The financial savings of proper loss control would have far outweighed the cost of hiring the electrician. The repair may have cost $3,000 to $4,000. The claim ended up costing $1.5 million, not including business interruption costs and premium increases.

Helping insureds spot the red flags

In all three of these examples, a comprehensive loss control initiative could have helped prevent disaster. Three must-have elements of a comprehensive program for lumber and wood products businesses:

Proper disposal of oily rags. When left in a pile on the floor, oil-soaked rags can oxidize and produce heat, sparking a fire. Agents should explain the risks to their insureds and offer best practices for disposal, such as placing oily rags in an air-tight, fire-resistant container and hiring a hazardous waste company to remove them.
"Hot work" risk mitigation. Common activities like welding and grinding create open flames and sparks that can ignite flammable equipment quickly. Human error is a common thread in these types of fires. Instilling a permit system that requires workers to log "hot work" activities and review ignition-reducing best practices prior to starting the job will help insureds prevent fires and develop a culture of safety.
Employee cyber training. Across industries, staff members are the weakest link in the cybersecurity chain. Some of the biggest risks are spoofing and payment fraud emails, where a cybercriminal pretends to be a vendor and requests updated payment information from a company employee. Too often, staff respond without a second thought, inadvertently exposing their business to a six-figure loss. Agents and brokers should encourage insureds to protect themselves by adding a second layer of verification, such as calling the vendor by phone, before sharing any payment information.

Working with specialty carriers

When insureds' needs go beyond general business liability policies, as is the case in lumber and other niche industries, specialty carriers bring considerable value. They not only provide deep expertise in underwriting their niche, but they also know the unique coverages companies in their industry need.

Special Reports /

Lessons from unique lumber industry claims

Related Stories

Recommended For You