As business owners, you are often approached with advertisements and salespeople that state you can save 15% or more on your insurance premium from this company or that company. Some of these companies may actually have better rates and would save premium dollars for your business, but other companies will simply cut coverage to lower the premium. It is important to understand the coverage offered by different insurance quotes and how insurance premium is calculated.

Insurance premiums are usually computed using a predetermined rate that is multiplied by either your payroll or revenue totals for the policy term and then adjusted based on your business characteristics. For example, workers’ compensation insurance in Florida has rates predetermined by the state government and all insurance carriers in the state use those rates by multiplying it by your payroll in the appropriate classifications. Here is a link to an article with the 2009 rates for Florida landscaping businesses.

The insurance premiums for general liability policies are based either on your projected payroll or your projected revenues. This rating basis is then multiplied by a rate determined by the insurance carrier. When comparing premiums on these policies, you can look at the specific rate or make sure that both insurance carriers use the same payroll or revenue figures.

Equipment floater insurance typically has separate rates for the value of equipment that is individually scheduled on the policy and the value of unscheduled equipment that is protected under the blanket equipment coverage. As is the case for the other insurance policies, these individual rates should be listed on the ‘declarations page’ of the policy documents.

As a landscaping business, if you ever have questions regarding insurance rates and total premiums, please feel free to ask an insurance agent at BearWise Landscapers. We would also welcome the opportunity to walk through comparative insurance quotes received by your business to analyze differences in coverages and actual rates. Let us know how we can be of assistance to your business insurance needs!

If you are bidding on a project and find out that they owe their previous lawn maintenance contractor over 5,000 dollars and have a reputation for burning bridges with their landscapers before that, would you still try to pick up that client?

You may answer that question ‘no’ or ‘yes’ or ‘yes with certain conditions’. No matter which way you answer it, you are weighing the risks of that type of a client in your mind against the risks of the amount of profit you could receive by doing the work. For this article, the term ‘risk’ is defined as uncertainty about outcomes that can be either negative or positive.

More than likely, if you chose to still bid on that project and service the client, then you would take measures to reduce the risk that this client would avoid paying you for the work you completed. The same is true for all of your clients and all of the risks you face as a business owner. By using an enclosed trailer instead of an open trailer, you are forfeiting some of your employee’s time on each jobsite towards getting out their equipment. But you are reducing the risk that your equipment will be stolen, so your business chooses to accept the tradeoff or not accept it.

This is the essence of controlling risks.

Risk control is a conscious act or decision not to act that reduces the frequency and severity of losses or makes losses more predictable. Risk control techniques prevent losses, reduce the severity of losses, and speed recovery following a loss. Risk control techniques can be categorized into one of six broad categories:

• 1. Avoidance – involves ceasing or never undertaking an activity so that the possibility of a future loss occurring from that activity is eliminated.
• 2. Loss Prevention – a risk control technique that reduces the frequency of a particular loss.
• 3. Loss Reduction – reduces the severity of a particular loss.
• 4. Separation – disperses a particular asset or activity as part of the organization’s working resources.
• 5. Duplication – uses backups, spares, or copies of critical property, information, or capabilities and keeps them in reserve.
• 6. Diversification – spreads loss exposures over numerous projects, products, markets, or regions.

As your business engages in risk control, it is important to keep in mind the main goals of controlling risks. These goals are as follows:

• - Implement effective and efficient risk control measures
• - Comply with legal requirements
• - Promote life safety
• - Ensure business continuity

During these tight economic times, every expense can impact the bottom line of your business. When was the last time that you reviewed your insurance premiums to cut costs? As an insurance agent specializing in the needs of landscaping businesses, there are four standard coverages I recommend to all landscapers that have at least one employee:

• 1. General Liability – pays losses arising from real or alleged bodily injury, property damage, or personal injury on business premises or arising from business operations.
• 2. Commercial Auto – pays losses for damage to company vehicles and trailers as well as injury and property damage to others as a result of vehicle liability and is typically required by state governments.
• 3. Equipment Floater – provides protection for tools and equipment from a number of exposures such as theft.
• 4. Workers’ Compensation – covers the cost of medical expenses and disability payments to employees that are injured at work, and it is required by state governments.

These coverages can be written on four separate policies, or the first three can be combined into one package policy that usually allows a premium reduction. With insurance, it is important to understand that each state has its own insurance department, so there is some regulation variety that affects these coverages across the country. This is most evident with workers’ compensation, and you should find out how your state’s statutes impact this coverage for your business.

Your premium for each of these coverages begins with the rating basis. Each coverage is rated differently. General liability insurance can be rated based on revenue, payroll, or number of employees. Commercial auto insurance is based on the value of the vehicles, drivers and their driving records, radius of operations, and a few other things. Equipment floater insurance is based on the value of the equipment and workers’ compensation insurance is based on payroll. Take a look at your current insurance policies and ask your insurance agent if they have carriers that can rate you based on another rating basis and what premium level those quotes had.

On all of these coverages, there are opportunities to receive discounts for safety measures that your business takes to prevent claims. Be sure to have these in writing and communicate them to your insurance agent. Your agent can relay this to the underwriter at your insurance carrier, and many of them have the authority to manually add discounts to your premium for safety procedures. Some states, like Florida, also have a safety discount included in their workers compensation statutes. Examples of procedures that often impact an underwriters’ decision to add a discount include a written safety manual for employees, strict enforcement of rules in equipment manuals, routine maintenance of equipment, theft prevention procedures for storing equipment, drug free workplace testing, and many others.

Previous claims also impact your current premium. The impact differs by type of coverage and the rating technique and formula used by the individual insurance carriers. Don’t hesitate to ask what impact your previous claims have on your current insurance premiums.

If you have any specific questions regarding insurance premiums paid by your lawn care, tree trimming, sprinkler repair, or landscape installation business, please feel free to ask our insurance agents or request a comparative insurance quote from BearWise Landscapers.