What Do Insurance Companies Do Best? Deny Claims!


Or so it seems when trying to file a claim for your business.

There is nothing that will give you a bigger “pit in your stomach” feeling than calling your insurance agent, explaining a loss and having the agent reply, “Well, that’s not covered!”

In this series of 4 posts I’ll be talking about insurance coverage and mitigating risk for your business.  I’ll cover the different types of risk and what makes an insurance broker good or great. And finally, I will get into the details of captive insurance company and workers compensation insurance. 

Risk tolerance.

There are many daredevils in the world today.  Base Jumpers, hanger glider pilots, sky divers, rock climbers, just a plethora of ways to get the adrenalin flowing.  They like the rush they get doing something dangerous and the euphoria when they’ve completed a death-defying feat.  I am always amazed at what people will do for a thrill.

But in business, it’s not wise to assume all the risk of your company’s operation.  Business owners mitigate their risk through insurance coverage.  But insurance coverage has its risk as well.  It really isn’t hard.  You have to remember, insurance companies are not philanthropic organizations…they do not take risks and chances and they do not lose money.  Insurance companies are in business for the same reason you are; to make money.  And one of the ways they do well is by denying claims.  So how do you get the best coverage you can afford and in the process get all your claims covered?

Let’s start with the types of risk your business may face. Here are 4 main types of risk:

  1. Strategic Risks – These are risks to your brand, reputation in the market; change of management; patent or trademark infringement.  How are you perceived in the community? How do you protect your product or service?  Recently, a large chicken processing company received very negative press because their processing practices have been attacked. Without insurance mitigating operational losses, this company may very well go out of business.
  2. Operational Risks – This risk affects your ability to manufacture, distribute or operate your business.  Perhaps there is a disruption of supply chain; employee benefit changes; worksite violence; or breach of data or privacy.  These are oftentimes unforeseen, but devastating to an Ill-prepared business owner.
  3. Financial Risks – These are risks that affect your cash flow and ability to secure cash when you need it.  They could be related to interest rates; banking regulations; accounts receivable/payable; retirement plans; changes in state and federal law; income tax or fraud.
  4. Hazard Risks – These are risks that cause harm to the environment or people and may come with local, state or federal regulatory compliance issues.  These risks are serious, not only because of the damage to property, people and environment, but because they are usually expensive and are always negative.

There is no way to cover all the risks, but this gives you a starting point to talk with your broker.  You want to mitigate risk in the most effective and financially responsible way possible.  I’ll talk about that in the next post, Lions, Tigers and Bears, Oh My!

My Role in Helping Business Owners

As your B2B CFO®, everything I do is to improve the life of you, the business owner.  You are important to society.  I have unique processes and tools to help eliminate the barriers to your success.  Let’s talk about how I can improve your life.

Other blog posts in this series are:

  • Lions, Tigers and Bears, Oh My!
  • Building the Fort to Protect Your Business
  • Think You Have Your Troops in Tip Top Shape?

I Bring Financial Knowledge, Provide Financial Training and GenerateFinancial Stability

I am fluent in “financialspeak” and can translate your monthly numbers into strategies for future success.  I take companies to a higher level of success

LinkedIn: http://www.linkedin.com/in/andyandersoncpa/

Email : AndyAnderson@b2bcfo.com.  Phone: 909-732-4917

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