As a business owner, managing risks is a crucial factor in business success. However, first you must understand your risks. Review your operations to identify critical activities, such as:
Responding to customers
Supplying a product or service
Billing and collecting money
Using outside suppliers and vendors
Identify risks that could disrupt your business
Think about the following hazards that could disrupt your business activities:
· A severe storm could interrupt power, making computers and phones unusable.
· An earthquake could damage your business, making it impossible for suppliers to get to you or for your employees to get to your customers.
· Computer theft could remove your customer and accounts receivable records.
· Software theft could expose your customers to identity theft.
· Your delivery driver could be involved in a serious accident with several other vehicles, damaging your truck, tools, and merchandise.
· A customer could trip on a rug in your office and break his or her ankle or wrist, then sue you for liability.
· Your product or utility suppliers could interrupt your business even though you suffer no direct damage at your premises.
Reduce your business risk
Insurance offers business owners a method to transfer the risk of property or financial loss in exchange for paying a premium to an insurance company. As a businessperson, it is your decision how much risk you want to transfer and how much you want to assume yourself.
Legal requirements may demand that you carry insurance for some risks; depending on the type of business you operate. Think about the cost of premiums in relation to the chance a loss will occur, and how much it could cost.
Improving building security, backing up online records or providing other power sources might help reduce the likelihood or severity of a loss.
Choose an agent or broker
· There are many kinds of insurance available to cover most types of losses. An agent or broker serves as an invaluable asset for your business. He or she can help you decide which policy you need, help you shop for the best coverage, and advise you when your coverage is not cost effective.
· Agents can represent one or several different insurance companies. The company they represent pays them on a sales commission basis.
· An insurance company does not appoint brokers. They represent you in the marketplace and can charge fees for their services.
· Whether you decide to use an agent or broker, it’s very important that he or she act as your representative to the insurance company. A good agent or broker understands your business, not just the coverage they are selling you. They also understand the insurance company, how it handles and pays claims, and the rating and audit provisions of commercial policies.
· Talk with friends, associates, an attorney, and financial consultant to ensure that your business advisors can work together.
· Contact the Office of the Insurance Commissioner to determine if an agent or broker is licensed and in good standing. You also can find out if consumers have lodged complaints against your agent or broker and if they’ve received any disciplinary actions.
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