(800) 666-5692Posted in Customer Service
Author: Roxanne Barry
Inspections! Honestly, no one really likes them, but they are necessary in the commercial insurance world to protect the insured and the public. Inspections also assist the insurance company in determining exposures and correctly rating the risk.
In surplus lines, inspections are typically ordered through a third-party vendor. We see them required on certain classes of business (think roofers, heavy machining, vacant property), certain premium thresholds, or when a risk exceeds a set property TIV (total insuring value). These thresholds can all differ by an insurance carrier.
What are the most common recommendations that I see on an inspection report?
- Fire Extinguisher – Nonexistent or tag is out of date: This is especially important for daycares, habitational, restaurants, and garages for life safety purposes and building protection.
- Garage/Auto Dealer – Not all employees are rated on the policy: Garage policies are rated on ALL owners, employees, and drivers, including family members. Sometimes if the employee doesn’t have a driving exposure, they may not be included on the application. This will result in re-rating the policy to add those clerical or mechanical employees that were discovered in the inspection.
- Contractors – Not collecting a certificate of insurance (COI) from subcontractors: Many insurance companies will re-classify those subcontractors who do not show proof of insurance as an employee and they’ll be added to the applicable GL class code as payroll. Collecting COI also protects the contractor from losses brought on by a hired sub.
- General Maintenance – Pick up clutter/debris and trim trees and overgrown bushes next to the building: Protects the building from damage and public or employees from trip and fall accidents.
- Walkways – Cracked sidewalks and potholes in parking lots: This is a trip and fall exposure for the public. The insured will need to contact a qualified contractor to repair as determined necessary.
How can an insurance agent make the inspection process smoother?
The best thing an agent can do is to let the insured know that an inspection is a requirement of binding, and that they should expect a call shortly after binding to set it up. Since most carriers require the inspection within 30 days of binding, we ask that the insured cooperate fully with the inspector to get it done quickly!
What happens after the inspection?
After the inspection is completed, the inspector will make recommendations, which we will then review and pass on to our agent in the form of a Hazard Report with Recommendations and/or Discrepancies. The carrier will require a signed Hazard Report, and sometimes evidence of completed recs, to show proof of compliance.
Keep your underwriter updated on steps taken for the inspection recommendations. If there are questions or concerns about the recommendations, please contact your underwriter as they can review for exceptions or an extension in completion dates etc. Communication is key! We will do our best to be flexible when necessary, as long as we are kept informed as to the status of the recs.
Inspections are an important part of the insurance world and play an imperative role in preventing general liability and property losses for the insured as well as helping the insurance company keep claims down. Working together will ensure a smooth process!