Thomas J. Crowley, CPCU, CRM, CIC
Information is overwhelming all of us: SBA Loans, Disability insurance, PFL, FFCRA, FMLA, Unemployment insurance and other legislated and regulated ways to help businesses and individuals get through our world pandemic and its economic impact. What can be done aside from these programs though to control cost?
I have tried to boil down some very practical steps businesses can take to immediately impact their insurance costs. Not every insurance carrier behaves the same way but all of them should be flexible, empathetic and willing to work with their customers. Call your broker if you have not already and see if any of the following can help you.
File a business income (BI) claim.
While it is extremely unlikely normal BI coverage under business policies will cover losses from Covid 19 we recommend you file anyway. Tracking the impact on your business now, not down the road, will make it easier to track the data. If carriers are forced to expand the definition of BI to include these losses you will have filed a claim and been tracking your loss. If we see government intervention with a relief program, it would likely require a declination from an insurance carrier and all of the supporting data to show your loss. Track expenses you incur to avoid a loss, track your decreased revenues and overall impact on profit.
Lower your sales and payrolls on Liability and Workers Compensation
policies based on what you project Covid impact will be. All carriers have shown a willingness to do this. If you anticipate a 3 month impact, lower all exposures by 25%. That will result in a 25% decrease in cost. You can always increase levels back in the future if the impact is less than 3 months or if you have a tremendous rebound once this is over.
Ask your insurer if they can provide any kind of credit to your auto policy
. Vehicles are being used less. Some carriers are rolling back premiums and others are laying up vehicles without turning in plates. Make sure you keep “Comprehensive” on your vehicles if you actually mail plates to the DMV and take vehicles off the road. Comprehensive is Fire, Theft and Vandalism and you want to be sure to retain that even if the vehicles are parked.
Governor Cuomo issued Executive Order No.202.13 which includes among many items a deferral of premium payments for 60 days
. This applies to immediate billings – whether it extends into future billings remains to be seen. Ask your broker to request deferral of payments due now. The carrier has to extend them by 60 days and then bill those premiums on a 12 month equal pay plan. This can help with cash flow.
Look at your inventory levels.
If you are not installing or servicing and you’ve worked your materials down and not replaced them yet, do you need the same contents, stock and inventory limits?
If you are renewing in the middle of all of this
contemplate two strategies:
Ask carrier for a 60 or 90 day extension so you can evaluate your business going forward more reliably than current guestimates you would be making today.
Or, try and negotiate renewal based on your current exposures with agreement to lower them after renewal is agreed to and locked in. If you lower them at renewal the lower exposures will result in higher rates due to filings insurance carriers make with the DFS and credits based on premium size.
If you apply for a receive a PPP loan
and put all employees back on payroll even though many or all are not working, ask your broker if carrier will waive those payrolls (or reclassify to a clerical rate) on GL and WC since the payrolls are being incurred but the employee is not working.
Consider if any insurance carried is not needed at this time
. A Foreign Liability policy could be dropped since business travel is no longer occurring and likely will be stopped for some time. Other examples might include installation floaters (if you are not doing any work in the field), Exhibition floaters and other policies that support activities that would be discontinued.
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If you would like information on PPP, FFCRA, PFL/DBL or any other government or insurance program please feel free to reach out as we have resources on all of these items.
Good luck to all of you as we navigate our way through this unprecedented event. Stay safe, social distance and please feel free to call me with any questions.
Thomas J. Crowley, CPCU, CRM, CIC
Cook Maran Insurance- An EPIC Partner | 631-332-7390