5 Factors to Consider in an Insurance Carrier and Policy at Insurance Renewal Time

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PLM Insurance Policy
istock.com/Pattanaphong Khuankaew
By Dave Adams, Assistant Vice President – Field Operations


The end of the year springs every business into careful planning. This may mean seeking out new business, taking stock of payroll and inventory, or for some, renewing insurance coverage.

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It has been an unprecedented year plagued with frequent natural disasters, a pandemic, and widespread social unrest. For many in the lumber and building material industries, it has also been a year of rising lumber prices, supply chain issues, and booming sales and growth. With all these changes, it is a good time to assess your commercial insurance needs for your business.

But it’s not just the insurance policy that should be evaluated. Who the carrier is also makes a big difference. Before renewing insurance coverage, take a moment to review your policy and your carrier. A good carrier offers more than an attractive price or comprehensive coverage. They also provide these five factors:

1. Relationship

Lumber and building material dealers should consider working with a carrier that provides ongoing consultative services and is actively engaged with their businesses. This can be demonstrated in many ways, such as relationships with local representatives who understand the specific business environment and risk exposures in the area, the carrier’s risk management services, and the availability of educational resources to support the insureds’ business needs.

Another thing to consider is the carrier’s involvement in its customer’s industry. A carrier that is invested in the wood niche will be an active member of the lumber and building material dealer’s community and its associations, both financially and legislatively. This displays a clear, vested interest in issues that impact their insureds and the industry as a whole.

2. Expertise

Businesses should work with a carrier that knows their needs and is familiar with the losses they might expect. With this knowledge, the carrier can put together a comprehensive insurance program to fit the business’ needs. Some insurers are generalists, and some specialize in serving specific industries. A specialist will have the deep understanding of the lumber and building material industry necessary to provide specialized products and services to your business. You do not need to accept a one-size-fits-all approach to your insurance protection as every program is unique.

This specialized expertise also translates into enhanced service in the event of a claim. It’s critical to have a carrier that can promptly analyze and handle claims. The carrier will need to understand the true value of the business, such as the inventory and replacement costs, and have the right contacts to get the lumber and building material dealer quickly back up and running again.

3. Value

Obviously, cost is a major consideration when purchasing insurance, but lumber businesses do not have to jeopardize coverage and protection for a good price. It’s more important to have the peace of mind that comes with good coverage and a trustworthy carrier, knowing that the business will survive in the event of a disaster. Lumber and building material dealers should shop carefully for coverage and services and ensure that the carrier they are exploring offers additional benefits like flexible payment options should they need them down the road.

4. Support

A carrier with strong customer service can be invaluable to lumber businesses and their broker. Having a carrier that is easily assessable and quick to respond is important, especially at the time of a loss. Dealers and their brokers should expect the support from the carrier to quickly answer questions on coverages, smoothly make adjustments to policies, and provide invaluable risk management solutions to loss issues.

5. Stability

The carrier should also have a strong track record demonstrating reliability and stability. Business owners should look to work with a carrier with a solid rating and sound financial strength. Dealers should also consider an established carrier in the industry that will not move in and out of the niche. A carrier with a proven history in writing coverage within the lumber industry can be trusted to keep your business protected.

Taking Stock Before Moving Ahead

Finally, before moving ahead with a new policy or new insurer, lumber and building material businesses should take stock of their current situation. Have there been any building additions or changes to the lumber business? Have you implemented any new technology or equipment? Has the inventory changed? Have you factored in the changing price of lumber into your inventory? Have you implemented any new risk mitigation measures like sprinkler systems, etc.? Answering questions such as these will make it easier to understand what, if any coverage changes are needed.

It can also be helpful for business owners to meet with their broker or carrier at renewal time to discuss their policy, any changes to their business and what they expect in terms of product and service. A carrier, who can discuss the status of the insurance market and what upcoming changes to expect, can help clarify business needs going forward. They may offer safety recommendations and building valuations as well, all of which are important factors that go into making adjustments at the time of renewal.

Consider what is happening right now in construction. The construction industry is booming, and with it the costs of labor and materials are rising as supplies become harder to find. As a result, businesses need to be more mindful of the proper valuation of their building equipment and what the replacement costs are, as well as their inventory.

One issue top of mind for many business owners as they consider insurance is natural disasters. The 2020 hurricane season has already become the most active season ever and the western part of the country has suffered one of the most damaging wildfire seasons on record. With these potential disasters in mind, it’s important to confirm your business is properly covered for similar events and that you are aware of and understand your wind and storm deductibles in case of heavy losses.

Once again a knowledgeable carrier specializing in the wood niche can advise on these issues and more. Such a carrier can also offer comprehensive risk assessments to better understand the needs of the property. An assessment should include a complete and thorough walk through of the property, safety tips and recommendations for programs to mitigate losses. Additionally, the carrier should look at your company’s relationships with contractors and subcontractors. Businesses frequently employ contractors without ensuring the proper risk transfer language is included in their agreements, which can leave the business owner responsible for the errors of the contractors.

In all, there are many important issues to consider during insurance renewal season. Deciding whether your carrier is the right fit for your business should be a critical step. From there, meeting with the carrier to understand timely issues within the industry and to get more specific information on your business’ exposures, as well as what new products and services are needed to address them, will help keep your business protected in 2021.

As the oldest and largest mutual insurance company dedicated to wood products, Pennsylvania Lumbermens Mutual Insurance Company has been a trusted partner for many lumber and building material businesses for more than 125 years. We strive to provide our clients with superior coverage and service, as well as the risk management tools they need to operate safely.

For more information, ask your insurance agent or broker about PLM, contact a representative at PLM directly at or call 1-800-752-1895. More details on loss control are also available on our website.

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