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tional risk? If the savings is only a few hundred dollars each year, is it worth the added worry? On the other hand, trying to avoid all risk by buying insurance that covers losses from the first dollar may also not meet a company?s needs. If based on prior loss records a business has $5,000 in losses each year, it is reasonable to as- sume that the insurer will build that cost ? plus overhead and profit margin ? into the premium. This leaves the customer who elects to have no deductible in the position of trad- ing dollars with the insurance company - and doing so at a loss. Working closely with an educated agent or broker to talk through all the op- tions may help your company choose the right deductible that targets any unex- pected risks. 3. LIABILITY LIMITSDetermining the right liability limits isa complex decision that should involve a company?s lawyers, accountants and pos- sibly even the owner?s estate planner. Several factors are in play, including what kind of losses a business may be ex- posed to, how high an award a jury might grant in the event of a loss, what type of legal entity the company is, and what as- sets need to be protected. In today?s liti- gious society, with ever-increasing jury awards and rising defense costs, having inadequate liability limits can spell theend of a going concern. Finding the rightliability limit is, therefore, an importantelement of managing risk.4. COVERAGE TERMS Both commercial and personal insur- ance are highly regulated businesses that frequently allow for "apples-to-apples" comparisons when customers go shop-ping for policies. However, the ocean ma- rine insurance industry is different. Two policies may look very similar, but in fact contain significant coverage differences. These differences could leave the unwary business owner without the coverage he thought he had. By working with an experienced agent, a company can better understand the dif- ferent coverages offered by a variety of insurers and make an informed choice that is right for the company?s level of risk and types of exposure. One good strategy is to go with an in- surer that has a long track record in oceanmarine. Think about it as the difference be- tween a specialist and a generalist. In-surers that continuously serve the maritime industry likely have a higher in- centive to provide good service. Simi- larly, a carrier that specializes in ocean marine is more likely to provide a range of viable policy options for each unique maritime risk. TWO ADDITIONAL STRATEGIES To keep premiums as low as possible, companies can use two other strategies to reduce risk. The first is to shift risk when- ever possible to other parties through contractual agreements. For example, a contract with a vendor doing work on a pier whose negligence may cause a fire or other damage should include languagethat places responsibility firmly on the vendor. Requiring the vendor to show proof of insurance that adequately covers both your company?s liability and its own lia- bility before work begins is an added safeguard that should not be overlooked. The second strategy is to put solid risk control measures in place. These controls may range from having standardized hir- ing, orientation and safety training pro-cedures in place to reduce the chance ofhuman error, to making sure that equip- ment is well maintained to reduce acci-dents and business interruptions. Insurers often consider these types of risk controlpractices when assessing risk and pricinga policy. Adequate risk control measures mayhelp lower a company?s loss record, which may in turn reduce its premiumsover time. AN ANNUAL CHORE As 2012 gets underway, it is the right time to review many things about how your business operates. Assessing your insurance needs andmaking sensible adjustments to your cov- erage should be an important annual rit-ual. Guided by the list above and with the help of your insurance agent and carrier, you may find better ways to strengthen your coverage and control your risks at an affordable cost. March 2012 www.marinelink.com 25MR March 12 # 3 (17-24):MR Template 3/1/2012 10:01 AM Page 25