What's Your Liability?

Understanding Your Liability

During the last several months I have had meetings with business owners regarding both common as well as uncommon lines of coverage to be insured through their Captive Insurance company(s). As your company is unique, your company faces liabilities that are common as well as uncommon.

The Oxford dictionary defines liability as, "The state of being responsible for something, especially by law."

As an owner, it is common to carry that liability on your shoulders. Transferring that liability to an insurance company is common. Transferring that liability to your own insurance company is more common than you think and certainly available. Transferring liability to your own Captive Insurance Company creates multiple, immediate and long-term benefits.

Real-World Exposure Examples

Here are some examples of exposures discussed with business owners:

• Shipping insurance. Shipping product from the United States halfway around the world, avoiding pirates of Somalia, and protecting the valuable products being shipped. If an insured package does not reach its destination, or if it is damaged when delivered, the shipper can file an insurance claim with the carrier.
• Political risk. One owner is concerned about operations in volatile political regions in the world where company operations are being implemented. Political risk is the risk that an investment's returns could suffer as a result of political changes or instability in a country.
• Supply chain interruption. Supply Chain Insurance covers the financial consequences of a loss of business income, as well as unplanned expenses, when a company's supply chain is disrupted beyond their control.
• Surety bonds. In some jurisdictions, insuring surety bonds through a Captive Insurance Company solves a significant opportunity for this low-frequency exposure.
• Administrative actions. Without warning or change in law, the BLM simply raised prices on oil and gas companies on their surety bonds. With this coverage, the insured may file a claim for losses.
• Product liability and product recall. Amazon is now requiring this coverage for products sold through their platform. Any or all parties along the chain of manufacture can be held accountable for damage caused by that product.
• Medical benefits. Portions of partially self-funded medical benefits, specifically stop-loss coverage, have been and continue to be insured in captive insurance companies.
• Environmental liability. Several industries and projects are insuring environmental liabilities in their own insurance company, covering wrongful acts leading to bodily injury or property damage from pollutants.
• Accounts receivable insurance (trade credit). Trade Risk Insurance protects the insured against default, insolvency, civil unrest, or government action preventing payment by a debtor.

And many, many more. Transfer your risk to your Captive Insurance Company and create security for your business.