Acquiring affordable r insurance for your business

[NSURANCE is one of Ithe largest expenses for a lumberyard, but there are ways to keep your rates down.

The four most important determinants of insurance rates are known by the acronym COPE: Construction, Occupancy, Protection and Exposure.

Construction: How is the structure built? Rates for a frame building, for instance, are usually higher than rates for a metal building.

Occupancy; What is the facility's use? Lumberyards will receive better rates than dynamite factories.

Protection: What type of disaster and theft protection measures are in place? Are there sprinkler systems, fire extinguishers, fire and burglar alarms? Is the local fire department a volunteer department?

Exposure: What type of operation is located next door? Insurance will be difficult to acquire ifyour neighbor is a propane gas plant.

Ali important is how your yard appears to the insurer. "Make the place look attractive to an insurance company," advises Ed Nail, district mgr., Indiana Lumbermens Mutual Insurance. "The first impression is so important, so give your operation curb appeal. A physically clean place will command the best rate."

"Cleanliness is an attitude," he explains. "Insurance companies realize that clean yards typically go out of their way to make sure things are safe and well maintained. The (yards') alarm systems are functional and regularly tested."

Regular housekeeping is necessary because insurers make regular tours of the sites they insure.

Story at a Glance

Ways to save money buying insurance ... factors that influence rates most common causes of losses.

Other ways to negotiate lower insurance rates are forms of self insurance, such as carrying higher deductibles. "Some companies, for example, will put a low deductible on office contents, say $100, then a $1000 deductible on goods like inventory, and $5000 on the actual building," says Nail.

"Agreed amount" is another way to lower rates by insuring property for less than its full value, such as having $5 million worth of coverage on a $10 million facility.

When contemplating insurance protection, most people give more thought to what they're protecting than to what they're protecting against. Adequate consideration should also be given to the causes of loss.

In outlining the causes of loss included under a given policy, commercial property coverage falls into three categories:

Basic Form

. Fire, lightning, explosion, windstorm or hail.

. Smoke causing sudden or accidental loss or damage.

. Aircraft or vehicles, including objects thrown by vehicles or falling from aircraft.

. Riot or civil commotion, vandalism and malicious damage.

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Sprinkler discharge or leakage (including the collapse of a tank considered to be part of that system).

Sinkhole collapse.

. Volcanic action (airborne blast, shock waves, ash, dust or lava flow).

Broad Form

Breakage of glass that is part of a building or structure.

Falling objects.

Collapse (not including settling, cracking, shrinking, bulging or expansion).

Weight of snow, ice or sleet.

. Water damage (accidental discharge or leakage of water or steam as the result of breaking or cracking of any part of a system or appliance containing water or steam, except automatic sprinkler systems).

Special Form

Combines the coverage under basic and broad forms as well as all other risks of direct physical loss, but is subject to specific exclusions and limitations.

"It's all risk coverage," Nail says. "If it's not excluded, it's covered." He said nearly every policy sold to lumberyards today is special form.

II/HEN you think of cedar, you Y Y think siding, decking or fencing, not doors and windows. But a handful of companies are carving niches by producing such distinctive products.

Dynamic Windows & Doors Inc., Abbotsford, British Columbia, Canada, specializes in custom wood windows and doors for high-end builders, with a niche in yellow cedar (about SVo of their total production). Yellow cedar is an attractive pale wood, but unlike western red cedar is a very hard, durable wood. It's long lasting due to natural oils and it stains beautifully. Specialties include grand front entranceways with raised mouldings and inlay panels, and curved glass in any radius for both doors and windows.

The company started supplying cedar doors and windows for expensive log homes and post-and-beam dwellings in Whistler, B.C., ski resorts. Their market area soon stretched to Aspen, Co., due to skiers who saw the products in Whistler and wanted it for their homes. Many Southeast Asians who immigrated to the B.C. area also began demanding yellow cedar because it is similar to the rare Japanese species hannoki. And, naturally, Dynamic now sells yellow cedar directly to Japan.

There are few producers of yellow cedar doors and windows because availability of the wood is so limited. "Yellow cedar only grows in the Pacific Northwest from Northern Oregon up to the Yukon, and the Japanese tend to buy everything they can, in bulk and export it," Dynamic's John Mathews said. "So the mills tell niche players like us they don'thave any. So whatwe can get, we mill ourselves."

Other companies prefer western red cedar, although Mathews does not recommend the species for doors or windows. "Western red cedar is very soft," he explained. "'We want something sturdier for door and window packages, things that stand the test of time."

Conversely, Styline Windows. North Little Rock, Ar., produces custom windows and doors of western red cedar specificallY because they think the qual-