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Insurance News—Back To School Issue

Sep 7, 2012

Hello! As we close the door on what was a scorcing and dry summer, we prepare for what many hope is a cooler, wetter season. In this newsletter we hope to enlighten or at least remind you of the need to keep in mind the 'total cost of risk' when thinking about your own risk management needs, whether it's financial or insurance needs. I had a little reminder of this just today when my 2 year old, 'low-cost' Vizio TV decided to not turn on. Being just out of warranty, I will be paying for repairs that typically come with low-value products. I heard many ads tell me they were good TV's though I had not had one before. So I bought one! Turns out I could have paid a little more and likely not had this surprise. Lesson learned: Don't always take the low-price-leader (as I did...but won't do again). Consider all that goes into the cost of the product and the service that comes along with it. I remember my High School teacher Mr. North reminding me "don't buy cheap, but rather look for inexpensive but valued". We trust that you value the products we bring you and the exception service that comes along with it. Thank you for the opportunity to service your insurance needs. Best regards,

Jim StonePresident United Agencies 301 E. Colorado Blvd. Suite #200 Pasadena, CA 91101 626.535.8300 View My Website

Calculating Your Total Cost of RiskPremiums are only a small percentage of the costs you pay to manage your risk. Your "total cost of risk" is much greater than the premiums you pay. Because losses cause specific financial damages, but the piece of the financial iceberg hidden below the surface can sink even the best-sailed ship. Here are components in the total cost of risk.Deductibles and self-insured retentions. Everyone carries a deductible or retention on his or her insurance, the cost out-of-pocket the insured pays before insurance kicks in. (I oversimplified the concept, but you know that if you back into a pole, $500 or $1,000 comes right out of your pocket. This cost is an incentive to practice safe backing techniques.)The cost of uninsured or self-insured losses. Insurance is not designed to cover every loss. For example, if you own a tavern and you serve a minor who then wrecks her car after she leaves your bar, a coverage exclusion may apply. Exclusions keep insurance affordable and help limit "morale hazards," an attitude of, "I have insurance so why should I be careful?"Legal costs are a cost of risk. If you fail to purchase enough coverage or have an uninsured loss, you will need counsel. How does $250 or $350 an hour sound? Legal fees are a devastating cost of risk that often fly under the business owner's radar until it is time to write a check.Loss control and safety costs. Safety professionals see it happen repeatedly. When times are bad, business owners try to save money by reducing safety training. Risks inherent to your organization but not well managed can produce unexpected costs. If OSHA arrives at your door or an expensive piece of equipment is damaged and you cannot make use of it for weeks while it is repaired, costs can be high.Administrative time is another cost of risk. When your worker is seriously injured, how much administrative time does it take to report the claim, calm your employees, and manage the ongoing medical and return-to-work issues? By some estimates, the indirect costs of a worker's compensation claim may be as high as seven times the amount actually paid to your employee and his or her medical providers.What about opportunity costs? If your star salesperson is critically injured in an auto accident, who can step in and help her customers? Did we hear you say "No one"? Then you must scramble to hire from a competitor, or hope someone in your organization can meet the challenge. Without key employees at work and highly functional, your organization cannot respond to market opportunities when they occur.Your total cost of risk is an important factor to consider when considering which insurance to purchase.

Thought for the day“Smooth seas do not make skillful sailors”- African proverbpresented by Jim Stone License #: 0252636United Agencies 301 E. Colorado Blvd. Suite #200 Pasadena, CA 91101 626.535.8300 https://www.cornerstonepref.comYou have received this email because you have agreed to receive emails from Jim Stone. If you would no longer like to receive this email, unsubscribe here.

Thought for the day“Smooth seas do not make skillful sailors”- African proverbpresented by Jim Stone License #: 0252636United Agencies 301 E. Colorado Blvd. Suite #200 Pasadena, CA 91101 626.535.8300 https://www.cornerstonepref.comYou have received this email because you have agreed to receive emails from Jim Stone. If you would no longer like to receive this email, unsubscribe here.

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