Businesses, regardless what they do or their size, make decisions that affect how they are covered. There are many factors that go into choices about what needs to be protected, such as:

    • Buildings

    • Machinery

    • Equipment

    • Business Furnishings

    • Vehicles

    • Inventory

    • and other assets

Besides physical assets, companies have to make coverage decisions to protect themselves against loss that involve injury and damage they cause to others when they arise from their business operations.

When trying to arrange coverage for property, the major issue is affordability. When coverage is not affordable, companies may decide that it can afford to keep that risk that it can do without coverage. When trying to arrange coverage for liability (responsibility for things the company does), the issues may be affordability and…availability. When a business decides to go without insurance; it's referred to "going bare".

A decision to go bare is a deliberate one; as opposed to a company that has overlooked a coverage need. Going bare is an accurate description, producing an image that an organization is, in some important respect, nakedly vulnerable to a serious loss.

Typically a company that has gone bare has limited options. The situation may develop because a company can't find either a standard or specialty source of insurance that is willing to provided coverage at an affordable level. In some instances, coverage just isn't available at any price and companies choose to continue business under the threat of a crippling loss possibility; rather than cease operations.

In some cases, an entire industry or market niche may face temporary coverage crises. A number of alternatives have been created in response to severe coverage gaps; such as the creation and growth of risk retention groups (RRGs).

RRGs are formal groups of companies that enter into an agreement to pool financial resources in order to cover each others' exposure to a similar source of loss that traditional insurance companies have either abandoned or have never chosen to provide coverage.

Regardless the reason, going bare for any significant amount of time is a dangerous situation for any company and it should never be selected if there is any chance to find a viable coverage alternative. An experienced insurance professional can be invaluable in assisting an organization to finding a coverage solution.

COPYRIGHT: Insurance Publishing Plus, Inc. 2011

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