Do You Really Know What You Do For A Living?
I would like to share something that happened this past week with one of my clients. I’m working with a local family. The wife works for a large multi-national company and the husband works as a handyman. They became my clients this past summer and they recently asked me to research the husband’s current business insurance.
Of course, I agreed and the first thing I noticed in their current policy was that the husband was classified as a carpenter. So I asked him…are you a carpenter? Well guess what he’s not, because in the course of his work week he does do some light carpentry, some electrical work, and minor home repairs, etc… In fact he is a handyman!
The commercial “class code” on his policy was wrong. This means that if he had a claim while doing something un-carpenter like he ran the risk of having the claim being denied by his insurance company and having his policy cancelled. On the other side of the coin, his current agent (no, not me…but a LARGE state-wide chain) has a possible errors and omissions exposure.
As a quick side note-a class code is the code for a type of business. This code is in turn associated with a rate. Each business type has a different code which means each code has a different rate. For example a carpenter is generally a less expensive rate than a roofer.
Sometimes an agent might misclassify a business deliberately because the rates are more favorable. An agent that does this might lose the ability to sell insurance for that company, especially if he/she does this often. While this may save you money on your insurance it could cost you a good deal more if your business is not classified correctly. The point is; check with your insurance agent to make sure that you are correctly covered for what you do. When you receive your commercial policy, please review the declaration page(s) carefully to make sure the information about your business and its operations are correct. Commercial insurance policies are very specific about what they will NOT pay for. If you see something there that either does not make sense, or you don’t understand…ASK.
When you receive your commercial policy and you have questions, your agent should be very willing to answer any and all your questions about it. By the way, when shopping for commercial insurance, you may want to consider using an independent insurance agent (like me!). They have more than one company they work with and if the rates go up with your current carrier, they can always “shop” your business with another company.
Charlie’s Info:
Hi my name is Charlie Schein and I’m an independent property/casualty insurance agent. I’ve been in the insurance industry since 1988…but have been working “from the basement” since September.
Charlie can be reached via his contact information listed below:
(860) 513-1055
(860) 819-9810-Cell
(877) 513-6363-Fax
charlie@starschein.com
www.starschein.com
To keep up with Charlie follow him on Twitter or Facebook.
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WFTB – Charlie Schein
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Thanks for the great article Charlie, when I figure out what I do for a living I’ll give you a call.
Interesting and informative article, I wonder what class code playing Bejeweled on Facebook is?? It comprises a statistically significant proportion of what I do.
Good info Charlie. I had a similar experience as a paint contractor. I was coded incorrectly but upon perusing the dec page I was able to get the proper classification.
My advice would be to always review ‘all that junk’ you get from your insurance carrier and make sure you have someone like Charlie on your side.
Thank you all for your kind comments.
Mike-I have a handle on what you do and there is a place for you in the standard insurance market…I will be please to quote you if you want.
Rachel-not yet…I’m also looking for a market (company/coverage) for people that play Mafia Wars and Majong!…so far no luck.
Doug-Thank you for the kind words. It is great that we all get to stay connected via the web…yet I miss hanging with you in person! I will put out the word for you if anyone is looking for a painter in Montana!
Underinsurance (or incorrect coverage) is definitely a trap many new business owners fall into. A good agent makes all the difference. Our trade organization (AIO) had a recent excellent lecture on this topic.