Dispatch #19 - Reduce Insurance Premiums (conserve cash)
In Dispatch #6 I recommended that you renegotiate premiums and payment schedules on insurance policies that are driven by volume (revenue, payroll, number of vehicles and equipment in service).
Below are a few more tips regarding this strategy:
For revenue- and wages-based premiums, request an endorsement to your policy that lowers your estimates of each. This will:
Lower the premiums you pay;
Reduce or eliminate your overpayment loss in case revenue and/or wages fall below the original policy’s minimum earned premium amounts.
If your broker and insurer refuse to oblige, consider getting opinions from other qualified brokers. You may be able to save money by canceling a policy written with previously higher estimated sales or payroll values that are no longer realistic.
For vehicle insurance, consider declaring idled vehicles as non-operable with the motor vehicles department then removing them from coverage to lower premiums. Ensure such vehicles are not driven until they are taken off non-op and put back on insurance.
Filing business interruption claims:
It sounds like a no brainer. Unfortunately, it’s not that simple—and at least one insurance consultant thinks it's unlikely based on his experience and the current industry buzz.
That said, putting your insurer on notice at least creates a record of your claim and may develop into compensation if merited in your circumstance. So, consider if it’s worth the time to file a claim to be “on the record”. Here's an article that further explains the business interruption question.
Thank you to insurance consultant, Don Bury, for contributing to this bulletin.
Need help with this or other financial matters faced by construction contractors? Let’s talk!
David Stern CFO makes every effort to provide useful and accurate information. This content, however, is not intended as a substitute for specific business-related financial advice. We disclaim all warranties and liabilities from its use.