Risk Management

I spent the day learning from two experienced insurance agents learning about the commercial insurance industry. The underlying issue is the lack of knowledge and exposure many businesses have in areas of risk particularly with employee theft. This is a clause embedded in most commercial policies which limits the total loss from any occurrence to $10,000. This often is woefully inadequate at the time of loss however because many thefts and embezzlements go undetected well into a loss in excess of $100,000. However, if this clause is written the insurance company will only cover $10,000.

Another complicated area that is misunderstood is insurance for business interruption. It is important that the policyholder understand how this insurance will be determined and what the coverage will actually pay. A good insurance broker should be able to answer these questions with specific details and calculations.

An independent third party such as a certified fraud accountant can provide objective advice that may well be worth their cost to assure proper insurance coverage over specific risks.