Optimizing Risk Management While Reducing Gaps in Coverage

Author, Jeremy Hoolihan, Account Executive, Rancho Mesa Insurance Services, Inc.

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Working within the construction unit at Rancho Mesa for over 15 years, I have developed strong long-term business relationships with my clients. As an insurance advisor, I have an obligation to insulate clients from exposures and liabilities. Many of which may remain the same from year to year. However, it is vital that business owners meet with their insurance advisor frequently, especially prior to an insurance renewal, to avoid potential gaps in coverage.  Below are a few key topics that should be reviewed on a regular basis by a company’s insurance advisor. 

Review and Discuss Business Operations

It’s always a good business practice to have the insurance advisor review the business’s operations to see if there have been any changes that could affect its risk profile.  For example, I once had a client in the construction industry that specialized in commercial tenant improvement work. The company wanted to start a residential construction division. By understanding this change before it actually took place it provided us the time to adequately access the differences in the insurance exposures between the commercial and residential marketplace.  As a result, we were able to proactively and affordably place their coverage with an insurance carrier that was comfortable with both exposures.

Review Financial Projections

With the economy fluctuating year to year, it is vital that you meet with your insurance advisor and go over your financial projections for the coming policy term.  These items should include projected; annual sales, payrolls, subcontract costs and any changes in your surety requirements. These factors will help in not only negotiating the most favorable renewal terms for you but help to avoid any unforeseen expenses like a large final audit

Discuss Business Assets

Businesses routinely buy, sell, and upgrade their tools, equipment, and vehicles. While most are conditioned to notify their insurance advisor of any changes, it is always a good business practice to review assets with the insurance advisor at each pre-renewal meeting. It is common that there are items that were either sold (that need to be removed) or new (that need to be added to policies). By reviewing the assets on a regular basis, it minimizes the chance that items are missed and you either are paying premium on an item you no longer have or have an uninsured loss.

Discuss and Revisit Recommended Coverages

Recommended coverages may include an Umbrella, Pollution Liability, Professional Liability, Employment Practices Liability, and Cyber Liability policies. Even if you have discussed these coverages in the past with your insurance advisor and have declined them, they should not assume you will do so again in the future. The business climate is constantly changing; therefore, so are the risks you are facing.  Understanding where you have gaps  in your risk management profile and making informed decisions to either transfer the risk to an insurance carrier (purchase insurance) or retain the risk yourself (don’t purchase insurance) is always a Best Practices standard.

If you would like to discuss and learn more about Rancho Mesa’s proprietary risk management tools and explore our help in developing a Risk Management program based on your specific business needs, you can reach out to me at 619-937-0174.