LAURIE WALSH, CAIB (CANADIAN ACCREDITED INSURANCE BROKER)
ommercial insurance in Canada is made available to the consumer primarily through an intermediary broker network. In this environment, your broker is performing as your agent. The broker is rewarded by commissions generated by the placing of contracts with insurance companies, and occasionally on a fee basis. The broker’s responsibility, however, is primarily to you the consumer.
To effectively address your insurance needs, your broker must first fully understand your operation- so expect lots of questions! The more forthcoming you are the better job your broker can do for you.
The focus of the annual review should be on selecting the right insurance coverage to adequately address your specific needs, so that you have the correct coverage in place in the event of an insurable loss. A good broker will seek the best value for you among options available from the insurers- not on cutting costs at the expense of sacrificing adequacy of coverage.
Let’s take the example of you, a Resort owner, sitting down for an annual review of your insurance portfolio with your broker. You should expect the conversation to include:
A complete review of all potential exposure to losses, both physical and financial, related to the operation
An analysis of the adequacy of your current coverage, and recommendations to fill any missing gaps
A review of all insured assets, and a re-assessment of values. Allowances may be made periodically for inflation (for example, increases in the cost to replace a building insured on replacement cost basis) . Allowances may also be made for depreciation (for instance, to account for the decline in market value of property insured on an actual cash value basis). Why pay premiums on an amount that you can never collect!
A review of the operation’s financial position, and your ability to absorb losses or a portion of losses. Decisions may be made to self-insure some assets, or to increase deductibles, in order to realize a savings in premium – but only if your financial situation allows it.
In some cases, a consolidation of multiple policies into one insurance policy may be practical- in others there may be premium credits available if your various insurance needs are placed with one insurance carrier.
The insurance wording should be reviewed in detail, so that you are completely familiar with the coverages offered- and more importantly the limitations or restrictions that may apply according to contract
A broker familiar with the class of business is often a valuable resource in terms of suggestions for loss prevention. Fire protection standards and other loss prevention measures should be discussed.
Finally, perhaps the most significant component of the annual review- the dialogue should lead you through any factors that make your operation unique, and therefore may require special consideration. It’s not a cookie-cutter meeting. Your broker has to understand your specific needs and work with you to select the best available insurance protection.
You should expect your broker to exercise high standards in both interaction with you and in the selection of insurance products to address your needs. Ideally, the broker will have an intimate knowledge of the Resort industry and the connections with insurers to provide the right products.
Once your annual insurance review is complete, don’t forget about your broker till next year. Your insurance policy includes a contractual obligation to keep the insurer informed (through your broker) of any material changes to the risk. If you plan to engage in any new activities, expand your operation, construct or remodel buildings, or purchase any new property or assets of any significant value- call your broker!
Failure to disclose changes can result in the decline of coverage. For instance, if you knowingly engage in a hazardous activity without telling your insurer, they may have a right to refuse to pay a claim arising from that activity. Or, if you should experience a fire or other loss related to a building acquired but not declared, losses to that building may not be covered.
In a nutshell, keep in touch with your broker. Remember, an insurance broker’s first and primary responsibility is to you.
This article was taken from page 16 of NOTO's "The Outfitter" publication, Fall 2006 Issue