Three Key Elements in A Fleet Safety Program for Plumbers and HVAC Contractors

Author, Matt Gorham, Account Executive, Rancho Mesa Insurance Services, Inc.

Commercial auto insurance continues to be problematic for plumbers and HVAC contractors as skyrocketing premiums are eroding profitability.

Unfortunately, indicators show that this trend will continue for the foreseeable future. For the 14th consecutive year, commercial auto has posted an underwriting loss, while just the last two years have developed more than $10 billion combined in net underwriting losses.

The primary driver behind these poor results is auto liability. Fueled by third-party litigation funding, social engineering, and shifting views of corporate responsibility, nuclear verdicts have upended the auto insurance marketplace, causing many carriers to re-evaluate their willingness to even offer commercial policies.

For those carriers that are still writing commercial auto, higher premiums and tighter underwriting guidelines are now standard. Along with closer scrutiny of claims history, the quality of a written fleet safety program has become critical to carriers who typically compete in the plumbing and HVAC insurance space.

While there are many components to a strong fleet safety program, there are three key elements that should be included:

1. Personal Use Policy

A company’s personal use policy specifies whether company vehicles may be used outside of work duties, under which circumstances, whether non-employee passengers are allowed, who may drive the vehicle, and whether trailers or recreational equipment may be attached.

A personal use policy may also address whether a company’s employees’ vehicles or non-company vehicles may be used in the course of work, minimum standards for vehicle condition, maintenance regularity and documentation, and personal insurance limits that must be met.

2. Alcohol and Substance Abuse Policy

Alcohol and substance abuse policies outline expectations and consequences for drivers regarding the consumption, possession, or distribution of alcohol, recreational drugs, or illegal substances. These policies will often include drug testing requirements, such as prior to being selected as a driver, random, post-accident, or reasonable suspicion testing.

3. Distracted Driving Policy

Distracted driving policies emphasize the importance of attentive driving and prohibit or limit the use of cell phones, tablets, or other electronic devices. They may also address other activities that divert attention away from driving, such as eating, putting on makeup, getting dressed, or reading while driving.

Specific policies may also be developed in more detail to address hands free cell phone use, practices for looking up directions, or the use of technology that screens cell phone usage.

For these policies to be most effective, it is important for drivers to not only be aware of the policies but to clearly understand them. Discussing these policies with new drivers and periodically throughout the year with all drivers will keep them relevant.

In support of plumbing and HVAC contractors, Rancho Mesa has developed a library of weekly driver-specific safety toolbox talks, providing key topics to further conversations about safe driving practices. The extensive safety library is accessible within the SafetyOne™ platform and by subscribing to the weekly Driver-Specific Toolbox Talk emails.. SafetyOne also provides the tools necessary to implement a company’s Fleet Safety Program.

Another crucial factor that determines the effectiveness of these policies is consistent enforcement. When drivers understand that there are consequences for breaking company rules, they are more likely to adhere to them, especially if their livelihood is at stake.

While cameras, GPS tracking, and telematics have gotten a lot of attention in recent years, these tools, while powerful, simply provide information. Cameras do not make drivers better; they just show what drivers are doing behind the wheel. Similarly, GPS and telematics do not make a driver safer; they just show where vehicles are and how fast they are being driven. The company must review the data and take action, when needed, to ensure these tools are effective.

Defining, discussing, and enforcing clear policies that govern the safe use of company vehicles reinforces safe driving habits and decision making by individual drivers. It can also help to create a company culture that elevates the status of drivers, celebrating the fact that driving is a privilege that comes with responsibility.

While auto insurance premiums are expected to continue rising, there are actionable steps that can minimize increases and avoid costly accidents that impact your profitability, your productivity, and your people.

If you have questions about your fleet safety program or want to learn more about the strategies that we are leveraging to help our mechanical contractor clients navigate this challenging market, reach out to me at (619) 486-6554 or mgorham@ranchomesa.com.

Navigating Risk A Holistic Approach to Mechanical Trades Safety with UFG

Account Executive Matt Gorham sits down with Gary Clevenger, VP of Risk Control at UFG Insurance, to discuss a consultative approach to risk management in the mechanical trades. They cover how a holistic risk assessment, strong partnerships, and modern tools like the DOS framework can elevate your safety and insurance strategies.

Matt Gorham: You're listening to Rancho Mesa's StudioOne™ podcast, where each week we break down complex insurance and safety topics to help your business thrive. I'm your host, Matt Gorham, and I'm joined by Gary Clevenger, Vice President of Risk Control with UFG. Gary, welcome to the show.

Gary Clevenger: Thanks, Matt. Glad I'm here. Appreciate it.

MG: Yep. Happy to have you here. So, you know, Gary, I wanted to start a little bit more about your background to give listeners a chance to understand where you're coming from. Tell us about your history in the mechanical trades and how you made your way to being VP of Risk Control for UFG.

GC: Well like everyone, I didn't start out to be the Vice President of Risk Control, but life will take you down many paths. Way back 25 years ago, I had the opportunity to be the risk manager for a Sheet Metal Contractor Association, SMACNA. So inside of that role, I got to be exposed to the mechanical trades, the roofing trades, they all, all the artisan contractors, and they all seemed to intertwine, and I would see them on projects. So I went to work for an international carrier, and in that space, I was able to work on programs related to the mechanical trades and the sheet metal trades. So Mechanical Contractors Association, state and local chapters, also got to work with some of the largest mechanical contractors in the U.S. and world, quite frankly. So just had a lot of exposure to the mechanicals and the sheet metals and took that experience and knowledge over the years and just expanded it as I went and really just find it as an area that I have a lot of interest in, a lot of experience with and something I'm passionate about is making sure that they continue to improve and that continues that improvement mantra within that group.

MG: It's fantastic. I mean, exhaustive, if not, you know, extensive certainly, which seems like it would give you a really unique perspective to approach the mechanical trades in particular and artisan trades more broadly, but mechanical trades, which would just give you some really valuable insights to how the mechanical trades operate and where you can provide more value to them in strengthening their safety program.

GC: Yeah, no, you're exactly right. We got to see so many different contractors' different ways of doing business, the good, bad, and the ugly, if you will. But with that, you know, you also had a chance to really learn and take what's good from many different contractors and bring it together to say, "What would the perfect mechanical contractor look like if you could put one together, like the 6-million-dollar man back in the day. What's that contractor look like?”

And there's a lot of commonalities. And so take the best out of those and bring that to the table for them to review and see where they can plug it into their operations.

MG: Yeah, that's fantastic. And now you've told me that UFG's approach to risk assessment, it's not traditional, but more of a service designed to support contractors. What do you mean by that?

GC: So I'm glad you asked you know, the old term transactional versus conversational or consultative. So, the old way of doing risk control seemed to be transactional. You would go out, have a conversation, do the quasi-inspection checklist, and, you know, get your information and go. We're really striving to be consultative, have the conversation, get to know the customer, find out their pain points, you know, look at the threat landscape, a holistic risk management type approach. So really trying to dig deeper into everything from their workforce resiliency to their processes, their process flow, what exposure they have in a given market or within the artisan trades, they are specialty. So if they're doing data centers, how can we help versus maybe service or a new install? So a lot of different components to it, but really trying to be consultative is a nice term in doing a total risk assessment with a holistic approach.

MG: Yeah, you just mentioned a phrase that, you know, when we first spoke really stuck out to me and you use it here again, just so fluently: risk landscape. Where do you first encounter that concept and how does that guide your team's work?

GC: Well, it wasn't a—when I say the concept, you know we coined the phrase the threat landscape or the risk landscape because it is holistic. You know, you can focus on safety or you can focus on compliance or the insurance side, but really they all dovetail together. So making sure that the contractor is aware that, you know, what they do on a job site that may cause a work comp claim can also impact them on the general liability side or that, hey, what penetrates the umbrella the most are auto accidents. So are you taking care of your drivers? That contractors in place, their job is to, is to build a constructor or install something, not manage risk or not manage that driver or do that driver training. So we're really trying to help them with those pain points and those threat landscapes out there, whether it be workforce resiliency or, you know, process flow, just the various ways you can engage with them to help them make their businesses better that continuous improvement mantra.

MG: Yeah, and I appreciate that you recognize that, right? their responsibility is building, constructing. That's their primary focus is running their business so they can deliver on the projects and the commitments that they've taken on. And you've also mentioned a couple of times a holistic, consultative process to risk management and the way that you guys are able to work alongside policyholders. How important is it to get collaboration from policyholders and from agency partners to deliver on your objectives and why should policyholders want risk control involved?

GC: Those are great questions. A risk assessment is essentially that opportunity to have an outside individual come in and just give you an assessment of your operations. You have threats to your business, you have safety, you have compliance, you have payroll, you have your workforce, you've got a procurement, you have so many things going on. So having a risk consultant come in or a risk assessment completed by risk control representative, along with the agent, you know, really is valuable or should be a value. That's that value add opportunity to say, Hey, we see hundreds of mechanical contractors or artisan contractors in a given year, let us help you with some of the intelligence we've learned from others and help you plug that into your business where it makes sense. Again, it's not a one-size-fits-all. It's really a, we call it a white glove service or boutique type service. It's like really trying to find, “Hey, where can we make the biggest impact and help you get better and then how does it build upon a stuff? How does it stair step or how can you ladder that into the next success?”

MG: Yeah, you shared with me that there are different areas that you guys will focus on. You just mentioned, of course, that auto being the area that's most likely to lead to an excess loss or an umbrella loss, and there are, again, these different areas that you have the ability to look at risk control and controls from different mechanical contractors and bring them together to support other policy holders. Can you speak a little bit about just some of the different areas that you're looking at, whether that be auto or whether that be work comp when you are doing a risk control survey?

GC: No, that's a great question as well. We broke it down into what I would call minimum standards. So it's really three categories. They focus on fleet and your equipment. They focus on general liability and they focus on workers' compensation. Then inside of those, there's just a number of items that really, if you have those in place, you will be successful. And this is from years of looking at Mechanicals and finding those who are successful and in most cases, what did they have in place that allowed them to protect their company, protect their assets? Everything from driver training, employee training, you know, how did they maintain their vehicles? Did they have subcontractor pre-qualification in place? Do they have the right contracts? Did they have a construction defect or product liability concern? What does their completed operations look like, you know, wellness programs, PPE, is it appropriate for the job? You know, safety training, safety programs, the whole gamut, all broken down together. And it's something that works well. It allows the contractor really more-or-less to do a quick gauge of how they stack up to peer companies across the country, quite frankly.

MG: That's awesome. And one of the things that comes to mind for me is you're talking about the different controls in the different areas here. You've also shared with me a DOS assessment. Walk me through that?

GC: So a DOS is a dangers and opportunities and strengths. It's very similar to a SWOT analysis or a 3P or a Lean Construction or a Kaizen. You think of all those different terms, but DOS, I've landed on that. It's very simple. It's dangers, opportunities and strengths. So just ask an owner or a risk manager what, in your organization, what do you see as your number one danger, your biggest opportunity and strengths? Sometimes they can all be the same.

A good example is that UFG, my risk control group, they're outstanding professionals and that's our greatest strength. They're also very tenured. That could also be a danger because they're, because of their tenure and their level of expertise, technical knowledge, others are trying to poach them or they may be getting close to retirement. It is an opportunity as well because we can lean into that high level of expertise and bring that to the customer and bring it a different level than just the basic risk control compliance type services really going deep in that white glove approach that we talked about earlier.

So, dangers, opportunities, and strengths, an easy one. You can do it in a lot of different scenarios. You can do it by line of coverage. You can do it by job. You can just do it by a company holistically. Think of that threat landscape that all these companies have in front of them and what does that you know reputational risk look like? So what's the threat to your reputation if you've got a great workforce that's healthy and is you know getting the hours they need and not getting hurt, you know, you're going to look a lot different than a company that's pulling up with trucks with dents on them and employees with bandages on their hand or beat up PPE, you know, that's that reputation risk we talk about so a lot of different pieces there inside of the DOS that you can go a lot of paths you can use it for.

MG: Yeah I like the fact that you point out that you could have one factor be both a danger and a strength

GC: Yes.

MG: It really depends on how you want to apply it and approach it and in protecting yourself, but also being able to provide what that benefit is to your policyholders or for you know our listeners for their businesses; how do to leverage the assets that they have and retain them effectively.

GC: Yeah, I would challenge anybody just to do the exercise yourself just in your head. You know, get or sit down with your team and you know, “Let's go through our dangers, opportunities and strength as an organization and what are they in it?”

And it'll be interesting, your frontline supervisor may have something different than your field leadership versus your, you know, the back room support. So it, everybody's going to have a different danger, opportunity and strength, but holistically bring them all together you'll make you a stronger organization

MG: Yeah, you brought something up that I think is really interesting is who do you would involve in that conversation and it seems like as risk managers it's a conversation that we should be having with our policy holders.

GC: Yes. No, that's a great point. It's really the risk manager the owner of the principles obviously all should be engaged. But the risk manager that's their job inherently the title of you know and just because you're called the risk manager, you may have 16 other hats you wear, but at some point your responsibility is managing the risk of the company. That could be the owner. That could be a designated individual. It could be a committee, but they would be a great exercise. Whoever's in charge of the risk mitigation to try the DOS.

MG: Really good point. I'm curious then, and there may not be a universal answer to this, but curious to hear your thoughts. How often should policyholders be in contact with a risk control consultant?

GC: Oh, that's a great question. So it's interesting, there's some customers that, you know, really two or three visits just really close together where you try to drive home a process or you need some help immediately. And then from there, it's as needed. Whereas others, it's like, I'm more of the approach of, let's make this a two or three-year service strategy. We're not going to get it all done in nine months or six months. Let's string this out. It must be realistic with it. What can we fix or work on? What can we bring to the table that is digestible? And then where can we go throughout the process? Where do you want to be is as a step, we want to go from A to B to C; how do we get there?

So really having a plan and understanding that you have that resource available. If you have an immediate question, “We're going on a job site, we've got crane setup, we don't know if their cribbing is right,” you know, we'll get you on FaceTime, let's use a virtual platform, let's look at it together. We can solve it. Versus, Hey I really need a new fleet safety program that incorporates telematics and, you know, external facing cameras. And I also need to, I'm concerned about negligent trust so I need to work on that type of a policy.”

So it varies depending on the customer and where they're at in their maturity level.

MG: Yeah, there's a lot of really good points in there. You know, one of them is the prioritization element, you know, and breaking things down into a digestible amount and a process that can be implemented on what's most important, what's most pressing, and also meeting policy holders where they are, with what they can practically implement.

And so, Gary, what are some less commonly known areas that risk control can provide support on?

GC: Most risk control professionals and in UFG, they're very broad in their experience and their technical expertise. And so what we've done is we've laid out a very diverse group of professionals, but we also have a diverse group of service offerings. So it may be initially we need compliance training to get us on a job. And then from there, “Hey, how do we bring our accident rates down so we can continue to get these jobs?”

And so to the point of a company may have contracts issues or they've got bad risk transfer in place. Not say bad, but it's lacking a component that could be stronger. Or, hey, really to button down the risk, they should really look at, you know, what kind of site controls do they have in place for subcontractors or what kind of, you know, pre-qualification you have for subcontractors. So the subcontractor pre-qual is a big piece of it, making sure they understand their insurance exclusions and personal use policies, whatever the case may be.

So there's that component of it, but then you also get into we can do training, training can be virtual, it can be on site. There's other resources. We have an ecosystem of vendors called United Vendor Network. These are vendors that do things, everything from telematics to confined space training to safety type training to industrial hygiene, to drug and alcohol testing and helping you write those programs, you know, so you can take in that force multiplier track approach in an ecosystem where maybe they need to tap into one of those to add value to their company or they're lacking that expertise. So it is very diverse in what most risk control can bring to the table.

And I think, I think the fallacy is that it's just an inspection. It should never be just an inspection that risk assessment term is what you should be hearing from most professionals and that's what it is it's an assessment of your risk. What's your threat landscape look like and then what maybe solutions or suggestions can we provide.

MG: Yeah which is fantastic because it—again it's less about bringing somebody out to tell on you right or having them tell on themselves.

GC: That's not the intent, yeah. That's a great, that's not, it's not a “gotcha” moment by any means no it's like, “Hey, tell us what you're doing, show us what you're doing.”

And then we may ask you more questions because we want to learn more because, “Hey, this is the best we've seen,” or it may be, “This is good, but if you want to go to the next step, this is what another company did that would help you tweak it a bit. And, you know, that process improvement could be implemented.”

MG: You also mentioned technology and the ways that we can connect now virtually or the library of resources that's available, where it's not simply a matter of having a schedule time face-to-face or walking around with a clipboard and a checklist, where you can get a lot more out of working with your risk control advisor, with your carrier partner than you could in years past.

I know where ergonomics training is an area that's getting a lot of attention, being able to use predictive modeling to see where injuries are going to take place or where damage is likely to be caused. So it seems like there's a different focus, there's a different approach, but technology is really helping your team develop a philosophy that's working more with policyholders in a consultative approach, rather then, again, a “gotcha” type moment.

GC: Yes, no, then I think the term we like to use is how can we be present? We want to be present with our customer. And you can't always be present in person just because of a variety of logistics that make them into place. So we've stood up a virtual platform and our virtual platform is FaceTime type technology. It's agnostic to any device. So we could talk to an owner in Ohio looking at a job site in Florida and a second job site in Arizona, all in the same in the same afternoon, and really have some great interactions.

If you think about the construction industry, you can go on a job site and see what you need to see via a FaceTime-type video and really be able to provide some valuable insights. As well as training, you can do training virtually. You can do training on-site. You can do training via the various platforms that are out there, the learning management systems that are out there. We have all those as well. Companies should take advantage of that of every one of those if they can. On-site’s great, virtual is good, learning management-type system training, it hits the mark it keeps the training documentation for you they're really well done nowadays so it's just an ever-evolving industry.

You know as well as I do everyone has a cell phone they have a smartphone we look at reels we look at clips we're on FaceTime we're on the various sites often so the more we can incorporate that in along with the technology in the vehicles from the telematics to the cameras to the, you know, cell blocking technology. There are so many ways technologies can be integrated. Now you can overwhelm yourself with that too and you have to be a little bit choosy so you don't just spend money to spend money. But in a lot of cases it's becoming table stakes.

MG: Absolutely. And like you mentioned, everybody has everybody has a cell phone. We've been able to leverage proprietary software here, SafetyOne, that has things like your tailgate topics to be able to make it accessible for people regardless of where they are in the field, but also digital record keeping, have it centralized.

So just helping to bring our clients into the 21st century and making sure that not only is the training being done, but there's continuous record of it to make things easier. And I imagine it's the same philosophy that you guys have followed of accessibility one, but also the follow-up that comes with it to ensure that people are getting something out of it and there's documentation that supports it.

GC: Yeah, I know to your point that the collateral and the resources that Rancho Mesa has are outstanding. They're, they're cutting edge top, you know, state-of-the-art, having that available to customers just brings more opportunities to be successful. Same with your carrier. So if you take your UFG and you marry that up with a Rancho Mesa, all the various technologies available, you can really have a robust platform, maybe more than you need, but you pick and choose what fits and then work with your producer, your agent, and your risk control consultant on building out a plan to implement and engage over time and be present with your customers, be present with your employees and really allows you to have a robust risk management platform that mitigates risks and really is thoughtful also in that process.

MG: Yeah, I appreciate that. And yeah, I really like the way that you've introduced presence within it, you know, especially in relation to the, you know, the DOS analysis of being able to introduce everybody to it, have presence, an ongoing presence and prioritization. When you bring these elements together, it can really impact the risk control of the business to allow them to focus on, again, what, like you said, their job is, it's building, it's construction, rather than having to worry about losing guys in the field or really dealing with the damage, the fallout of when things go wrong. You've continued to amaze with what you have to share, and I know that I'm going to continue to learn from you, just giving your vast experience and everything. Any other wisdom that you want to share with us before we wrap up?

GC: Partner with your insurance partners, partner with your carrier, partner with your producer and your agent at Rancho Mesa because you've got a lot of collaboration and a lot of expertise available to you. Don't be afraid to use it, that's what we're here for and it will really make the industry better as a whole, but also will improve your business, is a good way to look at it.

MG: Fantastic. I'm going to call it wisdom because the reality is insurance is, it's a difficult product for a lot of people to really wrap their head around because it's not tangible. It's not something you can touch and feel and it's feels like it's the same for a lot until you need it. But the reality is with carriers that are looking to invest in businesses, there's a lot more that they can bring to the table. And you don't have to wait till something goes wrong to find out what that value is.

GC: No, you're really looking for that partner that partnership and it and it grows across the whole spectrum that partnership so that's what you're looking for. Someone told me years ago, and I think it's appropriate for when we talk about mechanical contractors and such said, you know, “You can have a house and you can have a home you know so your insurance is a little bit like the HVAC system in your house; you don't have to have it, but it will make you a lot more comfortable with it.”

MG: Yeah, that's a good point. So, Gary, thanks for joining me in StudioOne. I really enjoyed getting to hear what you had to say, and just looking forward to continuing the conversation.

GC: Oh, thank you, it was great. I appreciate it, and I look forward to the next time.

MG: Thanks for tuning in to our latest episode produced by StudioOne. If you enjoyed what you heard, please share this episode and subscribe. For more insights like this, visit us at RanchoMesa.com and subscribe to our weekly newsletter.

New Auto Insurance Minimums Could Expose Coverage Gaps for HVAC and Plumbing Contractors

Author, Matt Gorham, Account Executive, Rancho Mesa Insurance Services, Inc.

The State of California has raised its minimum auto insurance limits effective January 1st of this year, and it could be problematic for some HVAC and Plumbing contractors.

Although the intention of the limits increase was to expand coverage for victims of accidents, there is concern that it will marginalize many drivers.

According to a 2023 study from the Insurance Research Council, California was already among the nation’s leading states for share of uninsured drivers at 17%, with many anticipating that number to be increasing.

Drivers that had carried the previous minimum limits due to financial constraints may not be able to afford policies with the higher limits and may choose to forego insurance altogether. For those that qualify for the California Assigned Risk Plan, their policy limits ($10k/$20k/$3k) will actually be lower than the previously imposed minimums ($15k/$30k/$5k).

Other drivers that had previously carried higher limits may now choose to reduce their limits to the state minimum due to the rising cost of auto insurance statewide.

With the commercial auto insurance marketplace already facing challenges, many carriers have chosen to reduce coverages they are willing to provide.

One key area of concern for HVAC and Plumbing contractors is Uninsured/Underinsured Motorists coverage, which provides coverage when an accident is caused by a driver who either does not have insurance or whose policy limits are inadequate to cover the costs of medical care and property damage arising from the accident.

Without appropriate coverage, an HVAC or Plumbing contractor could be found responsible for significant financial costs caused by medical expenses, lost wages, and pain and suffering due to injury to drivers and passengers of their vehicles – even if they are not at fault for the accident.

Here are 3 steps to help insulate your business from such a loss:

1. Review the personal use policies in your company’s fleet safety program.

   Do employees drive company vehicles home and/or are allowed to use company vehicles outside of the course of work? Who else can drive or be in the vehicle as a passenger? Establish clear answers to these questions and enforce your policies, reminding employees of them, as well as the risk of neglecting them.

2. Review your current insurance coverages for limits and symbols.

   Uninsured/Underinsured Motorist coverage limits can vary greatly from one carrier to another, while California allows policyholders to waive the coverage completely. Also, verify that the limits apply to the appropriate vehicles for your company with the relevant auto symbols.

3. Meet with your broker early in the renewal cycle.

   Discuss auto coverages, review vehicle and driver schedules, and develop a strategy to approach the market to secure the appropriate coverage for your business.

If you have questions on auto insurance coverages or would like to complete a policy review, you can reach me at (619) 486-6554 or mgorham@ranchomesa.com.

Workers’ Comp Rate Increases are Here — Are You Prepared?

Authors, Sam Clayton, Vice President, Construction Group, Rancho Mesa Insurance Services, Inc.; Matt Gorham, Account Executive, Rancho Mesa Insurance Services, Inc.

The workers’ compensation market in California is hardening. After many years of rate decreases, it appears that the market has started to bottom out.

The Governing Committee of the Workers’ Compensation Insurance Rating Bureau (WCIRB) voted in favor of pursuing an 11.2% rate increase. If the California Department of Insurance approves the WCIRB’s request, it would make the first rate increase in more than a decade.

In recent years, wage inflation has helped to offset rising medical care and claims handling costs within the workers’ compensation system, while carriers’ reserve redundancy releases have also contributed to the soft market.

With reserve redundancies declining and wage inflation stalling, the effect of rising costs in the workers’ compensation system are becoming more noticeable. Added to that, the diminishing investment returns for carriers and the need for rate increases and stronger underwriting performance becomes even more pronounced.

Below are four ways that your insurance broker should be helping to prepare you for the coming change:

Understanding Your Workers’ Comp Claims

Meeting with your insurance broker throughout the year can help you identify trends and underlying root causes for your claims. This can help you to implement practices and procedures that reduce the likelihood of the same type of claim recurring.

As an example, we identified that lower back strains are among the most common work injuries in one of the industries that Rancho Mesa specializes in, which led our team to develop the Mobility & Stretch Program and A.B.L.E. Lift Protocol.

Providing Effective Safety Resources

A strong safety culture depends on individuals consistently making safe choices and having access to the tools they need. Among other resources, Rancho Mesa provides clients with the SafetyOne™ platform, a website and mobile app that offers a suite of tools to implement safe practices, such as a library of topics for toolbox talks, online safety trainings, and safety observations.

Utilizing Workers’ Comp Claims Advocate

The workers’ compensation process can be complex and costly. Rancho Mesa offers an in-house workers’ compensation claims advocate to help navigate the claims process, manage claims, and provide accountability to adjustors. Leveraging your broker’s claims advocate can help manage the overall impact of claims on your insurance costs.

Exploring Loss Sensitive Plans

Rancho Mesa can help you evaluate a variety of loss sensitive options, such as captives; self-insured groups; large, intermediate and small deductible options; or retro plans to see how they compare against guaranteed cost. Having access to more product options allows for more relevant, effective advice on which program best meets your risk tolerance.

That final decision and recommendation will be done and take effect September 1st 2025.

While these increases will not directly impact you until your next renewal, taking action to prepare for the coming change is critical. Rancho Mesa is informed, has the resources available and most importantly the proactive commitment to help you navigate the approaching storm.

If you would like to learn more about our resources and approach to this process, please reach out to Sam Clayton at sclayton@ranchomesa.com, or Matt Gorham at mgorham@ranchomesa.com.

Controlling Auto Insurance Costs for Plumbers and HVAC Contractors

Author, Matt Gorham, Account Executive, Rancho Mesa Insurance Services, Inc.

Like most businesses, vehicles are an essential part of a plumbing or HVAC contractor’s operations. Whether the focus of their business is service and repair, tenant improvements, installation, or new construction, company leaders depend on trucks, vans, and cars to get their people, equipment, and materials safely to the jobsite.

Unfortunately, the cost to insure those vehicles has increased dramatically over recent years and there appears to be no imminent sign that trend will change.

According to AM Best, the U.S. commercial auto insurance segment sustained a $5 billion net loss in 2023. While it is still too early to know how the auto segment performed in 2024, early indications from the first half of the year showed further deterioration, marking the 12th straight year of net underwriting losses for auto insurers.

There are multiple reasons for the increase in auto losses. Distracted driving is contributing to an increase in the frequency of automobile accidents, while social inflation and third party litigation funding are amplifying the severity of associated losses. As all of these causes will continue to negatively affect the auto insurance marketplace broadly, avoiding auto accidents becomes increasingly more important for individual companies in controlling auto insurance costs.

While there are many factors that can lead to an auto accident, businesses can benefit from focusing on those within their control. Implementing or enhancing a fleet safety program with clear, actionable policies will better equip drivers to avoid accidents. Consider how your fleet safety program handles the following:

• Driver selection, qualification, and performance management. Establish clear written guidelines on who is eligible to drive and how their driving performance is evaluated. This may include policies such as requiring an applicant to provide their motor vehicle record as part of the interview or hiring process, participation in the Employer DMV Pull Notice program, incentives for safe driving, and responses to unsafe driving practices, near misses, tickets, or at fault accidents.

• Safety rules, vehicle use, and operating procedures. Define how and when drivers are allowed to operate vehicles. This should include policies that address use of cell phones and hands-free devices, impaired driving, personal use of company vehicles, company use of personal vehicles, passengers, seatbelt use, and speeding, among others.

• Driver training. Provide ongoing training for employees to understand their responsibilities as drivers and the risks that are present on the road. This could include in-person or video trainings that discuss topics like defensive driving, distracted driving, safe following distance, and driving in inclement weather. Having potential drivers successfully complete an in-person driving test in a controlled environment before getting on the road, as well as annual driving tests can also help reduce the likelihood of an accident.

  Learning management systems like Rancho Mesa’s proprietary SafetyOne™ platform can offer effective and convenient online trainings to ensure your drivers are knowledgeable and well equipped to drive for your company.

• Vehicle maintenance and inspection. Schedule and document routine maintenance tasks like oil changes, tire rotations, and brake inspections to help keep vehicles running smoothly. Implementing a daily vehicle inspection for items like active turn signals, working headlights and brake lights, and tire pressure reinforces the importance of safety to your drivers, while also proactively minimizing the risk of a dangerous maintenance issue that could lead to an accident.

Providing an easy way for your drivers to document and report their daily vehicle inspections and maintenance issues can increase the likelihood of compliance. Try one of our QR code-enabled Driver Vehicle Inspection Report (DVIR) to see just how simple it can be to document and report mechanical or safety issues with your fleet.

In addition to a robust fleet safety program, there are other tools and strategies that can be leveraged to provide savings in a challenging insurance marketplace, without sacrificing coverage.

To discuss these tools and strategies or for a complimentary review of your current fleet safety program and insurance program, contact me at (619) 486-6554 or mgorham@ranchomesa.com.

Five Tips to Protect Your HVAC and Plumbing Vehicles from Break-Ins

Author, Matt Gorham, Account Executive, Rancho Mesa Insurance Services, Inc.

Contractors’ vehicles have long been a preferred target for thieves. Due to their distinct shapes and often eye catching branding, contractors’ vehicles are generally easy to identify, and they often contain thousands of dollars’ worth of tools, equipment, and materials.

Heating, ventilation, air conditioning (HVAC) and plumbing business owners that allow their employees to drive their work vehicles home face an especially difficult challenge to keep their tools and equipment safe. And, the cost of a vehicle break in goes far beyond the financial cost of replacing what has been stolen.

Being the victim of a vehicle break-in will lead to delays in your operations, it can cause frustrated customers, and the affected employees can suffer psychologically, especially if they have had their own personal tools stolen.

Here are the top 5 tips to help navigate the risk of vehicle break-in’s at an employee’s home:

1. Have clearly defined policies and discuss them with your employees.
Before allowing employees to drive their vehicle home, ensure that they understand what is expected of them. Having policies to avoid or minimize losses are only effective if the driver is held responsible for actually following them.

And drivers are more likely to follow the policies if they:

• Are aware of them

• Clearly understand them

• Are accountable for implementing them

2. Leave expensive equipment, tools, and materials at the shop.
While it may be inconvenient for your techs to unload their trucks at the end of the day, creating and reinforcing a habit of securely storing expensive equipment at the shop is much more likely to prevent theft of that equipment.

If taking the equipment home is unavoidable or impractical, discuss with them if it is preferred to bring the equipment inside their home overnight.

Capreece Serna, Senior Safety Services Consultant with Sentry Insurance, offers an important reminder: Anything that is kept in the truck should be placed out of sight from the outside, and do not leave the keys in the ignition, on the seat, or tucked in the visor. Leaving electronics, keys, garage door openers, security badges, wallets, purses, or expensive tools in plain sight to potential criminals can encourage them to break into the vehicle.

It is also important that your techs know what is on their trucks. Having them conduct a quick inventory check at the start and end of their shift can help increase security of your tools and equipment, as well as theirs.

In the event that you ultimately experience a vehicle break-in, having an inventory of what was on the truck will help expedite the process of getting tools and equipment replaced.

3. Lock your vehicles and set your alarms.
This may sound basic, but locks are one of the most effective ways of securing your vehicle. Keep in mind that many technicians are getting in and out of their trucks repeatedly throughout the day, often times without locking their vehicles. This can lead to a false sense of security and unconscious habit of leaving a vehicle unlocked overnight. Having security bars or grates on the interior of the windows or doors will provide little security if the doors themselves are unlocked.

It is also important to recognize that there are different types of locks available. While not fail safe, aftermarket locks can provide an added layer of security on either the exterior or interior of a vehicle. As an example, puck locks are commonly found on the exterior, while cable locks or chain locks can be used in the interior to secure tools, tool cases, or equipment to mounted shelving.

Having an alarm system installed on each vehicle that gets driven home can be another effective deterrent. Would-be thieves are much less likely to target a vehicle with an alarm. However, if they are undeterred, the attention that an alarm system attracts in the event of a break-in can substantially reduce the amount of time they have to find and take anything.

4. Be aware of and monitor surroundings.
There are a number of environmental factors that employees can leverage or put in place to increase the security of the company vehicle. Serna offers the following suggestions whenever possible:

• Parking inside the employee’s garage or behind a security gate,

• If in the driveway, backing up to the garage door to prevent the vehicle doors from opening fully,

• If in the street, parking in a well-lit area or using a physical obstacle to limit door access,

• Making use of motion activated lights or cameras pointed at the vehicle,

• Placing a camera inside the vehicle facing tools and equipment.

5. Review coverage for tools, equipment, materials, and employees’ tools with your insurance broker.
Each of the above tips will help reduce the risk and severity of break-ins. However, eliminating the risk of a break-in altogether is impossible.

Serna points out, “When thieves decide to commit their crime, they are looking for the biggest payoff with the lowest potential for getting caught. The focus of your practices should be to minimize the appeal of your vehicles to thieves, which will also minimize the loss to your business.”

Talk with your insurance broker to develop a coverage strategy that aligns with your appetite for risk and have the carrier take on the remaining risk.

A unique advantage for Rancho Mesa clients is their access to the SafetyOne™ mobile app. Within it, business owners are able to make their vehicle policies available to their employees digitally, as well as provide security checklists through a QR code, while also being able to take pictures of their parked vehicle at the end of the work day, helping to reinforce safe practices, accountability, and employee implementation.

For a complimentary review of your current tool and equipment coverages, as well as your safety practices, you can contact me at (619) 486-6554 or mgorham@ranchomesa.com.

Protecting Your HVAC and Plumbing Business with Proper Classifications

Author, Matt Gorham, Account Executive, Rancho Mesa Insurance Services, Inc.

Within the construction industry, it is common for questions to arise about how to categorize work that a contractor performs. While organizations like the Insurance Service Office (ISO), Workers’ Compensation Insurance Rating Bureau (WCIRB), and the National Council on Compensation Insurance (NCCI) have created classification systems, nuances in worksite demands can lead to confusion about which class code to use for a given business’s operations.

Even though many types of work have similarities, mistakes in classification can lead to:

1. Problematic coverage exclusions

2. Surprise audit bills

3. Overpaying insurance premiums

General liability class codes differ between types of work, such as commercial/industrial plumbing and residential plumbing, or heating and air conditioning with or without liquefied petroleum gas.

Problems can arise for businesses when their coverage fails to match the work being performed, especially when certain endorsements are included within their policies. When a loss happens in this situation, a carrier may deny coverage, leaving the business to respond to the damage or injury on its own.

We recently started working with an HVAC contractor that had previously found themselves on the wrong end of this scenario, having incurred over $350,000 in property damage costs because they were held responsible for flooding an apartment while moving a water line. Their previous carrier denied the claim because of a coverage limitation endorsement, which specifically limited coverage only to the classification codes listed on their policy.

In severe cases, a carrier may also choose to cancel or non-renew coverage for the business if they learn that the business’s operations are heavier or significantly different than what was previously represented.

Like general liability, workers’ compensation class codes can also cause challenges for contractors.

Consider the example of an HVAC contractor. Their workers’ compensation payrolls could easily be categorized into either 5183/5187 or 5538/5542. There is a subtle difference that separates whether payroll should be classified within the plumbing class codes or the sheet metal class codes. However, there can be a substantial difference in the corresponding premium a company would pay for workers’ compensation, especially when you consider that these classifications are subject to different dual wage thresholds.

An HVAC company with a technician getting paid $32 per hour whose payroll is classified as 5187 could expect to pay premiums from a $4 to $5 base rate per $100. Another HVAC company with a technician getting paid the same, but categorized as 5538 could expect to pay premiums from a $10 to $12 base rate per $100. While the lower rate may at first be appealing, if payroll is improperly classified throughout the policy term, an audit could lead to a substantial additional premium, so it is best that you classify your work correctly from the start so that your premium properly reflects the risk of the work being done.

Plumbers often encounter a similar classification challenge. Should they be categorizing payroll under the plumbing class code only? Do they have any sewer or excavation exposure? That depends on some key details in their operations and will directly influence which carriers are willing to partner with them and how aggressively they price their coverage.

Rancho Mesa recognizes the importance of proactively working with accurate, complete information. To better serve the needs of our clients, we have developed a comprehensive submission and renewal process, which includes:

• Pre-renewal meetings 90 to 120 days before the renewal date to understand any changes in the business

• Industry specific supplemental applications to gather more thorough and relevant information

• Open, honest communication with carrier partners that fosters trust and transparency

• Policy reviews and audits to identify potential coverage issues

To request a policy audit, and ensure that the coverage and pricing for your insurance program properly aligns with your industry, contact me at (619) 486-6554 or mgorham@ranchomesa.com.

Leveraging Your Experience Modification Rating to Your Advantage

Author, Matt Gorham, Account executive, Rancho Mesa Insurance Services, Inc.

Your Experience Modification Rating (e.g., EMR, X-Mod, or Mod) can have a significant impact on controlling costs within your insurance program. While most business owners recognize that a lower EMR typically leads to lower insurance costs, few owners understand the mechanics for determining an EMR and how they can be used to proactively manage resources to their company’s benefit.

An EMR is determined by evaluating a company’s recent history of payrolls and job related injuries, relative to its own industry, to benchmark them to their peer group.

If a company’s incurred losses (both paid and reserved) exceed the average within its industry, it will result in a debit mod (i.e., EMRs above 100) which leads to higher premiums. If the incurred losses are less than the industry average, the company will earn a credit mod (i.e., EMRs under 100) resulting in lower premiums.

As your EMR changes from year to year, it will directly increase or decrease your company’s workers’ compensation premiums, thus impacting overhead costs. Higher EMRs will increase overhead costs and can lead to increased bid costs, reduced profit margins, and in some cases restrict you in the pre-qualification process.

In the construction world, passing higher costs on to your customers in a competitive bidding process can prevent you from securing contracts. Choosing instead to absorb those additional costs, however, can jeopardize your company’s growth, financial stability, or possibly stop you from having the funds necessary to complete the job.

But managing your EMR is more than simply having the good fortune to avoid expensive claims. It is important to recognize that not all claims impact your EMR the same. Severity and frequency of claims both play an important role in your EMR, as does your primary threshold.

Using these key data points, we are able to create a proprietary KPI dashboard for clients providing valuable insights to the mechanics of their EMR. Business owners are able to see their:

• Primary Threshold and Maximum EMR Impact

• Claim Dollars Equal to 1 Point of EMR

• Maximum Controllable Points within the EMR

• Individual Frequency Trends and Benchmarking to Industry

• Individual Severity Trends and Benchmarking to Industry

• Lowest Possible EMR

• Projected EMR

Our KPI dashboard has become a must have tool for business owners, providing a better understanding of how to manage their EMR, allowing them to more reliably forecast overhead costs, and proactively address safety concerns. Coupled with Rancho Mesa’s in-house workers’ compensation claims advocate, business owners can more efficiently deploy resources and return-to-work programs to mitigate claim costs.

To request your own KPI dashboard and start putting it to use within your business, contact me at (619) 486-6554 or mgorham@ranchomesa.com.

Dual Wage Thresholds Set to Increase Again

Author, Matt Gorham, Account executive, Rancho Mesa Insurance Services, Inc.

In an effort to keep up with wage inflation, California’s Workers’ Compensation Insurance Rating Bureau (WCIRB) has recommended increases to all 16 construction dual wage thresholds, which, if approved, would impact policies beginning on September 1, 2024 and could drive up insurance premiums for those unaware.

Dual wage thresholds help carriers evaluate risk of employee injury by correlating average hourly wage with experience on the job. The general notion is that employees with more experience command higher wages and are less likely to get injured at work, while employees with less experience are paid a lower wage, are less familiar with safety and jobsite protocols, and therefore more likely to be injured at work. This difference in risk leads to a difference in cost for insurance premiums, with higher paid employees costing their employers comparatively less in premium.

Using the base rate of $31 or more per hour from one carrier, consider the example of a plumber: a plumber earning $30 per hour will cost their employer $9.31 per $100 of payroll, while a plumber earning $31 per hour will cost their employer $4.35 per $100 of payroll. That is roughly a 47% higher cost in premium per $100 for an employee earning 3% less per hour.

Since the last time the WCIRB suggested an increase to the dual wage thresholds in December 2021, inflation and labor shortages have continued to drive up wages in the construction industry. According to the St. Louis Fed, average hourly earnings in construction have increased from $33.60 to $37.53 – more than 11% in that time. While wages are going up, the experience of employees is not keeping pace, leaving insurance carriers exposed. To address this disparity, the proposed threshold increases from the WCIRB range from $1 for plumbing, automatic sprinkler, concrete work, and painting/waterproofing to $4 for sheet metal/HVAC work.

To get ahead of this proposed change, business owners should consider whether it is more beneficial to award employees with raises or to pay more in insurance premiums. With increased overhead costs likely coming either way and quality employees already in short supply, not only could strategic raises offer relative savings, they could strengthen the loyalty from your team.

While this proposed change still needs final approval by the insurance commissioner, it is expected to have a major impact on wages and potentially premiums within the construction industry.

To evaluate the impact of the proposed dual wage threshold increase on your business, contact me at (619) 486-6554 or mgorham@ranchomesa.com.