5 Tips for Business Owners to Protect Their Balance Sheets

In times of economic uncertainty, business owners must become more vigilant in protecting their balance sheets and income statements.

Managing risk through insurance can protect the financial well-being of any company, large or small. Each company must develop a risk management philosophy that balances the amount of risk the company holds in-house versus the amount they transfer to an insurer. The key to successful risk management is to keep the loss frequency (# of claims) at a manageable level to avoid exorbitant premiums or unavailability of the insurance product.

Here’s how you can keep your insurance portfolio healthy
Increase Deductibles By increasing deductibles, business owners can save money on premiums and reduce the temptation to utilize the policy as a maintenance contract. When choosing a deductible, determine what dollar amount you would be comfortable paying on your own and set your deductible accordingly. For example, if you decide you could cover all building damages of $5,000 or less, do not choose a  $1,000 deductible. The lower deductible will cost you more in premiums and open up the temptation to use the policy as a maintenance contract.

Motor Vehicle Abstracts Business owners should obtain motor vehicle abstracts on all personnel operating company vehicles annually. While accidents do happen, choosing drivers with proven track records  will cut down on frequency of incidents. Remember to get informed consent from company drivers before ordering reports.

Maintenance Logs Business owners should keep detailed maintenance logs of all vehicles, equipment, and buildings. As the economy struggles, the general populous may become more litigious. Proper documentation can disprove negligence and help avert a claims situation.

Increase Liability Limits As society becomes more litigious, court awards are increasing. Are you sure your current limit offers adequate protection? An Umbrella Liability Policy is a cost effective way to increase liability limits under all policies. This policy acts exactly as it sounds – it provides another tier of Liability Insurance that is triggered once the underlying limits are exhausted.

Backup Surety Contract surety (bonding) is crucial to some businesses, as it allows them to avoid tying up working capital. However, if something goes awry, it can seriously impede the business owner’s ability to perform. Let us arrange a backup surety in case issues arise during the course of the bidding season.
We’re business insurance experts. If you’ve got a question, we’ve got the answer.

Insurance Fact: The insurance industry is highly inter-connected. Higher premiums may be the result of large losses or catastrophes in other parts of the world. Through re-insurance, primary insurance  companies spread their risks across several countries and even continents. Therefore, a large natural disaster or large court rulings in other parts of the world may have an impact on the cost of covering your risks,  even though your business’s characteristics have not changed.

Contact Us if you have any questions or click here for a pdf of this page.