Every construction project poses unique challenges and risks. Managing these risks is vital for a construction company to survive and thrive. Hoping a risk does not become a reality or outright ignoring it is a recipe for financial disaster. However, businesses cannot begin to manage their risks without knowing the possible sources as well as how to handle them. Below is a breakdown of common threats within the construction industry and ways to keep those risks in check.
Sources of Construction Risk
Knowing what to expect is a major part of managing construction risk. Below are the various risk factors construction businesses face.
- Competitors: Rival companies are impossible to avoid. However, they can present a major risk to profitability. Business owners may feel pressure to match competitor prices or project completion guarantees, but this can result in slim profitability margins or create problems sourcing materials in time.
- Contractual risk: Continuing with the above, failing to deliver a project on time can result in fees and penalties. Contracts that demand unrealistic timelines are rife with risk.
- Cyber liability: A successful cyber attack can damage a construction company’s reputation as well as finances. As construction businesses digitize more and more of their data, they need the appropriate corresponding cyber liability coverage.
- Fiscal risk: Several elements are a threat to a construction company’s bottom line. For example, unchecked growth, increasing interest rates, decreasing sales, and the economy can all spell financial ruin for a construction company.
- Natural disasters: Earthquakes and floods are among the most common natural disasters that can jeopardize a construction business. Extreme weather can damage project sites or delay work.
- Project management risk: Failing to manage a project properly can result in injuries, damages, and delays—all of which affect a business’ bottom line. Poor project management includes inadequate guidelines and policies, failing to enforce said policies, and misjudging time and materials needed to complete a project.
- Work-related risk: Workers not taking the proper precautions on the jobsite, misusing equipment, and so on can result in job-related injuries and claims.
Managing Construction Risks
There are four schools of thought regarding managing construction risk. These are avoid, transfer, mitigate, or accept the risk.
- Avoid: Companies can avoid certain risks altogether. For example, if the company knows an area is prone to flooding, they may decline construction projects for that area.
- Transfer: Most companies transfer their risk by investing in various insurance policies.
- Mitigate: While some risks are unavoidable, construction companies can reduce their effect. For instance, creating and enforcing safety procedures can reduce safety hazards and incidents on job sites.
- Accept: Some risks are not controllable, such as unexpected weather conditions delaying a project. Most construction companies accept these risks, but there are ways to reduce the likelihood. For example, businesses can plan construction projects for when weather is usually mild.
Most construction companies determine which method of risk management they will take based on a reward to risk ratio. If a project will net a small profit, it is not worth taking on a high level of risk. However, if the profit margin is large, a company may choose to take on more risk. To learn more about construction risk management, contact The Reilly Company.
Motorcycle insurance is an absolute must, but many motorcycle enthusiasts balk at the expense associated with adequate coverage. Underinsuring a motorcycle is a risky gamble as well since the owner may end up paying out of pocket for larger claims. However, there are steps motorcyclists can take to secure a more competitive insurance premium.
Top Methods to Reduce Motorcycle Insurance
Below are several suggestions to help motorcyclists save money on their insurance policies.
- Go small or go old. Smaller motorcycles tend to be cheaper to insure because their engines are not as powerful. Older bikes that cost less up front can also result in insurance savings because they cost less to repair. Motorcyclists should also avoid uncommon motorbikes. While it may be tempting to purchase a rare motorcycle or a highly customized one, they may cost more to insure. The more difficult it is to find replacement parts, the more it will raise the insurance premium.
- Enhance safety. Individuals who accrue fewer miles on their motorcycles per year often achieve better insurance rates. This is because the insurance company views them as less of a risk due to less time spent on roads and highways. Investing in safety features like alarms can reduce rates as well. In addition, how motorcyclists store their vehicle affects rates as well. For example, when an owner stores their motorbike in their garage or under lock and key, they are less prone to theft. Motorbike owners can take training courses as well. By taking a proactive interest in improving their skill and safety, motorcyclists can reduce their insurance rates.
- Look for discounts. Many individuals opt to make monthly payments on their insurance premiums; however, some insurance companies offer a discount for paying the entire premium in full. Another possible discount is for safe drivers. If a motorcyclist remains accident-free for an extended period of time, they may be eligible for a safe driver discount.
High premiums take away from the joy of motorcycle ownership. The Reilly Company can help motorcyclists determine what amount of coverage they need as well as how to negotiate the best rates. To learn more about motorcycle insurance, contact us today.
Starting a new business is an exciting prospect, but it also requires a lot of hard work. Entrepreneurs have to focus on several elements all at once such as their products, their customers, their insurance, and their bottom line. However, failing to invest in the right kind of business insurance can lead to financial ruin. While most entrepreneurs are familiar with the major forms of business insurance (i.e. general liability, property, etc.), not all businesses conform to traditional coverage needs. Below are examples of three types of business insurance coverage small business owners may not realize is vital to their continued success.
Home Business Insurance
Many individuals operating their business out of their home may assume their homeowner’s insurance covers them in the event of theft or damage related to their home business. Unfortunately, this is not the case. Some homeowner’s policies allow add-on coverage to protect some elements of a home business, but the best solution is to invest in home business insurance coverage. This type of policy covers liability, theft, loss of business equipment, and more.
Business Life Insurance
Many businesses cannot withstand the loss of their leader. This is especially true for small businesses since one individual may perform several major jobs. For example, the COO may also be the primary hiring administrator as well as head of marketing. A company would find it difficult to replace such an individual. Moreover, the time spent finding and training new employees to fill those jobs puts a financial strain on the company. If such an individual were to die without warning, the business itself could collapse. In the event of such an unfortunate incident, business life insurance helps companies stay afloat while they replace the individual.
Almost every company does some business via the internet. While having a presence on the web is often good for business, it also represents a liability. If a business collects credit card information or personal data about its customers, it needs cyber liability insurance. Cyber liability insurance also provides coverage in the event of cyber attacks designed to disable internal networks. On average, cyber attacks cost small businesses $9000 per incident. As a result, companies who fail to invest in cyber insurance can experience financial instability or even bankruptcy.
Neglecting to invest in insurance specific to your business is an unnecessary risk. The Reilly Company can help your business identify risks unique to your industry and suggest preemptive methods to protect against them. Contact us to learn more.
Insurance is not usually a gray area. Drivers know they need car insurance, homeowners know they need homeowners insurance, and renters know they need renters insurance. It seems like common sense that boat owners would need boat insurance; however, this is not always the case. Depending on several factors, an individual’s homeowner’s or renter’s insurance may provide coverage.
Coverage Available for Small Boats
If a boat is small enough, an individual’s existing homeowner’s or renter’s insurance policy may provide sufficient coverage. These policies usually provide $1000 worth of coverage. Some homeowner’s policies offer coverage equal to 10% of the home’s value. It covers the vessel, motor, and trailer. Examples of boats that fall under this type of coverage include:
- Small sail boats
- Small-scale power boats that cannot exceed 25 miles per hour
However, boat owners relying on their homeowner’s or renter’s insurance should be aware they will likely need additional liability coverage. Many homeowner’s policies allow for elective add-ons like liability coverage, but boat owners should discuss coverage limits with an insurance agent before investing in supplemental policies.
Coverage Available for Large Boats
Individuals who own boats larger or faster than those described above will need a separate boat insurance policy. Some examples of these types of boats include:
- Jet skis
- Wave runners
There are two common types of boat insurance available to boat owners: an actual cash value policy or an agreed amount policy. Actual cash value policies provide payment based on the cost of the boat minus depreciation at the time of the claim. If the boat is lost, most insurance companies use pricing guides to determine the market value.
Agreed amount policies differ in one key way. The insured and their insurer agree upon the boat’s value prior to any claims. In the event of a loss, the insured receives the agreed upon amount. This type of policy also pays out for partial losses, but without deducting depreciation costs.
Regardless of what type of coverage an individual chooses, there are likely to be limits and exclusions. The boat owner will need to invest in additional policies to cover the gaps in their insurance. However, many insurers offer discounts for bundling policies, which can help balance out the additional cost. Navigating the intricacies of boating insurance can be stressful. The Reilly Company can help individuals determine what kind of coverage they need as well as elucidate the particulars of boating insurance. Contact us to learn more.