What Drives Insurance Premiums?


Once a year we have to write a dreaded check to our insurance agent for insurance coverage. In my past article about the 4 Cs of insurance , I introduced that one of the Cs is cost. In the insurance world, we refer to the cost of insurance as the premium. Have you ever wondered how insurance companies come up with the premium amount for the coverage you purchase? When I attend the various restoration and cleaning industry conferences, I like to ask, “What is one thing you dislike about insurance?” I’ve heard a handful of interesting responses over the past 10 years, to say the least, but the most common response is that the cost of insurance is too high.

Contractors are not alone in this sentiment; I’ve never met anyone who has felt that they’re not paying enough for their insurance. However, like taxes, the cost of insurance is simply another one of those necessities in life.

Perhaps getting a better understanding of how insurance companies come up with the premiums they charge can make this pill a little easier to swallow. The determination of risk by the insurance company, also known as rating, is the process of how underwriters decide on the premium to charge for the insurance coverage being offered. The determination criteria vary by the type of insurance coverage offered. For example, an auto policy would have different criteria than a General Liability policy or property insurance; however, there are some similarities.

Insurance is a costly but necessary business expense. Read on to find out what factors are impacting the cost of your insurance premiums.

Four Factors of Insurance Premiums

By Kari Dybdahl



Green Cleaning is NOT Risk-Free

July 10th, 2019 : David Dybdahl & Aaron Millonzi

Green Cleaning is NOT Risk-Free

As the green cleaning trend ramps up, I’m sure many of you are considering implementing this as a service offered by your company. It seems like a no-brainer. Provide something people want and do good for the planet at the same by using more environmentally-friendly products and procedures. But these aren’t the only environmental products you need to purchase for your business to properly and safely operate as a green restoration, remediation, and cleaning professional. You also need to buy an environmental insurance product called Contractor’s Environmental Liability insurance.

What is Contractor’s Environmental Liability (CEL) insurance and why do you need it? CEL insurance, commonly referred to as Contractor’s Pollution Liability (CPL) insurance coverage, is a special type of liability coverage, similar to your Commercial General Liability (GL) coverage but also quite different. CEL coverage responds to claims or lawsuits against your company for bodily injury, property damage, or clean-up costs resulting from a pollution condition arising out of your work. It will also provide coverage for defense costs incurred for defending your business in court in the event of a claim or lawsuit against you. Essentially, it provides protection for you and your business if a customer or another third party comes after you for damages that were caused by a contaminant that they claim arose out of the work you did.

Why Insurance is the Most Logical Form
of Financial Assurance For
Compensatory Mitigation Projects

By David Dybdahl

Read The Full Article


In my work as an insurance consultant for various governmental entities, I have participated in a few Proof of Financial Responsibility evaluation projects. A couple of times it was a project post-mortem to figure out why a financial assurance requirement was a failure in practice.  A common denominator in all of those projects was the financial assurance mechanism needed to be:

  • Reliable as a source of contingent future funding,
  • Totally independent from the financial fortunes of the regulated party,
  • Cost effective, and
  • Supportive of the regulated community.

The financial assurance requirements in wetland mitigation work share these primary objectives.

However, in practice regulators often work in ways that undermine achieving one or more of these objectives. Nowhere is this more evident than in the use of the insurance mechanism as proof of financial responsibility in wetland mitigation projects.  I doubt if anyone set out to create significant obstacles for the use of insurance for wetland financial assurance; it just turned out that way, usually as a result of false assumptions and lack of information on insurance custom and practice in the regulator community.

Pollution Exclusions in Insurance Contracts

Avoiding Confusion and Litigation By David Dybdahl
May 2019

This article was originally published in the Spring 2019 issue of Insights: A Professional Journal by the CPCU Society and is shared with permission from The Institutes CPCU Society. © The Society For Chartered Property Casualty Underwriters. All rights reserved. www.CPCUSociety.org


“The most common environmental risks arise from water intrusion in the built environment.”

Avoiding Confusion and Litigation

Pollution Exclusions in Insurance Contracts

This article sheds light on pollution exclusions, limited
coverage give-backs, and the resulting coverage gaps that far
too often lead to unnecessary coverage litigation. It shares
the history of pollution exclusions and exposes the inherent
flaws with limited coverage give-backs for contamination
losses. Readers will gain perspective on pollution exclusions
that are often ignored, which needlessly harms policyholders,
who should know that reliable coverage solutions are readily
available in the environmental insurance marketplace.

Pollution exclusions have created historic levels of insurance litigation.
Coverage litigation usually occurs when the buyer and seller of an insurance policy have different ideas of how coverage should work in a claims situation. Accurate labeling of pollution exclusions in insurance contracts and the use of appropriate forms of environmental insurance policies in insurance program designs would likely avert a lot of coverage litigation for pollution and contamination losses.
Specifically, most such litigation could be avoided if insurance practitioners followed a two-step process when designing insurance programs

  Read the Full Aritcle HERE


By: Kari Dybdahl

April 2019

Biohazard Work: New Opportunities, New Risks.

With the new ANSI/IICRC S540-2017 Standard for Trauma and Crime Scene Cleanup, more and more restoration contractors are capitalizing on the opportunity to train and take on these complex projects. When you are going to a new job, the question, “Do I have the right insurance?” probably doesn’t come to mind. You are not alone, and that is why we have Kari’s Korner to answer any lingering insurance questions out there. So, let’s find out: Do you have proper trauma and crime scene cleanup insurance?

  Read More Kari’s Korner HERE

Let’s say you do purchase a Contractors Pollution Liability policy. Did you know there are over 144 policy variations to a CPL policy? I didn’t either until I attended the Society of Environmental Insurance Professionals conference. It is safe to say not all pollution policies are the same. Since they were created for contractors cleaning up nuclear waste facilities and Superfund sites, the policy needs to be significantly altered for fire and water restoration contractors, mold remediators, and trauma and crime scene cleanup professionals.

There are over 144 policy variations to a CPL policy


By: David Dybdahl

There are significant changes in the insurance marketplace in store for restoration contractors in 2019. These changes will adversely affect many restoration firms, some a lot more than others. The good news is if you know the changes are coming, you should be able to avoid significant insurance availability issues and/or premium increases in the coming years. In this article, I will detail the changes underfoot in the insurance market for restoration firms and lay out the options to get ahead of the impending insurance cost and availability problems many restoration firms will face over the next few years.

Here is what the future holds in 2019:

  1. Material insurance rate increases for General Liability and Environmental Insurance.
  2. Tighter insurance requirements and verification of compliance.
  3. Customer requests for higher limits of liability.

All of this will happen in the face of decreasing availability of business insurance options as history repeats itself. Insurance companies that sold policies for too little premium over the past few years are running from the restoration class of business the same way they did in 2002 when the “toxic” mold insurance crisis made finding liability insurance difficult.

A lot of the change in the insurance marketplace for restoration contractors is due to poor loss ratios. A loss ratio is calculated by taking the total money paid out for claims divided by the total dollars contractors paid for their insurance. When it comes to restoration contractors, insurance companies have paid out much more for losses than anticipated; in fact, some paid more in claims expenses than they actually brought in in premium dollars.

Read More HERE


Brownfields by their very definition involve properties with environmental liability risk:
A brownfield is a property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant. USEPA
The definition is broad and includes properties that may have contamination. It is a generally accepted principle that reusing a brownfield is preferable to developing greenspace for a host of reasons, but the top four include:

“We understand that these are economic development ventures and that risk costs must be managed and defined to effectuate a financially successful project.”



As a carpet cleaner, you would think your commercial insurance policy would cover damage to the work you do and mistakes that might happen. Think again.


by: Kari Dybdahl

Attention all carpet cleaners!

The carpet, rugs, and upholstery you work on may not be covered by your general liability policy in the way that you may think…

Most of you, I’m sure, are familiar with general liability (GL) insurance coverage as you carry it to protect your business in the event of some kind of claim for damages resulting from your operations. GL policies are designed to respond to claims for bodily injury or property damage in a general sense; essentially, someone getting hurt or something being damaged resulting form your operations.

However, exclusions in GL policies limit or restrict coverage. The exclusion of interest in this post is the Damage to Your Work exclusion. I won’t bore you with the full policy legalese (although if you’re interested, I’d be happy to). The gist is, due to that exclusion, your GL insurance would not apply to property damage to “your work” arising out of your operations. Read the Full Article.

4 Cs of Insurance Purchasing

Use these tips to ensure your company is safeguarded against the risks of your work.

Get Started


4 Cs of Insurance Purchasing

When I speak with cleaning and restoration professionals one of the first questions I ask is, “What do you dislike most about insurance?” It’s a loaded question, but it really does help me figure out what you value about insurance and what I can do to fulfill that.

Most people respond that their insurance agents don’t know what they do for a living. Restoration contractors especially say they must explain to their insurance agents — every renewal — that they are neither janitors nor carpet cleaners in order to have that taken off their liability policies. Does this sound familiar to you?

The next question I ask is, “What do you like the most about insurance?” The response I generally receive is that they like how it is an extra level of protection for their businesses. This is certainly accurate. The overall function of insurance is to provide the insured with financial assurance for the liabilities they take on and to be there when something catastrophic happens to help avoid bankruptcy or closing your business.

In my day-to-day work, I often hear that insurance costs too much. This could be true as well. Insurance is transferring the risks you take on to someone else in exchange for a premium. The premium charged should be minimal to the overall risk you take on.

Let’s say you are doing a Category 3 water job at a large commercial building valued at $15 million. If the job were to go wrong, what is the worst that could happen? Say you burn the building down, causing $15 million in damages; meanwhile, your annual liability premiums are $20,000. In this case, $20,000 is relatively minimal to the $15million dollars of risk you took on.

In this article, I will help solve the challenge of saving premium dollars while maintaining adequate insurance for your business. The simple way to do this is to follow the “four Cs of insurance purchasing,” which you should follow when looking over your insurance program. Three of the Cs affect you 365 days out of the year. One C will affect you only one day out of the year. Can you guess which C that is?

Kari Dybdahl : Kari@armr.net

“Insurance purchasing should not be stressful for you as the insurance buyer. If you feel like something is off with your insurance, it probably is. Ignoring the problem won’t fix it.”