Companies have a tendency to put every possible service they might ever perform on our websites, and that very well may be the reason that you are paying more for your commercial insurance than you should be.
Learn By Example
I always feel that its easiest to learn by example, so, here’s an example we see ALL THE TIME! So we don’t make anyone feel bad, lets use Hypothetical Bob for our example.
Hypothetical Bob is new in business and his primary objective is to get business in the door. Bob’s business is landscape maintenance. Bob goes on one of the many DIY website builders and makes his new business a website. He lists his services as landscape maintenance, landscape installation, and landscape design. In his eagerness to get traffic in the door he decided he is going to list EVERY other possible type of outdoor work as services so that anyone searching those terms might find his page, despite the fact that he has never and will never perform most of them. So he adds tree trimming, tree removal, pressure washing, hardscapes, pools, pool cleaning, and alligator trapping to his services. Ok, so the last one may be a stretch…but not by much, believe me.
Bob is in business for a period of time and business is picking up, so Bob needs to hire an employee and needs to be get a workers comp policy. (Bob should have already had a workers comp policy, see why here, but that is beside the point!) Bob calls us and tells us what he does, but does not tell us about his “All things outdoors” website. We put together all of the information that we need to begin working on some quotes, and get the applications submitted to the underwriters.
The underwriters come back to us and say “The application says 0042 landscape gardening, but the proposed insureds website says they are doing X, Y, and Z.” They end this with “Please advise,“ but almost always no matter what we say their text book response is “Well, if they don’t actually do those things have them remove it from their website, and try again next year.”
The reason for this is every service Bob said he performs on his website fall under a different class code. Depending on the class code it may result in an automatic decline. Tree removal for example is an auto-decline for about 95% of the commercial insurance carriers out there. Some class codes require minimum premium requirements. While others have strict sets of underwriting guidelines that Bob might not fit into.
In this Scenario Bob eliminated 95% of the carriers who would have written his coverage by what he has on his website, and will probably end up in the assigned risk pool paying double what he should be paying. He could potentially overcome this the following year by making the appropriate changes on his website if he remembers his password to login and actually makes the changes.
Hypothetical Bob’s brother Theoretical Ted is in the carpentry business. 98% of the time Ted installs interior trim. On occasion he installs some replacement windows. In the beginning Ted, like Bob, put a bunch of stuff on his website that he doesn’t actually do. He was more controlled that Bob and only put carpentry based services, but included window replacement, decks, soffit and facia, and residential framing.
While these are all carpentry based, we are looking at two different class codes here. They are: 5437 – Interior trim carpentry, 5645 – Carpentry detached dwellings.
Again, we are going to see a fair number of declines simply because there are a lot of commercial insurance carriers who do not like 5645 exposure. Another issue we are going to run into is what the governing class is for the account.
The governing class is the class code that the carrier believes the majority of the payroll is going to fall under. The carrier seeing the website, and list of potential services provided, comes back and asks if Ted accounts for labor specifically by job type and if there is crossover with employees who perform deck building and those who install interior trim. If Ted answers no to either of those two questions, the carrier will likely only offer a quote with all of the payroll under the 5645 class, which has a rate that is easily 3X higher than 5437.
Lead Generation Sites
In recent years we have begun to see issues arising from pages on lead generation sites like Manta, Angies List, and Service Magic. These sites can be great sources of new business, but you have to be diligent about what they are listing as your services because the commercial insurance carriers are checking them now.
When you get on the phone with a customer service rep to have your account set up they ask you about any type of work you might be engaged in. Sometime the reps also just click through whatever they think might fit well with your line of work. If you stop and think about it, for someone who doesn’t do carpentry would it really be a stretch to imagine that someone who installs trim also builds decks?
The problems we went over in the previous two sections are the same here; a long list of services that you don’t actually perform that make your account unattractive to the carriers. Again, we can fix this situation, but by the time we find out about it we will have likely burned most or all of the top carriers for your line of work for one full year.
What’s On Your Website
If this sounds anything like what you might have on your website, or if you think you might have had a conversation with someone trying to sell you on lead generation services, take a few minutes and look at what is out there on the world wide web about your company.
You may find that by making just a few minor changes to the services page of your website you start saving thousands on your commercial insurance.