How to Match Your Insurance Policies to Your Potential for Damages

Most businesses purchase insurance policies without first considering what potential for damages they are facing. Matching insurance policies to your potential for damages is a better approach than just purchasing insurance policies.

Loss potential for damages can be better assessed by analyzing the components of the loss potential for claims or damages. You can usually classify these into 3 categories of: types of exposure, the types of causes of loss and finally the damages and results of a loss.

• The first element is the type of exposure that we are dealing with. Normally a loss exposure can be damages to your employees, damages to your revenues, damages to your buildings and contents, and finally legal liability damages.
• The types of damages or perils that the exposure is subject to can be quite lengthy. Some usual perils include such things as fire, theft, explosion, bodily injury, property damage, termination, death, illness, disability, embezzlement, fraud, employment practices, professional liability, to name a few.
• Finally the consequences of a loss need to be considered whether they are financial, reputation, or marketplace setbacks in market share.

There are some basic risk management techniques you can use in dealing with potential for damages to loss.
1. The first technique is that of avoiding or deleting the exposure to loss in its entirety. If you have a troublesome exposure, such as a location that is uninsurable, you can eliminate that exposure by selling or getting rid of the property.
2. Another technique is to avoid the potential for a claim by never entering into problematic loss potential in the first place. While this is a 100% solution to eliminate your loss exposure it might not always be practicable or feasible based upon your business situation.
3. Loss prevention is another strategy to help reduce damages. Using non-slip floor coverings, dead bolt locks, alarm systems, etc. can all help in preventing claims.
4. Loss reduction by implementing such things as having smoke alarms, sprinklers in the building, etc. can all help reduce the potential for total loss of buildings or contents.

Loss potential for damages for any business need to be thoroughly analyzed before any purchase of insurance is contemplated. Doing your homework before you go out into the market place to buy insurance protection is more efficient and effective in the long run. Purchasing the wrong policy or not purchasing coverages that match your exposure to loss and leave huge gaps in coverage which can create enormous damages for your company.

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