TRUE VALUE OF INSURANCE
BY : DARIN MCCORRISTON PRESIDENT TSMI SPORTS MANAGEMENT
The True Value Of Insurance
Risk & Exposures
The importance of insurance for businesses simply cannot be overstated . It is important not only for weathering potential storms and shoring up the company against exposures but also for customer service . The main issue with insurance , however , is that it needs to be continually re-evaluated and compared against the current economic climate and the types of work being done at your company . One of the largest problems when it comes to facing risk is that the only person who knows the true value of a company is the business owner . That means that he or she needs to be heavily involved in the process of choosing and purchasing insurance .
Risk and exposure , along with your insurance plan , can be painful to review . Even so , it is essential to protecting your company . Review your policies every year , get quotes and shore up any gaps . Many owners of small to mid-sized businesses are of the mistaken belief that they will be better off saving money and going with the lowest price . Unfortunately , that way of thinking can leave you holding the bag when you have to make a claim .
Opt for the best and most comprehensive insurance you can get . Make sure you understand the value of your inventory and act accordingly . Include business interruption insurance in your plan . When you decide on the value of your buildings , remember that demolition
will need to be included in that cost . Aim for 100 percent coverage along with 90 percent co-insurance . Additionally , it is extremely important to understand what that 90 percent co-insurance clause actually covers . Rebuilding or replacement costs should be fully covered by your plan .
“ ONE OF THE LARGEST PROBLEMS WHEN IT COMES TO FACING RISK IS THAT THE ONLY PERSON WHO KNOWS THE TRUE VALUE OF A COMPANY IS THE BUSINESS OWNER .”
Finally , remember that you need to have documentation for anything you intend to make a claim about . This means that , in the case of business interruption , you will need proof of business losses . Business interruption insurance is not always black and white and requires the business provide accurate reporting and documentation .
For my company , TMSI Sports Management , I learned this lesson the hard way . While I had insurance , I did not truly have a grasp of how much work I needed to do on my own to document everything accurately for the claims process . When we went through three major fires , that lack of documentation resulted in a slow claims process with outcomes that were not as desirable as I would have liked . That was when I learned the lesson that every business owner needs to not only understand the true value of his or her company and its assets but also document everything thoroughly . Dealing with the replacement of the building and the associated claims was straightforward . Proving that I had lost revenue and all of the expenses that went along with it , however , was not . Since then , we have implemented off-site backups of important drawings , videos , inventory , and other important documents . Not only has this made insuring the company easier but it is also more likely to result in a positive outcome in the event of a claim .
The key takeaway is that the only person who knows the true value of your business is you . So when purchasing insurance , you should be heavily involved in the process . Make sure to document as much as you can , keep backups and do your due diligence . Replacing physical property is one thing . Replacing lost revenue , however , is much less straightforward . That is something all business owners should have in the back of their minds . +
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