How to choose best type of insurance coverage for a business or company – Radio Guesting August 10, 2020

How to choose best type of insurance coverage for a business or company – Radio Guesting August 10, 2020

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Welcome back everyone. My next guest has also been on the air with me before. I have Troy Froderman and he is one of the principals of FR Law Group. You’re a local law firm here in.. well, you’re located where?

Seventh Street in Camelback essentially.

So okay and but you specialize in a different type of area. And when I first met you I didn’t even know, explain it, tell everybody, welcome to the show. Tell everybody a little bit about yourself and what you do.

Thank you, Carol. So I’ve been practicing law in Phoenix for over 30 years. And my particular practice emphasizes on insurance recovery for businesses. So just like you and I have our own insurance policies either for auto or homeowners, businesses also have their own lines of insurance, ranging from everything from general liability to cyber liability to risk management and to errors and omissions. The number of lines for businesses for insurance probably exceeds over 45 or 50.

We are live on Facebook, so hi to everybody out there, like us and follow us. How important is it for someone to first of all have insurance, you know, because sometimes we don’t have it, they don’t think they need it. But then, of course, something happens and not only the see, they see that they need the insurance, but they need someone like you.

Right. So one of the things that just like you and I don’t like paying premiums on insurance policies, businesses don’t really enjoy it either obviously. And it’s usually one of those things, that’s the equivalent of thinking about taxes. It’s a necessary evil in order to do business. So what we find and I’ve experienced over the last 30 years is that when it comes to purchasing insurance, a business no matter how sophisticated it is, doesn’t apply the same amount of energy and force and concentration on purchasing policies as it does its ordinary business transactions. So it’s very important that you have a good relationship with an insurance broker. And that insurance broker, you want somebody who’s experienced, somebody who isn’t attached to one insurance company. So typically what will happen is, you may go to an insurance broker, an insurance agent, and they’re the designated agent for, let’s just say Acme Insurance company. Well, they have very little incentive to shop the market for you to get the best premium with the best deductible with the most coverage. So one of the things that we counsel our clients on is when you are out of procuring insurance, make certain that your broker is actually doing their own RFPs request for proposals with various insurance companies, you want at least to have three bids in from different or quotes from insurance carriers. So that you’re, you’re making certain just like you do with any important decision for your business, that you’re getting the best bang for your buck.

Right. And that’s a good point. I didn’t know that. And even someone like me, I’m a business owner. And I needed to get it. And it’s something that if you don’t think about these things, this is what I love about the show the most is that all of this information that they hear, this is something that you might hear and say, You know what, I really should do something like that. And when they do, what is the best type then of insurance is right for that company?

Well, it does. It depends on the type of business that you’re in. Obviously, if you’re a large transportation company, you need the best possible transportation policies in place. And there are certain endorsements and coverages that Arizona recognizes that say, for example, maybe California doesn’t. So you’ve got to make certain that the type of policy that you’re needing fits the best rating in the state that you’re located in. And for example, general liability policies, those are the most basic policies that every business has. It covers you, for any type of third party liability for property damage or bodily injury. There are hundreds of available options in the market. Sometimes the market’s hard, sometimes it’s soft. So what you should be doing is if, if you’re a small business, you probably don’t have somebody in a risk management position, other than somebody who’s short, you know, drew the short straw, and they have to do that role for the company. If you’re a medium sized company or a larger company, you likely do have somebody who’s a risk manager, who knows the ins and outs of having to purchase insurance policies. It’s critically important that you look at what your specific risks are, because you’re, if you’re a transportation company, people like that, your risks are different than a mining company. Absolutely. So that you want to make certain and I think I told you this last time, but the practice of law has evolved over the last number of years, and very few lawyers are generalists. You don’t, you wouldn’t go to me to have you or me to prepare your estate planning nor would you come to me for a medical malpractice claim. Well, certain brokers and certain agencies have their own specialization. I think that the one of the largest and well known insurance companies in Arizona deals with workers compensation. So if you’re going to apply for workers compensation coverage, what you have to have in Arizona, there are really two carriers that you would go to. You wouldn’t go to those carriers, for example, if you’re looking for errors and omissions. So you’ve got to be very careful about your selection. And one of the things I think you’re probably taking away from this is that I’m not citing any statutes. I’m not citing case law. I’m not citing precedent. A lot of this is common sense that our firm brings to the table in helping our clients make the right decisions.

Well, but also what brings you to the table is, it’s always God forbid that something happens, obviously. And but we’re living in a world where a lot happens in my life. And I told you this before, I’ve been doing this business now for 13 years. And in my life, I would have never thought that taping someone that even someone that brought something in here, knowing it, would cause an issue. And now I had to change the way I do business. And God forbid I might have had to call you if I needed you and I would have.

Well, yeah, some of the examples that I think of, I’ll make a quick story here. I have a client who manufactures engines for large equipment. And they have a routine, a business of a.. they actually customize the engine. So they’re not gonna to customize the engine until the customer has paid for it. Because why would they go to the expense of doing that otherwise, right? Well, one of the products that was adapted to, ended up having some issues with it, and they had purchased insurance for that type of a product recall, the insurance carrier in that specific instance denied the claim, because they argued that my client owned the equipment and therefore, it wasn’t a third party liability. So these are the type, the nuances that we end up encountering.

In today’s world we do, because there’s somebody that’s gonna find something, some way to come up. And we’re going to talk a little bit about, you know, the cyber of.. that kind of stuff that is going on right now too so important. Before we go to a break, I want to give out some information about you. Because yes, it’s wonderful that you are telling them about how what they should do to protect themselves and make sure that they have the right insurance and all that. But they need to understand where you come into that, into that. Okay? And we’re going to talk about that. You’re rated with the Better Business Bureau. You are here, right here across from Xavier High School, but you help anyone you said nationwide.

Our practice on insurance coverage is a national practice.

So, it’s a national practice, you do free consultations with people?

We do. And I think I told you last time that for the types of cases that we monitor, they’re really more of the bet the company case. If you’re a smaller firm, with a smaller issue, and it’s really not affecting your bottom line. We’ll still do a free consultation and try to help you in that regard but, we’re really looking at those very complicated coverage issues that go beyond just the normal negotiation.

But it’s all about the case. Right? It is all about the case. So if you need to talk to them, it’s not just a little something you might need, but make sure that you are taken care of, they can go ahead and do a free consultation for you. Your website is and the phone number to call them direct is 602-566-7425. I would say write that number down because you never know when you’re going to need it. We’re going to go to a break and when we come back, we’re going to talk further, especially to you people out there during the break. We’re going to talk to you in Facebook land, okay, so again, check them out on their website is, their phone number again, it’s 602-566-7425 hang tight, we’re gonna be back in just a minute.

So, welcome back everyone. And we’re talking with Troy Froderman and he’s one of the principals of FR Law Group. I love talking about this kind of stuff. We have a lot of business owners that listen to this station because it’s the kind of station that it is, again, the information that you hear here, maybe it’s something that you maybe know somebody that’s dealing with something like this, tell them about it. That’s what it’s all about. That’s what networking is all about. When we were at the break, you were talking a little bit about, talk a little bit about the story that you were talking about. So they can hear something super important for people to hear.

Sure. So almost every business that I’m aware of does take credit cards for payments. And pretty much every business pays a service charge for that credit credit card transaction. If you become subject to somebody hacking into your business, they can compromise the credit card information for your customers. I’ve had that happen on a couple of occasions, had one where it was a national chain, where there was a hack, and they had that particular chain had to go back and reimburse MasterCard in American Express for having the reissue credit cards to thousands of customers. Now there is a policy that was in place that this company had. It was a cyber liability policy that did cover certain cyber attacks. But I think as I mentioned to you the last time I was here, that policy like every other insurance policy, maybe tens, if not multiple tens of pages in length. That portion of the policy that provides protection is two paragraphs. The rest is primarily exclusions. Then there’s some endorsements and the endorsements eat up some of the exclusions.

There’s always exclusions. Yes. And those exclusions is somewhere where you would come in, correct because, you know, I mean, I, I hate those things.

But here’s a crazy thing that most people don’t really think about and but you think about it your own personal affairs. So the way that businesses purchase policies are on renewals, and then when they, when they get the renewed policy, it may be up to four to five to six months, before they actually get a physical copy of the entirety of the policy. Let’s think about that. By the time you’ve received the physical policy, you’re already starting the renewal process again. Right. So very few businesses, or at least a number of businesses, never review what they purchased. And so, for example, in that cyber liability attack, that’s where we came in. The insurance company had denied the claim on a specific exclusion. We were then able to show them through a lot of legal arguments, that one of the endorsements eroded the exclusion that they were relying on, or at least a good portion of it. So the client was happy. The insurance company accepted the responsibility. But, you know, most people like to thank you know, the whole thing about the good, good hands people. Insurance companies aren’t in the business of making a profit and so if they paid out on every claim without any ifs, ands, or buts, then we wouldn’t have insurance. So they have a responsibility to their shareholders. I, as the lawyer for the policyholder, have a responsibility to the policyholder. Sure. There’s one other quick example that I think might resonate with your audience. And that’s, you know the commerce, e-commerce is evolving every day. And so one of the things that we have been involved in is where a client transacts business by wires to its various customers, or vendors. It’s not uncommon for those wires to be intercepted, or for somebody to set up a fake account with a fake email, and email our clients say, yours $150,000 for this service. The client pays the $150,000 and discovers quickly or maybe not quickly but discovers that they had been defrauded. And then the real vendor steps up and says, well, that’s a shame. But you still owe me the $150,000. There are policies that do cover that type of fraudulent transaction. They’re evolving, it’s very important that you understand what’s covered. In some instances, you may have a million dollars in coverage, but you may have a $500,000 deductible. And so it’s very complicated. These are the types of things that an ice cream store doesn’t want to think about. They want to have their protection, and then they want to sell their product. And so that’s where we come in, because that’s what we focus on.

So I was just gonna ask you, somebody listening in there, that ice cream store owner or what whoever, and they’re sitting there, wow, you know, I haven’t dusted mine off in a long time. And I am wondering if I should make sure that I’m covered correctly. Could they call you and talk to you about that?

Sure. I’d be happy to answer their questions.

Every policy can be different. And that’s because there are endorsements that agents and brokers negotiate for broader coverage, or sometimes the carrier insists on it to restrict coverage. If there’s some pattern or history of the business that they’re concerned with.

What about second opinions? What about someone who might be in the midst of something right now? Can they talk to you?

Sure. Now, obviously, we have to be careful about attorney client privilege issues. But it’s certainly much like diagnosis from a medical doctor, who is helpful to get a second opinion.

Now, it always is. They’re rated with the Better Business Bureau, they’re going to do a consultation for you for free. The number to call is 6025667425, the website is And they work nationwide even though they’re here locally. You’ve been doing this for 31 years.

Yeah. Something must be wrong with me. But I enjoy it. It’s a very robust bar in terms of the lawyers who do this, you either are on the defense side, always representing the carriers, or you’re always representing the policyholders.

Quick question, and answer quickly for me. In the last, because you’ve been doing it for 31 years and we’ve always had to have insurance claims, we’ve always had people that take advantage of certain things, too. But have you seen that rise quite a bit in the last, let’s say 10 years, five years?

Well, that’s true of everything in our society, from my perspective. But particularly in the area of the law, there are on both sides of the aisle, I believe, claims that are submitted that are really stretching the intent of the policy. And then there are carriers who take very intransigent and unreasonable positions, when in fact, the policyholder was just looking for what it purchased.

But also a lot of people getting burned.

Oh, a lot of people, particularly individuals as opposed to the businesses.

And don’t try to do it yourself? No. And have somebody who’s a competent, very experienced attorney, especially when it comes to something like this. You have to make sure that you get the right person. They’ve been doing it for 31 years, you can call him direct 602-566-7425. The various levels of insurance really quickly, how do they apply?

So you have primary insurance and then depending on your business, you likely will have excess policies over that. Those are called towers. So you may have a primary policy that covers you that normally is a million dollars. And then on top of that, depending on your risk exposure, it can go anywhere from an additional 2 million to 10 million, large transportation companies 50 to 100 million. They’re also umbrella and policies that apply to various different lines of coverage. So it can get not necessarily complicated but you have to follow the fortunes of those various policies.

And what’s the main thing that you do need to do first of all, is get yourself covered. Number one, get you covered correctly. And also to make sure that you get those out, look at them, especially when he says like, he’ll say, you have gotten it and you’re gonna renew usually, already you brought it ready to renew when you have just gotten your paperwork.

Yeah, and correct. And one of the things that I try to advise clients beforehand, but oftentimes, it’s a new client coming to us will come in and say, well, I’ve got $2 million in coverage. I don’t even know why the insurance company is hassling me on this, I, you know, I can say well, because they’re, here’s what they’re reading from the policy that you purchased. And so we need to be in a position to respond to them to explain why there remains coverage, despite what they’re pointing out to.

But also to make sure even beforehand that it’s done correctly.

Well, I’d like to say that people come to us before that, but

They don’t, you always come after the fact and now unfortunately, but like like me, even though I don’t have a big huge corporation, am a little person like me would have needed someone like you because I would want, would have wanted to make sure because that person could have tried to get you know, they see and they see all that when people can get really hurt you got to make sure that you don’t.

Right, a $20,000 loss to a business can be the equivalent of a $200 million loss to a large conglomeration, so it really does matter.

They’ve been around for 31 years. Their website is, they’re rated with the Better Business Bureau. They are located right here across from Xavier High School, but they can help anyone nationwide. What are your final words today?

Review your policies. Be careful about what you’re buying and make sure that your risk is fully covered.

And if you don’t know how to read them, talk to them, they can even help you, maybe on something that you might not understand. That phone number to call is 6025667425, they’ll do a free consultation for you folks. We live in a different world today than ever before, but it’s always been in this situation, especially when it comes to business and somehow people do need to have to make sure that they are covered, make sure you are covered correctly. And if you don’t understand it, talk to somebody who does know. They have 31 years of experience, if something happens to you, you want to make sure you have a competent and extremely experienced attorney such as them. Again that number to call them is 6025667425, their website is, rated with the Better Business Bureau and they’ll do a free consultation. Again, that number is 602-566-7425. And maybe it’s not you, maybe it’s someone that you know, tell them about it. That’s what networking is all about. We’re live on Facebook, we’re going to be sharing this show right afterwards for everybody. Again, call them guys that number is 602-566-7425. You never know if you need something like this. So write it down, check out their website, it’s or 602-566-7425.

But you should