Expanding options: as the insurance market shows some signs of softening, dealers will be able to control inflated costs and obtain better coverage if they address the critical elements that policy writers evaluate

Prosales, Jan, 2005 by Pat Curry

One solution may be insurance wrap policies, Raven says. Already used in California and Arizona, where liability coverage is extremely limited and expensive for trade contractors, wrap policies cover everyone on a project. That gives a plaintiff's attorneys fewer targets and makes a project less attractive for litigation.

Broad form indemnification clauses warrant particular attention because coverage for it is disappearing as insurance companies institute new policy forms that eliminate coverage for sole negligence. Some insurers are already using the new forms; others haven't yet switched over, but the forms are en route. "It's like a freight train coming down the track," says Bob Scullin, vice president of The Graham Co., a regional insurance broker based in Philadelphia. "These are big deals. They're not small claims. The watchword [for dealers] is to take the time to understand what is and isn't provided in their policies and to make sure they understand what they're being asked to sign up for [from the builder]."

Healthy Approach

While risk managers and safety officers are sweating out liability and workers' comp coverage, their counterparts in human resources (HR) have equally daunting challenges with health care. They typically dread the annual renewal process, knowing it will bring dramatic increases in premiums, reductions in benefits, or both. Plus, they know how important health benefits are to attract and retain staff. Even in this tough arena, though, some dealers are finding ways to offer health care at reasonable rates.

In 2003, Steve Coleman actually got good news on the coverage he offers his 160 employees at Anderson Lumber Truss Co. Millwork and Rental in Alcoa, Tenn., whose single location includes a door shop, millwork shop, truss plant, and rental business. At renewal time, he expected a 15 percent increase over the previous year. Instead, the quote was a more affordable 4 percent increase. Part of the reason was a corporate wellness program that offers his employees incentives to stay healthy. Coleman, president of the company, pays half the cost of a gym membership if employees work out. Bonuses are paid to employees who get down to the weight their doctor recommends ("Some people have lost as much as 100 pounds" he says) or quit using tobacco products. "We have more employees now that [have quit smoking] and others on a wellness program," he says. "Those are little things that help. Insurers like to hear that."

As another strategy to keep health care affordable for its 79 employees, Winston-Salem, N.C.-based Smith Phillips Building Supply chose to partially self-insure; the company sets aside funds to cover a portion of its insurance risk and uses a third-party administrator to run the program. The current plan costs employees at Smith Phillips' three retail locations and its millwork and industrial cut-to-size divisions $47 per bi-weekly pay period. That same level of coverage through Blue Cross Blue Shield would have cost them $181 per pay period, says general manager Chris Yenrick. To the employees, the new plan has the appearance of a fully insured program, with a $20 co-pay, but the company retains a high-dollar deductible that covers most expenses.