Insurance is the best option for businesses wishing to transfer the risk of certain exposures to another company. It replaces the unknown and varying costs of these risks for a stable insurance premium that is known in advance. This allows landscaping businesses the opportunity to plan expenses and reduce the uncertainty of providing continual services to clients.

Insurance is not designed to cover all of the exposures faced by your business. Certain risks are better suited to be covered by insurance than others. Below are six characteristics of ideal risk exposures to be covered by insurance:

• 1. Pure Risk
  Pure Risk is a chance of loss or no loss, but no chance of gain. Insurance is designed to pay for damages and is not intended to allow insureds the ability to profit from the coverage.
• 2. Fortuitous Losses
  The associated loss should be fortuitous (or accidental) from the insured’s perspective. Insurance policies normally exclude coverage for losses that are expected or deliberately caused by the insured.
• 3. Definite and Measurable
  Insurance typically provides coverage for a specified period, after which the insurer is not obligated to pay for the insured’s losses. Similarly, the insurance policy contains limits of liability that allow the insurer to limit loss amounts.
• 4. Homogenous
  The loss exposure must also be homogeneous, that is, one of a large number of similar exposure units. Similar exposure units improve loss predictability.
• 5. Independent and Not Catastrophic
  Insurance is based on the premise that only a small percentage of the loss exposures will experience a loss at any one time. Similarly, the loss must not be catastrophic; a situation insurers avoid by limiting the accumulated value of insured properties in a particular area.
• 6. Affordable
  Insurers sell insurance and organizations buy insurance only when it makes good economic sense to do so. Exposures involving high loss frequency or low loss severity often fail to meet that criterion.

These insurance characteristics are the ideal and not necessarily required for a risk to be insurable. Many loss exposures do not meet all of these characteristics and can still be insured through a variety of options. Feel free to contact us if you have any questions about exposures faced by your landscaping business and to get premium quotations on covering your insurable risks.

The Agent Articles section of BearWiseLandscapers.com allows our insurance agents to provide practical information for landscapers. These agents can also obtain quotes and establish a custom insurance program for your landscaping business through our access to a variety of insurance carriers. This agent article is filed under (1) Insurance, and you can follow comments to it through the RSS 2.0 feed. Feel free to leave your own response below: