General Liability vs. Professional Liability for Manufacturing Companies

    Most people have a good understanding of the needs for professional liability or errors and omissions insurance for the industries that provide the public with services. Lawyers need professional liability, Doctors need malpractice and insurance agents, engineers, computer consultants and stock brokers all need errors and omissions insurance. Likewise, there is a general consensus that if you are manufacturing, fabricating or assembling a product you need a commercial general liability policy which includes product liability. What a lot of risk managers, CFOs, owners of manufacturing companies and insurance agents for manufacturing companies fail to realize is their risk exposure for Professional Liability Insurance as a manufacturer of a product.

    Companies that manufacture technology tend to have a huge professional liability exposure, but most companies that manufacture a product whether it would be considered technology or not have the exposure as well. As the operator of Internet Risk Specialist I see technology companies all the time which should have this coverage. But at ALC Risk Solutions we deal with companies in all industries that manufacture, assemble and fabricate products whose liability extends past the general liability's products liability definition.

To fully understand the gap of coverage, you need to understand what the commercial general liability policy covers. A commercial general liability insurance policy general will cover the company for suits brought against the company for a number of things: Bodily Injury, Property Damage, Advertising Injury and Personal Injury. As you can see, there is no coverage listed in there for "Financial Damage".

Let's say you manufacture computer servers. You have a product liability policy. So if the server catches on fire and causes the loss of life, the loss of property or a bodily injury to a customer, your policy will protect you. But what if that server catches on fire at a stock broker's office right after a client put in an order to sell $1,000,000 worth of stock which was about to tank and be worthless. Who does the stock broker's client sue? Who does the stock broker blame? What if it really was an error or omission on your company's part which caused the server to catch on fire?

Think about the product that your company manufactures. Does your product enable others to make money? Would your product failing cause your customers to not make money? If your product was to fail, explode, implode or malfunction due to an error or omission, or perceived error or omission on your part, what will happen? If you only have a product liability policy, than you are partially self-insured.

Some of you may be saying, "My carrier offered me a professional liability quote, and it was more than my general liability quote". Well your carrier has been insuring you for a few years now and they probably have a decent understanding of your business. If they charge you $2,000 for products liability and $4,000 for professional liability, maybe that's because they know that your professional liability exposure is two times as great as your product liability exposure. It might be even more than twice as great, but they know you're not going to buy it if it's that expensive so the insurance company is taking a little risk with providing the quote.

So now your thinking, "Great I have this huge exposure, revenues are down, insurance was too expensive last year, how can I afford to buy more coverage?" Well, the good thing for you as a manufacturing company is that this is a soft insurance market. Insurance companies are stepping over each other, and some are even taking underwriting losses to write accounts and get them on the books. So as a business owner, CFO, risk manager, this is a good time to shop around your insurance, get the General Liability down, scrimp and save on the workers compensation, beat down the property insurance quote and apply the savings to the professional liability insurance. If you're agent can't do it, give me a call. I am Andy Cohn with ALC Risk Solutions in Miami, FL. You can contact me by email at acohn@alcrisk.com or by phone at (786) 382-6833.

Saving Money on Your Cargo Insurance

    Writing any property and casualty insurance in Miami is always going to be a little trickier than other parts of the United States. Miami has a higher exposure to natural and human hazards including, but not limited to, hurricanes, tornadoes, theft, vandalism and fire. This makes the cost of insurance, and therefore, the cost of doing Business in Miami a little tougher. At ALC Risk Soltuions, we focus on writing insurance for niche markets. We have an agent that focuses on social services and another on health services and another on aviation risks. I specialize in writing insurance for the technology and the marine industry. A major part of the marine industry is Cargo Insurance. ALC Risk Soltuions is also an independent agency. This means that we do not have one single insurance company that we go to when we are looking to write your Cargo Insurance Policy, we go to many different companies that we know have specialized departments for dealing with Cargo Insurance.

    When you are looking at Cargo Insurance the main thing to be concerned about is quality of the company. If the agent does not provide you with the A.M. Best rating you can find it by going to www.ambest.com. Another concern company's face regarding cargo insurance is the cost. But, this is where you have to be careful. You should look at the upfront premium, but more importantly, you should be looking at the rate, and whether the policy is auditable or flat. An "Auditable" policy means that at the end of the year the company will ask you for a report of all of the shipments you made last year. If you went over what you projected, they will charge you additional premium based on the rate that was quoted.

    For example, you project on your application you are going to ship $10,000,000 worth of computers from Miami to Columbia. They give you a rate of $0.25 per $100 shipped. Upfront you are charged a premium which is minimum and deposit of $25,000. At the end of the year, you did better than expected, and you shipped $15,000,000. The extra $5,000,000 will be charged at a rate of $0.25 per $100. You know owe an additional premium of $12,500.

    If you had projected that you would've shipped $15,000,000, your rate might have been $0.20 per $100. This would've been a minimum and deposit of $30,000 and you would've saved $7,500 that year.

    Non-auditable policies are harder to find, however, at ALC Risk Soltuions, we do have access to a market that is writing Flat, or Non-auditable policies. However, these policies are only for companies which are shipping one type of good. So, if you are only shipping fitness equipment, or only shipping automobile parts, or only shipping kitchen appliances, ect, you may qualify for a Flat policy. This means that if you project $10,000,000 and ship $15,000,000 you do not get hit with an audit, you just have to adjust your policy accordingly next year.

    There are many other ways to save money on your Cargo Insurance policy. For a free consultation with me, Andrew Cohn of ALC Risk Soltuions in Miami, FL, please email me acohn@alcrisk.com or call (786) 382-6833. ALC Risk Soltuions is an independent insurance agency specializing in writing insurance for niche industries including technology, marine, cargo, manufacturing, health services, non-profits, social services and the food industry.

Laser Sharp Networking

The key to successful networking is being laser sharp when you are meeting with your groups. The groups you're in are your sales team, and you are their salesperson. It's good for them to have a general idea of what you do, but it's even better if they know specifically the name of the person and company you're looking to meet. Every meeting you should look up the names of a few companies you want to meet. Find the name of the company, a general idea of what they do, and the name of the person you need to contact. You can find this by using the division of corporation's website. You can also use LinkedIn, to find out in advance if they are on Linkedin, and if you know anyone in their network.

For example, I specialize in writing insurance for technology companies and marine companies. This week I am looking for a referral to the owner of Axerra, Inc. and Da Vinci Systems, LLC both are in Palm Beach County. That is my laser sharp commercial.

You should also change things up. If every meeting I only talked about technology insurance, eventually, people wouldn't think of me as the commercial insurance agent, they would think of me as the tech guy. But, I don't just want technology companies to insure, I want other kinds of business as well. So, talk I'll talk about technology and marine businesses 70% and other businesses 30%. Everyone still knows I specialize in technology and marine, but I'm able to talk about new markets.

A recent example of this is that our firm is now representing a company that only insures public entities. At my meeting this morning I mentioned that I was looking to meet with the people in charge at local municipalities and I got a great response.

Another good idea is to paint a picture for your sale steam. If you don't have a specific company you're looking, describe a recent client. But use great detail. You don't have to give the name and address, but give every other detail. Make them really understand what an ideal client for you look like.

Lastly, people ask a lot of times to tell them how they can send me business at a networking group. I sometimes here people answer this buying giving the same useless response, "I work with yada yada yada with over 10 employees". Next time someone asks you this, tell them a few buzz words that will help them pass you a referral. For me, buzz words would be technology, manufacturing, marine, workers comp, products liability, errors and omissions, professional liability, internet liability, cyber liability, ect.

In conclusion, make sure your sales team knows how to send you business. Keep changing up your commercials and be laser sharp.

The Art of Small Talk

This morning's educational minute was a summary of Keith Farrazzi's chapter in his book, Never Eat Alone, The Art of Small Talk. In this chapter he talks about how important it is to be a good conversationalist when you are at a business networking meeting. As a commercial insurance agent with Wilson, Washburn & Forster and head Florida Technology Insurance I constantly am attending networking events. I find these types very useful in accomplishing my goals at these events.

Farrazzi talks about the main things you need to do:

• First, give the person a hearty smile. It says, I'm approachable
  
• Maintain a good balance of eye contact. 100% = Creepy. Less than 70% says that you are disinterested and rude
  
• Unfold your arms, and relax
  
• Nod your head and lean in – but not too much where you are invading personal space
  
• Lastly, touch people. Touching is a powerful act. Just a little grab on the elbow when you shake hands breaks the gap.
  

Another aspect of the conversation Farrazzi talks about is developing conversational currency. He recommends doing this by keeping up on current events and cultivate your knowledge of niche interests. This includes specific hobbies like cooking, wine, sports, travel, collectibles, movies, music, ect.

Lastly, Farrrazzi warns not to monopolize the conversation, "share a passion, don't preach it".