When University of Louisiana at Monroe risk management and insurance majors asked small business owners how they make decisions about managing their business risk, most of them told us they rely heavily, if not completely, on their insurance agent.
But sometimes insurance isn’t the best way to manage risk.
The decision about when or whether to use insurance to manage risk can be complicated, as can the decision about what types of insurance to buy for what risks. While insurance agents can help you decide the types of insurance to buy, they might not help you decide when not to buy insurance.
Fortunately, there are three simple rules that will get you headed in the right direction when deciding “to insure or not to insure.”
They are: don’t risk a lot for a little; don’t risk more than you can afford to lose; and consider the odds.
Source – Christine Berry director of the Small Business Risk Management Institute at the University of Louisiana.