Business Insurance Question

So it's time for my yearly insurance renewal and my agent sends me this question.

In your opinion, what is the worst case scenario if your product or work should fail?

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How do you answer question other than, "It depends".

I'm not self-employed so this has never come up for me, but the best most honest answer is that someone dies. I keep the thought present to some extent at all times. It helps keep me from getting too lax about being vigilant in terms of safety matters.

To be sure, your insurance agent will love you for that answer.

OUCH!!! Have never had that one thrown at me.

cbuysse said:

I'm not self-employed so this has never come up for me, but the best most honest answer is that someone dies. I keep the thought present to some extent at all times. It helps keep me from getting too lax about being vigilant in terms of safety matters.

To be sure, your insurance agent will love you for that answer.

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Hey, manufacturing is still better than the process world. In the case of something like a press, "Somebody dies" is definitely a bad situation. In a chemical plant, though, a mistake could cause the facility to explode, potentially with everyone still in it.

You also might need to think about more direct financial costs of mistakes. If your mistake takes down a machine, which causes a manufacturer to stop producing a part that causes a Ford plant to starve and have to stop, there could be million dollar per hour penalties.

It’s important to note that your answer should be from the view point that the machine and/or your work is being used as intended, has reasonable safety systems and follows any appropriate regulations.

Originally posted bu cbuysse:

...but the best most honest answer is that someone dies.

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Unless you know micky personally I don't think we can say that. For all we know he designs data recording and analysis software. Not much direct risk there. Without knowing exactly what he does we can't judge the possible consequences.

However,

Originally posted by micky:

How do you answer question other than, "It depends".

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I don't think this is exactly accurate either. Unless you are buying coverage for specific instances and events, the worst case scenario can be defined, at least based on history. The inference for coverage is not based on the probability that a specific machines might fail. The inference is based on the possibility that your highest liability machine will fail and that all machines have an equal chance of failure. Look back on your history and pick the project you were involved in with the highest property and safety risk and assume that one goes horribly wrong. In a pure sense that is your answer.

mk42 brought up consequential damages. That gets pretty fuzzy for me. If your contract states that you are not responsible for consequential damages and your customer signs this, what is your level of liability? I've never run into this case so I'm not sure.

Keith

kamenges said:

If your contract states that you are not responsible for consequential damages and your customer signs this, what is your level of liability? I've never run into this case so I'm not sure.

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Unfortunately it’s not about what your real liability is. I’ve found that the “real world” and what the insurance company bases their decisions off of are seldom the same. The insurance company is looking for something to justify higher premiums and to shield themselves from a high cost payout. If you say that the worst case scenario is that someone could die you won’t get coverage unless you pay a ridiculous monthly premium.

micky said:

So it's time for my yearly insurance renewal and my agent sends me this question.



How do you answer question other than, "It depends".

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tell them that the worst case scenario is that they will owe someone alot of money.

You should send them this https://www.youtube.com/watch?v=_KuGizBjDXo