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by Tom Franzen, CIC, ARM, ARM-P

Every year, we face the challenge of renewing our insurance policies, and prices are rising despite having few claims. So why do we need insurance?

It’s a great question. While insurance premiums are indeed rising and have become a significant expense for our company, insurance is essential because it provides financial coverage for potential losses covered under our policies. This means that insurance will pay for losses that are specified in the policies.

These losses could include:
• Liability claims covered by general liability, business auto, and umbrella liability policies.
• Statutory liabilities like workers’ compensation coverage for employees.
• Employment-related practices liability for issues such as sexual harassment or hostile work environments.
• Property coverage for buildings, personal property, business income, and extra expenses.

All these potential exposures can place a significant financial burden on any business. Most companies choose to transfer these potential financial losses to an insurance company by paying a premium based on their exposures and experience.

In future editions, we will explore many aspects of insurance coverage, including what is covered and what is excluded, the conditions of the policies, and how to make informed decisions about which insurance companies to use and which agents to work with.

If you have any questions or comments, contact Tom at Tom.F.Franzen@gmail.com.

Tom Franzen is the retained Insurance/Risk Management Consultant for FEMA Services, Inc. With 45 years in the insurance industry, Franzen has experience on both the company and agency sides of the business.