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Commercial Insurance E-mail

Custom Solutions For All Types Of Business

Every business is different. A plumber's insurance needs are different from those of a jeweller. One thing that all businesses have in common is that no matter how professionally they're run, there is always a possibility of loss, injury or damage which can force them out of business. To provide proper insurance coverage there is a wide choice of policies, options and deductibles.

A commercial insurance representative at Larry Grummett Insurance will be able to help you decide on suitable insurance protection.

Risk management

ImageConsider your risks. Some risk exposures are obvious. Others, which could be just as serious, can lurk undetected in the background. Your insurance company can inspect your premises, assess your operations, and recommend options for safeguarding employees, buildings and goods. Both you and your insurer have a vested interest in minimizing the frequency and severity of losses.

Adopting a risk management program gives a small business the opportunity to use the same loss reduction and cost control mechanisms that large companies use to save money and be more competitive.

A risk management program will ensure that your company's insurance policies are competitively priced and provide coverage appropriate to the risks and their potential to harm your business. TOP

Protection of assets

Insurance is primarily a means of protecting your assets, including capital.

The risk to physical assets such as buildings, equipment and stock is obvious. Fires can be catastrophic. Burglaries and theft (by outsiders or employees) can cause crippling losses.

Less obvious is the strain on your capital if you are out of business for any length of time because of a loss to your physical assets. In fact, the loss of use of those assets could put you out of business permanently, as well as leaving you with bills for continuing expenses. Fortunately, insurance is available to cover both lost profit and continuing expenses.

A business that can continue elsewhere at extra cost should consider the advantages of an "extra expense" policy designed to keep a business going. Examples of such "movable" busineses include professionals, consultants and many service businesses.

Every business faces the possibility of lawsuits because of bodily injury, personal injury or damage to the property of others caused by your negligence or that of your employees. One large liability suit could use up your entire assets.

Finally, among your most important assets are your employees and yourself. If you are disabled, your business may be disabled as well. Disability insurance removes that doubt. You should also consider a benefits package for yourself and your employees. TOP

Four stages in risk management

Just as you manage other facets of your business, you can manage risk in order to minimize the effects of loss exposures.

The four stages in risk management are:

1. Identify your risks

By looking at each asset and listing each exposure, you can identify both direct and indirect risks. While most will be insurable, some will not.

2. Evaluate your risks

Each loss exposure has two components:

Frequency - how often a loss could be expected.

Severity - how much such a loss would be.

Your insurance representative will help you make a proper evaluation.

3. Minimize your risk

Because you want to avoid losses that could affect your business, it is advisable to implement measures which prevent losses and reduce the extent of losses that do occur. Examples are sprinklers, alarm systems, control systems for handling cash, and driver training programs.

4. Shift the risk to others

Once you are fully aware of your loss exposures and have taken whatever economic steps you can to reduce them, you will be able to put in place an insurance program that is right for you. TOP

Types of risk exposure

If your place of business is rented or leased, you may be responsible to your landlord in the event of fire, explosion, vandalism, water leaks and other perils. And if you own your business premises, you will need insurance to protect the interests of your mortgage-holders as well as your own. In calculating the amount and type of insurance coverage you may require, be sure to check for local bylaws that may require damaged premises to be rebuilt to costlier standards.

There seems to be almost no upper limit to the size of loss that could result in some areas, such as legal liability. High losses could arise, for example, from defective products or services, or even from a fall by a customer on a wet floor. Potential losses in other areas may be a little easier to figure out -- the loss that could result from embezzlement, for example, or the loss that you might experience during an extended shutdown because of fire, computer failure, loss of heat or power, and so on. Your broker will provide you with a loss-exposure checklist that will help you to make sure you haven't forgotten anything. TOP

Legal liability

Liability insurance can cover a wide range of exposures and encompass losses such as:

  • Damages for bodily injury or damage to the property of others
  • Emergency medical expenses
  • Expenses for investigations, defence costs, claim payments, etc.

Various liability coverages would be included in a single commercial general liability policy and would include premises and operations, owners' or contractors' protective liability, products or completed operations liability, tenants' legal liability and employers' liability. Separate policies cover such exposures as professional liability, automobile liability, etc.

Your exposure to loss determines the specific coverage that you might require. As in all types of insurance, the cost is determined by the extent of exposure.

Most liability exposures arise from negligence causing injury to persons or damage to their property. As an employer, you may be legally responsible for the actions of your employees who are acting on your behalf.

Federal or provincial laws may impose higher levels of responsibility, including absolute liability.

Contracts such as leases, construction contracts, purchasing contracts, as well as equipment rental or maintnance agreements among others, may increase your liability exposure. TOP

Human resources exposures

Small businesses in particular are usually dependent on the success of the owner and perhaps one or two key employees. Disability insurance for owners is vital in case of accidents or illness.

Key personnel insurance compensates businesses for the death of a key person or if the departure of a key employee causes a downturn in orders.

Many businesses provide a comprehensive program of employee group benefits in order to retain a stable, committed work force. TOP

Loss prevention

You can protect your property from loss and reduce insurance costs by taking a few positive steps on your own to discourage burglars, shoplifters, vandals and arsonists. Good inventory control and meticulous bookkeeping may help avoid placing temptation in the way of employees and suppliers. Investment in loss prevention often results in lower insurance premiums. In fact, your insurance savings may pay for this investment in only a few years. Here are just a few loss-prevention ideas you may want to consider.

  • Install approved sprinklers, intruder alarms and fire alarms.
  • Secure all doors, windows and skylights -- strongly.
  • Secure storage and other low-traffic areas.
  • Isolate flammable materials and dispose of waste materials properly.
  • Leave some lights on and windows clear so police patrols can view the interior.
  • Encourage employees to protect the company by being watchful and careful.
  • Back up your computer files frequently and store copies off premises.
  • Register with your local police and fire department so that they know who to call in an emergency.
  • Consider hiring a security guard when conditions warrant.

Police and fire-fighters and insurers do a great job - after the damage has been done. The key is to prevent ever needing their services - and that key, to the security of your business, rests primarily in your hands.

Do remember, though, that risks change over time. Once you have established a sound insurance plan, identified your firm's loss exposures, and addressed each one, that's only the beginning. New risks will arise and old ones will subside; that's why insurance coverage should be reviewed at least once a year. This gives you a chance to fix past mistakes; assess new types of coverage; adjust your coverage and deductibles to suit new market and regulatory conditions; adjust for changes in the type and volume of your business; and shop for competitive quotations. TOP

Deductibles

Almost anything is insurable... for a price! But would full coverage in most areas be cost-effective? Probably not. It often pays to assume a part of the loss in connection with even essential coverages; that frees up dollars for other worthwhile coverages or loss-prevention investments and activities. It makes little sense to skimp on capital investment that may help your business flourish in order to buy more insurance than you really need.

Generally, your insurance representative will suggest that you self-insure, or retain through deductibles, loss exposures that are low.

Deductibles allow you to keep costs down while still retaining insurance protection against losses that could put you out of business.

The size of the deductible should be determined according to the ability of a business to absorb a loss without severe difficulty. TOP

Small business

Risk management is an essential part of every business. Large companies can often afford the services of a full-time risk manager whose job includes looking after the firm's insurance needs. In a small company, unfortunately, risk management may be yet another chore to cram into a busy working day. The need for business insurance, however, is just as important for a small company as it is for a large one... perhaps even more important, since smaller businesses may have fewer resources to fall back on.

Of course, as the owner or operator of a small business, you will know instinctively that a program to manage risk is essential for your business to survive and prosper in today's competitive economy. The trick is to find the time to do something about it.

You are familiar with the operation of your company, and your broker should be familiar with cost-effective ways of handling risks. A good insurance broker is a valuable asset for your company.

When planning your insurance coverage, an important first step is to identify those potential losses that could cripple your business, and insure against them. Don't worry much about items which pose little threat. But be sure to consider carefully everything in between the two extremes; that's the difficult part, and it requires much creativity and perseverance. TOP

Home-based business

The majority of home-based businesses lack adequate business insurance. Too often they rely on homeowners' policies, which exclude or limit coverage for commercial activities. Advise your insurance representative about your home-run business.

Make a list of all property that you are using, even in part, for your business. Computers, copiers and fax machines, in particular, may be used for both personal and business purposes.

It may be possible to extend your home policy to cover business exposures. If not, a business policy held with the same insurer may avoid problems with claims involving property such as laptops used for both business and pleasure. TOP