Whether your company owns 100 vehicles or none at all, you have an exposure to loss arising out of automobiles used in your business. An “exposure to loss” presents a possibility of loss, whether or not actual loss occurs.” From a Risk Management perspective there are only four types of exposures:
- Third Party Liability
Automobiles can potentially impact all four of these exposures. In the event of an auto accident your vehicle can be damaged as well as business personal property or, rarely, personal property (Property exposure). Employees can be injured (Personnel exposure), your business revenues can be impacted (Income exposure), and you could become a defendant in a lawsuit (Third Party Liability). Oftentimes automobiles are a business’s largest exposure. Because of this it is imperative that all businesses to:
- Analyze the exposure they have arising out of their automobiles.
- Determine how to prevent losses, and then manage and control those exposures.
- Decide how much of this risk they want to transfer to an insurance company.
- Remain diligent in reviewing their changing automobile exposures to make certain they continue to be effectively managed and potentially determine its survival. Effective Risk Management, however, can lower the Total Cost of Risk and drive dollars to a company’s bottom line.
Every company faces numerous exposures to loss. Automobiles are one of the most significant exposures. Effective Risk Management can help to identify what those exposures are and which Risk Control strategies should be implemented to reduce the frequency and severity of those exposures. Once you have identified the exposures and agreed on the Risk Control strategies, you are then in a much better position to decide how much risk you want to retain and how much you want to transfer to the insurance company.
By understanding your risk and being able to convey to the insurance company the steps your company has taken to manage those exposures (Risk Control), you are in a much better position to negotiate favorable terms and rates. Effectively managing your automobile exposure can lower your company’s Total Cost of Risk and drive dollars to your bottom line.
Disclaimer: This article is meant to be used for informational purposes only. It is not the intent of this article to provide legal advice, or advice for any specific fact, situation or circumstance. Contact legal counsel for specific advice.