Accidents happen: Are you prepared?

On New Year’s Day, 2009, Deslaurier Custom Cabinets of Renfrew, Ont., received a phone call that didn’t start off with “Happy New Year.” Instead, the voice on the other end of the line asked: “Did you hear about the fire at the plant?”

These are words that no wood shop owner ever wants to hear, but it was the reality facing Denis Staples, Deslaurier’s president, who, instead of ringing in the New Year alongside friends and family, was standing over a destroyed building (pictured) and countless questions about the company’s future.

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According to Staples, “Nobody in our industry thinks it’s ever going to happen to them. Well, guess what? It’s happened to us — twice!” Staples is referring to another fire that occurred earlier at Deslaurier in 1986. One of the company’s founders, Jim Deslaurier Sr. — paralyzed from the hips down — was scrambling half naked in his wheelchair going up and down the street shouting for help as his beloved shop was burning.

The company survived the first fire to become one of the Ottawa region’s most successful wood-industry businesses. It has also survived the second.

How has Deslaurier managed to rise from the ashes of these tragic disasters? Staples says, “You have to be prepared. Instead of saying it’s never going to happen to you, take the necessary steps just in case it does.”

As Staples points out, you can do everything right and disaster can still strike. In the case of the New Year’s Day fire, it was an outside engineering crew hired by the building’s owner that started the fire. Staples says, “We had all our staff trained on safety procedures, but what can you do when it’s not even your own people that are coming in and putting your business at risk?”

THE RISK BUSINESS
The answer for Deslaurier and countless other firms in Canada’s wood industry is insurance. In fact, the purpose of insurance is to protect a business from risks that are out of its control. Staples says, “I think I can honestly say that we would not be here today if we didn’t take our insurance seriously. It saved us.”

Yet the words insurance and wood industry don’t always come together very easily. Sean Bell is vice president of Canadian Insurance Brokers in Toronto, Ont. As he points out, “The number of insurance claims for woodworking shops is higher than average. Of course, the risks associated with fire hazards are often at top of mind for the industry.”

Staples is a big believer in insurance. “Before the fire in 2009,” he says, “our insurance rep kept insisting we needed to take extra measures — just in case. Well, he convinced me, and thank God he did. I don’t think we would have survived otherwise.”

One piece of advice Deslaurier took from the insurance company was to make sure it had business-interruption insurance that covers 12 months of losses, instead of just six. Staples says, “Ask yourself a question. Could you rebuild your business back up to profitability in just six months? Probably not. I don’t think anybody can. It’s so important to think ahead.”

Another measure taken before the fire occurred that proved to be invaluable after the fire was the performance of a full appraisal of inventory and equipment. Staples says, “Believe me, the last thing you want to do as you’re rebuilding your business is squabble with the insurance company about how much you’re owed for lost equipment. We saved a lot of time by having those appraisals done before the accident.”

Marina Aprea of cabinetry manufacturer Viacraft Interiors in Woodbridge, Ont. says her company has been fortunate to avoid a catastrophic accident, but they still take all the necessary precautions. This not only means that Viacraft engages in standard safety practices, but they go out and get the right insurance. Aprea says, “It’s very expensive, but we pay the cost.”

Although the cost of insurance for wood-industry businesses can be high, Bell says it doesn’t have to be prohibitive. “The challenge for any business seeking insurance is to convince the insurance companies that you have your act in order,” he says. “If you’re running a safe shop, you should be able to get affordable insurance. We have done it for clients.”

SAFETY BASICS
Bell points to industry safety standards as a foundation for getting good insurance. “Make sure you’re addressing the combustible dust issue properly, of course,” he says. “Have the proper ventilation. Keep your shop clean. Train your workers in proper safety procedures. Insurance companies love seeing these things in woodworking shops.”

Richard Hatkoski is owner of Commercial Pallet and the Muskoka Surfboard Company in Baysville, Ont. According to Hatkoski, “We do not have a centralized dust collection system. This was a question when we applied for insurance. Since we use independent bag vacuum systems with each piece of equipment, we seem to have gotten around the issue.”

According to Bell, many factors can contribute to lower insurance premiums. He says, “For example, a shop in the city will pay less for insurance than one in the countryside because of access to fire hydrants. Proximity to fire halls is another one. Insurance companies will look at everything when assessing your risk.”

It’s just not fire hazards, or any safety hazards, that wood shops have to worry about, either. Liability insurance is necessary in case a party is injured as a result of doing business with you. In Canada’s secondary wood industry, two areas leave businesses particularly vulnerable to liability. According to Bell, “For one, installation exposes wood shops to liability issues. For example, a bad installation can lead to injury or loss, and woodworking businesses can be held liable. While outsourcing can help avoid risk, the best way to avoid risk, of course, is to hire properly trained installers, and make sure they have the proper insurance — whether they’re in-house or outsourced.”

Another area of concern for wood manufacturers relates to the types of products being made. For example, human beings use furniture. If human beings get hurt by the furniture you make, there could be trouble. This is liability. According to Bell, “The risk is even higher for things like children’s furniture and cribs, so getting the right liability insurance for such products is crucial.”

Bell has his share of experience in Canada’s wood industry. There are what he refers to as “best case” examples of shops that have their operations in order and can get affordable insurance. But he also refers to what he calls “worst case” examples, or shops that, for various reasons, have a hard time to get insurance of any kind.

“I have walked into some shops where people are smoking on the premises,” Bell says. “Let me tell you, that does not leave a good impression. However, there are also factors that are out of a company’s current control that hinder its ability to get insurance. For example, there might be a long claims history. You can’t just erase that.”

HELP FOR HIGH RISKS
Bell has a solution for wood businesses that might have a hard time getting insurance. He says, “They’re called MGAs, or managing general agents. In essence, they’re a market of last resort for insurance seekers. MGAs act as an intermediary for insurance companies to negotiate unique policies for unique clients. You might have to pay more, but it might be the right option for some.”

For his part, Staples does not mention any MGAs, but he has had his own run-ins with unique players in the insurance industry. “I call them ambulance chasers,” he says, “but they’re otherwise referred to as private adjusters. So, they’ll come to you after a tragedy and say they’ll handle your entire claim for a set amount. I would avoid these private adjusters, if possible.”

Instead, Staples cites his long- standing relationship with the insurance industry as a crucial factor in his company’s rebound. He says, “I have always sought out good insurance advice. After the fire, I got in touch with an industry professional with loads of experience dealing with insurance companies. I knew he was the right guy for us. He wasn’t an ambulance chaser.”

In other words, wood-industry manufacturers don’t always have to fend for themselves when it comes to insurance. In fact, Bell has been responsible for providing a sub-sector in the industry with a unique insurance solution.

According to Bell, “The Society of Canadian Woodworkers, a hobbyist group, came to us and said their members are having a terrible time finding affordable insurance. Even though they’re hobbyists, they often work out of leased facilities that require insurance. Some of them were paying over $1,000 a year. It was crazy.

“So what we did,” Bell continues, “is find the association a solution where all members pay only $450 a year for insurance. Crucial in making this happen was the association. It was under their umbrella that we were able to structure the right insurance solution. Otherwise, it’s every person for themselves, and that’s when the costs go up.”

Asked if a similar insurance solution could work for non-hobbyists, Bell responds, “I don’t see why not. I haven’t been approached by another wood-industry association. But, if I was, I’d be interested. An association brings all kinds of things to the table. It can ensure its members work to certain standards, for example. That can really help to bring costs down.”

Whether alone or in tandem with others, solutions do exist in Canada’s wood industry to help protect one’s interest in case of an accident. And accidents do happen. That’s why insurance exists. One day someone might call you and ask, “Did you hear about the fire at the shop?” If that happens, will you be prepared?

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