What Are Telematics?

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The terminology itself is an adopted term to describe all technology associated with tracking and communicating driving data. Insurance companies will take this data, and either offer you a personalized rate based on how you drive, or simply give a solid discount.

You’ve probably heard of various insurance companies offering a plug-in device for your car; lately these companies are adding a phone app to also track your driving. These devices all monitor various driving habits such as miles driven, time of day, hard braking, quick acceleration, etc. This is what we call “usage-based insurance” or UBI.

UBI consists of two types of rated insurance based on your driving data: “pay as you drive”, and “pay how you drive”. These are pretty self explanatory. Pay-as-you-drive telematics measures the distance you typically drive. This driving data measures how much and how often you’re driving. Pay-how-you-drive means that your driving habits, rather than pure distance, is measured.

So why should you consider rating your insurance based on telematics?

Traditionally insurance is rated based on historical data collected from the previous year. This doesn’t take into account certain years, or time periods, where you would be driving infrequently. You also may want to consider that if you are a low-risk driver, you could get a lower premium on your insurance. Telematics also accurately record accident damage; so if you find that you need your insurance, it may be helpful to have them already know what has happened. However, we know that this does bring up certain privacy concerns. This has led to some states writing legislation that requires insurance carriers to disclose the data they collect. In effect, this has caused these carriers to collect less driving data.

When you’re looking to lower your premium…

Adding telematics can be the easiest change to make without making a dent in your coverage. Many people have left the roads and their commutes this year. With the advent of working from home, or the unfortunate job loss due to Covid-19, many are looking to reduce their premium as much as possible. Why pay so much for insurance when you’ve reduced the chances you’ll need it? Various carriers, such as Nationwide, are offering variable rates based solely on how much you drive. So if you’re unsure of sharing your driving data, but want this variable rate, this may be a good fit for you.

If you’re looking to save money on your auto insurance this year, and telematics sound like a great idea, reach out to us and one of our knowledgeable agents will be happy to assist you.

 

Resources:

Telematics/Usage-Based Insurance – National Association of Insurance Commissioners

Background on Pay As You Drive Insurance – Insurance Information Institute

 

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Hard Market: Increasing Insurance Costs

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Your insurance renewal offer arrives, and it’s increased this year. How frequently does this happen? Has it remained more steady or even lowered in previous years? Why would it suddenly seem to rise? This increase can be attributed to a hard market.

Characteristics of Hard and Soft Markets

The insurance environment flows between two stages, which we call “hard and soft markets.” A hard market is defined by its higher premiums, stricter underwriting criteria, less competition among insurers and so fewer policies are written. Due to a number of reasons, insurance carriers decide that they want to make it harder for you to find affordable coverage. Otherwise in a soft market, you’ll find that your premium is generally lower and it’s easier to shop around. Insurers will evaluate these same metrics and when they determine the risk isn’t so daunting, the market will soften and become easier to obtain that price you’re looking for.

What causes the market to harden?

The primary factors that lead to a hardening market are weather and social inflation. This year in particular has added a new one to the mix: Covid-19. Let’s look at a few of these more closely as to why they may be adding to your premium increase. These are all factors that an insurer considers when offering a policy premium.

  • Weather: Catastrophic weather events lead to more frequent losses. You probably already guessed this one. As we see a rise in hurricanes, hailstorms, and tornadoes, we’re going to also see more claims filed for the damage that follows. Insurance companies pay close attention to the weather patterns, and predict how this will affect the amount of money they will pay out in any given policy period.
  • Social Inflation: You may be wondering what this means exactly. Simply put, social inflation is the term given to rising insurance costs, based on how much companies pay out in lawsuits. The general attitude towards large companies has become more hostile in recent years. This is more a sense of trying to topple down “the man.” Unfortunately this attitude also extends to small businesses. In general, if a lawsuit is brought against a company, juries have been handing out higher and higher awards. This is a risk that insurers look at when they’re offering policies to businesses, even small ones.
  • Covid-19: The year 2020 notably brought to you the leading factor in this year’s hard market. Covid-19 and its related lockdown caused many businesses to close, sometimes for good. If your business was affected by this, then you are already aware of its impact. Insurers were suddenly hit with claims for business income (closure) losses.

Why does it seem so sudden?

This is largely due to you, the insured, becoming comfortable in a soft market phase. If you’re used to your insurance policy remaining the same, or even going down, over a few years you don’t worry too much about it increasing. Unfortunately, this also makes things like risk management a bit more complacent as well. Don’t worry, this kind of thinking happens to everyone.

Another thing to consider is that all policies are vastly different. What covers everything for a donut shop will not have the same protection for a landscaping company. In a soft market, you’re able to find a policy that is tailored to your business’ exact needs and within your price budget very easily. Because of this complacency that it’s so easy, once a market hardens and your specific policy increases in price, it’s suddenly harder for you to find that same coverage within the same price range.

Unfortunately the fact of the matter is that we are currently experiencing a hard market phase. If you’re seeing your insurance premiums increase this year, it’s currently not so easy to find what you need within budget. Let us help! Reach out to one of our knowledgeable insurance specialists, and we’ll help you find that perfect policy.

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How Roof Maintenance Protects Your Business

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Simple answer: it saves you money. A small roof problem can easily turn into a disaster. When it gets to the point of disaster, you usually have other problems than simply replacing the roof. This could affect your business staying open, discourage customers, and even increase your insurance premiums.

What are some major threats to your roof? 

A commercial roof’s lifespan, when properly built, should last up to 40 years. Fully replacing it before its time can be costly. Luckily this is easy to manage! For instance, regular inspections keep you aware of potential issues. If you catch a problem early, it can save a lot of money and headache before it becomes more serious. You should also be inspecting the roof before and after major weather events. Wind, rain or hail damage is unavoidable from a storm, but if you have everything up to date it will save costs on potentially bigger repairs. Here are a few things that you can look out for that will help your roof and business in the long run:

  • Mold/Moss Build-up – tends to grow out of sunlight, and if roots are left too long they can tear up the roof layers
  • Water Pooling – leads to faster deterioration and has the potential to worsen the integrity
  • Dirt & Debris – clogging the drain pipes leads to water build-up
  • Wildlife/Pest Entrance – if there is enough deterioration, wildlife can find a way in leading to sanitation issues and can hurt your business’ image

Prevention Before Disaster

Keeping these threats in mind, you can be more prepared to keep your business running. Small costs here and there to fix issues can be the difference between keeping your doors open and shutting down completely. Take a moment and think about what the worst case scenario would be. It’s shutting down your business so you can spend more money to fully replace your roof, isn’t it? We know it can seem pointless to spend money on small repairs, but it will be worth it! Just a little time and effort keeps your roof up to date. For example, it’s a great idea to take regular pictures, keep drains clean and make sure all cracks are sealed. That doesn’t seem so hard!

Who doesn’t want lower insurance premiums?

That’s right, a nicely maintained roof can even help you save on insurance. One of the first things a carrier will look at is the condition of the roof. For one thing, they see higher wear and tear as a higher risk. If your roof looks like it can blow away in the next storm, they’re not too happy about taking on that risk. However if you continue to improve the appearance and safety of your roof, this can provide discounts and lower premiums. If you’re looking for lower premiums, let us help you with a quote from one of our very knowledgeable agents. 

How have you kept up with roof repair? Leave a comment below to let us know all you’ve done to keep your business covered.

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