Insurance 365

You just bumped into your insurance
agent at the market and felt uncomfortable you didn’t remember him.

Worse yet, he didn’t recognize you.
Considering your policy may be your last
line of defense to continue your business
when the worst happens, shouldn’t you
have more than just cursory knowledge
of this document and the people who
supplied it?

“If your agent simply renews policies
just as before without delving into your
business operations, then opportunities
for losses will be missed at your
expense,” says Jim Reese, Gateway
Insurance Agency in Fort Lauderdale.
“You have to lead your agent until he
knows almost as much about your business as you do.”

Smart Business spoke with Reese
about why business owners cannot be
satisfied with seeing their agent once a
year and how the best agents help business owners build and protect their
dream empire.

What milestones can be jeopardized by
unsatisfactory insurance coverage?

Once you’re up and running, your business goals may include passing it along to
your children, helping employees support
their families, or being well-known and
respected. That’s where insurance comes
in, because properly insured, you don’t
need to build huge cash reserves for
potential losses and can feel safe investing that money to build your business.

What is the most important asset insurance
can protect?

Your most important asset is the
employee base that supports your business. Employee costs soar if you have to
hire new employees after a property loss.
You need to pay your employees while
your building is being reconstructed and
machinery and equipment is being replaced. Have you successfully completed
the simple math exercise with your agent
to ascertain the correct amount of dollars you’ll need to pay your employees?

Also, insurance helps retain employees
by protecting their financial security
through hospitalization, life, long-term
care, workers’ compensation and retirement plans.

Can insurance minimize the impact of
employee fraud?

Most owners can’t watch every detail of
every transaction their employees process. So, you must have controls in place
to protect against an employee or group
of employees acting in collusion to steal
money or products. Consider a case
where an assistant, who never took a
vacation and often worked on weekends,
was fixing the books so no one would discover she was taking money to feed her
gambling habit and to take care of her
sick mother. She said she fully intended
to pay the owner back, but that was after
she had burned down three buildings,
including the accounting and computer
records. Of course, the owner later
learned that he didn’t have the large cash
balance he thought he always carried.
Fortunately, the owner felt very secure
because he had an agent with a close relationship with the adjuster, paying him
$500,000 just three days after the fire.

What other more visible exposures could
jeopardize a business?

Potential loss exposures fall into five
groups, including property, liability, automobile, crime and benefits. If your products or services injure the public, you
shouldn’t have to worry if you will survive. Top lawyers are expensive, and
juries and courts can award astounding
judgments. Insurance responds with the
best lawyers — no matter what the cost
— to keep you from losing sleep during
litigation. The most important part of any
comprehensive insurance program is the
agent who crafted your coverage to mitigate large losses.

How can you be sure your policies fit together when a disaster strikes?

It’s easy to have too much or too little
coverage. Good agents involve themselves in understanding your business
operations and in the myriad policy
details to make sure things like automobile and property schedules are accurate.
Your agent should follow a process to
help you determine what exposures concern you the most — and uncover those
you haven’t yet thought about. Major loss
exposures should be examined so they
can be eliminated or transferred or
reduced to a more manageable level.
Only after a review of other possible
methods to alleviate these issues should
insurance be employed.

You should also consider the relationship your agent has with company
underwriters and claim adjusters. A
good agent/underwriter relationship
means you don’t have to fear what might
happen in the event of a claim: It’s covered, and everybody knows it. Your
agent also should examine any loss histories to prevent claims from recurring
— an effort that can reduce your premiums. This is particularly true with workers’ compensation, where it is not
uncommon to reduce premiums by up to
30 percent.

JIM REESE is with Gateway Insurance Agency in Fort Lauderdale. Reach him at (800) 940-5501 or [email protected].

Jim Reese
Gateway Insurance Agency
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