From the November 2003 issue of Entrepreneur

Setting policies to address potentially risky situations can be your best insurance when it comes to defending yourself against a claim. If you demonstrate you've done due diligence in terms of protecting people and otherwise diffusing potentially risky situations, you're in a much more defensible position in the eyes of a judge or jury, says Al Nagelberg, president of Albert Risk Management Consultants, an independent risk management consulting firm in Needham, Massachusetts.

Let's say someone slips and falls on your property on a snowy day and sues you for not removing the snow. If you had a snow-removal policy, you could clearly show you were aware of the potential risk and took steps to minimize it-reducing the likelihood you would be held liable for damages.

The benefits of being proactive are significant. First, notes Nagelberg, your loss ratio is a key driver of your insurance rates, so reducing or eliminating losses keeps your premiums down. Because many insurance consumers are accepting higher deductibles to contain premiums, reducing your liability exposures directly reduces out-of-pocket costs.

General areas where you should have procedural policies include: employment practices, property and equipment management, Internet use, cell phone use, vehicles and workplace safety. To figure out what policies you need and how to create them, contact a risk management consultant, an insurance agent or an insurance broker.


Jacquelyn Lynn is a freelance business writer in Orlando, Florida.