Cut Your Costs – Here’s a Foolproof Way
Kathy Phillips is the “go to” expert on parking facility insurance. She is a featured speaker at the Parking Industry Exhibition to be held March 30 through April 2 in Chicago. This article is a “taste” of what she will present. Editor
Do you know what factors most affect the cost of insurance for your parking company? General economic conditions and trends do, of course … as does the health of the parking industry as a whole. However, the primary contributing factor to higher insurance rates for parking companies is their loss history.
Addressing what insurance carriers look for when they’re underwriting insurance for your kind of business is the key to understanding how to control your insurance costs. Managing your risk more effectively to reduce the frequency and severity of claims on a proactive basis puts you in control of your insurance program.
There are four key areas that are recommended for your continuous review: (1) hiring and training employees, (2) premises control and maintenance, (3) written policies and procedures, and (4) contracts wording.
Insurers evaluating a parking company for underwriting purposes determine how good a risk it is by evaluating these key areas of importance.
Specifically, they are looking for companies that have an acceptable loss history, show evidence of well-controlled and well-maintained premises, have written policies and procedures that reflect proper hiring and employee training practices, and use appropriately worded contractual agreements.
As a result, what it all boils down to is severity and frequency of claims. Insurers accept the fact that the unforeseen happens and that, when it does, it can be catastrophic. Without risks of this nature, no one would need insurance.
Severity. A “severe” loss is the result of something unforeseen and, therefore, difficult to anticipate, something that is truly an “accident.” For example, a sympathetic jury might award a large sum of money to a claimant even though the evidence clearly shows that the liability was not the insured’s. Another example might be an out-of-the-ordinary occurrence that results in a claim that is unlikely to happen again.
Frequency. A history of frequent losses, on the other hand, usually reflects poor management. Such claims are typically preventable; usually all that’s required is keeping premises properly maintained, hiring qualified employees, and training employees adequately and regularly.
It might surprise you to know that an insurer might willingly write an account that has one multimillion-dollar claim, yet reject another that has had many small claims. The insurance company’s decision would have a lot to do with the types of claims a parking company’s loss history shows, of course. But that insurer might still consider a parking operation to be an acceptable risk even when its history shows a severe claim, if that incident had been difficult to anticipate and the problem that caused it has since been corrected.
Hiring and training employees
Insurers evaluate the claims contained in a parking company’s loss history to determine the quality of that company’s hiring and training practices. That’s because the nature and types of claims can indicate a couple of things, such as the parking company doesn’t hire unqualified employees and/or the parking company doesn’t train its employees correctly or adequately.
Premises control and maintenance
Insurers look for signs of indifference to premises hazards, including poorly maintained surfaces, inadequate lighting, blind corners, and inadequate signage. The best way to practice adequate premises control and maintenance is to conduct frequent walk-through inspections, properly document problems you discover, and notify the owner of the lot or building immediately.
Insurers will review the contractual agreements you have with your clients to see if those documents contain the right kind of wording. Far too often parking companies get pulled into and are forced to pay claims due to improper contractual wording.
Kathy Phillips is a vice president at Alliant Insurance Services. She can be reached at email@example.com.