How many times have you heard that statement after something of significance has happened?

The Attorney General in New Orleans is saying that about the folks who forgot to buy flood insurance prior to Hurricane Katrina. “They never thought about a flood destroying their house”. Therefore, why should they be penalized because they didn’t buy flood insurance.

Words to that affect are heard frequently by folks who are beset by the risks and tragedies that folks face in their everyday life. Those who own a propane business also face the same risks.

Why aren’t you thinking about the “what ifs of life? Your family and your business are both depending on YOU to think about the risks that you face and to implement effective risk management techniques to minimize or transfer the risks that you face.

Death is inevitable and yet many marketers are operating without wills and trusts or they have old wills and trusts which are based on laws that have become obsolete or have expired. Worse yet is the person who doesn’t buy any life insurance to meet life’s eventuality.

Many years ago when I was starting my insurance career, I insured a young man who aspired to get into the construction business. A pickup truck, shovel, pick and wheelbarrow were all he had to his name. Every year as his insurance expired I would meet with him and his wife and go over his insurance needs, and every year, he put off buying life insurance. It was with a broken heart that I received the call that he had been killed in a cave-in, leaving his wife in debt with two small children. “I had never thought about that” was not true in this case, but the decision had been put off till tomorrow, and tomorrow never came.

California is a beautiful state with mountains, forests, lakes and ocean beaches, but that same beauty also contains some risks which need to be considered. Forest or brush fires, earthquake or earth movement and floods are perils that many marketers need to consider and how they would affect your home and business.

The standard property policy that is written by all of the insurance companies exclude coverage for flood, earthquake and earth movement. What affect on your business would a flood or earthquake create? Can your company survive the “big one” that the scientists are predicting without insurance coverage.

Flood and earthquake insurance can be purchased. Usually the coverage is written as a stand alone policy and normally requires a 5% deductible based on the total value of the property insured – but it is available. Earthquake insurance has a minimum premium of $1,000 and the price goes up from there depending on the value of the property to be covered.

While we are on the subject of property insurance, we see a number of property policies that are written without business income (BI) and extra expense (EE). A large property loss will drastically affect your company’s bottom line. The extra expense to get back into business quickly and keep your current customers, requires a lot of extra time and expense to lease new office space, new LPG storage, phone lines, advertising etc, the extra time and effort will all impact the bottom line.

“I never thought about that”, also occurs when we see marketers that try to save insurance dollars by underinsuring their buildings and storage tanks because the losses always happens to someone else. Recently, we wrote the property and casualty insurance on a fuel distributor. We worked diligently to educate him on escalating construction costs and the need to bring his properties coverage up to 2005 replacement costs, and to add Business Income and Extra Expense.

The need for that insurance review and increasing the property values became painfully obvious, when we received the call that his main facility had experienced an explosion and his warehouse and neighboring buildings were destroyed in the ensuing fire.

So what should one do when thinking about the what if’s of life and the risks facing your family and business.
1. Family is first. Have you taken care of life insurance, disability insurance, living wills, trusts etc. Tell your loved ones daily that you love and care for them.
2. Business. Do you have a good CPA that can talk to you about financial and tax risks that your business could face?
Do you have a good attorney or attorneys that can advise you regarding the legal risks your company faces.
Do you have a good insurance person who is knowledgeable about your business? Invite them to visit and tour your place of business . Ask them about the insurance coverage and exclusions that you have on your policy. And ask them about what additional coverage they recommend such as Employment Related Practise Liability, or Director and Officer and maybe increasing your umbrella coverae.

Lastly, we remind everyone of the liability risk your company faces when selling to commercial accounts without a service agreement. Don’t put off implementing a strong service agreement until your company is brought into a large lawsuit.

by Frank B. Thompson, CPCU
President PT Risk Management

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