In the movie Apollo 13, Gene Kranz is the flight director for the Apollo 13 spacecraft and it just had an accident. His staff are flying around, almost in a panic, when he says: "Let's work the problem, people. Let's not make things worse by guessing." Whether he said it or not doesn't matter, it's true.
Shelter in place. Whether your business is closed, severly impacted or even booming, the COVID-19 crisis has affected every business and EVERY business has had to make changes.
From a financial perspective, the government is stepping in with the Cares Act, which is to provide stimulus and relief. Businesses have been trying to make cuts to save money wherever possible. When it comes to insurance, there is right way and a wrong way to do it. Let's look at ways to save without making the problem worse.
Cancelling your coverages should be the last thing that you do if you are planning on reopening. An insured loss history that shows an excellent track record helps businesses get better rates. If you create a gap in coverage, that experience goes away. Putting coverage back in place could take time and it could cost as much as 30% more. Follow these steps FIRST to save during the shutdowns so that you can be prepared to jump back in as soon as possible.
1. Commercial General Liability is often rated off of sales of the business. If you are not selling, you are not incurring more liability costs. You might still be making payments for the DEPOSIT, therefore, we can look at endorsing the sales figure lower on the policy. These policies will all audit at the end of the period so it will either adjust then, or we can adjust it after business starts again.
2. The same method works for Workers Compensation Insurance, except using your payroll. If you aren't paying employees, then you are not incurring additional insurance costs. You can endorse the policy payroll lower so the deposit is smaller, lowering your payment. Also, there are companies that offer pay-as-you-go solutions that allow you to pay only on what work is done during the month. If there is no work, you don't pay anything.
3. We generally do not recommend removing vehicles from Commercial Auto policies due to the issues that can be caused with the DMV, lenders and DOT/FMCSA, however, if you are going to idle vehicles and can remove them from the policy, make sure you cancel the registration with the state, placard or disable the vehicle so it can not be operated until it is registered and insured, and make sure it's protected if you remove the comprehensive coverage. Keep at least 1 vehicle on the policy to make sure it stays inforce.
4. Review your Property and Business Income policies to make sure they are accruate and currently valued. Stocking levels have changed. Work from home has taken a lot of equipment off premises. Changes to business model have altered how to evaluate business income coverage. There can be savings found with proper values, however, make sure you are properly insured.
Give us a call at 770-487-8310, to review your options. Individual companies are waiving late fees and moratoriums on non-payment cancellations. Whether you are a client or not, we will come up with the right game plan to whether the storm.
Just as in Apollo 13, there are those that are saying things will never be the same again. "...could be the worst disaster [we] have ever experienced." I am with Gene Kranz here as well: "With all due respect, sir, I believe this is going to be our finest hour."
Ken Wilcox, CLCS - Viall Insurance Agency