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Are You Really Covered?

I’ve often heard business owners say, “I don’t really need to improve my security. If something happens, that’s what I got insurance for.”

True, your insurance company may pay the claim. Or they may not, depending on what type of loss it was and whether you were insured for it. For example, does your general liability insurance cover your failure to adequately protect an employee from an attack which resulted in their death? Incidentally, homicide is the leading cause of death for women in the workplace nationally, and for men and women in California (and probably other states as well). Does your insurance cover you if you have an artificial condition highly dangerous to trespassing children and a child trespasses into your property and dies due to a hazard? In Penna. and NJ and most states the property owner is liable for this and the trespass is not a defense. (Think: razor ribbon on your fence. Think: A deep pit at a construction site. Think: Outdoor machinery or inventory piled high. Think: retention basin, quarry, reservoir or swimming pool.)

Indirect and Consequential Costs

Are you covered if someone “short-loads” — that is, dumps, some toxic chemicals on your property? It is very expensive to legally dispose of this, so criminals just dump it illegally on others’ property. It’s crazy but under the law you are responsible to then legally dispose of it and that could cost millions.

What is the dollar limit of your coverage? An incident may exceed your limits, even if you were lucky enough to be covered for the type of claim.

No one can afford to be insured for every possible risk. Are you insured for the indirect and consequential costs of a loss in one of these unanticipated areas? For example a multiple shooting, instigated by an ex-employee has indirect costs of horrible publicity. It has huge costs of shock and ruined morale of all the surviving employees. Productivity will plummet. Customers may go away. It will cost more to recruit new employees in the future. If equipment was sabotaged the insurance may pay to replace it. But if it is highly custom and takes a half year to replace it, what happens to your customers while you can’t produce what they need?

All of these are uninsured costs that few business owners think about. Who likes to think about such horrible stuff? People think about these things at the worst time possible: the day after an incident has happened. Better to think in advance with a level, cool head.

Even setting aside all the uninsured, unanticipated parts of the loss, if it is a truly catastrophic event, maxing out your insurance limits, what do you think your insurance company does to your rates after they paid out the huge claim? They can double or triple your rates. Then your insurance is simply too expensive for you to stay in business. Two-thirds of insured businesses are out of business within two years of suffering an arson.

Okay, you got me scared to death. What’s the answer?

As Mark Twain said, “No one gets out of here alive.” So you may as well start by relaxing. For all the crime, a catastrophe probably won’t happen to you. You will have some crime. You can count on some workers comp claims and possibly a public liability claim or two. So the best thing is to learn about the great new things that technology can provide to protect your business and to even reduce workers comp and all types of liability claims. Prevention is a lot better than filing claims and dealing with all that pain.

The new technology is advanced video analytic surveillance systems. This utilizes artificial intelligence. It “anticipates the unexpected” for you automatically. It creates situational awareness that is beyond the capability of a single human. It leaves the traditional video surveillance “dumb” cameras in the dust of ancient history.

This is sounding better…

Insurance companies automatically give homeowners a premium credit or discount if they have a burglar alarm system. Burglar alarms don’t prevent crimes too well and they lead to very few arrests. For example, in California 98,000 responded-to burglar alarms led to merely five arrests. So if you could show your insurer a system used at the highest security facilities and very effective at preventing losses, should they give you a premium credit? It is cutting the very risks upon which they based your premium. The advanced A.I. (artificial intelligence) video surveillance system not only effectively prevents intrusion and crimes but also spots employees breaking safety practices, and thus reduces workers comp. It spots vehicles driving in abnormal ways such as the wrong way on a one-way driveway. It can spot smoke outdoors.

Depending on the yearly cost of your insurance, a reasonable credit may pay for the cost of a leased A.I. (artificial intelligence) smart video system. A couple major insurers’ underwriting departments have pre-approved such credits for implementation of this type of technology.

Wouldn’t you rather have the latest technology, putting you centuries ahead of the competition and the less informed? Wouldn’t it be nice to know you have the best, smartest protection, so that couple with your insurance, you can concentrate on your business and not have a background of worry about uninsured or underinsured risk and liabilities?