melloInsurance

Serving our clients, Serving our community

Lyndon Block

Co-Insurance. Why share the claims burden?

How many times has it happened to you where you thought you were entitled to a certain return on an investment, and it was laced with hidden costs and fees?  Whether it is a RRSP, GRC, Mutual Fund or another type of financial initiative, it always seems like there is a hidden cost involved in claiming your investment on your own terms.  Insurance policies, at times, can feel the exact same way.  Whether it is a deductible that wasn’t properly explained, or a settlement that is reduced by a clause in the contract, it can feel like there is a battle at claim time.  Co-Insurance is one of those types of situations in a claim that can also cause frustration and confusion.


Where did Co-Insurance come from, and why do insurance companies enforce such harsh penalties?

The answer stems back to the early 1800’s back in London.  Insurance companies back then were trying to understand how to fairly adjust a partial loss where a building had been inadequately valued.  For example, there would be an instance of a large barn catching fire, and that fire being put out prior to total destruction of the building.  The front half of the barn was almost destroyed with $30,000 worth of damage, while the back half of the barn suffered little to no damage.  This presents the question in valuation.  If the entire building was worth $100,000, but only got insured for $50,000, which half of the building was the insurance purchased on?  The insured would insist that the insurance was purchased on the front half (of course!), and the insurer would insist that the insurance was purchased on the undamaged back half of the building (classic!).  This would result in frustrating court processes to determine where the insurance started, and ended. 

To rectify this situation, the courts along with the insurance companies came up with a relatively simple system to eliminate these long arguments and questions of insured property.  This was called the “Co-Insurance Clause.” They concluded that the insured (policy holder) and the insurer (the company the policy was purchased from) would co-insure the loss.  This clause is derived from a notion that the policy holder would take partial responsibility for under insured property on a partial loss, and that the insurance company would also step up, and take partial responsibility. 

The solution would save the people, and insurance companies abroad, tons of legal costs, and would go on to reduce insurance premiums as a result.


The co-insurance clause is applied to partial losses only, and it encourages policy holders to carry adequate limits of coverage on property.  The clause completely revolves around one simple formula to determine the appropriate amount of shared responsibility between a policy holder and insurance company to co insure any type of situation.  The formula used for these settlements is as follows:

What did the affected property get insured for?      X   Amount of the loss  =  Settlement
What should have the property been insured for?

Using this formula with our previous example on the $100,000 barn; the amount of responsibility shared in the partial loss between the policy holder and the insurance company would be calculated as follows:

 $50,000     X    $30,000    =    $15,000 Settlement
$100,000

This formula ensured that the co-insuring of the partial loss was equally shared between the policy holder and the insurance company in a way that was fair, and easy to calculate. 

So here’s the rub

Why suffer a co-insurance penalty?  The good news is that there is no reason to.  The simple way to avoid these situations is to ensure that you carry proper limits of coverage on your property so that this clause doesn’t even become a factor.  Talk to your broker at Block’s Agencies today to ensure that you are carrying adequate limits of coverage for your property.  You will sleep better at night knowing that you are adequately insured, and that you don’t have to worry about a nasty co-insurance surprise!

Peace, Love & Unity this Easter Season

Easter is coming up this weekend. Winter has dragged on for so long that it’s hard to believe it’s almost April. During this holiday season, we need to remind ourselves of what’s important in our lives.

Our slogan for this holiday season is – Peace, Love and Unity. With all the turmoil in the world today, it seems like we need this more than ever. Whether it’s news about our own government, or daily information about Donald Trump or what is happening in all other countries of the world; our news feed is filled with anger, pain and animosity.  What happened to all the love and laughter in the world?

Well, here at Block’s Agencies, we are a firm believer in Love and Laughter! Every one of our staff members have an attitude of compassion, empathy and gratitude. We treat every customer the same, no matter how their day is going. We strive daily, to be a place of business that attends to your needs in a way that leaves you feeling encouraged and looked after. Maybe if we’re lucky, you’ll leave with some good jokes and a few stories.

This season, we encourage you to spend time with your loved ones, but to also reach out to people outside your normal circle. Maybe there is someone who could really use a helping hand, whether it is doing a physical project, going through an emotional strain or struggle or maybe they are having a tough time with their health. Sometimes, we feel too busy to be bothered with such tasks, but in the end, we will all be better for it.

Peace, Love & Unity. Three words that have a ton of weight to them. In order to obtain Peace, we must love one another. Love takes work, a lot of work. We all have differences and sometimes we don’t agree on matters, whether they are political, religious or we just disagree on the choices others make. It doesn’t make us any better than them.  All we can do, is look into the mirror and be the best person we can be, for today. Once we get to that level, where we put others before us (which takes great sacrifice), then we can be unified.

The world pounds its chest about individualism. “What can the world do for you!” That is the wrong attitude. Our perspective should be on “What can I do to make the world a better place.” It sounds cliche, but it makes a lot of sense. If we flip that switch, and make the extra effort to “pick up the trash that some guy threw out his window” or “give the homeless guy a subway gift card” or “encourage a co-worker who’s going through a difficult time,” the world will become a better place. It will not happen overnight, but “it takes time to move a mountain” – as Anne Murray would say.

The Chronicles of Commercial Auto Insurance – Part 3 – Cargo & CGL

Welcome to the closing segment of our four part Commercial Auto series. We want to thank you for reading these articles as we know, insurance information can be a bit (extremely) dry. However, make another cup of coffee, and grind through another one, because this article touches on the last bit of information you need to make sure your Commercial Auto’s are properly insured.

First question – If you already have Commercial Auto Liability, why do I need to carry Commercial General Liability (CGL)?

CGL insurance covers a business for property damage and bodily injury claims, that may arise from reasons other than vehicle usage. As long as the damage or injury was caused by your operation, products or it happened on your company property, CGL can respond.

Most people believe once they have Commercial Auto Liability they do not need CGL, however, you never know when a claim could occur outside the normal vehicle operations. If you have a physical business address, you definitely need CGL to insure potential claims arising on your premises.

Another reason to carry CGL is when you are loading and unloading your vehicles. If property damage or injury arises during this process, the commercial auto liability would not respond as your vehicle is not in operation. However, the CGL policy would apply.

Second question – When am I required to carry Cargo Insurance?

If your vehicle is registered with a Class A plate under the IRP, you will be required to carry Cargo Insurance, unless you are Hauling Low Value Goods or Hauling Your Own Goods. Details are below:

Insurance Requirements NSC Block's Agenies

Third Question – How much cargo insurance should I be carrying?

Based on the total weight of your unit, you will be required to carry a specific limit of coverage for your cargo you are carrying. Below are the minimum amounts of insurance based on the weight of the truck, trailer and load. However, you may want to increase the limit if you are hauling higher valued commodities.

Cargo Liability:

Cargo Insurance Limits

Fourth Question – If my cargo load is oversized what should I do?

If you know your load is going to be “oversized,” or  “overweight,” you should contact the Saskatchewan Permit Office. Permits are available to upgrade your limits on load size, weight or vehicle class – for a single trip (some restrictions may apply). These permits are available from:

The Permit Office
Saskatchewan Government Insurance
5104 Donnelly Crs, PO Box 1580
Regina SK S4P 3C4

Phone:
(6am – 10pm) Daily
1-800-667-7575 (In Saskatchewan)
1-306-775-6969 (Outside Saskatchewan)

Fax:
1-306-775-6909

Email:
sgipermitoffice@sgi.sk.ca

Website:
www.sgi.sk.ca/businesses/permits

There is much more information regarding your Commercial Auto, Cargo, NSC, IRP, Driver Safety and Registration Requirements available in the Saskatchewan Truckers Guide. Please keep a copy of this guide nearby as it will help make sure you are properly registered and safe to be on the road.

Final Question – Where can I get Cargo Insurance and what coverage is available?

We, at Block’s Agencies,  can offer you a comprehensive cargo policy that will meet your needs. Whether you haul retail goods, livestock, luggage, perishable foods, logs, gravel, grain or fertilizer. We will design a policy that ensure your hauled goods are covered, in the event that an accident were to occur. Some of the coverages that come with a Cargo policy include:

  • Coverage for chains, tarps, straps and electronics (Up to $25,000)
  • Contractual penalties
  • Refrigeration breakdowns
  • Set up and Dismantling
  • Terminal Coverage
  • Valuation Clause
  • Methods of Transportation (Rail, Airline, Ferry, etc)

Additional Coverages you can add:

  • Accidental Blending (Up to $250,000)
  • Enhanced Contractual Penalties
  • Employee Theft Coverage
  • Set or Partial Set Coverage
  • Warehousing Coverage
  • Non-owned trailer/container damage

There are many risks on and off the road. We want to make sure that you have peace of mind while your business is in operation. Whether that is on your property or on the open road. Whether your business is a Limo service or a Commercial Fleet Operation moving houses or hauling heavy equipment. We want to make sure your business is insured properly. Please contact one of our offices and talk to one of our experts on getting your Vehicle Registrations, Commercial Auto, CGL and Cargo policies set up today.

The Chronicles of Commercial Auto Insurance – Part 2

On the last article, we discussed how to get your power units and trailers registered with SGI and IRP along with the requirements held by the NSC and Highway Traffic Board. Now that your vehicles are registered, we can discuss on how to properly insure them.

Many commercial vehicles are required to carry a minimum 1,000,000 liability. However, it is not mandatory for all business types. Regardless, we recommend you carry an extension auto liability policy on all your vehicles, whether they are personal or used for business. This is to protect your family and your business from the types of losses that can ruin you financially. The rating on liability is based on the type of risk. If you are a contractor, taxi, ambulance or commercial trucker, your rate will be based on your type of operation.

Liability coverage is the main concern on every policy as this is where the larger losses and claims generally occur. However, there are other damages to your vehicle that can be financially painful as well. You can add endorsements onto your auto policy to protect these types of losses. They include:

  • Wildlife deductible waiver
  • Reduced Deductible (All Perils)
  • Road Hazard Glass
  • Loss of Use
  • Replacement Cost Coverage
  • Excess Value
  • Environmental Liability
  • Family Security

Wildlife Deductible Waiver

If you have this waiver added onto your commercial auto policy, and you suffer damage to your vehicle by a wild animal (Bird, Deer, Moose, etc.), you will not have to pay your deductible to have the damage repaired.

Reduced Deductible (All Perils)

With your commercial auto policy, you have the option to reduce your deductible from your standard deductible on your registration given to you by SGI or the IRP. Choose a deductible that you will be comfortable with in the event of a loss.

Road Hazard Glass

If you have an expensive windshield or other windows in your vehicle, you may want to add this coverage onto your policy in case you suffer damage to your glass caused by debris or rocks on the road. Depending on the deductible you choose, bruises can be fixed for free and if the windshield needs to be replaced, you pay your glass deductible and get a new windshield.

Loss of Use

This endorsement allows you to rent a vehicle of similar nature, if your vehicle is unusable during a claim. This coverage is not available for taxis, funeral vehicles, driver trainers and U-drives. Coverage does not respond to mechanical failure. The table of coverage is below:

screenshot-2018-03-12-17-10-11

Replacement Cost Coverage

If you have purchased a new vehicle (cars, suvs, vans and trucks – one ton and less), you will want to purchase this coverage. You have 120 days from the date of purchase to add this coverage onto your vehicle. Coverage runs for a duration of 36 months from that date. What this coverage does is eliminate the depreciation of your vehicle in the event of a total or partial loss. Please give us a call if you would like more information on this coverage.

Excess Value

With large commercial vehicles, SGI will limit the amount of coverage given on your registration. You can add the coverage onto your registration or you can add that value here on your commercial auto policy under the “excess value” endorsement. Every year, you are required to submit an updated list of drivers and vehicles for your commercial auto policy, so we recommend you carry the excess value on the policy so we can review this value annually. What this coverage does is make sure your vehicle is insured for the appropriate value. If your power unit is covered for $15,000 on the registration, but is worth $75,000. You should add the additional $60,000 onto this commercial policy to make sure you are adequately insured. Just remember that if you unlicense your truck to put it in storage, you are removing that $15,000 amount of coverage, so be sure to bump up the value on your commercial auto policy at that time.

Environmental Liability

Where environmentally sensitive commodities are hauled (petroleum, industrial or chemical waste, etc.), the insurance provider may add this endorsement onto your policy which could result in an additional premium to offset the added exposure.

Family Security

Family Security coverage applies when you are involved in an accident with an underinsured or uninsured motorist. If the person who is responsible for the claim does not carry adequate insurance coverage, this endorsement steps up and covers the costs incurred for injuries and damages to the people in your vehicle. Where the coverage is available, Family Security protection will match the third party liability limit to a maximum of $2,000,000. 

Commercial Auto policies are quite complicated and require constant attention. Whether it is keeping your vehicle list or driver list updated, or making sure the liability coverage is accurate to your business operation, there will consistently be changes and updates. We are here to help you every step of the way. Please give us a call if you have any questions regarding your commercial auto insurance policy or if you would like more information. 

The Chronicles of Commercial Auto Insurance – Part 1

There are many truckers on the road each day. They all have a different destinations, objectives, commodities and drivers. There are many variables when it comes to commercial hauling and we want to let you know what needs to be looked at when insuring your rig and your fleet.

So what do I need to know when registering my commercial truck and trailers?

  • First, you need to license your vehicles. The way your truck is licensed depends on the commodities you haul and the weight of your load. If you haul a B-Train of Grain or you deliver fuel to stations, this will change the classification of your truck. The total weight of your truck, trailer and load (combined) will be required when registering and that weight will need to be added onto the truck portion of the registration.
  • How much weight you are qualified to haul will depend on the trailers you have, the tire size as well as the axel spread of both your truck and your trailers. So you will need to do some research before you come in to register your unit.  
  • With this information, along with a bill of sale, we can set up your vehicle registrations. However, if your truck is hauling out of province, there will be additional requirements that will need to be met, this is handled by the IRP department.
  • The IRP department has an approval process that you will need to follow. This requires a list of vehicles, drivers, commodities, weights, jurisdictions and mileage in those jurisdictions. They will want to know experience of the company and drivers and any details related to the operation. Once approved, you can submit your vehicles in for a quote request. This rate is based on the amount of mileage in all jurisdictions, the risk and weight of the load, and the claims experience of the company/drivers. We can help you through this process and make sure your vehicles are properly registered.
  • Three specific requirements that a carrier needs to adhere to under the IRP is:
    • Maintain an established place of business
    • Distance accrued by the fleet
    • Keeping maintenance and operational records available
  • Once you have registered your vehicle with SGI and/or the IRP department, we can work on the commercial auto insurance policy.

What is the minimum mandatory insurance I need to start hauling?

  • The NSC (National Safety Code) is a code of minimum performance standards for the safe operation of commercial vehicles for all jurisdictions in Canada. According to the NSC, all individuals holding a Certificate of Safety Fitness are required to maintain extension insurance.

Insurance Requirements NSC Block's Agenies

Minimum Insurance Coverage

Third Party Liability

  • $1,000,000 – All carriers transporting freight except dangerous goods
  • $2,000,000 – All carriers transporting dangerous goods

Buses

  • Passenger Capacity (15 or less) – $1,000,000
  • Passenger Capacity (16 or more) – $3,000,000

This is the basic information to get your commercial auto on the road. There is many more coverages that may be required by the NSC or coverages you may desire to make sure you have the best coverage available. We will touch on the extension auto policy in the next “Chronicle of Commercial Auto Insurance.”

What do I need to know about Commercial Auto Insurance?

The days of horse and buggy are unfortunately, behind us, and traffic is moving faster than ever. We have ships, trains, planes, and trucks delivering goods all over the world every minute of every day. The world seems to be getting smaller and smaller, especially with our abilities to order from websites like Amazon and Ebay; who ship their products right to our door.

With all the vehicles on the road, there are many different types of businesses that are travelling daily. If you are a commercial carrier, or you are running your own business there is a good chance you will need a commercial auto policy for your protection. We recommend that everyone carry a personal auto pak for their privately owned vehicles, therefore, we recommend it for your commercial vehicles as well. In some instances, the highway traffic board makes it mandatory that you carry a minimum 1 million or 2 million liability for your commercial vehicles.

Whether you are a contractor, delivery service, salesman (hauling own goods), concrete hauler, oil field worker, taxi or limo service, food truck, tow truck, garbage truck, hot shot operation, commodities hauler (gravel, grain, livestock, etc), logging truck or snow removal service; you will be at risk of an auto claim. There are tons of operations that all require a commercial auto policy on their vehicles. This policy is required for both the trucks and the trailers. If you are unsure about whether your operation is required to carry additional liability coverage, please contact our office.

What you are hauling or what your operation is, will decide the premium rating for your vehicle. That is why it is important to give us as much detail as possible so we insure your vehicles with accurate coverage. For example if you haul “Anhydrous Ammonia” or other chemicals, your liability costs will be greater than someone hauling “blankets and pillows” or if you are hauling your “own” metal products or you are custom hauling metal products for someone else’s business – these small differences change the rating factor.  

Along with insuring your vehicle for physical damage and liability, you may want to consider insuring your cargo. If you are hauling goods of others, you may be required to have a cargo policy by the highway traffic board. Please contact us to find out what is required, and if you are responsible for the load you are hauling. You don’t want to have an accident and realize you are responsible for the damages to the load you were hauling.

We will touch on more individualized operations in our upcoming blogs to give you an idea of what to look for in specific fields. In the meantime, please contact us if you need to set up commercial auto insurance on your business vehicles. We can set up a policy to give you that peace of mind you’ll need when on the road.