Every business has property that is critical to its operations. This can include manufacturing equipment, a family owned building housing a retail store front, inventory held in a warehouse, ingredients or parts to make products, improvements made to a property, computers and phone systems to support internet sales, and even the business income from company sales. If a covered peril such as a fire destroyed any of this property, or interrupted the business so sales were discontinued, transferring the risk of loss to an insurer may be critical to maintain the viability of the business. Business owners should consider the following when reviewing their property insurance policies:

1. Is your business income protected? Have you reported all of the physical property to be covered or scheduled on your policy? Imagine your business was “vaporized” tomorrow, what would it take to get up and running again? What would be your continuing expenses? How long would it take to duplicate your operations at another location? Have you reported all of this to your insurer?
2. Are you insuring the property for the same amount you insured it 20 years ago? When was the last time your building was appraised?
3. What perils are covered? Do you have flood coverage? How about Earthquake coverage? Some policies have restrictions on certain perils including wind and hail. Does your policy have such restrictions?
4. Will you be penalized for underreporting your property values by having a policy coinsurance penalty or a margin clause applied?
5. What ancillary coverage is provided by your policy? Do you have employee dishonesty, backup sewer and drain, or valuable papers and records coverage? What about extra expense, dependent properties, or increased cost of construction coverage?
6. Are there any warranties on your policy requiring you to maintain a sprinkler system, fire alarms or burglar alarms?

There are many endorsements that are available to improve your coverage and provide additional protections. Knowing what losses can occur and properly endorsing your policy to provide the coverage is an important risk management step every business owner should take. It is especially true to prepare for the worst but hope for the best when it comes to insuring your business.

Risk Manager’s Takeaway:

Reviewing your property insurance coverage and making sure it addresses the risks faced by your business is critical. Invest the time to review your risk management program so when a loss does affect your company you will be properly protected.

There are numerous ways to control the costs related to workers’ compensation. This article focuses on the actual premium paid instead of the other components associated with workers’ compensation costs such as labor used to investigate, report, and follow up on workers’ compensation claims, lost productivity directly related to an accident, temporary labor to replace an injured employee, and other administrative, claims and loss control related expenses.

The workers’ compensation premium alone can be a significant cost to any business but by taking the appropriate administrative steps you can ensure that you are not overpaying for your insurance. Trust me, your insurance company is not going to help you save money, and neither will your agent as he earns more commission when you pay more in premium. Below are 10 questions to ask when reviewing your workers’ compensation policy and risk management program:

1. Did I reduce reported payroll to account for the extra compensation related to overtime pay?
2. Did I cap or exclude executive payroll from the reported payroll?  
3. Are my employees properly classified and can some be classified at a much lower rated class code, such as clerical or sales?
4. Does my policy have a credit applied which can reduce premium by 5% to 30% or more?
5. Does my insurer have competitive rates filed with the State for the governing class codes of my business?
6. Is my company experience modification factor correct and applied?
7. Did I make sure that losses used to calculate the experience modification factor are correct and do not include excessive reserves?
8. Am I properly reviewing and controlling my claims to ensure insurers are not paying excessive claims and passing those costs on to me?
9. Is safety a priority at my company as frequency of claims drives premiums?
10. Can I retain or transfer risk to lower my premiums and ultimately save money?

Risk Manager’s Takeaway:

Taking the time to answer some basic questions can help you focus your efforts to reduce risk and develop a sound risk management plan. This can save you substantial money over the long run. Call the experts at Star Risk Consultants and we will be happy to review your program with you to create a plan that will save you money.