How is my premium for liability insurance compiled? Who sets the numbers? What are all the pieces (extra fees, etc.)?
This will vary slightly with each insurance underwriter. The premium price is determined by several factors.
- Insurance Application Form: Your answers to all of the questions on your challenge course insurance application form will have an impact on your final premium.
- Your premium will be directly proportional to what your exposure for risk is. Your organizations exposure to risk is determined by many factors including: your payroll totals; the number of “participant days” or clients who go through your challenge course program; the number of facilitators you have trained, the amount of training they have received, who provided it, how recent it was, are they a “certified challenge course practitioner”; product liability is also a consideration if manufacture or sell a item to the general public (ex. Making a portable Spiders Web” and selling it to a local group or client)
- Experience, Experience, Experience: Your experience operating or having staff with experience facilitating challenge courses will work in your favor – having no previous experience might count against you.
- Prior claims history: If you have ever had a claim made against your company or insurance policy this may count against you (will depend on the nature of the claim)
- CurrentStateof the Market: The insurance industry makes its money by investing your pooled premiums and hoping their gains exceed their losses. When the stock market goes down, insurance premiums tend to go up.
What is the role of your insurance agent, broker, and/or carrier?
The insurance agent’s responsibility is to directly handle the client’s needs and provide hopefully quick friendly and timely service. Your insurance agent or agency will seek out the best policy for your organization and securing the terms and conditions for the actual insurance policy. In some cases, insurance brokers are limited on the types of policies or underwriters that they can work with based on state law, company vendor preferences, affiliate and/or franchise limitation.
The insurance broker or wholesaler is basically a middleman between the insurance agent and the actual insurance company or carrier. The broker actually performs many of the functions of insurance companies including underwriting and issuance of the actual policy but the broker like the insurance agent do not bear any actual risk. Brokers and insurance agents get paid a fee or commission to perform the functions of the insurance carrier (because the insurance carrier does not have the resources available or they don’t want to underwrite and issue policies to each individual or organization looking to buy insurance).
The insurance carrier is who owns all of the associated risks, handles the burden of much of the cost if a claim is made against your organization, pays to fight the claim and /or actually pays the claim (less your deductible). Some insurance companies simply an organization with a lot of capital (cash) that they want to have earning money for them. Offering insurance is like playing the stock market; they put their capital at risk and collect a premium fee for the potential of absorbing that risk if a claim were to be made against you.
What benefits do I receive by joining a pool of insured parties?
Joining an insurance pool such as the ones offered through AEE and ACCT is a great way to help bring down your premium by working with an insurance agent or broker that understands your industry and truly knows what it is that you do. These agents are involved within the challenge course industry, attend industry conferences and have a vested interest in the success of challenge course programs.
What has been the role of ACCT in putting together the insurance program?
ACCT’s and AEE’s insurance provider has an "A" rating or better. (A.M. Best provides ratings in the insurance industry). ACCT and AEE also helps to educate the underwriters about the challenge course industry. These non-profit membership and trade associations have a vested interest in the success of their insurance programs, so that their members maintain access to good insurance coverage at a fair cost.
Will We Need Workers Comp Insurance?
Workers Compensation Insurance covers the employer’s responsibility if an employee is injured during the course and scope of employment. It also pays lost wages, benefits to surviving spouse, etc. Each state has laws that determine who is an employee and what circumstances constitute an employee/employer relationship. Workers Comp Insurance will pay what the employee what they are legally obligated to pay under the applicable state law (this will vary by state). Currently Workers Compensation Insurance is required in allUSstates exceptTexas.