Risk & Business

Those of you doing business have come across the Hold Harmless Agreement at one time or another. While many have signed and accepted this agreement, quite a few aren't really familiar with the actual purpose and intent behind it. The purpose of the hold harmless agreement is to transfer risk from one party to another. In the contract, one party (A), promises to pay another party (B) for certain losses sustained by (B). One example would be when the tenant of a building agrees to pay for any fire damage to the building that occurs during the lease. Another example would be when (A) agrees to indemnify (B) for defense costs and damages resulting from third party claims against (B). An example of this would be if a building contractor agrees to pay the landowner for the costs of a claim arising from injuries at the building site. This agreement does not, however, change the fact that (B) is still legally liable for all damages to an injured 3rd party. The hold harmless agreem

We have addressed property and liability risk management in broad, general terms in previous posts. In this post let's take a look at the liability exposures in a specific industry, namely restaurants. The restaurant owner has a plethora of risk exposures that that they need to keep track of. In addressing general liability exposures they have the following that are probably on the top of the list- poorly lighted exits signs; inadequate railings on stairways; broken furniture; burns to customer's from hot plates or liquids; cuts from broken or chipped tableware; worn floor coverings sticking up, along with spills from soda, coffee etc; and poorly maintained parking lots. Another important area of concern would be the products liability hazards they face, namely - foreign materials in food served; food poisoning as a result of improperly prepared, stored or purchased food; expired shelf life of products; improper temperature of foods stored, and many others too numerous for

I've experienced this more times than I can count, as many others in the profession have as well. When asking a potential client for some information to provide them with the quote they have requested, they often get irritated and exclaim "Why do you need to know that? I just want a quote". Believe me, the last thing we want to do is irritate a potential client, we're there to gain your business, not drive it away. Unfortunately many don't understand the need for specific information in order to provide the most accurate quote we can give. Information regarding building construction, age of building, sprinkler system installed or not, fire alarms, extinguishers, etc, all play an important factor in the final price/coverage offered. If this information is not provided correctly up front, you risk the potential of receiving a higher priced product than you bargained for after the policy has been issued and the issuing company has done their research. Next time

Reading the Wall Street Journal this morning, one of the main headlines referred to the rate cut announced by the Federal Reserve yesterday, one of the sharpest decreases in over 20 years. Reading this lead me to think that many small business owners might be unaware of how the economy as a whole, and specifically the stock market, affected how the insurance industry operated. While there are many factors that contribute to the health of the industry, such as busy hurricane seasons and the subsequent losses paid from those events, the one area of that you might not be aware of that is a major contributor to insurance companies financial success, or lack thereof, is the stock market. For some time, insurance companies have reaped a major source of their income by investing in the stock market. As a result of the strong performance of the market the past few years, insurance companies income has been strong. Due to the income derived from this performance, along with the lack of an

We have discussed liability exposure identification in a previous post and now might be a good time to discuss the assessment of your business' property loss exposure. The first step in this process would be to identify and categorize the business property that would potentially be subject to a loss. You would further break this down into real property, such as land and all permanent structures attached to it, such as buildings, and the other category, personal property, which would be all other property not classified under real property. This would include money and securities, inventory, furniture, equipment and supplies, to name a few. One way to approach this task is to draw up a list of all real property, it's current value, how the value was arrived at and what would it cost in today's dollars to return that property to it's current state in the event of a loss. This is a list that should be updated on an annual basis since the value of land and buildings d

When implementing or changing procedures related to risk management, business owners are often stymied by those in their company that are resistant to change, or worse, simply aren't interested. One way to combat this is to seek out those in the company that like the experience of trying new ideas and like to get involved. Discuss with them ways to approach a specific risk management idea you have, or even risk management in general as it relates to their specific area of responsibility. Once you have them on board, it will make the task of implementing change much easier, since enthusiasm and acceptance tends to spread when you increase the odds of smooth implementation in your favor by adding allies to your new direction. This approach also makes sense since it makes more employees aware of risk management and they will likely end up contributing fresh new ideas that you might not come up with on your own.

As a small business owner most of you are accustomed to having your agent or another agent shop for you to obtain the best price and coverage. While this is the standard and usual way to go about this, it is a good idea to create a risk profile on your business as well. You know the standard drill, the agent requests to review current policies and asks for loss runs. While this is an important aspect of the process, how much does that agent or company know about you and your business? A good idea would be to put together a folder containing the following items - a short history of your company; a resume of key management; sales brochures and web page addresses; audited financial statements if applicable; estimated sales figures; workers compensation payrolls; property values; vehicle values; workers compensation mod and loss runs for the past five years. This is all information that should be gathered by the agent or company anyway, but by having this information readily available

When reviewing your organization's loss exposure it's a good idea to have an idea as to what your premises liability and operations loss exposure is. This exposure is the possibility that your organization will be held liable due to bodily injury or property damage caused by either an accident occurring on your premises or an accident occurring away for your premises arising out of your organization's ongoing operations. A couple examples would be if a customer or visitor slips and falls due to either a slippery surface or uneven stairs, or if a customer's truck is damaged while being loaded by one of your forklifts. The organization's liability is usually based upon their supposed negligence. Let's face it, in today's legal climate the degree of care is just about always going to be in your lap and not due to a lack of care on the part of a customer/client. When doing an in depth exposure review, this area is usually the best place to start.

Many times business owners make the mistake of hiring a new employee without delving into the new hired person's driving record. While most business don't involve actual trucking operations, they can involve having their employee's driving while on company business. These activities can range from occasional errands to a more regular driving exposure such as daily mail pickup and delivery to the post office and other related jobs. While we pay attention to the resume and references, we often overlook the prospective employee's driving record. While we can't order their driving records ourselves we can submit their license information to our insurance carrier to ensure that their driving records are acceptable to the company. While the insurance company can't share the details of the driving record with us they can give an indication as to whether their records will be acceptable. Too often people are hired and business' don't find out about driving