In the transportation world, like every other industry, insurance is fundamental for protecting against risk and associated liabilities. The word “insurance,” however, causes most people and businesses to change the subject or postpone indefinitely coming to grips with the reality of their risk-management condition. Companies cannot afford to have this attitude, however, and must understand the coverages they have in place, what losses are actually covered, and how much of their risk exposure is insured. In other words, is your insurance doing what you think it does, or what you want it to do?
A first step in answering those questions is a thorough analysis and audit of your insurance as part of your company’s risk management plan. While insurance agents and brokers are your obvious starting point in the process of managing risk and providing insurance options, they cannot offer legal opinions on what your insurance does (or doesn’t) provide for you. In Virginia, and many other jurisdictions, an insured has a duty to read its insurance policies, and it cannot rely on what its subjective understanding of what its policies insure.
Hence, the importance of an insurance audit. The process starts with examining your company and operations under a microscope to ensure you have the coverages you need. Information related to operations, records, employees, management, and other areas are reviewed to determine insurance exposure.
States have their own laws on what types of insurance and limits are required. For example, Virginia requires workers’ compensation insurance for any business with two or more employees. Sound simple? Unfortunately, it is not, as many companies utilize independent contractors regularly and operate in multiple jurisdictions. On top of that, many companies are really separate but related entities that utilize the same employees, complicating who the employer is and what company needs to carry insurance. Does each company qualify as an insured under each policy on which you’re relying?
Commercial general liability insurance (CGL) generally insures against liability for bodily injury, personal injury, and property damage caused in the course of your business’s operations. In theory, it may sound like CGL would broadly cover your business from a wide variety of losses. In practice, however, a company will not find out whether it is covered for a particular loss or claim until after the claim arises. Companies must have an understanding of what losses and claims are insured before they occur, or else face the possibility of a denial of insurance coverage just at the moment insurance is most needed. Adding insult to injury, cyber and data breaches involving sensitive information have become ever more common, exposing companies to liability in a host of ways until recently unthinkable. If you have cyber insurance, what losses does it exactly cover? Should you have cyber insurance?
Being proactive will help bring peace of mind to your company and provide a clear understanding of how insurance protects your operations. We are here to help review your existing policies in light of your risks and offer legal opinions you can rely on. If you’d like to follow up with us, please contact Pete Schurig (firstname.lastname@example.org) at 804-377-1276 or Kevin Streit (email@example.com) at 804-377-1270.