Massey Insurance

  • 7 DEADLY SINS

    This information is "so good" it makes the “bad demons” spit-fire angry!

    HOW TO AVOID THE 7 DEADLY SINS THAT TRUCKERS COMMIT WHEN BUYING INSURANCE
    This report was put together at the request of my clients. I have been talking about the 7 Deadly Sins for years. Insurance policies used to be simple and straight-forward and life was wonderful, but trucking insurance is a changing market and now there are traps… not intentional traps, but changes that you need to know about so you won’t become one of those “truckers that commit the 7 Deadly Sins” when you buy your insurance.

    Deadly Sin #1
    HIDDEN IN YOUR INSURANCE PROTECTION

    As strange as it may seem, your biggest problem might be your current agent or broker. If they do not handle truck insurance on a daily basis, they are out of touch with our market! Keeping up with the truck insurance market is a full time job. If your broker is not independent, or if they don’t specialize in truck insurance they may not have the tools available to do a good job. You may be losing out on better protection and lower premiums.

    Our business is driven by change. In today’s economy, we are dealing with a demand for truck insurance offering more coverage at a lower price. Truckers are looking for a broad policy, allowing them to travel further and haul more. The main reason for this is so they can take any load that comes their way.

    Some insurance companies offer a broad policy and others, are for a specific type of operation. As a trucker you have a lot of options, operating locally or long haul, transporting electronics or building materials, the list goes on and on. Insurance companies may offer coverage for only some of these and not others.

    This is why it’s best to ask an experienced broker who specializes in truck insurance to quote your insurance. Why is it best? Because they represent many different insurance companies and are familiar with the policies they offer. Here are a few insider tips to keep your rates down.

    1. Slow down and keep your driving record clean. This alone can save up to 30% on your rates. 2. Prove to your new company you are a good driver. Ask your present company for a 3 year loss history.
    3. Where you park your truck at night counts! If you have choices where to park, check with your broker if there is a pricing difference.
    4. Protect your investment. Lock and remove your keys from your truck no matter where it's parked.
    5. Never put a new driver behind the wheel until you have confirmation from your agent that the driver has been added to your policy.
    6. Routine maintenance and safety inspections are worth their weight in gold.

     

    Deadly Sin #2
    INSURANCE COMPANY RATINGS

    Did you know that all Insurance Companies are given a report card? Do you remember the report cards you received when you were in school? The letter A was for excellent, B was for good, C was for average, and D was for poor.

    Insurance companies are given a “financial” report card with these same letter grades. The company who grades them is called the A.M. Best Company. Their purpose is to protect you from buying insurance from a company in poor “financial” condition. When you buy insurance your broker should tell you the grade of the company he is quoting. It is safest to buy insurance with a company who has a letter grade of A or B.

    Here are some other reasons a company’s grade might affect you:

    1. Poorly graded companies can mean a poor financial risk for you. 2. Some truck brokers might not accept proof of insurance from companies with less than an “A” grade.

    Do you know if your sub-haul contract requires you to buy insurance from an “A” rated (grade) insurance company? It is better to know what you need before you begin shopping for a “good” price. Tell your broker you need an “A” rated company when you ask for your quote. The cost to cancel and rewrite a new policy is very expensive. If you receive a quote from another broker and are not certain about the A. M. Best Company Rating, then give us a call! We’ll look up the company and tell you their rating. No questions! No obligation! Call TOLL FREE (800) 447~8467 anytime.

     

    Deadly Sin #3
    ADMITTED AND NON-ADMITTED COMPANIES IN THE STATE OF CALIFORNIA

    The state protects you when you buy insurance from an admitted company. Admitted companies are companies that are licensed in the State of California. They contribute money to the California Insurance Guarantee Association (C.I.G.A.). The State sets aside this money to pay claims in case an admitted company goes broke.

    Non-admitted companies do not contribute to the C.I.G.A. fund. If a non-admitted company goes broke, there is no guarantee your claim will be paid. However, non-admitted companies are not all bad. The most important thing about a company is their A.M. Best rating, but you should know that you’re asking for trouble if you buy insurance from a non-admitted company with a bad A.M. Best rating.

    When freight prices go down or fuel goes up, there is a demand for lower prices on insurance. In the past this opened the door for scams and schemes. These offers are usually very low, and often they have names that sound like nationally known companies. If you get a quote that sounds too good to be true, be careful, it probably is. Ask questions. Ask for the name of the insurance company. Be certain to write the entire name down. Then call your broker and ask him to look it up for you. In the past these companies were not rated. They were called “off shore”. Many truckers have been hurt by these scams.

    If you are in doubt, remember your friends! The A. M. Best Company gives your insurance company a financial report card. The State of California protects you with the C.I.G.A. fund. And a trusted broker can help you avoid problems. If you are ever in doubt, give us a call. We’ll call the Department of Insurance to check your company’s status and A. M. Best rating. We promise not to play games with your business to make our living.

     

    Deadly Sin #4
    POLICY ENDORSEMENTS

    Most people don’t think about endorsements. If they do, they’re not certain what that word means. People know that lawyers write them, which makes the words hard to understand. Do you feel this way? Let’s discover the loophole that will help us avoid this “sin.”

    Endorsements remind me of yellow post it notes. You know, the little notes you stick on top of stuff. Endorsements are like that. They get stuck (attached) to the policy. They are legal contracts. They either add or subtract coverage to the policy.

    All policies have endorsements. They are listed by form number on the Declaration page. The Declaration page is in the first part of the policy. Match that form (by form number) attached to your policy. Read it carefully. Does anything there look like it could cause you a problem? Call your broker if you are worried. Don’t wait until there is a claim.

    How do you know if your policy is complete? That’s easy! Each form has a number. Match up the form numbers on the front page with the attached forms. If you are missing one, your policy is not complete. You need to call your broker. Let them know someone made a mistake. People make mistakes, but you need a complete policy. Plus, you will impress your broker!

    Insurance policies are not all equal! The basic policy is standard. However, endorsements change your protection. When you shop for the best deal, be careful. Sometimes lower prices subtract protection. Don’t be afraid to ask questions. Listen to what the broker says. Does the broker give you a clear and direct answer? Or is the answer vague and rambling? Your broker should make you feel confident.

    Here are some insider tips. The forms described will help you avoid “Sin #4’s” death trap:

    1. Non-Reported Driver ~ What may happen? The company might deny a collision claim. The collision deductible might be doubled, and the policy might be cancelled or non-renewed.
    2. Radius Restriction ~ What may happen? The company may deny a physical damage loss if it occurs out of radius.
    3. Cargo Commodity ~ What may happen? There is a cargo loss. The type of cargo lost is not listed on the policy. Your claim is denied. For example. Your policy states you haul groceries. You have a loss and your load is steel. The load of steel may not be covered.
    4. Liability Bodily Injury & Property Damage Deductible ~ What may happen? You have an accident. The other party is hurt and so is their property. You pay this deductible to the other party. This payment is on top of your own collision deductible.
    5. Property Damage Only Deductible ~ What may happen? You damage another’s property. You pay this deductible to the other party. Again, this is on top of your own collision deductible.
    6. Newly-Acquired Vehicle Limitation ~ What may happen? You buy a new vehicle and drive it home. You do not add it to your policy. The next day it is in an accident. Your claim is denied. Many dealers think you have 30 days of automatic coverage.
    7. Cargo Theft Limitation ~ Limited coverage on cargo target commodities. Target commodities consist of liquor (except beer and wine). Tobacco products including cigars and cigarettes. Seafood unless it’s canned. Cameras or film; wearing apparel; computer equipment or components and software. Other items include fax machines, photocopies, VCR’s, HI-FI’s, stereos, compact disc players and televisions.
    8. Unattended Covered Vehicle ~ What may happen? This form excludes cargo loss by theft, unless at the time of loss the covered vehicle is garaged in a building or parked in a fully enclosed or fenced yard.

    Before you hit the panic button, read your policy. If you have a problem with it, perhaps, one of three things happened.

    1. You didn’t tell your broker enough about your business.
    2. You did tell your broker and he wasn’t listening.
    3. Your broker doesn’t have enough knowledge about truck insurance.

    In any case, call your broker and explain the problem. Get it solved before a claim occurs. If your broker can’t help, find another broker. By the way, we’re available TOLL FREE (800) 447~8467 anytime.

     

    Deadly Sin #5
    SUBCONTRACTORS

    My grandchildren love Walt Disney movies. Recently we watched Snow White. All the characters are wonderful. The music is great! Part of the story is about seven little dwarfs. Each morning they whistled and sang on the way to work. Everyone was happy, except grumpy!

    Each dwarf had a different job skill. They each had a license. Each one had his own tools. Each one knew how to do his job. Each one knew how to get to work. They went to work everyday. They were all dependable. They were the kind of workers you’d like to have on your won team! The “Seven Dwarves” were independent contractors! They worked for many different contractors.

    Now what would happen if Snow White hired them to do all her extra work? What if Snow White said,

    “You’re independent contractors, you’re licensed, you’re insured, sign a contract with me. I have too much work. I need more help. I will keep you busy.”

    The dwarves decide to sign the contract.

    Sure enough, Snow White is a woman of her word. She keeps them busy. They are too busy to work for others. Are they still independent contractors? In California, under the Workers Compensation laws, they are employees. Snow White is liable for work related injuries. Do you run your business with full time “subs”? Then you may have a Work Comp exposure. Here are some things you can do:

    a. You can buy Worker’s Compensation (expensive)
    b. You can buy Occupational Hazard Insurance (affordable), or...
    c. You can read the attached list and work around the problem.

    If you hire subs to haul your overloads you will need special coverage. It’s called “Hired and Non-Owned Auto Liability.” This coverage can be added to your auto policy. Look at your policy. See if you have this coverage. If you get confused, call your broker. They will check your policy and tell you.

    DEFINITIONS:
    1. Non-owned autos are autos (or trucks) that you don’t own, but for which you may be held responsible.
    2. Hired autos are autos (or trucks) that you rent or lease (short term).

    Check to see if you are operating as a true independent contractor.

     

    Deadly Sin #6
    MISREPRESENTATION ~ DO NOT LIE!

    We live in a world that “plays” to win. No matter what the cost. People think it’s OK to lie. It’s no big deal. Everyone does it. People get away with lying everyday. Some get rich! But wait a minute! What if the company finds out that you lied? Can they do anything? Yes they can and yes they will. However, a lot depends on what you lied about.

    Do you know what happens after you buy insurance? When the broker says, “you’re covered,” do you think, “it’s a done deal?” Sure you’re covered, but there is one more step to this process.

    After you leave the broker’s office he sends the paper work to the company. The company has 60 days to double-check it. If you lie about something important and they find out, you might be cancelled. When this happens, people you work for are sent notices of cancellation. The notice tells why the policy was cancelled.

    Would this bother you? What might happen if you have a claim? The answer depends on more than one thing. Such as, the company, the adjuster, case law, and the size of the claim. There is a risk the claim might be denied. This creates problems. One of which might be losing your job.

    To be safe you better avoid that nagging sin that prompts you to lie. Tell your broker the truth. He knows which company will quote your insurance. Then you’ll have peace of mind, and that’s what insurance is all about!

     

    Deadly Sin #7
    CO-INSURANCE CLAUSE

    This part of an insurance policy reminds me of a childhood playground ride. As children, we went to a local playground. I especially liked one ride called a teeter-totter. Do you remember it? It was a long, narrow pole with seats at each end. A bridge in the middle held it up. The ride was fun, but only if both children were the same weight. The equal weight made it easy to go up and down. But, if one child was heavier than the other it wasn’t much fun. The child who weighed less was left sitting up in the air. His legs couldn’t touch the ground. It was a helpless feeling. The child on the ground controlled everything.

    Why does this remind me of the Co-insurance clause? Because this clause works best when you insure your property for its true value. It’s just like the teeter-totter. You tell the company the true value of your property. The company charges you premium on that value. This makes the weight even on both sides. It’s a fair deal. If you have a loss, the claim is settled. You are happy because the claim is settled at the true value of your property.

    A “Co-Insurance Clause” tells the company the correct value of your property. What happens if you understate its value? Several things happen. One is you pay less for your insurance. Another is you are out of balance with the company. You are on the teeter-totter with a heavier player. If you have a claim, you are out of control. The company will severely penalize you. Why? Because you are not playing by the rules. If you have a loss the claim will be settled but only at a fraction of the true value of your property. You will be very unhappy, and it will be your own fault because you were not completely honest with your company.

    Usually, the Co-Insurance Clause affects your physical damage, cargo, and equipment floater policies.

    A Truck Dealer will give you a good idea of your equipment’s current value. Check your policy to see if you’re insured for that value.

    Look at your sub-haul contract. Double check your cargo limits. Then look at your policy. Are the limits the same?

    Does the contract state that you do certain things, for instance, does it state that you “waive your cargo co-insurance clause?”

    The point is that what you actually do should match what the company says you do on your policy. If you don’t understand this, fax your policy to your broker. Make him double check it. You do not want a penalty at the time of loss. Make your broker work for you and answer your questions. By the way, we’re available TOLL FREE (800) 447~8467.