August 13, 2019
Over the last few years many members of the RCR team have had instances within our own families, circles of friends, and with clients, of what many would consider life-altering disasters. From injury, illness, emergency surgery, and even death, to natural disasters like hurricanes, fires, and floods, it has seemed as though these events keep hitting closer and closer to home. It has reminded us to think about the role of insurance in both our personal and professional lives and how important it is to be prepared in even the most unlikely of circumstances.
Most of us think we have enough insurance and we resent paying for what we believe “can never happen to me!” The reality is that we all need adequate insurance of various kinds so that we are covered personally and professionally. Being so busy in the day to day, it is easy to just renew a policy without reviewing the level of coverage. It is crucial to carefully review your policy with your insurance advisor to make sure you have adequate coverage. Many companies are growing with the economy, adding employees, and driving higher revenues. Real estate values have been steadily climbing as have construction costs, which can easily change the replacement cost for owned real estate assets. General liability, errors and omission, property, workers compensation, and key man insurance, to name a few, are all important to review on an annual basis.
After the massive historic fire in Downtown Raleigh, an RCR client was displaced overnight by the massive blaze that severely damaged their property. The client’s staff all worked from home for weeks until a “short-term sub-lease” location could be found, and they eventually got into a temporary space. They had hoped to be back in their building quickly, but now, 3 years later, they have recently had to sign a new 3 year term with a new landlord in a direct lease and move again as they continue to try to work through the insurance and rebuilding process. Luckily, they had the proper coverage to get through that tough time, but the situation would have been far more devastating had they not.
When it comes to running a business, many give little or any thought to what would happen in the event of disability or death. How would my business keep running without me? Having a strategic plan can be critical in keeping your business operational if tragedy strikes. Equally important to having proper insurance coverage is having powers of attorney in place, a written will in the event of death, a business succession plan, and an emergency plan of action in the event of loss of a key employee. As roles and responsibilities change, it is important to review this plan with your leadership or management team annually just as you do your insurance, to see if adjustments need to be made.
One extreme example we experienced was with a long-term client who was on the verge of signing a letter of intent when their CEO was killed in a car accident. The management team had decided to relocate to another building but, once this tragedy occurred, the team immediately went into survival mode and were forced to extend their current lease term in order to focus on running the business and hiring a new CEO. They eventually did hire a new executive who changed their course entirely and ultimately relocated the company to another city. However, this process took over 3 years and, during this time, we were able to witness the disruption firsthand. This is a prime example of a circumstance that you would never think could happen to you or your business but, unfortunately, we have seen countless situations like this firsthand. While planning will not prevent these accidents from happening, it will certainly ease the burden if or when it ever does.
As part of our client-focused plan to understand the business operation and long-term strategy for our clients, we ask the hard questions that will assist in making the “what-ifs” bearable should something unexpected occur. With real estate being a major line item expense for most all our clients, it’s important to discuss exposure and risk early in the decision-making process and to continue to keep that conversation alive. Certainly, we will be there to assist when something unexpected occurs, but a little pre-planning by the owner, management team, and its advisors can only help to structure how best to handle an unforeseen circumstance. For all the good times we’ve had with our friends and clients, we want to remind all of you that we are here for you in the bad times as well!