Archive for May, 2013

Do you know your Risk Definitions?

If you want to manage risk within your firm, you need to familiarize yourself with riskmanagement language. Here are some basic definitions, provided by the National Alliance for Insurance Education & Research, which you can use to build your knowledge base:

  • Exposure: A situation, practice or condition that might lead to a loss; an activity
    or resource (assets, people).
  • Peril: A “cause” of loss; an event that might cause a loss.
  • Hazard: A condition within an exposure that might lead to an incident; “a peril
    about to happen.”
  • Incident: An event that disrupts normal activities and might become a loss or
    claim; “a near miss.” Lifecycle of an incident: Preincident,incident, immediate
    postincident,post incident, rehabilitation (repair, recovery).
  • Accident: An incident resulting in injury or damage to person or property which has, or will become, a loss or
    claim; “an unplanned event definite as to time and place that causes bodily injury or property damage.”
  • Occurrence: An accident with the limitation of time removed.
  • Loss: A reduction in value.
  • Claim: A demand or obligation for payment as a result of a loss.
  • Frequency: The number of times an incident occurs.
  • Severity: The monetary impact of a loss.
  • Expected losses: Loss projections (“loss pics”) based on probability distributions and statistics; frequently
    developed using actuarial techniques.

For a complimentary review of the risks your business faces, please feel free to contact us at any time.


A business insurance “don’t do” list

Here’s a “don’t do” list for commercial insurance:

  1. Never hide unique or unusual risks or exposures from your agent in hopes of receiving a lower premium. A loss related to one of these hidden exposures could result in the insurance company claiming misrepresentation, a word no one—especially the policyholder—wants to hear.
  2. Never assume that your homeowners insurance policy will cover busness-related exposures.
    Any coverage that may be included is minimal—not a worthy substitute for a suitable business policy.
  3. Never underinsure your property to get a lower premium. Underinsurance will result in a lower payment from the insurance company when you need the money most—after a claim. It could also lead to costly penalties that will further reduce the amount paid.
  4. Never purchase any policy, even supplemental coverage, from an insurance company without learning that company’s financial rating. A financial rating is an indicator of that company’s solvency. You don’t want to be stuck depending on an insurance company that is on the verge of bankruptcy.

Our insurance team can help you find ways to save on your business insurance without cutting corners or creating coverage gaps. Give us a call to review your coverage or discuss savings options.