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The Cost of Risk

What is the cost of risk?

It's a combination of factors. The most direct, of course, is the price of the policy. But it's the indirect factors such as the lost productivity value that end up being the most important. Why? Because these factors often exceed direct costs across all lines of insurance. Lost productivity factors include:

  • Time lost from work by injured or ill employees
  • Loss in efficiency from a crew breakup
  • Time damaged equipment is out of service
  • Cost of lost business opportunities
  • Cost of media response and control
  • Disruption of usual business operations and relationships
  • Loss in corporate earning power
  • Cost of training a new worker
  • Legal expenses
  • Cost of internal investigations
  • Recovery/restoration of brand or reputation
  • Time lost in defense of, or contesting, claims

It helps to step back and look at the big picture. Risk management is a complex subject. It is imperative to know the value and not just the price.

Below is a worksheet to assist you in understanding your real cost of risk. Enter your figures in the spaces provided and then click on calculate. You can print this page for your records by clicking on the Print this page button.

  CGL BA W/C Property
Cost of your premium
Cost of your deductible
Direct, but uncovered cost of claims
Indirect, but uncovered cost of claims
Uncovered loss of value
Your True Estimated Cost of Risk
The LIG Insurance Agency can help you lower your "costs" by utilizing industry expertise, proven solutions that work and the product to meet your specific needs. Give us a call today.