Customers can struggle with the correlation between their premiums and the coverages associated with those premiums. It’s very easy to have the mindset that “that could never happen to me,” and you make the decision to cut back on coverages limits to save a little premium.
Say you opt for a lower premium. Even though you’re saving financially on your yearly premium, it could cost you in the long run due to lower coverage limits.
Who pays in a loss?
Decreasing your coverage below the replacement cost (material and labor expenses) to return your property back to its normal pre-loss condition could cost your operations thousands, due to self-insuring those prior cutbacks that you made to those coverage limits.
Not properly securing adequate liability limits, (auto liability, farm liability, commercial liability, for example) could have the same outcome.
We advise our customers to secure the same amount of liability as the net worth of their operations.
So, what’s right for you?
Typically you’ll need to purchase an umbrella policy to go over your underlying limits (auto liability, farm liability, commercial liability) to do this correctly. You can never predict how much you’ll be found financially liable in the event of an incident, and we find this to be the best solution to protect your operations from being forced to self-insure a liability claim.
A financial burden to your operations isn’t the only difficulties that you’ll find yourself dealing with when not property insured.
Time can be another obstacle that you’ll be dealing with, specifically working with your insurance agent and claims adjustor more than necessary…especially if you are attempting to minimize the impact caused by your decision on your coverage limits.
There is also the extreme possibility that you could be working with your attorney in the event you’re forced to utilize their services in the event of a lawsuit.
Another obstacle is stress, as whenever you’re dealing with the burdens of financially self-insuring an incident and the possible time that’s involved, stress will always be involved.
Take the time today to review your coverages with your insurance agent, it might just save your operations from a catastrophe in the future.