The economy is still recovering from the recent recession, and employers continue to experience budget pressures. The first reaction is always to cut back, and in some instances, this can be a wise decision. But one area that should never be impacted by the budget is insurance coverage. In fact, when budgets are tight, having proper insurance coverage is more important than ever.

Insurance Based on Budget

Dropping or lowering your coverage may seem like a smart or even necessary move when faced with low funds. However, dropping or lowering coverage exposes you to the risk of greater financial hardship when you can least afford it. If you don’t think you can afford insurance coverage, then how could you possibly afford a claim or loss?

Risk Management

Not only does lowering coverage expose your company to greater risk from a claim, it can also expose your company to possible lawsuits. For instance, if you lower and raise your coverage level year to year based only on price and then have a claim for which you aren’t fully covered, shareholders or claimants could sue you for negligence because the company did not have a strategic risk management program in place. Employers should develop a risk management plan based on what their company needs and applicable to all lines of coverage, and it is important to follow it regardless of budget.

Special Considerations

Certain types of coverage, such as Employment Practices Liability (EPL) and Director & Officer Insurance (D&O), become even more vital in a tough economy. If your company is laying people off, there is always the risk of someone suing for discrimination or wrongful termination – this makes your EPL coverage essential. Or, if the company takes a big loss or is struggling, shareholders and stockholders are likely to blame the board of directors. It’s important to retain appropriate D&O coverage in case of a lawsuit.

Employee Benefits

It can also be tempting to make cuts on the employee benefits side when the company is tight for funds. However, employee retention is more important than ever. In order to retain your best employees, your benefits need to remain competitive and valuable. Keeping your top employees is essential for your company to remain strong or bounce back from a weak period.

To discuss smart but viable ways to retain your coverage and protect your company, contact us today.