We can all appreciate and understand the importance of carrying a comprehensive commercial insurance program to protect ourselves in the event of a claim or loss. The lack of a solid insurance program could be detrimental to a company and its employees in the event of a loss. Contrary to popular belief, you as the insured can help determine the price or cost of your cosmetic insurance premiums by following a few simple guidelines:
Evaluate and understand your true exposures: Since property premiums are partially derived from the amount of property you are covering. It is very important that you provide the insurance carrier with the accurate cost of buildings, inventory, personal property, and any additional costs your company would incur in the event of a loss. While underestimating these factors can mean you as an insured would have an inadequate amount of coverage. Overestimating will only result in additional costs not necessary to your company as the insurance company will only pay for the actual cash value or in most cases, the replacement cost of the insurable property. Remember, cosmetic insurance exists only to restore an insured to the financial status they enjoyed before the loss. A person should never profit from a loss. Why pay premiums for limits that will never be afforded to you at the time of a loss?
Invest in protective devices: Items such as burglar alarms, smoke detectors, and sprinkler systems could help you avoid a potential loss or lessen the damage should a loss occur. Insurance companies will offer certain credits to risks that have one or more of these devices in place. Thus resulting in a lower insurance premium. You should furnish the insurance with evidence that these devices do exist throughout your facility in order to obtain these possible credits.
Combine policies or lines of coverage: Some insurance companies will provide discounts or issue credits on premiums to insureds that carry more than one line of insurance coverage with that company. A perfect example would be what is called a “package policy” where both the property and general liability coverages are listed under one policy form. In some instances, the insurance company will issue a “package credit” which could result in lower premiums.
Considering Higher deductibles: Carrying a higher insurance deductible and retaining a larger portion of the risk can help lower cosmetic insurance premiums. The insured should keep in mind that by carrying a higher insurance deductible, they will be retaining a greater portion of a covered loss. The insured should consider this fact very carefully before going with a larger deductible.
Periodic Reviews of your cosmetic insurance program: By reviewing your insurance program periodically, you will be better able to ascertain whether or not you are carrying to much insurance for your needs. For example, have your inventory levels dropped in the past few months? Are inventory levels higher at certain points of the year then others? If you answered yes to one or both of these questions, maybe you should consider adding a “peak season endorsement” onto your current property insurance policy. This endorsement will increase your property insurance coverage during a specified period of time when you are carrying greater inventory values. This will help keep insurance costs down as you will only be paying premiums on higher inventory values when they are actually being carried.
Implementing Loss Control Practices: The implementation of good loss control procedures can help decrease both the frequency and severity of potential claims. Thus helping in keeping insurance premiums down. For example; installing video surveillance throughout your warehouse will help discourage employees from pilfering or stealing. This will result in what is considered by the insurance companies to be “favorable loss experience”. The difference between what is considered “favorable” or “unfavorable” loss experience can have a huge impact on your premiums.
Training Program for new employees: An employer can help lower the potential chances of a claim by training employees properly in the workplace. For example; training an employee to use a particular piece of equipment can insure that the employee will be aware of the proper safety procedures that must be followed to prevent the possibility of an injury. This will also help keep losses to a minimum thus helping to keep cosmetic insurance costs down.
Obtain current driving records for employees: In instances were employees are operating heavy equipment or vehicles, obtaining their driving records can help assure that an insured is not allowing high risk drivers to operate equipment. Employing “high risk” drivers will not only impact your insurance premiums in a negative fashion, it can also open your company up to a greater potential of losses in the future.
Practice Good Housekeeping: Practicing good housekeeping and insuring the workplace is safe and tidy can and will prevent claims such as slip and fall. Fewer claims can mean cheaper premiums in the long run. This is one recommendation that is the easiest to accommodate and should be practiced by all.
Utilizing an experienced insurance broker: The utilization of a knowledgeable Insurance broker specializing in the cosmetic industry can help ensure that you are receiving the broadest possible coverage available, for the most affordable price.
As you can see, by adhering to a few of these simple recommendations you can ensure that you are not paying more for cosmetic insurance coverage then necessary. It is equally important to work with a qualified insurance broker with a specialization in your industry as he or she can help you determine the insurance program that would best suit your exposures. Having an extensive knowledge and understanding of your industry is crucial in order to construct a clear, concise, risk management program that will both protect your company and keep insurance costs to a minimum.
Kenneth C. Hegel Jr.
Cosmetic Insurance Services