Managing
Risk
A clumsy client trips on the antique oriental rug in your
office, falls, and considers retiring on the proceeds of this
misadventure. Or, your product is swallowed by a customer's dog,
with the predictable ill effects. Or, your inventory gets fried
in a warehouse fire — along with your computer, which held all
your accounts receivable records, among other irreplaceable
files. To avoid losing a lot of sleep, evade these potential
pitfalls and manage your risk.
Managing risk can be done in several ways. Once you've
identified a risk, you can elect to:
- prevent it — by, for example, practicing good fire
safety
- avoid it — by, for example, subcontracting a part of
your product manufacture involving hazardous materials
- spread it — by, for example, backing up your computer
files and keeping the copy at a separate location
- absorb it — by assuming that certain losses are an
acceptable cost of doing business
- transfer it — by sharing the risks with an insurance
company
In most cases, risks that you can't readily handle or predict
are best transferred to a reliable insurance carrier. You are no
doubt familiar with personal lines of insurance, such as homeowner's,
personal
auto, life,
disability,
health,
and home
business owner's. But if your business is located away from
home or if it's home based but growing fast, you'd be well
advised to see a business insurance professional and evaluate
the cost-benefit of transferring your risk via a comprehensive
insurance package designed to protect your particular
circumstances.
This sounds more complicated than it actually is. Insurance
companies have been at it for centuries and they've thought of
risks you never dreamed you had. So they're well prepared to
protect you from most perils via a standard policy at a
reasonable price. You will be able to keep that price down by
electing to take the highest possible deductible you can afford.
An annual review of your business insurance with your agent will
assure you that you still need what you're paying for and that
no new risks have emerged, due to the growth or nature of your
business, that are not covered in your package policy.
Business insurance types fit into a concise menu from which
to choose. There are three basic types of policy coverages:
Liability |
Special |
Property |
General Liability |
Business Interruption |
Auto Physical Damage |
Product Liability |
Plate Glass |
Comprehensive Damage |
Auto Liability |
Credit Life |
Crime Coverage |
Workers Compensation |
Surety Bonds |
Fire & Extended Coverage: |
Umbrellas |
|
for hail, vandalism and malicious mischief |
|
|
Inland Marine |
|