Bret Dixon Insurance

Summer 2013


Bret Dixon Insurance News



Our newsletters are intended to keep you up to date on pertinent industry news and offer more in-depth insight into various types of coverage and endorsements.  We publish our newsletters at least once each quarter.  We hope you enjoy it.


Thank you for your patronage!


Recommendations Getting Closer Scrutiny   


We've talked about rising rates in this space before, as companies look to balance out after tremendous storm damage losses across the nation the last few years.  Another side affect of periods of large claim activity is closer attention being paid to inspections and the subsequent recommendations generated by those inspections.


For commercial businesses, annual inspections are pretty much the norm.  But with personal lines - homes, condos, rental property, etc...inspections vary.  Some insurers never inspect, some of them inspect a handful of policies as a sample, and others may only inspect based on certain criteria such as the age of the structure or past claims activity at the address.  Personal property inspections are almost universally exterior only, but inspections on commercial property usually include inspecting the interior as well.


Typically, a company will inspect a commercial risk shortly after writing the policy (30-90 days).  If you have your lines of business split amongst insurers, each insurer may want their own inspection.  So if your property coverage is with Company A, your general liability is with Company B and your liquor liability is with Company C, it's quite possible you could have three different inspectors wanting to schedule a time to meet with you at your property.


These inspections are to evaluate the risk exposures at your property, estimate a replacement cost, and verify that your property and operations are as presented to them on the application by your agent. If they are inspecting after you have renewed your policy, they're checking to see if those things have changed from a prior inspection. 


The inspector will observe the condition of your building and any risks on the property or in the neighborhood.  They may also measure the building, sketch a diagram, collect other physical data and snap some pictures. 


Within a week or two of the inspection, you may receive a letter outlining certain conditions at the property which need rectified. Some of these may be advisory (just letting you know about a situation) or mandatory.  As you can probably surmise, mandatory recommendations mean they want some type of corrective action.  They'll typically give you 30-60 days to correct any issues.  Proof of these repairs may be in several forms.  Some companies will accept your signature on a recommendations list, attesting that you've fixed any situations listed.  Others may require a receipt or work order from a contractor or even pictures showing the repairs.


A comprehensive list of what is looked for is too big for this column, and, based on varying state laws and ordinance and code variance from municipality to municipality, impractical.  But some of the more common recommendations issued are listed below.   

  • debris around the building
  • leaking pipes
  • roof damage
  • loose wiring or uncovered electrical outlets or panels
  • overloaded electrical outlets
  • emergency lighting not up to code
  • steps or porches without proper handrails
  • uneven surfaces marked with reflective tape/strips
  • doors swing outward, with direction of egress
  • Parking blocks around buildings & potholes in parking lots
  • Protective safeguards in compliance and working order. These include hoods & ducts, fire extinguishers, fire suppression system and sometimes sprinkler systems and premises alarms, if present.  See service requirements here.
  • age and condition of major building systems - roof, electrical, plumbing and heating
  • deteriorating side, soffit, and door/window seals - anything that could prevent moisture from getting inside the structure and causing further damage

No Need to Panic


Companies understand that the recommendations they issue can take some time to be addressed. There are things that you can take care of and there are some things that may require a 3rd party vendor or contractor to fix, which can complicate the speediness of repairs.


If proof of compliance with mandatory recommendations still isn't received at the end of the initial period the company gave you to make repairs, insurers will go one of two routes.  First off, is to let the matter go and non-renew you at the end of the policy term.  Few companies still do this.  If they've already identified hazardous situations that may elevate their exposure for a loss, they're not likely to give it more time for a potential loss to occur.


The more common approach is to issue cancellation for "non-compliance with mandatory safety recommendations."  All is not lost when the cancellation is issued.  Cancellation can only be issued for another 30-60 days out (depending on your state), and most companies will accept proof of compliance with recommendations and withdraw the cancellation provided it's received before the date of cancellation.


What Does It Matter?


Basically, it comes down to that old adage, "an ounce of prevention is worth a pound of cure." If a $40 handrail on a set of steps could prevent one person from falling, thus saving hundreds, thousands, perhaps even tens-of-thousands of dollars in medical bills, the insurer is going to push for it. If mandating that the use of extension cords be curtailed by installing an additional outlet for a few hundred dollars, and it prevents one large fire, the insurer will push for it. Some companies are more diligent than others at enforcing certain things, but they all do it.


Many people think of recommendations as nit-picking on the part of their insurer, but in general, the company is really just looking out for both of you. They want a risk that's less likely to suffer a loss, making them more profitable. You get a business less likely to be interrupted by a loss, allowing you to focus on day-to-day operations and turning a profit.


Can Online Reviews Make or Break You?


In mid-to-late May, it was the customer service disaster heard around the Internet. An Arizona restaurateur, fed up after years of negative online reviews and an embarrassing appearance on a reality television show, allegedly posted a social media rant laced with salty language and angry, uppercase letters that quickly went viral, much to the delight of those who love a good Internet meltdown.


"I AM NOT STUPID ALL OF YOU ARE," read the posting on the Facebook wall of Amy's Baking Company in Scottsdale, Arizona. "YOU JUST DO NOT KNOW GOOD FOOD."


It was, to put it kindly, not a best business practice. Add to that an appearance earlier this spring on the Fox reality TV show "Kitchen Nightmares" - where celebrity chef Gordon Ramsay gave up on trying to reform the restaurant after the owners refused to listen to his advice - and you have a recipe for disaster. 


In the evolving world of online marketing, where the power of word of mouth has been wildly amplified by the whims and first impressions of anonymous reviewers posting on dozens of social media websites, online comments, both good and bad, and the reactions they trigger from managers, can make all the difference between higher revenues and empty storefronts.


Businesses that depend on good customer service reviews have all grappled in recent years with how to respond to online feedback on sites such as Twitter, Foursquare, Yelp, Facebook and Instagram, where comments can often be more vitriol than in-person reviews because of the anonymous shield many social media websites provide.


The general consensus of digital marketing experts is that no matter how ugly the reviews get, businesses need to be willing to acknowledge mistakes, apologize, and offer discounts to lure unhappy customers back.


In the past, customers sent back bad food, they gritted their teeth over service delays, and fumed at home over perceived overcharging.  Maybe they were still steamed about it the next time they saw friends and family and maybe they still cared enough to vent to them about their treatment.


Nowadays, they're getting on social media right away and telling their friends, family and anyone else they can how bland the food was at a restaurant they went to, how their garage screwed them on car repairs, how a parts supplier took too long to get a part in stock for their dryer. It takes the customer experience to another level.


The challenge becomes how you respond to someone who doesn't think your product is as great as you do?


In the case of this Arizona restaurant, the bad reviews were compounded by their reality TV experience. The couple who owns the pizzeria said they needed professional guidance after six years of combating terrible online reviews.


The show "Kitchen Nightmares" follows celebrity chef Gordon Ramsay as he tries to rehabilitate struggling restaurants with menu makeovers, supplier and vendor changes, coaching up and reassigning personnel, and overhauling a restaurant's look. After sampling a dish he confronted the owners for growing increasingly irate over his constructive feedback. Among his many critiques: store-bought ravioli smelled weird, a salmon burger was overcooked and a fig pizza was too sweet and arrived on raw dough.


"You need a thick skin in this business," Ramsay said before walking out. 


After the episode aired in mid-May, the restaurant closed temporarily. Their answering machine was full and emails were not returned. A post on their Facebook page later claimed their social media had been hacked, although hundreds of commenters expressed doubt. It appeared that someone posting as a member of the family had been insulting customers over negative reviews since at least 2010.  The story exploded into one of those things that bounces all around the Internet.  It was all a textbook less on how not to respond to criticism.


While many corporations hire communications experts and firms to respond to every tweet, Facebook message and online review, the wave of digital feedback can be especially challenging for small businesses with small staffs.


For one thing, there is so much online content to wade through. According to a study by the Pew Internet & American Life Project in 2011, roughly 60% of all adults get information about local businesses from search engines and entertainment websites.


One social media marketing consultant described customer service as a "spectator sport". It's not about making a particular reviewer happy on a social media website, which is often a big misunderstanding. It's about the thousands, perhaps hundreds of thousands of people, who will come across the review at some point and are looking to see how you handle it.


In their episode, the Arizona restaurateurs are seen yelling and cursing at customers inquiring about undercooked food or long delays. They blamed online bullies.  "We stand up to them," they tell the camera at one point. "They come and they try to attack us and say horrible things that are not true."


Digital experts say this is exactly how not to respond.  If your policy is to become combative and berate the customer online, that doesn't create good public relations.


A 2011 Harvard study found Yelp's 40 million reviews disproportionately affect small businesses. The research found a one-star increase in Yelp's five-star rating system resulted in a revenue jump of up to 9% for some restaurants, while chains with sizeable advertising budgets were unaffected.


One consultant, Jay Baer of Convince and Convert, a social media marketing firm in Indiana, recommends to his clients to create a response matrix representing different potential complaints that staff can refer to whenever bad feedback arises. Creating the comment chart before the bad publicity hits helps ensure businesses aren't responding to angry or disappointed customers with their own anger or disappointment.


"You have to respond 100 percent of the time, whether you like it or not," Baer said. "Businesses need to assign someone to stay on top of it."


Spotlight On: First-Party Claims


A first-party claim is a loss that affects you, the named insured of a policy. These are usually property losses in most instances.  First-party claims are of the utmost importance to our Agency because they affect you, our clients, directly.  With second party (your customers) and third-party (someone one of your customers injures) claims, there can be uncertainty over the extent of the damage and the cost incurred. In some instances, you may be totally unaware that a potential claim has even occurred until you're sued.


Given that we're in the throes of storm season, let's tackle some of the required documentation to get a first-party claim settled.  Please note, these are "guidelines" only.  Depending on your company and your policy language, what's required of you and what's covered may vary.


Building Damages - Owner Occupied Premises

Needed:  contact info for your contractor


For buildings owned by you, your company will work with your contractor in reaching an agreed scope of damage and may prepare an estimate of repair, using their estimating system.


Building Damages - Tenant Occupied

Needed:  copy of lease, list of improvements the tenant has made, loss documentation (receipts for damaged property, contracts on leased/rented equipment)


For buildings leased by you, your company will need to review the building lease to determine the extent to which building coverage may apply.


Business Personal Property (BPP) loss

Needed:  list of damaged contents, loss documentation (receipts for damaged items, quotes for replacement items from the Internet or vendors)


You will need to prepare an itemized list of all the damaged contents including the quantity, age and replacement cost of each item. You will need to submit supporting documentation for these items.


Business Income

The Business Income Loss Coverage is usually available for 12 months or the "Period of Restoration", whichever is less.  The "Period of Restoration" is the length of time from the date of loss until the time the business should be up and running.  There are three facets of Business Income Coverage. They are Continuing Normal Operating Expenses, Ordinary Payroll and Loss of Net Profit.


Continuing Normal Operating Expenses:

Needed: list of expenses that continue, loss documentation (copy of mortgage, property tax bill, phone bill, contracts)


Business Income coverage provides for reimbursement of normal operating expenses that continue while the business is closed. These can include mortgage payments, property taxes, lease payments, advertising costs, etc...


Ordinary Payroll:

Needed: list of employees including names, addresses, phone numbers and SSN's


Ordinary Payroll coverage provides payroll to employees (other than Managers and Owners) for up to 90 days after the loss.


Loss of Net Profit

Needed: Daily Sales Records and Monthly Profit/Loss Statements, Federal tax returns (up to 3 years prior) and corresponding Monthly Profit/Loss Statements (where requested).  We have created a couple of spreadsheets to help you compute your loss, which are available under our Claims page.


The Loss of Net Profit coverage provides payment for the loss of net profit during the Period of Restoration. It does not provide coverage for "loss of sales", only the loss of net profit after expenses and other deductions are applied to those sales. Net profit will be calculated on your monthly profit/loss statements. Your company may ask you to provide your Federal Tax Returns for up to three years prior to the loss and the corresponding monthly profit/loss statements where they feel it's warranted.


Other Coverages:


There may be several other coverages that may pertain to your loss. You should refer to your declarations page and policy form for more info.


Use BDI's Partnerships for Your Benefit



Bret Dixon Insurance has added a few new partnerships in recent weeks that may be of interest. 


Bar & Restaurant Equipment

We've just recently teamed with St. Charles Restaurant Equipment, who promises "big deals" to clients of Bret Dixon Insurance.  Specializing in both new and used equipment, turn to them if you're in the market for a particular piece of equipment.  Contact owner Clark Morelli at 636-244-2378 or by email here.


Point-of-Sale Systems

We've also teamed up with Future POS, a tech vendor specializing in point-of-sale systems.  Their systems can be customized with a variety of options, so if you're interested in upgrading your current system, contact Tom McLeod at 314-369-1242 or by email.  Don't forget to mention our name. 


Although our Links page is being redesigned and updated, don't forget to check there for various third-party organizations and vendors when you're in need of something. 


The GAP, What It's Worth vs. What You Owe          


Ahhh, a new car!  Check you out.  As great as it feels to close your door and breathe in that new car smell, reality says something altogether different.  It says that shiny new vehicle isn't exactly the best investment. Not to be Debbie Downer, but many estimates have your pretty new ride losing 15-20% of its value the instant you drive it off the dealer's lot.




So what if a few months down the line, you're fiddling with your new radio and don't see that dog in the road until the last instant? You veer madly to one side, avoiding poor little Lassie, but slamming into a pole or some landscaping blocks instead. You're not injured, but your new car has suffered a fair amount of damage.


Enter, stage left, GAP insurance.


GAP stands for Guaranteed Auto Protection, and it literally fills the financial gap between what your car is worth now (minus depreciation for age, mileage, physical condition and other factors) versus what you still owe on the loan, should you have an accident that totals the vehicle.


Let's crunch some numbers for a better picture of how GAP insurance might help protect you:


Original Vehicle Value............................................$25,000

What's owed on the loan at time of loss...................$20,000

Vehicle's Current Value..........................................$15,000

Insurance Settlement (suppose a $500 deductible)...$14,500

What you still owe on the loan................................$5,500


Under this scenario, you'd be responsible to continue paying $5500 still owed on a loan for a vehicle that you no longer have.  Unless, of course you had GAP coverage on your policy.


While this coverage isn't for everyone, it could make sense for you if:


You made a low downpayment (less than 20%)

Your vehicle depreciated rapidly

Your interest rate is high

Your term is for more than four years

You rolled over costs (money owed in a trade-in) into your new car payment


There's also coverage available for leased autos as well. 


Helping St. Louis Childrens Hospital

2013 MCLBA Golf tourney check presentation

Bret Dixon Insurance recently helped organize the 13th annual golf tournament for the Madison County Licensed Beverage Association (the Madison County chapter of the Illinois Licensed Beverage Association).  We have been helping put this tournament on for years, and are pleased to announce that this year, the MCLBA, raised a little over $8000.  This year's chosen charity was the Shriners Childrens' Hospital in St. Louis.


We are pleased to be able to contribute to this worthwhile cause.  Thank you to all our players and sponsors for your help in making the tournament a success.  We hope to see you again next year.


Check Out our Personal Lines in 2013

We offer a full range of personal lines coverages for homeowners, condos, renters and rental property, auto, boats, motorcycles, RVs and more. Give us a shot at your next renewal to see how we compete.  Get discounts for putting additional policies with the same insurer.



Carrier Corner



We represent over 15 insurance carriers directly and have access to many, many more via brokers, but you may only know one or two that we deal with.  If you're dissatisfied with your current company, let us know, we may be able to find you another fit that's better to your liking.







 Bret Dixon Insurance is a Trusted Choice Agency.  Learn more about it here




  Have a great 4th!


Bret Dixon Insurance will be closed this Thursday and Friday, July 4th and 5th, in observance of Independence Day. 


If you anticipate needing service during that time, please contact us ahead of time so we may assist you in a timely manner. 


If you have issues while we're closed, check our Claims & Payments page for your Company's direct contact info. 


Everyone have a safe and fun-filled 4th of July.


Bret Dixon Insurance

Toll-Free Phone: 1-888-249-0035