Not Knowing is Not Protecting

In business bad things happen.

It’s another hectic Monday and just past noon, your employee frantically calls you. He has just ran a red light while running a business errand for you in his personal car and has rammed in to a family of four. To make matters worse, he tells you he forgot to pay his insurance bill last week and he doesn’t know if he is insured. With the sirens going on in the background, you sit stunned wondering if you are covered. Could this lead to an embarrassing claim that devastates your business? Are my assets covered? Will I lose everything?

Your business, the restaurant that has been in your family for generations, has burnt to the ground. Your agent and the company he represents has responded quickly and it looks like you’ll be able to get the building back up in six to nine months; you let out a sigh of relief. Then your regular bills start coming in, you have to figure out a way to pay your managers and chefs or they are walking, and how are you going to pay for your kids private school bill with no money coming in? A business associate mentions Business Interruption coverage; you call your agent and ask him about it, the silence on the end of the line gives you a pain in the pit of your stomach. How am I going to pay my bills?

No matter how hard you work to avoid catastrophes, if you are in business long enough, it will happen to you. Whether the catastrophe is a serious liability claim or a fire that destroys everything you have worked to create, without good risk management these things can end your businesses’ life. The sad thing is it does not need to be that way. Insurance is not some mysterious body of knowledge only known to a few, the policies are written in a language that is fairly understandable and if you have selected an insurance professional as your agent, they can clarify any unclear areas. The question is, am I covered for what I think I need covered for and what coverages don’t I have that I should be considering?

Let me give you some tips that will put you in a position to avoid the scenarios above and answer this all-important question:

1. Communication- every year, two months before your renewal, sit down with the agent you have chosen and review your coverages. Are a couple hours worth the piece of mind to know you’re covered when something bad happens? You bet it is. Not only will this meeting inform you of what you are covered for, it should also reveal what you are not covered for. Your agent should know your business; take time to explain what you do. If they don’t have the time or the answers, find another agent.
2. Consolidation- If you have your insurance spread around to a number of agents, consider seeing if you can get it all with one agent and one company. You want to avoid gaps, the more companies and agents involved, the better chance there may be gaps.
3. Competition- every few years get your insurance quoted by another professional agent. You don’t need to switch if you get the quote, there is something positive to be said for longevity with the same company and agent. But going through the process, will keep your agent and company on their toes resulting in the best price for your insurance and may result in the other agent pointing out something that your current agent has missed.
4. Control- Every year, have your agent provide you with a claims payment print out from the company you are insured with. This is important because your Commercial claims history has an even more direct link to the amount of premium you pay than it does with your personal insurance. If you see a claims pattern in your business, look at ways to control those losses. No matter how good an employee is, if they are driving a commercial vehicle of yours and have accidents and tickets, they are probably costing you money. With that same reasoning, before you hire a new employee, have your agent take a look at their driving history. At no cost to you, your agent can run their MVR and you can know, before they are on the payroll, they are someone you want driving your vehicles.
5. Commonsense- The title may be a stretch, but this concept is solid. Consider high deductibles and high liability limits. If you are smart, you will self-insure small claims so as not to impact your loss experience. If you are going to do that, doesn’t it make good commonsense to get the premium benefit of this action by carrying high deductibles on auto and property coverages? Of course it does. At the same time, you would be surprised how little it costs to carry high liability limits versus carrying low limits. Also consider adding an Umbrella Liability policy, the cost is relatively inexpensive and the protection is substantial. If you carry low deductibles, you can probably save enough by raising them to pay for the higher limits.

If you implement these simple tips, you will, most likely, save money on your insurance premiums and be confident that when the catastrophe you’ll know whether you are covered. We are all busy; just a few hours a year can make a world of difference when it comes to protecting your business’ future.