RECONSIDER DROPPING YOUR COVERAGE
BY: GAVIN BENSON LLOYD SADD INSURANCE
Why You Should Reconsider Dropping Or Lowering Coverages
Take Another Look At Your Current Program
Though the economy seems to be on the rebound, it is still reeling and many employers are still experiencing budgetary pressures. In these situations, the first gut instinct is to begin to cut back on expenses. In some cases, of course, this is a good decision. With that being said, insurance coverage is not an area that you want to cut. Just because the budget is tight doesn’ t mean your exposure is entirely gone.
BASING INSURANCE ON YOUR BUDGET Lowering insurance coverage( or dropping some of it altogether) can seem a very attractive option. In fact, when a company is facing low funds or running in the red, it may be a necessary option. Unfortunately, doing so will often open a business up to even greater financial trouble when it is least prepared to weather a potential financial storm. If you do not believe you can afford the right coverage, how do you intend to handle claims or losses? This could result in not only short term trouble but also catastrophic financial loss.
In reality, increasing coverage is actually a potentially better solution. Prices are currently extremely low for commercial lines, and it is a great time to purchase additional coverage. Additionally, underwriters want to avoid seeing gaps in coverage which can reduce premiums even further
RISK MANAGEMENT Lowering coverage will most definitely expose your company to greater risk of claims. It also exposes your company to potential lawsuits. If you were to lower or raise your coverage annually based only on price, and then have a claim for which you aren’ t covered, you may find that your shareholders or claimants can sue you for negligence because your company does not have a strategic risk management program. These plans should be put in place based on what a company needs, and it should apply to all coverage lines. The plan should also be followed regardless of budgetary concerns.
SPECIAL CONSIDERATIONS Some types of coverage, including employment practices liability insurance and directors and officers insurance, are vital in a tough economy.
When companies lay people off, the risk of discrimination or wrongful termination suits dramatically increases. Likewise, companies taking financial losses will likely see the shareholders and stockholders blame the board of directors for what is happening. Employment practices liability insurance and directors and officers insurance cover against those situations.
Sometimes, the answer isn’ t even about reducing or increasing coverage— it’ s just about restructuring your current program to meet your needs through the downturn. Lloyd Sadd is available to help manage your insurance costs while still maintaining proper coverage. +
Gavin came to Lloyd Sadd with a desire to help build the Lloyd Sadd Energy Services practice. He is motivated to learn about the inside and out of his clients businesses, both from a day to day operations stand point as well as from a long term strategy point of view.
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