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No one wants to think about it. The age-old question: what happens if…?
You don’t need to leave these worries to your imagination. Unfortunately, serious accidents are a reality of the business. It makes sense for lumber or building material dealers to make sure their businesses are protected from one unthinkable tragic event that could bring down the whole enterprise. It’s smart to not only consider the “what ifs,” but also to act.
Consider this: A delivery truck driver is sipping his morning coffee while heading to his delivery site in a major metropolitan area. As he removes the lid to cool his coffee, he runs through a red light and collides into a minivan that was crossing the intersection with a mom, dad and four children on their way to school. The thought of such an event is hard to stomach, considering the potential injuries and even fatalities. But for the lumber dealer, who owns the delivery truck, the event could be what we call in the insurance world, “a company killer.”
After such an event, the company behind the accident is responsible for compensating the victims. This compensation includes payment for economic losses and pain and suffering. Economic losses typically include past and future medical bills and past and future lost wages or loss of earnings. In other words, if a business’s driver collides with a 35-year-old who incurs a traumatic brain injury, the business owner will owe millions of dollars to cover his or her future medical bills and millions more to cover the injured individual’s six figure annual salary. At this point, the company owes millions to the individual, and this is before compensation for pain and suffering is added into the mix. In truth, it’s not unusual to see a $10 million claim when considering traumatic injuries like spinal cord and brain injuries, burns or amputations.
So, now that the business owner is considering these unthinkable “what ifs,” what does he or she do to protect the business?
This is where liability insurance comes in. Liability protection covers a business in the event that a claim is brought against the business or if employee negligence has caused a loss. And, while a business owner may already have liability coverage in his or her policy, it’s almost always not enough when you consider what could happen.
When considering liability limits, we at Pennsylvania Lumbermens Mutual Insurance Company, look at a number of risk factors. As a leader in insuring wood and wood-related products for more than 100 years, we understand the unique risk exposures of lumber and building material dealers, including the following:
Commercial auto accidents are a leading risk exposure. The type of vehicle can increase the risk, as can how often and where a vehicle is driven.
Construction defects can lead to major claims for lumber and building material dealers, particularly if a dealer wins a contract to supply a major work site, such as a condo complex.
Loading and unloading also presents risks. For example, improperly loaded materials can fall and injure workers or bystanders.
To protect their businesses from such risks, lumber and building material dealers need to secure a quality insurance policy with adequate coverage limits. A specialty insurer, like PLM, will work with your broker to find a business umbrella policy whether it’s $1 million or $20 million in liability coverage.
An insurance partner can also recommend loss control or risk prevention tactics to help a business reduce its risk exposure. For example, in the case of commercial auto, business owners can employ telematics to monitor and assist drivers and they can review driver motor vehicle records regularly. Employee training on driving, loading and unloading, as well as inventory stacking and more can also go a long way.
Finally, when considering liability limits, business owners should realize they probably need more coverage than they think they do. As we explained above, $1 million in coverage can disappear quickly after a tragic event. On the bright side, a higher coverage limit does not cost much more than a lower limit, and the cost per million in coverage goes down with each million purchased.
Again, a specialty insurer who knows the industry, like PLM, can be a valuable resource when it comes to understanding liability limits.
For more information, ask your insurance agent or broker about PLM, find a PLM representative at www.plmins.com or call 1-800-752-1895. More details on loss control are also available on our website at www.plmins.com/loss-control.