Insurance Inspection

[DR Buck]

Have any of you guys had an insurance inspection done by the underwriter?    I've got one scheduled for today and I haven't got a clue of what they are going to inspect.    I've had the same insurance underwriter (Scottsdale) for about 10 years now and several times in the past they contacted me about being inspected.  I've told them that 95%+ of my business is done on the road at a customer location and there is really nothing at my home location to look at other than where I park the sawmill.   Even now I don't have my home location set up for milling.  Since moving last winter I've spent most of my time getting the house construction/remodel done and have done almost nothing toward setting up my mill operation here.     I tried to explain that to the guy that called but he insisted that he is coming and will be inspecting my "operation".

[Crossroads]

Well he's a determined fellow lol  i just got an email from my agent yesterday asking questions about renewing my policy. When I told her I needed to update my address since I've moved to Idaho, I was told I needed to find a new agent. Keep us posted on how the inspection goes 

[YellowHammer]

I get annual and "surprise" inspections from my insurance company and local county.  If you mill on the road, they won't find much.

However, with a home fixed operation like mine,  
They are looking for many, many things, I could send you a checklist if you send me your email.  

First is housekeeping - most insurance claims are due to fire.  So sawdust, unemptied trash containers, flammable materials laying around (they should be in a service cabinet), flammable debris are very bad.

Clean out under the sawmill, mine insurance requires weekly cleanings.

Blow out the shop with a leaf blower, and get everything clean.

Fire extinguishers.  

Electrical - Closed electrical panels with no open breakers.  Are the panels clean or full of sawdust?  Are the circuits labeled?  Does the electrical look neat, serviceable and been done by certified electrician.  Do any breaker look like they have been hot?  Electrical outlets should be serviceable, I am required to vacuum behind mine every year.  Sawdust packs in behind hem them you can't see.

Dust on rafters.  Dust on shelves.

Lights with protective covers.

Safeties on machines.  Well maintained equipment (overheated bearings and burned motor cause a lot of fires)

My insurance requires a yearly Infrared Camera Inspection to check fo overheated circuits under max load.

Personnel safety issues.

Emergency contact list posted.  Fire Marshall inspections annually.

The list goes on and on.  I have Pennsylvania Lumberman's.  Very good very thorough.

Main thing is cleanliness.  A low risk operation from an insurance standpoint is a clean operation.

[DPatton]

Depending on your policy coverage they may be looking for things like making sure you aren't operating a business from your home address, your mills value and working condition including all safety guards and devices in place, stored materials such as fuel, logs, lumber. What they find could ultimately effect your premium in a good or bad way. My advise is that you take time beforehand to make sure everything is in order and tip top shape prior to inspection.

[E-Tex]

YH and DP are right on.

At the very least carriers will perform an Annual Audit of your operation via email/phone and a review of your financials and overall operation.  Most all carriers will review your financials every year to help determine their premium for the risk exposure.  Payroll and/or Gross Sales will impact your annual premium.

In addition, periodic inspections are required.  Frequency will vary by carrier and their risk exposure (are they covering PROPERTY such as the mill, any building or structures, other equipment or are you only carrying General Liability).

When they are potentially "On the Hook" to payout ten's of thousands to Millions of dollars in a loss, they need to make sure they have a clear picture of our operations.  The good news is, once he's done you should have some time to "Clean Things Up" to satisfy the carrier.  Work with your local agent to satisfy the carrier.

Good luck and let us know how it goes!

Also...just a side note.  Let your agent know EVERYTHING you do in your operation so that he/she can place the proper coverage for you.  Ex:  If you have a mobile sawmill operation and then do some part-time roofing on the side - AIN'T Covered (unless you're rated for it).  Make sure your agent rates for all exposures you do!  If you advertise something (services/products) on a website or Facebook, the carrier will look at that and evaluate you accordingly!

Also...Insurance will never cover everything.  never will!  But you and your agent can make most "Issues" go away with proper coverage!

[moodnacreek]

I don' think anybody could really answer this.  Having been denied insurance several times over the past only to get it later on a silver platter and only get inspected once in 10 years. Other than state regulations, the carriers do what they want and change constantly.

[Bert]

This is what I do for my day job. What is your policy for? There are different things to look for for different coverages. The biggest thing for the carrier is actually insuring what they wrote they policy as. For example, your not being insured as a retail store and have a logging operation where you "retail" logs :D. Its really not a big deal for the average business. A premium audit is where they determine your WC or GL premium based on your sales or payroll. Thats another side of insurance. Insurance inspections are just an overview of your operation and giving you recommendations on what to do to reduce loss potential.

Most inspectors are independent contractors. They dont get paid unless they get a completed report with photos. That is probably why this guy is chasing you down.

Heres the real purpose of inspections. Agents lie. Lets say you shop a policy with two agents one gives you a better deal. So you tell the first agent... hey this guy gave me a better quote. Now the second guy wants to compete so he puts your house on the application as having a 5 year old roof  instead of a 30 year old roof that leaks and your woodstove in as radiant so the rate (or risk) to the carrier goes down. He gets the sale, but insurance company is on the hook for a bad risk.

[DR Buck]

I don't know what the outcome will be but the rep took photos of both my mills, log trailer, and kiln.   Then asked about employees which I have none and types of customers I service.

My policy covers my equipment and liability.

[Bert]

It will be fine. For the most part its a formality. You might get a letter in the mail saying you need a serviced extinguisher or something like that but nothing thats going to cause big headaches.

[SawyerTed]

Better to make allies out of the insurance inspector, building code inspector and the fire marshall.  They can help prevent losses if they see you are interested in their help.  Or they can make your life "heck" if you view them as the enemy.  I've experienced this first hand with the fire marshall in my last job.  

The insurance inspector is programmed to prevent losses.  So we are actually on the same side.

[Southside]

Hopefully it works out.  My guess would be your account got flagged due to your recent move.  Just remember he was there representing the interest of the insurance company, not you. 

[DPatton]

Better to make allies out of the insurance inspector, building code inspector and the fire marshall.  They can help prevent losses if they see you are interested in their help.  Or they can make your life "heck" if you view them as the enemy.  I've experienced this first hand with the fire marshall in my last job.  

The insurance inspector is programmed to prevent losses.  So we are actually on the same side.

SawyerTed, 
you are dead on with what you said. I work in the commercial construction industry and working in cooperation with your city or county inspectors, and state officials is usually always easier than trying to fight them. In my area it's usually the municipal plumbing inspector who throws up the most hurdles. But their requirements are usually relatively simple and inexpensive to meet. The state electrical inspectors in my area are quite knowledgeable but willing to work with any respectable electrical contractor. In my experience it's the state fire marshal official that proves to be the the more difficult and expensive to satisfy. 

[YellowHammer]

My insurance inspections are a major undertaking, and are very much like the formal safety audits at work.  We fall in the middle for a business and as we have grown our insurance inspections have grown also.  Mine aren't a formality, on my initial inspection I was given a check list a dozen pages long with initials where the items were inspected and a few weeks to fix the gigs or no insurance.  

Every year, I get inspected, I can set my calendar by it.  

Let's see....our insurance requires us to do a lot of things. Pages and pages. Here are a few highlights.  

Certified electrical inspector contractor as well as one time county electrical inspection to make sure we were in code.

Mandatory yearly inspections with the County Fire Marshall.  Yearly reviews and updated Certificates of Occupancy for workplace, posted evacuation plans (seriously, with a building that has one wall of nothing but huge doors, the evacuation plan is to "run to the light", emergency lighting, Exit signs, fire extinguishers, first aid kits, no extension cords, emergency contact numbers posted, etc.

Signed off annual fire drills.  The inspector asked one of my employees if we actually conducted fire drills.  

Yearly Infrared Circuit Survey, with temperature reports of all major circuits and breakers required by the insurance company or immediate drop of policy.  I get the TVA to do it, as they have an office and inspectors set up just to it.  They say lots of insurance companies now require it.

Annual inspection of kilns.

Annual inspection of retail sales building for workplace hazards.

Yearly on site financial audit with a guy in a three piece suit.  

Required to take a hot work permit class since I have welding equipment.

Was required to redeed the 5 acres I do business on.

Was required to enclose all my fluorescent tubes in protective plastic sleeves.  With one building having 40 tubes, we are gradually moving to LEDs as we replace them.

Housekeeping, housekeeping, housekeeping.  Flammable materials in cabinets, garbage cans emptied on schedule, required to clean up showroom weekly.

One a year the checklist is confirmed by the inspector and he signs off on it.  As a reward I get to continue to send them my massive premiums checks.  

The list goes on. My inspector is as sharp as a tack, nice guy, but he's seen it all. One time I had left my electrical box door open.  He spotted it and made me close it immedialty after he had checked for sawdust.  He wanted to know why it was open.  He then checked the labels on the circuit breakers to make sure they correct.  

If anybody has insurance for primary and secondary lumber processing, retail sales and storefront insurance from another carrier, I'm interested.  My company is good, but they don't play around.  

[Ianab]

Thing is that you and your insurance company do have common ground.

They don't want to pay out on a claim, and you don't want to have to make one. Pain in the wallet for both of you. So the things like safe wiring / fire extinguishers / chemical storage are in both your interests. 

Having employees and public access complicates things even more as your liability exposure goes up. But same thing, neither you, nor your insurer, wants to deal with a claim, especially one that might suggest negligence on your part. 

At least locally, if someone gets injured in a workplace, it usually ends up in court. Being able to show you took "All reasonable steps" to avoid an accident (and have the paperwork to prove it) counts in your favour if things to go wrong. 

[PA_Walnut]

Of course, ALL insurances are risk-based, so they are gambling (calculating) the risk:reward ratio. The more they can stack the odds in their favor (at your detriment) the better they like it.

One can/should look at the "self insuring" for physical loss and/or damages of property and see if paying yourself into an escrow account (and you taking the risk) is more feasible. Many smaller operators probably fit this model.

Liability and injury insurance, especially with customers and/or employees  on your site, is a WHOLE other matter. One claim could bankrupt you and/or land you with a legal and fiscal burden steeped upon your head!

Insurance people, I believe are politicians and car salesmen that flunked-out. They pretend to be smart and helpful, but all they do is fill out papers which get sent to an underwriter who can calculate that risk:reward ratio and assign dollars to the calcs.  :D

YHammer is Yoda-wise, so he's probably a good model to follow. I suspect Martha has to do the inspection prep/cleanings as he has trouble leaving the saw!  :D ;D :D

[terrifictimbersllc]

I've been inspected (maybe it's more properly called audit) for my liability policy 3 times in 11 years.  First time was in my driveway. Other two were at customer property, both times I checked with the customer first then got back to the inspector that it was OK.  All 3 times took about 5 minutes each, several photos and several questions that was it. Each time it cost me $100 more for that year which I think went to the inspector guy who is an independent contractor to the insurance co. to do these inspections.  

All 3 times I wondered whether anything would come of it and nothing other than continuing to be covered by the policy. Best I can tell the underwriter requires this every 3 yrs or so to make sure they know what I'm doing (sort of).