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Risk Management and Insurance: Types, Coverage, and Exposures

Understand the different types of risk, risk management process, and various insurance coverage options to protect your company from financial losses. Learn about property insurance, liability exposures, workers' compensation, and more.

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Risk Management and Insurance: Types, Coverage, and Exposures

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  1. BCN 4708 Fall 2008 Chapter 8 Insurance

  2. Insurance • What is Risk? • Specific types of Risk • Inflation • Market • Principal • Liquidity • Credit • Two categories of risk • Speculative Risk • Pure Risk • What is Risk Management?

  3. Risk Management • Risk Management Process • Identify and analyze loss exposure • Evaluate alternatives • Select the best techniques • Implement • Monitor and adjust

  4. Risk Management Risk / Return Tradeoff Return Risk

  5. Risk Management • Dealing with risk • Identify • Plan • Monitor • Anticipate • Improve company

  6. Insurance • Transfer risk exposure • Insurance • Required • Covers specific risk • Selection is important • Disclosure • Best’s Rating Guide

  7. Insurance • Types of losses • Property • Financial • Liabilities • Losses involving personnel

  8. Insurance • Premium Rates • Property • Full value • Fire rate • Flood rate • Wind rate • Etc • Maximum values at risk • Credits for certain amenities • Payroll or gross sales • Location • Reputation

  9. Insurance • Builders Risk • Property deductions • Unoccupied • All losses not excluded

  10. Insurance • Property insurance • Covers losses due to destruction of personal or company property • Replacement cost • Value • Coinsurance • Specific perils • Exclusions

  11. Insurance • Financial Loss Exposure • Loss of net income • Decrease in revenues and increase in expenses • Business interruption insurance • Covers rental equipment costs • Work stoppage costs • Temporary relocation costs

  12. Insurance • Business General Liability Exposures • Legal liability losses • Bodily injury • Property damage • Other injury • Caused by employees or subcontractors • Occurrences

  13. Insurance • Contract Liability Exposure • Owner , Contractor, Surety • Exculpatory Clauses • Hold-harmless • Indemnification • Contract Liability exclusion

  14. Insurance • Other types of coverage • Business Automobile Policy • Workers Compensation Insurance • Employee Benefits Liability Coverage • Employment Practices Liability • Umbrella Liability Policy • Personnel Loss Exposures

  15. Insurance • Public Liability Insurance • Need proof for initial license or to renew • Signed affidavit • Min requirements • Different for different areas of construction • No exemption

  16. Insurance • Workers’ Compensation insurance • Certificate of registration • Can obtain exemption

  17. Employee Deductions • FIT • SIT • Social Security Tax (OASDI) • Medicare Tax (HI) • SUTA • SDI / Workers’ Comp • Local • Union • Medical • Dental

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