DeshCap | Fred Barnachawy | Jul 20, 2022
Have you heard of insurance companies not paying claims?
If you have, that’s because there is a lot of truth to it. Commercial insurance is of no value unless reworded and triggered by independent experts. This is because the insurance is worded by the insurance company and their counsel to benefit the insurer, and that is in turn sold by the insurance broker. In order for insurance to be effective, it must be reworded and triggered by experts independent of brokers, insurers, or any insurance lobbyists.
How can your company benefit from reworded insurance?
There are 3 main benefits to using commercial insurance:
- Better protection for Operational Risk
- Better financing from lenders
- Better valuation for investors
Many companies buy insurance for compliance purposes or to meet certain contractual obligations, and what they end up getting is bad insurance that does not pay out on relevant and large losses all while being expensive.
By rewording the fine print of the insurance policy, your company can also save on cost by getting rid of a lot of the fat that benefits brokers and insurers. Let’s look at some business risks and how these can be insured through commercial insurance (keep in mind there are various types of commercial insurance, and it is important to reword every single type to hedge intended business risks).
Fidelity Bond would be the commercial insurance product you would use to hedge against fraud risk, whether it’s employee or third party fraud.
Liability Risk from Customers
There are numerous business liability insurance products. Professional Liability Insurance, aka E&O, is the product that hedges against customer monetary demands and lawsuits.
Liability Risk from Shareholders
D&O insurance is the product that hedges against shareholders or investor monetary demands and lawsuits. These could be directed at the individual directors and officers themselves or at the company itself. D&O insurance can also hedge against regulatory suits.
Whether your company is a Buyer or a Seller, rep and warranty insurance is the product that can be reworded to hedge against various M&A risks such as liability, fraud, and other.
So, if you already spend a meaningful amount on commercial insurance per year or are looking to attract investors or hedge important operational risks, it is best you hire a risk expert independent of insurance brokers or companies to assist you with your negotiations with brokers and trigger the insurance in the event of a loss. DeshCap is a leading and independent tech driven risk advisor whom you can contact.
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