Insurance: How Much is Enough?
Assessing your risk to determine what level of insurance protection you need is a challenge with which you need expert help. Of course, it is hard to trust what you are hearing from the experts because most of them want to sell you something. When first buying insurance, go to friends and ask for recommendations for licensed agents in your area, and then ask more than one agent to give you a quote on what they perceive as your level of need. Another source may be an industry trade group. They often have preferred vendors who specialize in industry-specific risks. Once in place, review it yearly. Your annual renewal meeting should not be a “rubber stamp.” Continue to shop to make certain your annual premiums aren’t increasing at an accelerated rate. Often, to get your business a company will offer low rates in the first couple of years, followed by high increases in subsequent years.
In this increasingly litigious and complex society, the need for specialty insurance policies has skyrocketed. These specialty policies can be bundled by your broker into one “business owners’ policy.” I remember the first time our company had to purchase a cyber insurance policy. I had no idea what it was, much less how to structure or how much to buy. And my broker didn’t know much more than I did. (In his defense, it was a relatively new product for the run-of-the-mill company like ours). What he did have, though, was a host of stories of the things that could happen to our company if we were not insured. The “scare factor.” The application process that year was excruciating. However, since then, I have become much more educated and the industry has become much better at assessing the risks.