Tips for Federal Government Contractors to Be Sure You Are Fully Leveraging Your Commercial Insurance Program

Posted in: Commercial Insurance

When considering the correct commercial liability insurance to purchase, there is far more than just price. It is a multi-fold process that can insulate your business from severe losses, and be leveraged to help a company grow. After building insurance programs for government contractors over the past seven years, I’ve compiled a list of tips relating to the management of your insurance that can positively affect profitability and provide an edge when marketing your business’ specialties to the federal government.

  • Broker Selection:  First, find a broker that is experienced in your business and works with carriers who focus on government contractors.  All brokers have the ability to sell you an insurance policy, but only a handful can provide the correct policy, and even fewer specialize in federal government contracting. It is important to have an insurance broker and carrier that can custom fit your program to unique exposures, as opposed to jamming your business profile into a cookie-cutter program not meant to address such issues. Make sure you are dealing with a government contractor specialist.
  • Carrier Selection: Several carriers have well established government contractor divisions that excel in building insurance programs in key areas such as overseas contracts, aircraft products, working offsite at government installations, and the use of independent contractors.  Having a carrier that can respond to new exposures that come with you pursuing new opportunities, coupled with a broker that can effectively communicate these changes to the carrier, can enable you to bid on future contracts with accurate insurance pricing built in.
  • Avoid Wasted Time and Resources: A properly negotiated insurance program can ensure that in the event of a claim, cash flow and the valuable bandwidth of the company’s key personnel remain protected. Negotiating the terms and pricing of your policy should be handled by someone who understands and knows your industry. For example, assume you and your employees have been working for months, preparing an RFP only to realize at the last minute there are specific insurance requirements in the contract that are not covered by your current insurance program. Even if the work you are doing is not complex it could take weeks to procure the proper policies. The man hours and bandwidth your company has spent could be lost and your opportunity to bid on the contract is gone!
  • Keep your insurance team in the loop: Very often small to mid-size government contractors will bid on new contracts without taking into account insurance costs that may be changed by new areas of focus.  Communicating with your broker ahead of time can ensure that your bids not only promote your firm’s ability to do the work at a cost effective price, but your insurance program’s ability to respond to the new risks generated by these contracts.
  • Ask your carrier what types of risk and safety management services they can provide: These services can actually be used as more than a way to reduce your losses in the future. Most small to mid-size government contractors do not have a risk management department.  Utilizing a carrier or broker’s risk management services can help the insurance buyer manage exposures outside of the policy. These services could be anything from safety audits to contract and compliance checks.  The rules and regulations the government enforces can change in the blink of an eye, therefore working with someone who watches this movement can help mitigate your exposure. Either way, risk management procedures can be used as a selling point for your company. Any client, be it private or public sector, sees it as a selling point to work with a business that is organized and mindful of how to control potential disasters.

For government contractors risk is inherent in every state of business growth, from start-up to maturation. Though the nature of risk a firm will face can change throughout the business life cycle, one thing remains the same: taking the time to analyze risk and working with an educated broker and carrier familiar with your business is a time saving and forward-looking decision.

Don’t wait for a disaster to happen before realizing the importance of proper broker selection and policy negotiation. If you’re a government contractor with questions about your commerical insurance program, please contact me at craig@psafinancial.com.