of files, but a premium audit is not something to fear. Debbie Guthrie, Vice President of Premium Audit at US-Reports, encourages retail brokers and agents to reassure clients that a premium audit is customary. “The premium auditor is only there to verify their exposure as it relates to their policy,” says Guthrie.
Premium audits are a standard procedure which takes place at the end of a policy period. According to Guthrie, an audit is simply designed to validate business operations and actual exposures, the review of financial records, verification of officer and employee duties and their remuneration if applicable, determining subcontractor use and insurance coverage, and ensuring the company is properly classified.
Insurance policies are written based on estimated risk exposures across a finite period of time–typically one year. Depending on the type of insured, the risk estimate could be based on payroll, sales, cost, etc., and the auditor will verify the actual exposure and report the findings to the carrier. “If the insured increased their business, expanded their service offerings or hired new employees beyond those estimated on the policy, then risk exposures could have increased as well,” says Guthrie. She continued, “Annual audits provide brokers and agents with a current look at clients’ exposure and any new risks that might arise.”
3. Keep the Certificate of Insurance accessible.
Service contractors receive a Certificate of Insurance, which provides evidence of the amount and type of insurance they own. When signing on to a project as a subcontractor, the insured may be required to provide their certificate to the general contractor as proof of workers compensation or general liability coverage. This requirement demonstrates the subcontractor has the means to cover any possible losses or harm in the event of a claim. As a best practice, brokers and agents should remind clients to keep the certificate of insurance accessible.
There is no ‘typical’ when it comes to working with service contractors. From the different types of construction to the varying size and scope of jobs, each client will need specialized coverage to protect their business. Going beyond expectations can help build and maintain relationships with your contractor clients and uncover new risk exposures not accounted for by their current insurance policy.