Understanding the Complex Maze of Insurance
By Mike Trudeau (partner at Trudeau Risk Services, LLC and President of Trudeau & Associates, LLC. Mike and his partner, Larry Polec, are also MLBA Insurance Company program managers for Liquor Liability Insurance available through the MLBA for its membership)
(Reprinted with the permission of Mike Trudeau, of Trudeau Risk Svcs, LLC. This article first appeared in the Hospitality Review magazine (August 2018 issue)
Insurance is defined as a contract or device for transferring the risk of loss from a person, business, or organization to an insurance company that agrees, in exchange for premium, to pay for losses through an accumulation of premiums.
When it comes to the topic of insurance, most of us shudder at the thought of the complex maze of possibilities, costs associated with having coverage, and whether the correct coverage is in place. Transferring the risk of loss to the insurance company is why we carry insurance. We would not want to pay for losses out of our pockets, so we share in the risk with insurance companies by paying them premiums for policies issued.
But is just paying for premiums enough? Oftentimes the most important and overlooked facet of purchasing the right coverage for your business, home, auto, etc. is based on the expert advice, education, and knowledge about your coverage to make the correct and most cost effective informed decisions. As a bar or restaurant business owner there are many forms of insurance you must carry such as Liquor Liability, General Liability, and Workers Compensation to name a few. But what comes within those lines of coverage and being fully educated about your policies is most important.
Are you protected enough? Do you have the right deductibles in place? Are you protected for catastrophic things like equipment breakdown, food spoilage, and cyber-crime or terrorism risk insurance? Are your policy limits of insurance set up correctly? In other words, if you have a claim, how much will you and your insurance company be expected to pay if you have a particular loss?
While insurance is a broad term, remember it is a transfer of risk from a loss. How much risk are you willing to take and are you properly covered for potential losses? These questions need to be asked frequently and often until you are 100% satisfied that you full understand your coverage. We can expect our professional insurance agents to do a great job of educating about the coverage we have, but many times, we rely on the agent to just do what’s best for us, and we don’t get “in the weeds” to understand the complexities of our policies. At the time of loss this can create big problems for you and your business. Being prepared and informed is the only way insurance can make sense and keep you protected.
Adding coverage to your policies through endorsements, modifying coverage at the time of review, looking at additional options, and making sure you are fully covered are things everyone should review frequently with their professional agent. Don’t be afraid to ask, and certainly don’t just assume something is covered in your policy. After all its hard-earned money you are spending so be informed about all your policies and make sure you and your agent take time to review every aspect of your business. Make sure your coverages are up to date and that you are protecting your hard-earned money should a loss occur.
Purchasing and carrying insurance doesn’t have to be complex; it just needs to be fully understood. None of us want to think about a loss that occurs in our business, our home, auto, or our health, but this is the exact reason why we all carry insurance, to transfer the risk. Be informed, and stay on top of it, ask many questions, and your insurances will not be a constant maze of confusion and frustration. Having peace of mind knowing that everything is protected and that you are paying premiums to top rated insurance companies that are willing to share in the risk, can ease tension and stress in our everyday lives.
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