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

WHEN INSURANCE COVERAGE MAY BE COMPLETELY WORTHLESS

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.

WHEN INSURANCE COVERAGE MAY BE COMPLETELY WORTHLESS

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.

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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.”

 

What ‘Your Work’ Means for a Restoration Contractor

As a restoration professional, you would think your commercial insurance policy would cover damage to the work you do and mistakes that might happen. That might not be the case.

 

By Kari Dybdahl

In the last “Kari’s Korner,” I wrote about what “your work” means for a carpet cleaner regarding insurance.

This month I am going to carry that same topic on to a restoration contractor. Many may be thinking “your work” would be the same for all trade contractors. However, when operations involve regulating the relative humidity within a structure, we in the insurance industry look at “your work” on a more macro scale than the one thing you were called to a job to work on.

Although the way we look at “your work” as a restoration contractor is a bit different from how we look at a carpet cleaner, the core concept remains the same. In general, “your work” is the thing you were called to work on. As a carpet cleaner “your work” is the carpet you were called to clean.

What would “your work” as a water extraction or restoration contractor dispatched to a flooded home be in the eyes of an insurance company? Well, “your work” is the thing you were called in to work on, which is bringing down the relative humidity in that entire home. One would say the whole home is “your work”!

The “your work” exclusions on your General Liability policy and Contractors Environmental Liability policy exclude coverage for property damage to “your work” arising out of your operations. In the case of a restoration contractor at a water-damaged home, “your work” applies to the entire home; in theory, you have no coverage for any damage to that home caused by your operations.

Imagine one of your dehumidifiers short-circuits and starts a fire, burning down the entire home. We would expect the “your work” exclusion to trigger, because the property damage to the home from the fire resulted from your operations. It would exclude coverage for the whole loss because “your work” was the entire home. Therefore, “your work” exclusions are especially deadly for restoration contractors.

The good news is solutions exist to fix this immense gap in coverage. There are wholesale insurance brokers specializing in your industry that can help.

 

Claim Frequency Kills | Part 2


How a few insurance claims can make your restoration company uninsurable.

Claim Frequency Kills | Part 2

How a few insurance claims can make your restoration company uninsurable.

Last month, we talked about the issue with claims frequency. However, I don’t want any of this information to scare you away from making a claim when you need to. In this article, you’ll find a list of situations that should always be reported as a claim. This is by no means an exhaustive list or a rulebook on what to report and what not to report. You should always reference your specific policy documents for conditions, duties, and requirements imposed on you as a policyholder and it’s a good idea to chat with your insurance agent on what to do. If you selected your insurance agent solely based on the cheapest coverage available in the marketplace, I would get an opinion from someone else on when to submit a claim under your insurance policies.

Read The Full Article HERE


By: David Dybdahl

 

Navigating the Complex World of Insurance


With custom-designed insurance policies, many of the cleaning and restoration industry’s insurance woes can be resolved.

READ MORE HERE

 

 

Let’s transport together back to 2003 when a court ordered Farmers Insurance to pay Melinda Ballard $32 million for a small water damage claim gone bad that resulted in toxic mold growth in her home.

Although the payout was eventually reduced to just over $4 million, the point still got across to insurance companies throughout the industry. Ballard is the number one person insurance companies love to hate. A 2003 article by The Austin Chronicle stated insurance companies use the Ballard case as ammunition against the fight of frivolous lawsuits.

What is particularly interesting about the Ballard case from the viewpoint of an insurance professional is that the claim originated from a small water damage loss. Due to the lack of urgency from the claims department, the small water leak turned into extensive mold growth. Instead of getting the water out as soon as possible, the claims adjuster wanted to investigate the loss, which took two months. Within those two months, the loss worsened and resulted in detrimental bodily injury to family members as well as an uninhabitable home.

A claim similar to the Ballard case could happen to any restoration contractor no matter the size of the firm or the job.

READ MORE HERE

Have you ever wondered why you are rated as a carpet cleaner on the declarations page of your commercial general liability policy even after you have told your insurance agent most your revenue is from water damage restoration?

By: Kari Dybdahl

Kari@armr.net

 

Claim: Frequency Kills: Part 1

How a few insurance claims can make your firm uninsurable

By: David Dybdahl | July 2018

When should you report a claim?

Here are little known facts in insurance:

What does this boil down to? Insurance Is Important! You need it to run your business as well as protect it!  With out it, you will be unable to get a majority of jobs and leave yourcompany open to loss that could bankrupt it! 

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Insurance Is Important! You need it to run your business as well as protect it!

6 Things to Know to Get Paid for Sewage Claims

By: David Dybdahl

A continuing conversation on getting paid, working with mortgage companies, and insurance dilemmas.

This is the third in a series of articles on how to get paid for insured restoration work. The first two articles focused on accelerating payments from insurance companies and from banks holding two party checks in escrow, mostly in homeowners insurance claims.

This article focuses on getting paid for water losses on commercial property. The writing is on the wall; it will become increasingly difficult to be fully paid for jobs involving a speck of mold/bacteria or Category 3 water in the future, if the property is not insured under a specially designed Environmental Impairment Liability (EIL) insurance policy. Restoration firms providing Emergency Response Plans to the commercial property owners and management firms in their area can cut the costs of this needed insurance by half.

Changes in claims payment practices combined with universal exclusions for restoration work involving fungi/mold/bacteria have created the situation where 99% of all commercial property owners are severely underinsured for any loss involving a speck of any type of mold or bacteria in any sequence in the job. Being underinsured creates problems in getting paid when a property owner is dependent upon insurance to pay for a loss.

The good news for remediators is 99% of claims adjusters do not know how to pay for claims when there is a sublimit on the policy for mold or bacteria-related losses. The result is uncovered claims for losses involving a speck of mold or bacteria have been routinely paid for the last 12 years. However, things are changing fast in the claims business. Today, there is a much higher chance that a remediator will be left holding the bag with a bad debt for the work performed for underinsured property owner or manager.

Here are six factors to consider to assure payment for mold or bacteria related (Category 3) water jobs:

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Getting Paid for a Commercial Sewage Loss

By: David Dybdahl January 2018

A continuing conversation on getting paid, working with mortgage companies, and insurance dilemmas.

In December, you read about six factors to consider to be sure you get paid for commercial category 3 water jobs. It was part of an ongoing conversation about a shift in coverage on these claims. While most insurance policies exclude coverage for cat 3 water, for decades they were paid out anyway by adjusters. Now, things are changing, and getting category 3 water jobs paid for is not so easy.

For unknown reasons, claims adjusters must have read the 12-year-old fungi and bacteria sublimits on property policies in 2016 and started pulling the trigger on denying claims under the sublimits of coverage.