It’s no secret that the COVID-19 pandemic has put a major financial strain on all sorts of organizations. Schools, non-profits, ministries, and small businesses have all been affected and have had to adjust. As your organization begins adjusting budgets for 2021 and looks at the areas where you could potentially save on your costs, do not lower or cut insurance coverages! This blog post will lay out some of the reasons why your insurance and risk management program should always remain a high priority in your budget.
The issue with putting a strict budget on your insurance:
As an organizational leader during an economic downturn, it may seem easy to drop coverages from your insurance program. Sometimes that may even seem like a necessity for your organization to get back to a good place financially.
The truth is, when you drop coverage or lower your coverage limits, you are exposing your organization to the risk of greater financial hardship when you can least afford it. If you are wondering how you can afford quality insurance coverage, then how could you possibly afford to pay for a major loss without having enough coverage? During a time of recession and during a global pandemic is one of the worst times for your organization to experience that type of heavy burden. Having the right amount of insurance coverage is an excellent way to actually protect your organization’s finances.
Think about what additional risks you might be opening yourself up to:
Removing or lowering coverage opens you up to greater risks when it comes to claims, but it also can open you up to potential lawsuits. For example, if you drastically lower your coverage limits, and then an event happens that results in a claim that goes beyond your insurance coverage limits, you could potentially be sued because you didn’t have a proper risk management or insurance program in place. The expense of hiring attorneys during a lawsuit is enough of a financial burden on it’s own, let alone the damages you may be required to pay on top of the legal expenses.
In fact, insurance coverage might become even MORE important during this season
During tough economic circumstances, some insurance coverages can increase in importance. As an example, during an economic downturn, many companies choose to do layoffs. For those organizations, employment practices liability insurance becomes a critical part of their risk management program. When employees are let go from a company, there is always a chance that you could get sued for wrongful termination or even discrimination. In this case, employment practices liability insurance can help your organization get through a difficult situation like that.
Another example is your director’s and officer’s insurance coverage. During difficult seasons, it’s really easy for people to blame problems within the organization on the board. Whether it’s a financial decision that was made, or any other major decision that will affect the organization as a whole, the board should be protected with insurance coverage as long as they are making decisions with the best intentions, and for the greater good of the organization.
Consider the value of employee benefits:
It can also be tempting to decrease your employee’s benefits when times are tough for your organization. As an employer ourselves, we want to stress the importance of taking care of employees and making retention a priority. An organization would never be the same without the people who work or volunteer for them. Good people can be hard to find, and in order to keep your best employees, offering high-quality and competitive benefits is a good way to encourage lasting relationships with employees. Keeping your best employees is also setting your company up to bounce back quickly after a time of hardship.
2020 was a tough year for so many, and our hope is that 2021 will be better for organizations of all types. While many are still struggling in this first quarter of the new year, we encourage you to look at your budget and find ways to cut expenses without leaving your organization vulnerable to a huge loss or even greater financial burden. Having a good risk management plan in place, coupled with a quality insurance program, is one of the best investments you can make as an organizational leader.
For more information about how our agency can help your organization with a custom insurance program suited to your unique needs, give us a call at 800-231-9963. We offer a 16-point Risk Management Inspection to help identify your areas of risk and how to best combat them and prevent losses. For more risk management tips, you can visit our blog, where we add new helpful content every two weeks to help organizations like yours better manage their risks!