application

Luz Sustaita

Professor Parisi

FINC 330

3/12/17

Business risks and insurance

Parkers should ensure that the insurance coverage undertaken covers both their personal life and their business because they have ownership. Therefore, before taking an insurance cover for the firm, the following processes have to be considered:

1. They should begin by analyzing the potential risks such as threats, fire, and flood. These risks can destroy their infrastructure thereby obtaining losses in their business. Thus they should plan to cover all perils which can destroy their property to avoid any potential damage.

2. They should consider the areas of responsibility which should be done by crisis management that looks for a solution after the occurrences of a risk. Therefore, an effective management should be through training programs for the employees so that they can be prepared for any disaster, incident management, and recovery process because some of the threats may result from loss of workers.

3. Parkers should develop an emergency contact information for their business premises so that when a risk occurs, for example, a fire they can call the fire brigade instantly to put out the fire. Therefore, the information updated has to be both internal personnel such as CEO and legal advisor and external staff and services which include ambulance, security services, utility companies, and fire.

4. They should also plan to have a back power because a lot of natural disaster causes the electric power to get the loss. Therefore, to ensure the business continuous as usual after a power outage the management has to plan what to do in case this happens. They can decide to purchase a back generator for the supply of power for smooth business activities in their premises.

5. They should also have a recovering phase that usually outlines the steps to be followed when obtaining and reinstating the business operations into a free disaster state. Some of these procedures should include the assessing of the damage caused by threats, estimations of recovery costs, information insurance company, monitoring the recovery process, and management transmissions.

In my view, a garage business premise seems not to have sufficient insurance coverage. Therefore, I would recommend the company to take more coverage’s such as professional liability insurance that will protect their business from negligence claim because of the damages that are experienced due to performance failure. They must also have a property insurance which covers equipment, inventory, and furniture in the event there is fire or theft. However, the property insurance is not applicable in some scenario such as mass destruction that involves flood and earthquakes, therefore; a different policy with slightly higher charges should be applied. This is home-based business implying that it under homeowner policy which is not similar to the commercial property insurance. Therefore, because the firm is operated outside their home, they have to obtain an additional cover from insurer so that they can cover their equipment and inventory in case of any risk. They must also obtain product liability insurance due to their product sale in the market. This will ensure their product is safe and can be named in lawsuits in case damages obtained as result of other product. Therefore, product liability insurance protects a business from a particular type of a product.

Business has different ways to keep their insurance at low premiums. They should minimize their risks through proper management that helps in reduction possibility for claims o the insurer. A business should improve security measures such as security system, extinguishers systems, drivers training classes, and safety policies for the workers that reduce the insurance costs. The plans for the business has to be evaluated annually which help in renewing a policy that assists in adjusting business model. The design gives a chance in protection for the firm by reducing the amount paid for maintenance. The insurance cost can also be reduced by making premium up front which means that you reduce your final cost through privilege payments. The company may also ask for discounts from the insurer which will, in turn, lessen the cost of coverage. They can also carry out a specialized service within your industry thereby giving policies that your business needs for better pricing. Finally, you can decide to modify your deductible by increasing them which as a result leads to lower the premium. It just means that what a company can afford in case of risk it end up claiming the same product.

Part 2

Recommendation coverage

They should be enough cover for the property and belongings because in the event of an event you will have less to pay for your capital. A self-protection has to take enough liability coverage though for protection against lawsuits due to negligence on the properties. Finally, there are policy requirements that are given by the insurer to replace the cost protection where preferred plans require a system that limits to 100% of replacement cost whereas standard policy needs an 80% of replacement cost.

Amount of coverage

The insurance obtained should cover the structure of your home, the private premises possessions, extra charge from damages, and personal liabilities to the third party. The amount of coverage can be calculated through (did/should) x loss = ultimate BI payment

Did-amount of business insurance

Should-estimation of 12-month

Loss- the compensable income

Work Cited

Sam Meenasian. 9 ways to lower your business insurance costs. 2017press http://articles.bplans.com/9-ways-to-lower-your-business-insurance-costs/

Deb Shinder. 10 things you should cover in your business continuity plan. 2007press. http://www.techrepublic.com/blog/10-things/10-things-you-should-cover-in-your-business-continuity-plan/

John Boitnott. 7 types of insurance you need to protect your business. 2014press. https://www.entrepreneur.com/article/241026

National Association of Insurance Commissioners. Types of coverage in a homeowners insurance policy. 2017press. http://www.insureuonline.org/consumer_homeowners_types.htm