Post by bkushnier on Jun 25, 2019 10:36:51 GMT -5
In Canada you can legally purchase most insurance products only through a licensed broker or agent. An agent works for an insurance company as their employee selling directly to the public (think State Farm or Desjardin), while a broker is an independent who negotiates with multiple insurance companies that do not sell directly. To my knowledge there are no direct sellers who will insure any commercial operation relating to fireworks. That leaves brokers.
Most brokers will have a very difficult time finding an insurer to provide coverage for anything related to explosives. Very few insurance companies will consider insuring a business that manufactures, imports, distributes, or uses explosives. Right now the global insurance market is not doing so well, and insurers are looking for safe bets. I know all this because I am an insurance broker. I'll try not to be self-serving in this post, as I'm not here to say, "if you want to know how to buy insurance for fireworks the quick answer is from me". Instead I'll try to give you your options on a high-level, and what to watch out for along the way.
Step 1: Find a broker
There are many insurance brokers across Canada. You can find a local broker that runs a shop in your town and walk in, or you can do a quick internet search and call up an international brokerage that has offices all over the world. I promise you there are a lot of us around.
A broker is a professional shopper who is negotiating on your behalf. Talk to them and make sure you have the right fit. This is like picking a real estate agent, an accountant, or a lawyer. You want someone who you believe has your interest at heart, and you believe will do the job. They need to understand your work so that they can explain why you are safer than you may seem. The better they know what they are doing, the more likely the insurance underwriter will feel comfortable working with them. Going to five brokers and giving them your information is not a good way to do it either, as insurers will generally work only with the first broker that contacts them. That means if you give your information to someone and they go out to every insurer out there, the next four brokers may not be able to help you at all.
Step 2: Give the broker the information they need to get you a quote
This depends on what kind of insurance you are buying and what you are doing. Let's assume you are buying 3rd party liability and 1st party property coverage. In other words coverage for when someone sues you because of some bodily injury or property damage they think you caused, and coverage for to pay out if you have some damage or loss involving your building/equipment/stock.
At the minimum they will need the name of your business, which is the legal name you are operating under. You can operate under your personal name if you are a sole proprietor, or a trade name like John's Fireworks owned by John Doe. If you are incorporated then they need the numbered company or legal name, and again if you have a trade name like John's Fireworks owned by 12345 Canada Ltd. then they need that. A mailing address is required. A description of your operations, such as "Fireworks display company", or "Fireworks retail store" is the bare minimum. After that you need to provide information on your annual revenue, the number of employees you have and payroll cost, and details of the property you want to insure. The property details they need is, normally, the address where the property is stored/located, a general description of the property, a value (normally replacement cost, which means the cost to replace it with something of like materials with no deduction for depreciation), and as much detail on the location as possible (year it was built, what are the walls and roof made out of, are there sprinklers/cameras/alarms, and year of last updates to the roof/electrical/plumbing).
Liability insurance costs are based on what you do, where you do it, how you do it, how well you do it, and how much of it you do. Property insurance costs are based on how safe your property is, which means many factors come into play including any security measures such as locks/gates/cameras/alarms, the location of the nearest firehall, the nearest fire hydrant, how flammable or sturdy the structure in question may be, how old it is including the age/type of wiring/plumbing/roof, and on and on.
Lastly you need to provide a loss history from your previous insurer showing the last 5 years of your losses (hopefully there are none).
Step 3: But I don't have a loss history because I haven't purchased insurance before...
This makes things harder, but not impossible. Harder often means more expensive, but to mitigate that demonstrate that you know what you are doing. If you have 20 years of experience but are starting out on your own, make sure that you point that out. Help your broker by providing the information they need to negotiate effectively on your behalf.
Step 4a: Receive the quote.
When you get your quote review it with the broker. Make sure they confirm that it is the type of coverage you need, and ask about relevant exclusions. Is there any other coverage that you should consider? They should be able to list for you products that may be relevant to your business. If the quote is what you need, then tell them to proceed and you are all set.
Step 4b: Receive no quote. Panic.
There is no guarantee that a broker can get you a quote. They may not know where to go, or cannot convince anyone to insure you for any number of reasons. Maybe the insurer that they go to normally to quote clients in your industry is no longer able to do so as they've changed their appetite. Maybe you have a bad claims history, or your operation is not well run compared to others in your industry.
Ask around to others in your industry about where they are getting their insurance. Work on explaining how you are turning your business around so that whatever the issue is (like bad claims) won't be an issue in the future. Keep in mind that the people making the decision to quote your insurance need to justify that decision to their boss. If you have had a bad loss history, and they insure you, then you have more bad losses they will have a very tough time keeping their job. Even if you don't have more bad losses they regularly get audited and have to justify their decision to provide insurance to your business. Make that easy on them by looking professional, organized, and safe. Having an employee handbook, emergency response program, quality control program and other risk management tools makes it easier to insure you. Some of my clients take videos at their shows of the crowd to see if there is any fallout or if someone in the crowd is shooting their own product. Some of my clients have strong security systems to deter theft and break-ins. Some have great emergency response plans that make it clear they take risk seriously. All those things matter.
I'll wrap this up by letting you know some places that you can probably successfully get insurance:
Most brokers will have a very difficult time finding an insurer to provide coverage for anything related to explosives. Very few insurance companies will consider insuring a business that manufactures, imports, distributes, or uses explosives. Right now the global insurance market is not doing so well, and insurers are looking for safe bets. I know all this because I am an insurance broker. I'll try not to be self-serving in this post, as I'm not here to say, "if you want to know how to buy insurance for fireworks the quick answer is from me". Instead I'll try to give you your options on a high-level, and what to watch out for along the way.
Step 1: Find a broker
There are many insurance brokers across Canada. You can find a local broker that runs a shop in your town and walk in, or you can do a quick internet search and call up an international brokerage that has offices all over the world. I promise you there are a lot of us around.
A broker is a professional shopper who is negotiating on your behalf. Talk to them and make sure you have the right fit. This is like picking a real estate agent, an accountant, or a lawyer. You want someone who you believe has your interest at heart, and you believe will do the job. They need to understand your work so that they can explain why you are safer than you may seem. The better they know what they are doing, the more likely the insurance underwriter will feel comfortable working with them. Going to five brokers and giving them your information is not a good way to do it either, as insurers will generally work only with the first broker that contacts them. That means if you give your information to someone and they go out to every insurer out there, the next four brokers may not be able to help you at all.
Step 2: Give the broker the information they need to get you a quote
This depends on what kind of insurance you are buying and what you are doing. Let's assume you are buying 3rd party liability and 1st party property coverage. In other words coverage for when someone sues you because of some bodily injury or property damage they think you caused, and coverage for to pay out if you have some damage or loss involving your building/equipment/stock.
At the minimum they will need the name of your business, which is the legal name you are operating under. You can operate under your personal name if you are a sole proprietor, or a trade name like John's Fireworks owned by John Doe. If you are incorporated then they need the numbered company or legal name, and again if you have a trade name like John's Fireworks owned by 12345 Canada Ltd. then they need that. A mailing address is required. A description of your operations, such as "Fireworks display company", or "Fireworks retail store" is the bare minimum. After that you need to provide information on your annual revenue, the number of employees you have and payroll cost, and details of the property you want to insure. The property details they need is, normally, the address where the property is stored/located, a general description of the property, a value (normally replacement cost, which means the cost to replace it with something of like materials with no deduction for depreciation), and as much detail on the location as possible (year it was built, what are the walls and roof made out of, are there sprinklers/cameras/alarms, and year of last updates to the roof/electrical/plumbing).
Liability insurance costs are based on what you do, where you do it, how you do it, how well you do it, and how much of it you do. Property insurance costs are based on how safe your property is, which means many factors come into play including any security measures such as locks/gates/cameras/alarms, the location of the nearest firehall, the nearest fire hydrant, how flammable or sturdy the structure in question may be, how old it is including the age/type of wiring/plumbing/roof, and on and on.
Lastly you need to provide a loss history from your previous insurer showing the last 5 years of your losses (hopefully there are none).
Step 3: But I don't have a loss history because I haven't purchased insurance before...
This makes things harder, but not impossible. Harder often means more expensive, but to mitigate that demonstrate that you know what you are doing. If you have 20 years of experience but are starting out on your own, make sure that you point that out. Help your broker by providing the information they need to negotiate effectively on your behalf.
Step 4a: Receive the quote.
When you get your quote review it with the broker. Make sure they confirm that it is the type of coverage you need, and ask about relevant exclusions. Is there any other coverage that you should consider? They should be able to list for you products that may be relevant to your business. If the quote is what you need, then tell them to proceed and you are all set.
Step 4b: Receive no quote. Panic.
There is no guarantee that a broker can get you a quote. They may not know where to go, or cannot convince anyone to insure you for any number of reasons. Maybe the insurer that they go to normally to quote clients in your industry is no longer able to do so as they've changed their appetite. Maybe you have a bad claims history, or your operation is not well run compared to others in your industry.
Ask around to others in your industry about where they are getting their insurance. Work on explaining how you are turning your business around so that whatever the issue is (like bad claims) won't be an issue in the future. Keep in mind that the people making the decision to quote your insurance need to justify that decision to their boss. If you have had a bad loss history, and they insure you, then you have more bad losses they will have a very tough time keeping their job. Even if you don't have more bad losses they regularly get audited and have to justify their decision to provide insurance to your business. Make that easy on them by looking professional, organized, and safe. Having an employee handbook, emergency response program, quality control program and other risk management tools makes it easier to insure you. Some of my clients take videos at their shows of the crowd to see if there is any fallout or if someone in the crowd is shooting their own product. Some of my clients have strong security systems to deter theft and break-ins. Some have great emergency response plans that make it clear they take risk seriously. All those things matter.
I'll wrap this up by letting you know some places that you can probably successfully get insurance:
- If you are a display professional with a smaller operation reach out to fireworksinstitute.com/. They have a program for display supervisors, and it's a good group to be a part of anyways. Full disclosure on my bias, I'm a member and I do handle their insurance program.
- If you want a temporary policy to do an event then you can look at www.palcanada.com/ but I caution you on buying "short-term" or "event" policies if you want to really be covered. This option doesn't scale well either, so as you have more events you don't have any cheaper of a price. Any accident that happens after the event even if it is related may not be covered (see my other thread for an explanation on why).
- You can reach out to me. That doesn't mean I can definitely help you, but I'll try my best. Feel free to message me on this forum and I will respond as soon as possible.