In the Know: Shopping for insurance

In the Know is a monthly partnership between LP Gas and Propane Resources. This month, Adam Zoellner and Sean McCann explain how to position your propane company when shopping for an insurance provider.

QUESTION: What do insurance providers like to see in a propane company?

Photo: MicroStockHub/iStock / Getty Images Plus/Getty Images

ANSWER: Have you ever wondered how insurance companies in our industry assess risk? What makes a company insurable versus a company that isn’t? We reached out to an expert from a large insurance company on the matter and consolidated our findings into three areas of focus:

1. Tenure: This is one of the most important attributes of a new customer that insurance companies assess. How long has this propane company been in business, and what is its track record? How many insurance claims has it filed in its existence? How many in the past 10 years? These basic questions tell insurance providers more than you think.

2. Internal controls: Written internal controls and procedures in the company handbook don’t seem like a big deal, but they can be the difference between life and death. Written controls and procedures are the how-to guide for the drivers, techs and CSRs of your company, allowing them to work through their day with the confidence to take care of the customer safely. Insurance providers have much more confidence covering a company when they know their insured parties have written procedures in place and are available to everyone in the organization.

3. Documentation: We have all heard the phrase, “If it’s not documented, then it didn’t happen.” Do not experience that pitfall. Document everything. Most folks document easy things like lease agreements, delivery tickets and customer contact info, but so many activities need a paper trail. Simple tasks, like a tank set, can lead to dozens of data points that need to be tracked and documented, including tank serial number, regulator number, parts and fittings used, the tech’s name, installation date and time, initial pressure test and customer signature. Leaving a paper trail that can be referenced in a court of law reduces your organization’s risk of exposure. It also helps your insurance agent sleep better at night.

It’s a common misconception that larger propane companies receive more competitive insurance rates. This simply is not true. Company A delivering 1 million gallons annually might have a better insurance premium than Company B delivering 10 million gallons because Company A does everything it can to be the safest operation around, while Company B prioritizes speed and profits over safety. The propane industry subject matter experts do not see merit in the number of gallons a company delivers. “Quality over quantity” is a good mantra to drill into your organization’s culture.

Insurance may be one of the less glamorous aspects of your company’s operations, but everyone needs to think about it. Instilling a safety-first mindset in all employees and doing everything you can as a business owner to minimize risk will pay dividends when shopping for a new insurance provider.

Adam Zoellner is a mergers and acquisitions manager at Propane Resources. He can be reached at adam@propaneresources.com. Sean McCann is a financial analyst consultant at Propane Resources. He can be reached at sean@propaneresources.com.