“Key Man” Insurance
Losing an important employee who plays a large role in the company is a very tough ordeal for the whole organization. There is a large risk that the whole operation may be affected or hindered. For these situations there is the “Key Man” Insurance. It is intended to protect the company from a loss of the “key employee”. Unlike the traditional disability insurance wherein the employee is the recipient of the benefits, here in “Key Man” Insurance the company is the one who would reap the benefits. The insurance vehicles for key man insurance can take two forms: Disability insurance or life insurance. Even if you are your company’s only “key man”, you should consider taking out key man insurance on yourself. If there is anyone in your organization that you could not operate without or who's skills and experience drive your profitability then you might want to consider purchasing this type of insurance.
Monday, December 13, 2010
Monday, December 6, 2010
ALL IN
What do you think of when you hear the term "All In"? I think of a poker player who is so confident in his ability to win a hand that he is willing to put all of his chips on the line. I also think of an entrepreneur who is so confident in his ability to make his business work that he is willing to put all of his resources and the livelihood of his family on the line to make it happen. There are many people in our business community who have committed everything to building a successful business. This is what it takes. You have to be "all in". There are many factors we can control when it comes to building a successful business such as hard work, providing good service, fulfilling a need, developing good products, and hiring quality people. Essentially, we are able to choose the hand we are dealt. That is what makes our country great. Every single person has this opportunity to bring something innovative and new to the table and build a successful enterprise. However, there are a lot of people who are not willing to put it all on the line.
There are certain risks that we have no control over which scare people away from seizing the opportunity to go "all in". We sometimes get caught up in thinking: What happens if I go all in then my building burns down? What if I hire the wrong person who steals money out of my company and sabotages the organization? What if someone sues me because I did something wrong or didn't perform my work perfectly? What if my products are no good and cause damage to someone of something? What if an earthquake or other natural disaster puts me out of business?
Fortunately, there are insurance answers for these questions. This is why we buy insurance. Sometimes after several years of running a successful business and never having to deal with something going wrong, we start to think that we are somewhat invincible and that all those things we worried about when we started the business are no longer a threat to us. So we start to cut back on our insurance spending, commit to larger deductibles that we may or may not be able to meet, and shop our policies so competitively that we take the value of a quality agent out of the picture because we no longer need someone looking out for us. All of a sudden, we just want the lowest premiums attached to somewhat decent service so we can get our insurance certificates to the people that request them. When was the last time you sat down with your insurance agent and discussed every business exposure you could think of and looked at insurance options before deciding to retain those risks or transfer them to an insurer? When you let a new agent work on your insurance, are you looking for a lower price on the same product or are you looking for what they can bring to the table as far as advice, knowledge, and superior service?
If you are "all in" with your business as many people are these days, let's get back to the basics. Let's make sure you are properly insured. Let's make sure you know what your exposures are and what options you have. Let's make sure you know what risks you can and can't afford to retain. Let's make sure you are getting the knowledge and advice you deserve from your insurance agent. Please give me a call if you feel like it would be valuable to you to have an in-depth discussion on protecting your business assets and liabilities. If you are a client of mine, let’s spend a little extra time this next year discussing your options as we always do but taking some time to brainstorm and think about the things we might have missed or haven’t discussed before. I would encourage everyone to go “all in” because that is where success is found; but don’t do it without knowing what your uncontrollable risks are and creating a plan to protect yourself.
There are certain risks that we have no control over which scare people away from seizing the opportunity to go "all in". We sometimes get caught up in thinking: What happens if I go all in then my building burns down? What if I hire the wrong person who steals money out of my company and sabotages the organization? What if someone sues me because I did something wrong or didn't perform my work perfectly? What if my products are no good and cause damage to someone of something? What if an earthquake or other natural disaster puts me out of business?
Fortunately, there are insurance answers for these questions. This is why we buy insurance. Sometimes after several years of running a successful business and never having to deal with something going wrong, we start to think that we are somewhat invincible and that all those things we worried about when we started the business are no longer a threat to us. So we start to cut back on our insurance spending, commit to larger deductibles that we may or may not be able to meet, and shop our policies so competitively that we take the value of a quality agent out of the picture because we no longer need someone looking out for us. All of a sudden, we just want the lowest premiums attached to somewhat decent service so we can get our insurance certificates to the people that request them. When was the last time you sat down with your insurance agent and discussed every business exposure you could think of and looked at insurance options before deciding to retain those risks or transfer them to an insurer? When you let a new agent work on your insurance, are you looking for a lower price on the same product or are you looking for what they can bring to the table as far as advice, knowledge, and superior service?
If you are "all in" with your business as many people are these days, let's get back to the basics. Let's make sure you are properly insured. Let's make sure you know what your exposures are and what options you have. Let's make sure you know what risks you can and can't afford to retain. Let's make sure you are getting the knowledge and advice you deserve from your insurance agent. Please give me a call if you feel like it would be valuable to you to have an in-depth discussion on protecting your business assets and liabilities. If you are a client of mine, let’s spend a little extra time this next year discussing your options as we always do but taking some time to brainstorm and think about the things we might have missed or haven’t discussed before. I would encourage everyone to go “all in” because that is where success is found; but don’t do it without knowing what your uncontrollable risks are and creating a plan to protect yourself.
Wednesday, December 1, 2010
A Nice Note From A Client Today
I really appreciate the occasional notes of acknowledgement I get from my insured's. I really need to do a better job of sending the same kind of notes to those who work hard for me.
"Thank you for following up on this. I appreciate the professional manner Blake and yourself handled this with our insurance company. You fought for our little business. In addition, Blake went a long way in educating me (your client) about our coverage, gave me (your client) options on how to go forward, shift coverage and still get the protection we need. In short, I am a grateful customer."
"Thank you for following up on this. I appreciate the professional manner Blake and yourself handled this with our insurance company. You fought for our little business. In addition, Blake went a long way in educating me (your client) about our coverage, gave me (your client) options on how to go forward, shift coverage and still get the protection we need. In short, I am a grateful customer."
GENERAL LIABILITY TO THE "T"
Most business owners and professional service providers purchase General Liability insurance because it is a very common requirement that they have it by the people they do business with. How many people actually understand General Liability insurance and what it is for?? I want to take a minute to walk through an example which will hopefully help us all understand it a little better. I think if we understand it a little better then we might have a greater appreciation for it, which will also help us to know why it can be so dang expensive!
For my made up example, I am going to use John's Manufacturing Co. John manufactures children's toys and ships them to various distribution outlets. EVERYBODY John wants to do business with is requiring him to provide them a certificate of insurance for General Liability which includes Products and Completed Operations. The retail outlets that sell his goods want to be Additional Insureds on John's policy. John has never had any problems with any of his toys and has never had a single complaint. So, let's address some of the questions as to why John needs to have this policy in place.
What does the General Liability policy cover?
This policy protects John's Manufacturing Company againt Bodily Injury or Property Damage arising out of his operations. Generally, defense costs are outside the limits of insurance so any claim or lawsuit that is brought against John's Manufacturing Co. for Bodily Injury or Property Damage will be defended by his insurance company until settled. Any idea how much those defense costs alone can add up to?? Then, any settlements will reduce his limits for the policy year accordingly.
Nothing has ever happened before. What could possibly go wrong? Here are a few scenarios:
A school class visits John's Manufacturing facility on a field trip. While touring the buildings, one of the students is badly burned by a piece of equipment. The students family brings a lawsuit against John's Manufacturing. This type of injury could happen at any business to any visitor. A slip and fall, a negligent employee, failure to block access to a dangerous area, etc. Your premises can be a huge liability exposure for your company.
A child is poisened by a chemical used in the paint on the toys and the family brings a lawsuit against John's Manufacturing because of the unsafe product. Does your business have any products/completed operations that could potentially harm somebody?
John hires an electrician to update some wiring in his building. During the process, the electrician starts a fire which burns a large portion of the neighboring building which belongs to another business. The other business sues the electrician AND John's Manufacturing for their damages. John's insurance company will defend him in this circumstance until a settlement is made. Is what might happen is that the business sues the electrician but finds out that they dont have proper insurance or their insurance is insufficient, then they drag John's Manufacturing into the lawsuit. This is where the importance of hiring quality subcontractors comes into play and getting insurance certificates from them naming you as an Additional Insured if they are going to perform some work or provide some product on your behalf. This is why we are all required by the people we do business with to carry our own insurance!
I hope this helps clarify the General Liability policy a little bit. I am happy to answer any questions or discuss certain circumstances with you individually anytime. Truth is, there is a wide range of exposures for any business or individual that provides a product or service. The examples are endless and some of the lawsuits/settlements that go through an insurance carrier would amaze you. Remember, your business and all of it's assets are at stake and in some instances you can personally be liable in these situations. As a side note, an Umbrella policy provides excess limits to your insurance policy in the event that you have a huge claim or your base limits are exhausted. It is not uncommon for us to insure our business clients with a $5,000,000 Umbrella Policy on top of their $1m/$2m General Liability limits but these Umbrella's can go up to whatever limits make you feel comfortable.
For my made up example, I am going to use John's Manufacturing Co. John manufactures children's toys and ships them to various distribution outlets. EVERYBODY John wants to do business with is requiring him to provide them a certificate of insurance for General Liability which includes Products and Completed Operations. The retail outlets that sell his goods want to be Additional Insureds on John's policy. John has never had any problems with any of his toys and has never had a single complaint. So, let's address some of the questions as to why John needs to have this policy in place.
What does the General Liability policy cover?
This policy protects John's Manufacturing Company againt Bodily Injury or Property Damage arising out of his operations. Generally, defense costs are outside the limits of insurance so any claim or lawsuit that is brought against John's Manufacturing Co. for Bodily Injury or Property Damage will be defended by his insurance company until settled. Any idea how much those defense costs alone can add up to?? Then, any settlements will reduce his limits for the policy year accordingly.
Nothing has ever happened before. What could possibly go wrong? Here are a few scenarios:
A school class visits John's Manufacturing facility on a field trip. While touring the buildings, one of the students is badly burned by a piece of equipment. The students family brings a lawsuit against John's Manufacturing. This type of injury could happen at any business to any visitor. A slip and fall, a negligent employee, failure to block access to a dangerous area, etc. Your premises can be a huge liability exposure for your company.
A child is poisened by a chemical used in the paint on the toys and the family brings a lawsuit against John's Manufacturing because of the unsafe product. Does your business have any products/completed operations that could potentially harm somebody?
John hires an electrician to update some wiring in his building. During the process, the electrician starts a fire which burns a large portion of the neighboring building which belongs to another business. The other business sues the electrician AND John's Manufacturing for their damages. John's insurance company will defend him in this circumstance until a settlement is made. Is what might happen is that the business sues the electrician but finds out that they dont have proper insurance or their insurance is insufficient, then they drag John's Manufacturing into the lawsuit. This is where the importance of hiring quality subcontractors comes into play and getting insurance certificates from them naming you as an Additional Insured if they are going to perform some work or provide some product on your behalf. This is why we are all required by the people we do business with to carry our own insurance!
I hope this helps clarify the General Liability policy a little bit. I am happy to answer any questions or discuss certain circumstances with you individually anytime. Truth is, there is a wide range of exposures for any business or individual that provides a product or service. The examples are endless and some of the lawsuits/settlements that go through an insurance carrier would amaze you. Remember, your business and all of it's assets are at stake and in some instances you can personally be liable in these situations. As a side note, an Umbrella policy provides excess limits to your insurance policy in the event that you have a huge claim or your base limits are exhausted. It is not uncommon for us to insure our business clients with a $5,000,000 Umbrella Policy on top of their $1m/$2m General Liability limits but these Umbrella's can go up to whatever limits make you feel comfortable.
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