We have a love-hate relationship with insurance. It’s supposed to keep your company afloat in case of catastrophe, and in today’s economy you need all the protection you can get. But, when you look at the bill, insurance may actually feel more like the gaping hole in the floor of your ship.
Keeping these costs in line requires a combination of frequent monitoring of your needs, exploration of new options and maintaining your company’s risk exposure. Here, pool-industry veterans offer tips on how to walk this line.
- Carefully raise employees’ contributions. It’s tough to increase employee burden, but if you offer a generous health plan, they may be able to handle a higher premium or deductible.
- Manage workers’ compensation. The best way to manage claims is to prevent them. If you’re not having regular safety meetings for your staff, start doing so now. Try beginning with a safety meeting once a week, each of which would address a different topic.
- Try to resolve lawsuits. Sometimes, homeowners associations or apartment complexes might name a given company as one of many defendants on a lawsuit before they are even appraised of the issues.
- Company owners: Take your family off the company insurance. Don’t place family members — especially children under 25 — on your company’s auto insurance, unless they actually work for you. You may think you’re saving money, but it actually costs more. And if there’s an accident, the pain will be company-wide.
- Keep driving employees accountable. When you entrust a staffer with a company vehicle, you need to ensure that they’re doing a good job, both on and off the clock.
- Hire only insured subcontractors. If you’re the pool builder, you ultimately will be held responsible for any problems that arise, no matter whose fault it is. That’s why insurance companies will charge you more for your liability coverage if your subcontractors aren’t insured.
- If you’ve stopped working with home builders, review what coverage you actually need. Many home builders require their subcontractors to carry additional insurance as a condition for working with them. If none of that work is coming your way, or if your home builder only throws you a pool or two a year, honestly assess what you need.
- Shop around. If you stick with the same company for too long, you may find that the costs just keep rising astronomically. That’s why it’s good business to shop around every so often.
Start by looking at low-risk areas. For example, if your staff rarely has hospital stays, you can raise the deductible there.
To soften the blow to employees, consider setting up a 125 Cafeteria Plan or similar program so that deductibles are removed from their paychecks before taxes are taken out.
The insurance industry is promoting Health Savings Accounts and Flexible Savings Accounts. With these, employees set money aside from each paycheck that goes into the account. Those funds then are used to cover employee costs, such as co-pays and prescriptions.
When considering these options, however, research the provider. Some plans are simple and straightforward, but others may be hard-to-follow and mired in paperwork. In addition, some say, you may be refused your money after you’ve already paid for a prescription.
“[You] don’t find out until months later that they’ve decided not to cover it, so you’re out the money,” says Ken McKenna, president of Tampa Bay Pools in Brandon, Fla., a Pool & Spa News Top Builder.
Some insurance companies can provide materials to help. If not, safety-meeting kits are available for purchase online.
“The HOA’s and attorneys go out and try to get this business,” says Brad Cotton, CFO of Mission Pools in Escondido, Calif., a Pool & Spa News Top Builder.
When that happens, Cotton immediately contacts the plaintiff’s attorney and tries to resolve it. Sometimes, there’s nothing wrong with the pool. Other times, it’s something minor. If that’s the case, Mission Pools will offer to fix it if they are released from the lawsuit. They warn their own insurance carriers not to pay anything out until the builder has tried this.
The same holds true for medical coverage. If a family member becomes sick, everybody’s premiums go up. Plus, you may find a better deal for your family elsewhere.
Once a year, pull the motor vehicle record of each employee who drives a company car or truck. If you have a staff member out there with a lot of speeding tickets or accidents, you can stop him from using a company vehicle.
To reduce your own coverage costs, limit your business to other companies that have covered themselves.
“Some of that coverage costs $3,000 or $4,000 more a year,” McKenna says.
Some like to compare rates every year. Others recommend every two years. When getting a quote, don’t always assume that the package deals are the way to go. Find out if different providers will give you better rates on different kinds of insurance.