Too often insurance is considered a “necessary evil” and an overhead that cannot be managed. Periodically it is important to think of the real needs and the benefits that restructuring the businesses insurance can bring to the enterprise. A careful review of the risks in the business may highlight insurance needs that are not covered by the current policies. This may include:
Casualty (automobile, fire, accident), business interruption and similar risks;
Directors and officers and errors and omissions;
Insurance designed for protection of partners and/or exit strategy planning
It is unfortunately often left to the insurance agent or broker to inform the business operators where there is a gap that needs to be covered. The reality is that often this person is an outsider who knows very little about the business, the risks and opportunities that confront it. It is up to the owner or President of the business to ensure that there is a strategy to manage every material risk. Of course one such strategy is to accept the risk and not insure against that risk.
If you decide not to take out insurance against a material business risk it is critical that you pause and map out the steps that will be taken to manage that risk. Just because you decide to accept the consequences of an event, does not mean that you cannot take steps to minimize both the risk of the event happening and the severity of the consequences if it does happen.
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