It’s Law – Episode 10: What should you know about your insurance portfolio? Dec 19, 2023

It’s Law – Episode 10: What should you know about your insurance portfolio? Dec 19, 2023

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Hello, and welcome to episode 10 of the It’s Law Podcast. I’m Richie Edwards from FR Law Group, and today we’re going to be talking about what you should have in your insurance portfolio. I’m here with Troy Froderman, who’s been an insurance lawyer and business litigator for many years. And also here with Peter Liefer of PrimeView as our special guest. Peter, to start, if you just tell us a little bit about yourself and your company, that’d be really great.

So I’m a father, I have an 11-year-old boy, you still gives me an x. So been in Phoenix for quite a while I’ve owned the PrimeView for gosh, 20 plus years now. So yeah, 25 altogether. Wow. Yeah. So I started off with modems were you know, just getting rolling like, this started off in Hawaii. Okay. And this phone has more bandwidth now than the entire state didn’t? Really? Yeah, exactly. This thing called the internet was coming along was exciting. To me. Oh, yeah, exactly. So projects we do anywhere from with things that you would know, we build the website for the Department of Education for here in Arizona, so all the 6 million people that serves and stuff like that we do that site? Yeah, that was quite interesting. A lot more politics involved in government than I anticipated. I don’t know why. That was a good lesson to share. Notable stuff. We’ve done stuff for Nissan and other publicly traded companies. And these are divisions of that university, feeding some other projects for them, you know, a variety of Goodwill’s some other things like that, right. Our sweet spot usually is small to mid-sized companies doing everything from service-related to work to e-commerce and things like that. So going into decent sized team of kind of experts in digital media marketing, and SEO, and all the buzzwords you can think of. It’s a fun business, I enjoy it. I’m lucky. I’ve got a great team. And the part I enjoy the most is actually working with customers, check it out, get an understanding what they’re trying to create or find then picking out the solution that works for them. Sure. That’s,

that’s excellent. And Peter, I don’t think I mentioned off the top is a surprise guest today came for a different meeting, and we dragged him into this recording. So we’ll hopefully, you know, teach him and everybody else something a little bit here. Troy, you wanted to talk about insurance portfolios, and it’s something that I’ve learned is incredibly important that you have the right coverage for your business for your risks in your portfolio choices. This

week, when I go to QuickBooks Online, and I have the it says buy insurance and I click the insurance thing, I’m not covered 30 bucks or 30 bucks or whatever. Don’t know what I’m doing,

I think you need to up your game, if that’s what you’re doing. So I’m

calling I’m sure it’s a

friend of yours. So it’s really so important for a business to have a good working understanding of its insurance program. All too often we get presented with a claim from a client or prospective client. And the first time they’ve ever looked at their insurance policy was right before they picked up the phone to call us to say that they have a loss, and they don’t know what to do about it. And so that’s really not a very wise or efficient way to administer your risk management instrument. So I think it starts from the very beginning. And it’s top-driven down. So, if your company is large enough to have a risk manager, it falls within the risk manager area to make sure that the company is protected to the extent possible. If you don’t have a risk manager, that’s probably going to fall on your CFO. And if it doesn’t fall on your CFO, then it’s going to fall on you. But at some point, somebody’s responsible for it. So when you go out into the marketplace, you should have already done your own self-analysis as to what your business risks are. If you own a building, you know what you’re you’ve got a risk there that could burn down or could have some type of destruction of the premises or portion of the premises. People that fall down or people that fall down. Right? They can do that, right? Insurance companies love slip-and-fall cases. So if you’re a farmer, you’re going to have an agricultural risk of some sort. Engineer you’re going to likely have, at a minimum, professional liability exposure. Same thing for Lawyers, probably the same thing for your business to a certain extent. So I think what the first thing is, is you do an analysis as to what your primary risks are, what keeps you up at night? What should keep you up at night that’s not keeping you up at night, right? It’s the things that you don’t know that can possibly be the worst scenario. So, it’s not uncommon for clients to do a request for proposal from agencies or from brokers. Okay, so say you’re a bakery, you have a bunch of different types of exposures. So you send out an RFP, to brokers, and you say, here’s what we do. Tell us what you think we need in terms of insurance. I’m simplifying this, obviously. And make us a proposal for what you would do and how much it would cost us to go to the market for our various coverages. So that’s pretty much insurance risk management 101. You know, belts and suspenders make sure that you’ve, you’ve identified the risks. And we’ve mentioned this in a previous episode, but everyone specializes, okay, brokers have their own specialty. So you don’t go to broker A, and say, I want your best person on our program. And I want them to shop all over our insurance. Now, you can have a point person, but some of the folks there may have their expertise in general liability, someone else may have it in food contamination policies, others might have it various different risks that you have. So that’s a good thing to know. And it’s good thing to have that capability. So as

a company like ours, we have a combination of we do websites and data stuff. So there’s data with risk, cyber type stuff, cyber stuff. If you see, like, every minute, then we have the professional services. So we screwed up when somebody screws up, there’s some kind of recourse, and how do we protect ourselves in that stuff. So we basically go through the business line and try to figure out which areas we would look, we might need coverage for, and go to not just one broker, but ideally, a couple of them to make sure that we have coverage in these areas. And we understand what it is. So ideally, business owner CFO is going to do this, or if there’s a larger company that the risk management person is supposed to be doing these things, can gather that data. Yes, exactly,

yes. And these brokers, especially the national ones, they know that they’re being pitted against one another. And so you’re gonna get not just different types of coverages, but different schedules, different years, different price points so that you can then make an informed decision. Okay. So, for smaller businesses, you’re not probably going to do an RFP, but you need to make sure that the agent or the broker who you hire, knows your business. I’ll give you an example that hits close to home. So speaking of cyber liability, so there, a lawyer in town, pulled his, you know, coverage with a couple of different law firms so that they could have some buying power. Okay. Unfortunately, through that network, they ended up getting a ransom. So some outfit out of Russia, right? That consortium of law firms had to pay like $300,000

to get their data back, or get their

data back to get their client files back to attorney-client privilege. So you can sense the, the panic, the panic, and the level of critical, critical issues there. So lawyer came to me, and he said, Is there anything that we can do to get reimbursed for this? You know, my share of it was X, and that’s a lot for me. I’m a solo practitioner. And I said, did you have cyber coverage? And he said, no one ever told me that, to do that. And so you, everybody that you think wants us lawyer is going to be sophisticated enough to it. You don’t know everything, right. So that’s one where if you’d had coverage, he would have probably been reimbursed about 85 to 90%. Wow. So, if we didn’t do it then but it would have been helpful to have that coverage. So the questions to ask so when we go through our annual renewal at FR Law Group with our insurance. Sure. We don’t necessarily do an RFP, but we know the right to the right questions to ask since we do insurance law. But that’s not true of every law firm and every business. So it’s really important if if you’re not looking at trends in terms of what your exposures are for your business, right? And you know, that’s, it’s, if you’re selling a widget, it’s important to know how to make that widget, it’s important to know how to protect that, which that’s what insurance does.

Sure. We’re just seeing this speaker cyber thing this the rates or terms of people being attacked, just going through the roof. So the bands, yeah, so if you don’t have it, got it.

And because of that, it’s expensive. Yeah,

but it’s guising. In Russia, you’re gonna $1,000 Go for it. Right? Yeah. Yeah. So the economics of that are disturbingly going the wrong direction. But anyway, so yeah, so we have metal segments. It’s so great. So I’ve got side insurance policy, I’ve got the slip and fall policy. Is there anything that’s obvious that I should? That’s obvious to you that I would be going oh, crap, I wish I’d done that, you know, for your business or for any businesses in general?

Well, it’s an important conversation to have with your agent and your broker. Okay.

Yeah. And that’s probably because it’s so specialized to the industry at a construction company might want a particular builder’s risk policy or a pollution policy. Right, right. That takes care of things that are excluded otherwise, from their commercial general liability and right, it’s really very specialized, and you sort of weave together your coverage to cover everything. Unfortunately, I don’t know if there’s a policy out there that will just cover all your risks. And they’re more exclusions than come out. So I’ll see Doc, it’s

interesting, you say that. So what you refer to as a slip-and-fall policy is a commercial general liability policy, right? That’s something that pretty much every company should have. And a lot of landlords required of their tenants. So, to Richie’s point about whether there’s no policy that covers everything, the commercial general liability policy before 1986, was called the comprehensive general liability policy. Okay. And so there are all sorts of lawsuits by policyholders and I was told that this was comprehensive. Like, no, it’s commercial, it’s what is bodily injury and property damage. It doesn’t cover your entertainment failures or whatever. And so they, the industry said, we’ve had enough of that. So they changed it to commercial general liability name. Yes.

Yeah, talking. Okay. All right. So that’s, that’s that stuff. And then when you said, so people come to you for us, you guys have a specialty in insurance, right? So people come to you and their house burn down out. But that’s really an area, but it’s with involving that. Yeah. So I had a friend of mine who, you know, had that happen, and then realized that the payout, what they offered him was a fraction of what it was going to take to replace that had to go work with, you know, a firm like yourself to go get the difference. Right? How often does that happen? All the time. I really, like one out of 10 times, or one out of 1000 times, or one

time. It’s more than that. So we’re talking about, there’s a vast array of lines and policies short covering a multitude of risks. Right. But then you focus in on one of those policies. We’ll talk about your slip and fall policy that yeah, so that policy will have different types of endorsements with it. And it has exclusions that apply sometimes in California and not in Arizona, etc. So when you when a business purchases, its commercial general liability policy. Very rarely do you get the policy when it’s issued. The actual hard copy or emailed to you, but more often than not, you don’t even try to read it until you need it. Right. I’ve sent you the general business. Oh, yeah. And so here’s a good example of making sure you’re protecting your risks. Let’s say you’re a construction company. And you hire a subcontractor to do the concrete work, okay? And the subcontract that you have between you and the subcontractor requires a subcontractor to list you as an additional insured on its policy. Sure. And so that subcontractor agrees to that. And then no one bothers to check and see if he actually did. Okay. Then there’s a loss involving his work. And there’s an injury involving his work. And then you tender it to your insurance carrier, your insurer insurance carrier tenders it to the subcontractor, its carrier and the subcontractor carrier says, You’re not insured under our policy. And the CEO says, well, blah, blah, blah. I know that we told that we told him, Well, you may have told him, but he didn’t do it. And so up the creek. So it’s really important that you have somebody on your team who double triple-checks, all of that type of documentation, okay? Because I don’t say happens a lot. But if people get in a hurry, they get rushed. And you’ve come back, you’ve just negotiated the subcontract with the concrete company, you come back and said, got him and I beat him down 10% on the cost. I was like, yes. All right, what’s next? And then two weeks later, there was an injury. And we need to tender it to his insurance carrier. Okay, well, you did get enlisted as it was as an additional insured. What’s in the subcontract? And then usually those, the boss will say, that’s not my question.

And we’ve seen this once or twice, for

years. Right, right. And then that person has to come back with his tail between his legs and say, yeah, he didn’t do what he was supposed to do. Then the boss says we didn’t do what you were supposed to do. And then the shareholders say to the boss, you didn’t do what you got it.

Got it. So bottom line is having is looking at my insurance, as he might be looking at the policies I have against the risk factors I have and making sure that I have no one question for you is, what’s enough? Right. So is it a $9 million dollars $10 million? What’s is it depends on the size of the business,

the size of the business, the nature of the policy, the nature of the risk, the standard is a million per occurrence, in 2 million in the aggregate, that’s bare minimum. And what that means is that CGL, if there are four homes Commercial General Liability, there are four people injured. And the damages are $8 million. Well, we only have coverage for 2 million for all eight. Okay, and so that’s why it’s there. Companies have umbrella policies, excess policies. So it really depends on the nature of the risks, the nature, your policy. One thing that’s really critical that Richie and I have been dealing with a lot is the underwriting process. And so the business owner hires the broker, here, I need you to go out and place coverage for us. The broker is going to send back more likely than not an application for you to fill out from the various different insurance companies. So you may have a handful. And here’s what happens, kind of like the guy that didn’t get the additional insured. People get sloppy answering these applications. No.

shocked at that, right. Okay.

So the broker, a good broker should push back. But don’t push back too hard, because he wants to get the deal, right. And so it’s your choice. Right. So what happens is, is that there may be a question that, did you have any prior notice of this? Or do you have any claims out there that might arise? No. And then they send the application and it’s proved, it gets proved, they get the insurance, they pay the premium. And then a month later, they get sued for something that they knew about three months ago. And so the insurance company will send a reservation of rights letter and say, I want you to give me the information on the following questions. When did you first know about this that you wrote back? Well, I received this letter three months ago, that, you know, they’re not done, oh, look at that matched up with the application. Sorry, but you were dishonest in your application. So now there’s no coverage, so nobody’s happy?

How can you step

more often, more often than you think, and then, I mean, that’s an exaggerated example, but

20 30% or quarter, okay.

And so, What does that mean? That means that the business owner and his team need to thoughtfully fill out the application. Take it seriously. Take it seriously. Yeah. Okay. It’s kind of like what I tell our younger lawyers here. When they’re writing a brief, I get it. Very few errors, meticulous, right? They’ve looked at it five times before they gave it to me. When they send out an email to a client right, they don’t even look at it the first time. It’s like, Hey, listen,

never seen that before. Yeah.

Right. So take it seriously is exactly the point there because, you know, why go through all of this effort and trying to get this coverage just to get it denied? Because you’re sloppy? Got

it? And that can be done you have exposure? A huge amount of Yes. Right.

If you’re, you know, we’d say naked on the on the problem, you’re not insured. And now it’s all your insurance,

if I have multiple coverages the same policy, right. Now, if I

wait, every single one of correct, it’s gonna do. Sorry. Right. Yeah. And I thought you’ve purchased this acknowledged the coverage? Does

it make sense to have multiple insurance carriers or different insurance carriers? Or Not really? Sort of? Yeah,

it depends, you know, depends on your market, your buying power. A lot of factors that come into play the gym, the basic answer is no, doesn’t it doesn’t get better get the best coverage that you can, okay. Like, for example, we don’t have this. We have a different carrier for our commercial general liability policy than we do for our errors and omissions than we do for our workers comp. Okay,

that’s good, especially given your field of expertise. Yeah, whether it makes sense these guys know this area better their offer better rates or better terms. I’d

like to say it was that level of sophistication. It’s just the broker bringing back to us what’s available,

and these guys are good at this. This goes. Yeah. Okay.

And this was maybe better coverage for a better premium from this carrier versus worse coverage for more and more premium, maybe, yeah. Right.

So yeah. And so let’s say that you’ve carefully filled out the application, and it gets bound. So that now you’re going to be insured, get a copy of the entire policy, have a electronic folder, wherever you keep risk management insurance, and put it in there with your policies. Don’t go searching for it after the loss. It happens, right? Well, what happens is this in it, I think, varies on the industry. But there’s always a period of time, whether this huge wrap-up or, oh my gosh, it’s renewal time for our insurance, and everybody’s bouncing off the walls, trying to get the information. And then they do it. And it’s kind of like the guy that didn’t get the additional insured endorsement. Everybody’s like, a sigh of relief that worried about this for another nine months. And then there’s a lawsuit like, did we get coverage for this? Let me call the broker. And that’s always like one of the first and it’s not a bad response, but you should have the policies with you as well. Right. And so, also doing a good job of maintaining your risks is a lot of brokers offer year-round advisory services as part of their representation of you in the market, okay, take full advantage of that. They have seminars, they have conferences, they have most of the larger ones, or even middle sized ones, have claim advocates. And so that’s a service that you’ve paid for when you use them to get your insurance. So let’s say there’s a loss. And let’s say you get some type of cyber liability claim. You’re in the business of PrimeView. You know what you’re doing there? You’re not in the business of presenting insurance claims. No. So, you contact your broker, can you say, Hey, I just got this claim? What do I do? They say, well, we need to put the carriers on notice. We’ll do that on your behalf. Okay, we’ll copy you on the notice. So that there’s no argument that you didn’t do that. And then that’s all done at a cost that you don’t have to absorb. You don’t want to this cuts against me, but if you can have them do it better than paying me to do it, right. You may not need me they may tender it and the carrier may accept it, and then you’re so Okay, big takeaways.

The online marketplace for QuickBooks for insurance probably is not the is the place to go, look? Sure, there’s good deals, there are ICFO, we don’t do that. And then. And then the other thing is, you really want to work with a good advisor, right insurance advisor, whatever that can help you sort through these different applications and go through the data and stuff like that. That’s really valuable that, I have not had any issues knock on wood. But you know, I didn’t know that much about it. And this has been a hugely insightful thing. One last question for you, what’s the worst situation that horror story or whatever, that somebody has happened to you, you know, of that they didn’t get this managed, and then were so well,

other a lot of them.

Too many horror stories account, it’s like, mentioned me companies, but they make you here on the TV, they make promises about how great they are, and what they’ll do. And it’s typically a lot of marketing lip service, and they don’t do that a lot. We have a case now that I’m handling primarily, and it’s going to end up, you know, the client is going to end up and knows they’re probably in a bad position because the policy they got doesn’t cover the specific risk. And then they didn’t get the additional insurance is exactly what Troy talked about. They didn’t go make sure they were an additional insured on the other policy that would have covered the risk. And so now, the insurance policies are both saying, Well, I don’t have to cover you, you’re not an additional insured, and their insurance policy saying we have an exclusion for this exact thing, and we’re not going to cover you. And it’s a really big loss that they might be on the hook for totally on their own, just for the simple mistake of not getting that that turned into, you know, multiple, maybe millions of dollars of worry in trouble. So those sorts of things, I think, happen more often than then you would like, and it’s it’s a mistake and like choice had not obtain a copy of the policy. And then he’s you know, he’s talking about your risk management. I don’t even think it ends after you get a copy of the policy, because you then need to make sure you know what you need to do. You need to get additional insurance. What sort of things do you need? How do you need to make the claim, you know, isn’t every occurrence What do you need to notify the insurance company of so that when it comes down the line, they can’t go back and say, nope, you didn’t do X, Y or Z, no coverage. So you’ve dotted your I’s and cross your t’s so that when a day comes, they’ve got to write the check is what you’re trying to make sure you do as best you can. Okay,

it’s, yeah, that’s valuable. So

we’ve said this in other episodes, but so the insurance policy, when you get a copy of it, the part that actually provides you with insurance is less than one page. Okay, everything else is why you don’t get coverage. Right. Okay, you got to meet definitions, you’d have to avoid exclusions, you’d have to be giving them timely notice that you know, to the right person, the right person? Yeah. What is timely notice? It’s in the eye of the beholder. And unfortunately, that’s always in the eye of the claims adjuster.

And then you have you also have the flip side, it was when I have a claim with my insurance company, and it’s not being taken care of. There’s another episode, right? You work with them just to saw help solve the issue with the insurance company, or get compensated for it. So the claim adjuster says no, and maybe he’s actually covered? Well,

yes, we have that happen every day in f1 order. So there’s a whole process that it entails, we put together what’s called a what we call a hammer letter. And it’s essentially it’s essentially saying to the adjuster, hey, look at it just totally missed the coverage issue there. This is why it’s covered. And here’s the case law, pay on the claim. It’s so we do a good job. I think our success rate is pretty good. But we sue a lot, too. Because you’re in the business of doing internet platforms. They’re in the business of defending lawsuits. A full cadre of lawyers and adjusters and consultants just waiting to take PrimeView down if they have to. On its insurance. Okay, that’s that’s the people with the good hands,

right? They sell you a policy to cover you what their business, like Corey said is to not pay your fine. They pay your claim they don’t make money, their businesses to deny the night and never

get at it. Got it. Okay, so one of these much smarter about I’m dealing with insurance and stuff like that, something that will pay potentially millions dollars, gonna save you millions of dollars, save

you a lot of money. And it’s it’s as true. So this whole time it’s be smart, intentional and detail-oriented from the very beginning. Because you can save a lot of heartache, we prefer. If you’ve done that, from the very beginning, you can make our job a lot easier when the time comes. Because we say no. Look, Peter notified you exactly how he’s supposed to the right person at the right time, and he has the additional insured, and he kept his data, how are we supposed to keep it and he has this process? And this claims a good claim or need to pay

to deny it or whatever the case was, you’ve done a dotted my T’s and cross my eyes. Correct. Right.

What also makes it more informed for you? In terms of do I really think I should be pursuing this insurance claim? Sure. Because you don’t want to go into it uninformed and then start chasing after something that is just a chase with no catch. Right?

Okay, we’ll be great as I don’t know if you guys can do this, but have like a, maybe a summary of this or list on your website of you know, these kinds of suggestions or bullet points or whatever. I would find it informative, happy to share with my team.

My wife, you give us our website guy.

Yeah. Absolutely put together. That’s

a good idea. Troy, that’s about all I have. Do you have anything in kind of closing here for us? No,

I think that. From the general business perspective, if you have a good risk management program, the likelihood of you getting sideways with your insurance carrier is much minimized. Not having a good handle on it. Your chances of being adverse to your insurance carrier is highly likely. Got it. And it’s a it’s an expense to be informed. Is it greater expense to not be informed? There? This? Okay, I’ll put that on the

on the website. That’s the closing. Hammer. Well, Peter, thank you. Yeah. Thanks for taking time with us today. It’s been great to try, thanks. And then Peter, you tell us about your business. But you know, can you just tell whoever whoever might be watching where they can reach it when they Oh, yeah.

Thanks, it’s website I’ve had for a while. I think Google is online and see what it’s done. I’m Peter Liefer for producer can look me up that way. It’s already the questions let me know. And I can tell you about insurance stuff. That is

excellent. Well, thank you all for watching. It’s Law Podcast episode 10.