Know Your Carrier
What does all this mean for you, the business owner and insurance consumer? First, look at the company or companies with which you are insured. How are they weathering the storm? One of the primary and perhaps most reliable sources for checking the condition of your insurance provider is A.M. Best Co. Founded in 1899, A.M. Best is a full-service credit-rating organization dedicated to serving the financial-service industries, including the banking and insurance sectors.
You can review the financial ratings of your insurance carrier at www.ambest.com. For a secondary source, many analysts and interested parties also check the Standard & Poor’s financial ratings for insurance companies. Alternatively, you can request this information directly from your insurance agent or provider. If your carrier’s rating is slipping below an A or is on a watch list, you should have healthy concern about its condition.
Examine Your Program
Now that you’ve increased your knowledge of your insurance carrier, let’s look at your overall program. When finances get tight, people become more litigious, so consider raising your limits for coverage in areas such as premises liability, customer-goods legal liability and sale-and-disposal legal liability.
Since increasing your liability coverage will boost your premium, you might reduce in other areas. For example, consider accepting higher deductibles for your property coverage, which will lower your premium. Customers may be more inclined to place the blame for property damage or theft on you during hard times. This makes tenant insurance or property-liability retention programs even more valuable.
The increased potential for loss does not reside solely with your customers. While the potential for employee theft always exists, the probability increases during a poor economy. Employee-dishonesty coverage is available as an option with many insurance package policies and should be considered where employees are entrusted with cash transactions. Improved audit precautions are strongly encouraged at this time.
If you’re an employer who provides employee benefits such as health insurance, annuity or retirement-income accounts, give extra attention to purchasing errors and omissions coverage for your role as an agent or representative in these accounts. These are uncertain times; accounts will lose value, and you may be brought into an action that requires you to defend yourself―at significant cost―against the actions of a financial market that has lost its way.
We are living in interesting times. Make sure your insurance is really working for your business.
Scott Lancaster is the regulatory compliance officer for Deans & Homer, which has provided insurance products designed to respond to the unique risks of the self-storage industry since 1974. Lancaster started his insurance career in 1976 as a licensed insurance agent and broker in California. For more information, call 800.847.9999; visit www.self-storage-insurance.com.
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