2 minute read
AGENCY CORNER: Use it or Lose it
by Alan Schaefer
The unfortunate truth sometimes, in the insurance world, is when a business owner can try and do everything right, but still be wrong. We are all familiar with the phrase “use or lose it”, but today’s insurance climate is leaning more towards “use it and lose it.” It is a common frustration when a business owner sits down to buy insurance, one of the largest annual expenses, and premiums only grew larger when they had to file a claim the prior year. It is not an easy pill to swallow when you pay out thousands of dollars for coverage only to be “punished” with higher premiums come renewal time.
In today’s world, the cost of doing business seems to be on a steady rise. The same goes for insurance carriers given increasing medical costs, trucks repairs, and overall cost of claims. As many of you know, auto carriers have become increasingly reactive with pricing when it comes to claim activity which is even more reason to limit the frequency of claims as much as possible.
Underwriters analyze claims with two major methods being - frequency and severity. Several small claims can carry just as much weight as one major claim (to an insurance carrier several small claims are an indicator that a major claim is on the way). When it comes to smaller claims, such as a minor physical damage claim on a truck, it is more than likely in your best interest to settle that claim out of pocket rather than filing it with your insurance carrier. Ultimately the cost to do so may seem major at the time, but in the long it is minor compared to the potential rate increase at renewal and/ or possible non-renewal of coverage entirely.
Your insurance deductibles serve the purpose of preventing numerous small claims with a certain carrier, also do your due diligence in preventing them as well. It is another method of not giving a carrier any more reasons for an increase in your rates come time to renew. While it seems using your insurance is “punishable” it is simply the reality of our situation, due to the nature of the log truck insurance sector. Obviously, this cannot be applied in every situation, nor is it mandatory, but it is one way for your logging business to remain attractive to insurance carriers and create more stability in the premiums you pay. Something as simple has having two claims in the same year could be the result of possibly getting non-renewed with an auto carrier. So, it is imperative to reduce claim frequency as much as possible.
