Column: Let’s talk about insurance

Have you ever boarded an airplane for a long trip and just wanted to relax and read a good book? This is invariably the time when your neighbor leans over to start the conversation, “So, what do you do?” Let me tell you from experience, that if you want that peace and quiet, just respond, “I sell insurance!”                                     

Why is it that people don’t want to talk about insurance?

• It’s complicated, and no fun to buy

• When you need it, it’s too late to get it

• It’s difficult to know how much is enough

Let me start by saying that as an insurance agent, I am proud to sell insurance. As a past business owner and current consumer, I see the value of having adequate insurance and do feel this is a noble career – so enough with the jokes!

Insurance may not be fun to buy, but that doesn’t mean you shouldn’t understand what it is you are purchasing. Find an agent who can walk you through the compliance part of insurance and enter into the world of active risk management. A knowledgeable agent will first determine what risks your business faces and then work with you to discuss your options of dealing with those risks. Insurance is one vehicle which transfers risk to an insurance carrier. Other options should be discussed to implement separately or in conjunction with insurance products. Other options to consider run the gamut from on-going staff training to self insuring or higher deductibles. 

Any banker will tell you that the right time to apply for a line of credit is when you don’t need it. The same applies to insurance because when you need it, it must be in place. The news of the horrific earthquake and tsunami in Japan is very fresh in our minds. The Independent Insurance Agents and Brokers of Washington report less than 50 percent of commercial properties in Japan had earthquake insurance. Those hit hardest by the earthquake or tsunami would probably not consider that coverage “optional” in hindsight.

As a business owner, many buy insurance to satisfy a requirement. Is this level of coverage sufficient? In current economic times, both commercial and residential properties have seen a drop in value. Does this translate into needing less insurance on that property? From an insurance standpoint, the important measure of property value is the replacement cost, not the market value or assessed value. Do these economic times create greater levels of liability exposure than we have seen in the past? From laid off workers to potential cyber liability, this is a great point of discussion.

Employment Practices Liability Insurance (EPLI) is an optional coverage which basically covers a company for claims and defense costs for wrongful termination, discrimination, harassment and retaliation. With the difficulty of finding new employment these days, employees may be more likely to seek legal council and pursue a claim against your company. Even with great company processes and procedures to accompany your downsizing activities, the current economy creates a bigger risk. Should your company actively protect itself with this coverage?

The answers aren’t always easy, so go buy a good book and reach out to your trusted insurance advisor when you need help. 

Tony Johnson is an accredited advisor in Insurance and can be reached at Davidson Insurance, 360-514-9550 or Tony@Davidsoninsurance.com

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