Personal Risk Management for the Business Owner in 3 minutes

Personal Insurance

  • Check your Limits on all policies

  • Personal Umbrella should be carried. Look at higher limits than just 1,000,000. The Umbrella extends the limits of all your personal policies.

  • Make sure your boats, RV’s, UTV’s, Motorcycle covered under Umbrella

  • Make sure Vacation homes and Condo’s are Under Umbrella.

Health & Life

  • Life Insurance - Check current limits, if it’s a term policy consider rewriting every 5 years if you are healthy to extend term.

  • Health Insurance/Medicare - lots of changes here. Talk to your agent/broker about all your options.

  • Long Term Disability - Look at a group policy for your company as an option as the cost can be about the same as a policy just on you and involve much less underwriting.

Estate Planning

  • Establish a Trust?

  • Don’t place Everything in the Trust - Look at (Payable on Death for Bank accounts and Transfer on Death on Vehicles) A Revocable trust does not provide the protection many people think. You can also use LLC’s that are owned by the trust to provide layers.

Other Stuff

  • If you are on Board, does your Umbrella give you Directors & Officers Liability? Does your board provide coverage for Directors & Officers?

  • What contracts have you assumed liability in (Condo’s, Boat Rentals, etc)

  • Consider any Foreign Travel Risk and related insurance to purchase. You can buy Kidnap and Ransom Insurance with your business and Emergency Travel Insurance from specialty insurers.

  • Domestic Workers? - Can you cover them on your homeowners insurance or do you need Workers Compensation?

The Importance of Fleet Maintenance

Why should fleet maintenance be important to you?

  • If the vehicle is not properly kept up and is later involved in an accident, the owner and their assets are exposed.

  • As the owner of the company, these vehicles are assets. If your assets are inoperable, there is a potential for loss of income.

  • All vehicles diminish in value over time; however, keeping them functioning properly can help them maintain their value.

For example, the owner of a landscaping company has 5 trucks operating at full capacity in the summer months. They neglect to have the brakes properly maintained and one of the trucks is involved in an accident. The truck is now out of commission, there may be injured employees and the owner needs to figure out how to make up the loss of income since it’s peak season causing loss of business income. Not to mention liability to a third party in an at fault accident.

A worst case scenario was the limousine accident in New York this past fall that killed 20 people. The limo was severely overdue for maintenance and was operating without credentials. The owner lost his business as well as suffering the guilt of knowing it was likely preventable.

The best thing to do regarding fleet maintenance is to have a plan. Schedule regular maintenance. Put it on the calendar! Take care of it on a rain day or a weekend. Contract with a local shop that guarantees a maximum one-day turnaround.

The goal is to keep your fleet running safely which protects employees and third parties and helps the business run efficiently.

Questions? Let’s talk.



What is a Reservation of Rights Letter?

You file a claim with your insurance carrier. The carrier acknowledges the claim and starts their investigation.

 A week or so passes and you receive a Reservation of Rights letter.  What is it and what does it mean?

 A Reservation of Rights letter will typically mean one of three things:

1. The carrier is investigating the claim and may think you are not liable for the claim. In this instance, you would have had coverage if you were liable so they mostly likely will continue to defend you if a lawsuit arises.

2. The carrier needs more time to investigate. This ties in with #1; however, the claim might be moving quickly and the carrier wants to make sure their investigation is thoroughly completed.

3. The carrier has noted in the letter that policy language could cause this claim to be denied, but they are still moving forward until that can be fully determined.

Insurance policies are complex contracts. Reading your policy when you receive them is a best practice but is always recommended. At a minimum, read the headings on the exclusion pages. If something concerns you, call your agent for an explanation.

Sean Leigh

Commercial Risk Advisor



4 Ways to Reduce a Work Comp Claim

Most business owners have at least one workers’ compensation story they can recall because of the nightmares it caused them.  It’s no surprise when 39% of employees will never return to work for their employer after a muscular back injury.  The following strategies can help you take a proactive approach to controlling your workers’ compensation experience.

1.       Smart Hiring – Avoid “Hiring a Claim”

Ever heard of a new employee submitting a back injury claim six months after they’ve been hired?  Aside from paying increased premium rate for years to come, the added emotional stress for a business owner impacts their life both at work and at home.  Implementing a smart hiring process is one of the keys to uncovering information necessary for selecting the best fit candidate.

2.       Safety Training

Business owners know that safety is important, but they often don’t have the time and resources to develop a high quality, results driven plan.  Safety training is an investment in future productivity, time saved and increased profits.

3.       After an Injury – Incident Action Plan

“The Cost Clock” of a work comp claim starts as soon as a workplace injury occurs, whether the injury is reported or not.  An incident action plan lays out clear lines of communication, defines responsibilities and sets expectations.  98% of injured employees are entering the work comp process for the first time. Employee recovery assistance prevents resentment by displaying a company’s commitment to the health and wellness of its employees.

4.       Light Duty

If an employee returns to work within the first 3 days of being injured, the insurance company does not need to pay for lost wages and the claim will not impact your E-Mod in the State of Oklahoma.  Depending on the degree of the injury, the employee could possibly return to work on light duty status.  Light duty can save your company premium dollars and creates opportunities for employees to learn about the roles of other coworkers and how their job fits into the bigger picture.  This also makes communication with supervisors and monitoring of healing an easy task.

Workers’ Compensation is the most controllable form of commercial insurance and is designed to help employers, not keep them up at night.  365WorkComp, a specialization of Professional Insurors, helps businesses take control of their workers’ compensation program by using a year-round, proactive approach so you can focus on doing what you love – running your business.


Peter Sheetz

365WorkComp Division

Commercial Risk Advisor


Age of Roof matters with wind & hail claims

Most commercial property insurance policies are written on a Replacement cost basis. This means that if you have a roof loss and it requires your roof to be repaired or replaced, the insurance carrier will pay what it costs minus your deductible to repair or replace your roof damage. The main stipulation to get replacement cost is that you repair or replace the roof. If you choose not to repair or replace at that time, you will only be paid the actual cash value. Actual cash value is the depreciated value of the roof. In simple words, you won’t be paid for what you don’t do.

Even with a replacement cost policy there is often a potential exception to getting paid replacement cost. Most policies contain language or an endorsement that states that if the roof is over 15 years old, then a claim would be settled on an actual cash value basis.  In other words, you would only be entitled to the depreciated value of the roof. 15 years is currently the standard but occasionally you will see the limitation of 10 or 5 years. 

Why is this the case?

Once a roof is 15 years old or older, it is nearing the end of its life.  In most cases, the insurance carrier believes that a roof over this age is more vulnerable to damage and the roof probably already has some wear and tear. Insurance does not pay for wear and tear.

No one likes surprises, but there is a silver lining.

If you are not aware of this wording at the time of loss, it can be disappointing to learn that you will only be receiving 50%, 60% or 70% of the cost of a new roof minus your deductible. But on the bright side of things, you were within a couple of years of having to replace your roof out of your own capital account. Getting a significant portion of that upcoming cost paid by an insurance carrier is still a pretty good deal.

How is the age of the roof determined, I have not owned the property for 15 or more years?

Obviously, documentation of when your roof was installed or replaced is the best determination, but often 10-15 years later, that information is not available. If the information is not available, many times an inspection by an adjuster and a roofer can make the determination. When it is still not clear, the carrier may engage an engineer to perform a roof analysis and take samples to a lab to make the determination. When this occurs, the carrier is not trying to deny or avoid cost, they simply want to do the right thing for you and the right thing for them. Insurance companies are not a government program, they are a business too! And just like you with your customers, you want to provide what you promised but also not give services away that you did not agree to.

Advise on settling a claim.

My advice to my clients when they have a loss and are working with contractors and adjusters is, “Act like you are paying the claim out of your own check book.” If you approach the repairs or replacement like you are paying the claim out of your pocket, it always seems to work out for everyone.

Questions? Call me.



The benefits of a Master Policy


We have all heard the phrase “Cheaper by the Dozen." This means that things are handled more efficiently as a group than individually. This same principle can be applied to insurance as well. More specifically, property owner’s insurance and whether that be rental properties, apartments, or other commercial buildings, there are many benefits to an insurance consumer that can be achieved by combining multiple insurance policies into one master policy. 

The first benefit, and probably the one that consumer’s value the most, would be the premium saved by combining policies. Using the “Cheaper by the Dozen” example, say you own 12 rental properties and currently insure them all on their own separate policies, each costing you $1,000 for the year ($12,000 total). If you could combine them into one policy, the larger premium amount will allow you to gain a “bulk discount” of say, 10%. Your annual insurance premium would then drop from $12,000 to $10,800, saving you $1,200 per year. Over an extended period of time this kind of savings could really add up. With the larger premium for the portfolio you may be able to better absorb a loss vs. a single location premium.

In addition to saving you money, combining your insurance policies will make your life easier. Imagine reducing 12 separate renewal dates into just one common effective date. Handling everything once a year instead of 12 different times will make the task of managing your insurance portfolio much simpler and give you more time to focus on growing your business. 

To find out more about the many other benefits of combing your insurance policies into one master policy, I can be reached at 405-507-2734 or

Percentage deductible? What is that?

What is a “percentage deductible?”

A percentage deductible is a calculated deductible based off of the total insured value on your property policy.  For example: you have your hotel or apartment insured for $3,000,000; the contents insured for $250,000; and, your annual receipts/business income insured for $250,000. Your total insured value would be $3,500,000.  With a 1% wind/hail deductible, your deductible would be $35,000.  

I know this topic may seem elementary, but I’ve spoken with several clients and learned they had been misinformed on how a percentage deductible works. 

As your agent, I will always strive to get a flat deductible. Questions? Let’s talk. 


Mother Nature and Deductibles

If you live in the Midwest region of the country, or “Tornado Alley”, it is almost inevitable you have experienced some form of wind and hail that may or may not have resulted in an insurance claim. Whether it was your personal home, auto, or maybe a rental dwelling, you have seen the damage that Mother Nature can cause during the storm season.

As a landlord, these storms can impact to your bottom line and it is important to understand how your properties are covered against these perils. There are few different approaches to structuring your insurance deductible, and choosing the correct deducible for your portfolio could mean the difference in thousands of dollars to your bottom line. When explaining deductibles, the Insurance Information Institute says,

“A deductible can be either a specific dollar amount or a percentage      

of the total amount of insurance on a policy. Generally speaking,

the larger the deductible, the less a consumer pays in premiums for

an insurance policy.”

There is not a universally correct deductible option for everyone and it is not a certainty that you will have the liberty to choose which form will apply to your policy, but there are a few factors to understand how your deductible will affect your policy.

Percentage vs. Flat Deductibles

If you have a flat $1,000 deductible, that money would be deducted from your claim. So, if your insurance company has determined that you have an insured loss worth $10,000 you would receive a claims check for $9,000.

Percentage deductibles are based on a percentage of the property’s insured value. So if your house is insured for $100,000 and your insurance policy has a 2 % deductible, $2,000 would be deducted from the amount you are reimbursed on a claim. In the event of the $10,000 insurance loss, you would be paid $8,000.

Per Location vs. Per Occurrence Deductibles

Realizing how your deductible will apply to your property schedule is crucial. Say you have 10 rental dwellings and a single hail storm damages all 10 roofs. If you have a $1,000 per location deductible, that would equate to $10,000 in total deductibles you would pay if you were to file a claim to replace all your roofs.

Using the same situation where all 10 properties are damaged by one storm, if instead you have a $5,000 per occurrence deductible, you would only pay one $5,000 deductible if you were to file a claim to replace all your roofs.

Not all carriers will offer a per occurrence deductible, and depending on the number of locations you have and the total insurable value of your portfolio, it may not be the right fit for you. It is important that you consult your agent to explore all the possibilities that are available to you and figure out which deductible structure suits you the best.

If you have questions or would like to learn more about our unique programs for rental dwellings you can reach me at 405-507-2734 or

Costs to consider when bidding for jobs

These days everyone wants to know the upfront cost of a project.

When you bid jobs, the General Contractors (GC) look at cost along with what you will do and what material you will use. Let’s look at some costs to consider when bidding for jobs.

Auto Coverage

For ease, let’s assume all your drivers have clean motor vehicle records (MVR). For a one-ton truck, you are roughly looking at a $1,000 annual premium with $1,000,000 liability and a $500 deductible for comp and collision. A variable would be if you have a fleet of ½-ton trucks. 

Now, are you having the employees who drive your trucks provide their MVR’s? Many factors play into you having their records. One example would be the cost of having a driver who has 2 DUI’s vs. a driver with a traffic ticket for rolling a stop sign. But hey, that’s what insurance is for……right? The easy answer is “yes” but you could end up spending your valuable time away from a job site with dealing with these issues. 

Workers Comp Coverage

Again for ease, let’s assume you keep perfect books and split all of your payroll between landscape maintenance and landscaping. As you know, landscape maintenance has a much less expensive rate than landscaping. There is a lot that goes into calculating the workers comp premium, but let’s say your maintenance rate is $4.50 per $100 in payroll and the landscaping rate is $9.00 per $100 or $4,500 per $100,000 and $9,000 per $100,000 in payroll. These figures are based on no workers comp claims within the past 5 years.

What is your protocol when an employee is injured? Do you have a doctor you trust or are you relying on an unknown doctor who keeps your employee in the workers comp system for an unknown length of time, ballooning your claim? Also, do you stay in touch with the injured employee? Do you keep an open line of communication to prevent them from getting bad advice?

Equipment Coverage

Let’s say you have $140,000 worth of equipment and it’s insured for a premium of $1,000 and a $500 deductible. Damage? Destruction? If you have provided the equipment year, make model and serial numbers, we can get you replacement cost as opposed to actual cash value. What is actual cash value? In essence, it’s depreciation. Kind of like a used car value. We have the only company our there that will give replacement cost on equipment. They don’t just write you a check, they’ll find you the equipment just like the one you lost.

General Liability

What types of contracts are you getting yourself into? Are you doing large jobs for larger contractors or sticking with smaller residential companies? Do you hire sub-contractors? If so, is there a written contract? There are certain coverages in an insurance policy that kick in as long as there is an actual contract in place. NO HAND SHAKE DEALS. Friendship goes out the window when large sums of money are involved. Make sure you are protected. Have contacts in place with sub-contractors and let us look at the contracts you are signing.

Did these topics bring more questions to mind? If so, let’s talk. This is what we do. These are the questions we ask. 

Understanding co-insurance in today's commercial property market

What is Co-insurance?
Most people associate co-insurance with health insurance; however, it’s not exactly the same thing when dealing with property coverage.  The co-insurance clause was implemented as a tool to ensure property owners were not under insuring their properties.  

How does it work?
Just like car dealers use the NADA Guide for car values, we use the Marshall Swift & Boechk (MSB) guide for commercial building values.  Now, these are not market values but rather rebuild estimates. At the time of a loss, our adjuster enters information in the MSB system to determine the rebuild cost of a property.

An example:
Let’s say your property is insured for $500,000 and the insurance policy has an 80% co-insurance clause, meaning you must insure the property for 80% of the cost to rebuild it.  If the adjuster determines that the cost to rebuild is $1,000,000 then the minimum you can insure the property for is $800,000 (80% of $1,000,000). Since the property is insured for $500,000, the claim check will now show a co-insurance penalty because the property was under insured. his is calculated by dividing what you should have insured the property for into the amount you did insure it ($500,000/$800,000 = .625). The penalty figure is multiplied by the loss amount, which let’s say is $50,000 and that amount is listed on the claim check ($50,000 x .625 = $31,250). A claim check for $31,250 on a $50,000 loss and that’s without even applying the deductible!

I say all this not to confuse you; but rather, to take the burden of calculating the building value of your property off your shoulders.

We know the questions to ask and the information to gather to provide you with the best insurance coverage for your property.

Let’s talk.

How A Wellness Plan can save you on Workers Comp premiums

wellness workers compensation plan

Many companies are now considering wellness plans and how they can help reduce health insurance costs. With health insurance costs on the rise every year, I can see how this becomes a topic for health insurance brokers and TPA’s (Third Party Administrators) to explore. What is seldom talked about, however, is how a wellness plan can reduce your Workers’ Compensation costs.

When we are looking at ways to cut costs, the addition of a wellness plan is an expense that just might pay for itself. Consider that a Duke University Medical Center analysis found that obese workers filed twice the number of Workers’ Compensation claims, had seven times higher medical costs from those claims, and lost 13 times more days of work from work injury or work illness than non-obese workers did. Further, smokers were absent from work 50% more and took longer to recover from injuries. With Workers’ Compensation costs continuing to rise, a wellness plan can promote the balance between treating injured workers and returning them to work with cost containment strategies.

By implementing a wellness plan and incorporating it into your workplace accident procedures, the ROI (Return on Investment) for Workers’ Compensation alone is estimated at 4:1. Knowing this, some companies are starting to involve the risk management department in the development and implementation of wellness plans and then offering it to injured workers as a way to get them back to work quicker.

Because the best, and easiest way to educate employees and get them engaged in wellness is through their health insurance, many companies are now offering incentives to encourage participation in wellness programs such as lower deductibles, additional employer contributions to HSA accounts, lower coinsurance, etc. On the flip side, others are introducing the “stick” approach whereby deductibles and co-payments are higher, etc. for not participating in wellness initiatives such as smoking cessation plans or health risks assessments.

The real savings derived from a wellness plan that is often overlooked is the cumulative savings when it is incorporated into a company’s benefit package. For example, add all the savings that the health insurance community describes with the Workers’ Compensation facts I just explained and the savings from both sides are exponential. If you are under a fully insured (standard) group health plan and a Workers’ Compensation fully insured plan, this could be a good savings. If you are self insured or insured in a captive or large deductible, the savings could be even more and would start immediately in this case as the cash flow is more rewarding early on with this type of plan.

Would all industries benefit from this approach? Since Construction, Oil and Gas, Service, and Manufacturing pay much higher Workers’ Compensation rates than industries primarily with office workers, they stand to benefit the most from implementing a wellness plan. If I were a CFO at one of these companies I would consider this immediately.

Chris Moxley, CIC

Real Cost of Your Property Insurance

What is your TCOR (Total Cost of Risk) for your Property Insurance?

Property Insurance Real Cost

Many Businesses look at their Insurance Premiums as their cost of risks from year to year and do not take into account what their real costs associated with their property exposures are.  You hear a lot of discussions about Workers Comp and Liability when talking about Total Cost of Risk but very little is said about your property exposures. 

The Total Cost of Risk (TCOR) is defined as the overall costs associated with running corporate risk management program.  These include such items as:

  • Insurance Premiums
  • Deductibles
  • Uninsured Losses or Losses exceeding Insurance Limits
  • Risk Control or Safety Expenses
  • Management's time in dealing with issues (claims, contractors, moving tenants)
  • Reputation with Insurance Companies (future premium increases)
  • Loss of Reputation in Community
  • Fines (City, State, Federal)
  • City or State Mandates (ordinances) that force upgrades after a loss

When looking at these issues, most would have to agree that avoiding the loss is by far the best way to lower your TCOR and a key component of risk management.  Even though many say that there is not much they can do to lower their risk cost or, “it is just luck” that could not be further from the truth. 

Here are some items that can lower your TCOR for your property exposures:

  • Inspections of Property to identify problems to prevent losses
  • Fire safety equipment such as extinguishers, alarms, & sprinklers
  • Properly Value Properties before loss
  • Contractor Hiring & Risk Management Transfer
  • Proactive improvements to property such as electric, roofs, plumbing, etc.
  • Disaster Recovery Plan
  • Tenant Screening where applicable

We will explore these in future articles.

Chris Moxley, CIC, CRIS

Do you have a Disaster Plan?

disaster plan oklahoma tornado

As we approach weather season, let's talk about your disaster plan. I have discussed in the past that a good Disaster Plan is critical to reduce your total cost of risk. When we ask clients about their disaster plan, I usually hear, “no we need to work on that” or, “yes our computer guy has us taken care of”.  The problem with the first response is obvious but when I dive into the latter scenario,  I often find many holes in their program.  As we know, having your computers backed up is very important and most of us think and expect that that is being done properly.  Even though you may find that the backup is not being done as good as it can be done, a bigger problem is what are you going to do with that data if your building is a total loss due to a fire, tornado, or ice storm?  Even if your data survives, most businesses never recover from a total loss at their property.  Below are some important elements of a complete Disaster Plan:

  • Data Backup and Recovery – This includes software and not just data.
  • Written plan with procedures,  and contacts.  Copies of relevant data for each key employee  should be kept at their houses.
  • Facilities & Power - If you are shut down, for many types of disasters, so is your power.  Who will provide power, computers, office space, warehouse space, and internet or phone connectivity if these are out.  A disaster can include a major cut in your internet service without any type of natural disaster being the cause.  We partner with firms that provide these services to our clients.
  • Testing – If you plan has not been tested, it will probably fail or not obtain it’s desired result.  Everyone we know that has tested their plan has found huge problems they had to fix after the test. When you test, you should simulate a complete loss and restore just like you would have to do in a disaster.
  • Funding – Now that you have the plan to take care of all of this, who will pay for it?  It’s important that your Risk Advisor structures your insurance to properly fund your plan.

Managing your Risk when you sign Sign Contracts

Risk management in Oklahoma and signed contracts.

 What you sign can impact your Total Cost of Risk as much as anything else you do.  Yes that signature you sign in haste just to get that invoice paid, or obtain that lease before anyone else, can be a huge risk to your business.  Many business owners do not have anyone review their contracts before they sign them.  Below are just some of the contracts business owners sign that should be reviewed by an attorney and insurance broker or risk consultant:

  • Leases (property)
  • Automobile or Equipment Leases
  • Construction or Service Contracts – This includes subcontract agreements with any subcontractors or service providers or contracts where you may be the owner of the property for work being performed.  An example of this might be you hiring a General Contractor to do a roofing project for you and he hires a subcontractor to do the work.  You should review this contract as well.
  • Distributor Contracts – whether you are the one selling the product or the buyer

What are we looking for?  An attorney should be looking at the entire contract including how you will be paid and when or how you can get out of the contract.  Your Risk Consultant or insurance broker should be looking at:

  • Indemnity Clauses or Hold Harmless agreements – are they fair? Are they insurable?
  • Does your insurance cover as many of the exposures that you are assuming as possible – (many are uninsurable)
  • Does the contract use modern Insurance Language -  Many are still patterned after policies first introduced in 1973.  Those were modernized in 1986 and much of the wording could be out of date if not modernized
  • What can be taken out or changed that benefits you – If we can suggest changes in language that reduces your exposures, many times that can be negotiated before you sign the contract(s)
  • What endorsements need to be added to your insurance to meet the requirements and how much will it cost you?

Commercial Umbrella Liability - What Limit should I carry?

Umbrellas and Excess policies are important because they give you additional (higher) limits on multiple policies by purchasing one policy.  Most cover General Liability, Automobile, and the Employers’ Liability part of Workers’ Compensation Insurance. Umbrellas are written on their own form and often contain broader coverage than their underlying policies plus they offer drop down coverage for these situations.  Excess policies follow the underlying policies and are only as broad as the polices they encompass.

I have been asked several times what Umbrella Limit a company should carry? While there is no definitive answer to this question, companies should begin their analysis by using the net worth of their company as a guideline.  For example, the more you have, the more you should carry. Companies with substantial property values that have appreciated over time should look to  more than just their financial statements to determine asset values. They should also look at the current market value of their properties. 

We all hear of large losses that put companies out of business, where there could not have been enough coverage purchased to cover the loss. I have personally seen accidents that exceeded $2,000.000 but I have not seen anything over $10,000,000.   This is why I am a proponent of dividing your companies into separate entities if it makes sense to do so. Whether or not you do this, keep in mind that the higher limits you obtain, the less each incremental layer will add to your premium. For example, let’s say the first $1,000,000 of the umbrella  costs $2,000.  The next $1,000,000 might cost $1,000 and the 3rd $1,000,000 might cost $500 for a total premium of $3,500 for a $3,000,000 umbrella.

Whatever you do, take the time to properly protect your company.  You spent a lot of time building your business, so spend the time to make sure you get to keep it.

Buying Personal Umbrella Insurance might save your Business

Personal Umbrella Insurance and commercial insurance solutions by Professional Insurors Business Insurance OKC

As a Business Risk Advisor, I am often looking over Business Insurance policies, doing risk management worksheets, and asking lots of questions to make sure my clients business' are protected properly.   We talk about carrying proper limits on General Liability, Auto Liability, & workers compensation.  We even talk about Umbrella coverage, that increases these limits even more. Since I and many advisors specialize in commercial only and don't provide  personal insurance, this is one thing that can get overlooked by your personal lines insurance agent.  There is a flood of Internet based insurance companies now providing coverage for Auto, and Homeowners.  There are equally, personal lines insurance agents that do not ask the proper questions to cover the Business Owner as he needs to be covered for his personal exposures.  As the Allstate commercial says, "your 15 minute insurance may not protect you".

Many business owners protect themselves by purchasing high limits of insurance and setting up multiple companies to keep their assets protected.  You need to spend equal time making sure you have your personal coverages set up properly.  (For Example:)

My employee is driving a delivery truck and causes a multi-car accident in which there are several serious injuries.  A large award is given and I have enough coverage with my auto and umbrella liability to pay the claim.  As a backup to keep them away from my personal assets, I have the protection of my corporation or LLC. 

What if I have this same accident on my way home in my personal vehicle and I don't enough insurance limits to cover this claim?  Once they get a judgement, they can go after my personal assets. 

If that is not enough they can come after my ownership in my company or it's assets.  The price to increase my personal auto limits is very reasonable and would seem cheap now.

I recommend you look at your personal liability limits under your homeowners insurance, personal auto, and any other recreational vehicles or boats you have, and increase them enough that you can buy a personal umbrella to extend all of those limits to between $1,000,000 and $10,000,000 depending on your needs.  Personal Umbrella's cost start at a couple of hundred dollars a year and go up from there.

Thanks to Chris Griswold, Attorney, for his help on this article.

Using Multiple Entities to Limit Risk Exposure

Question:  Why should a business owner use different LLC’s (or corporations) to help manage their risk and exposure?

Forming multiple companies, holding companies and Oklahoma business Insurance programs.

Answer:  First of all, legally speaking, it’s important to understand that LLC’s (or S-Corps or C-Corps, whichever one you use) are actually their own, separate, “legal persons.”  This means that, just like you or me, the LLC (or corporation) can actually sue and/or be sued as a separate, legal entity (Note: the only difference between you being your own, legal person and the LLC being its own, legal person is that you, as a human being, in addition to being a separate, legal person, are also what’s called a “natural person” who is, medically speaking, an entity that is alive and breathing!).    

Second of all, as a business owner, it’s important to understand the incredible importance of having your various interests owned by various LLC’s (or corporations) because doing this, in and of itself, is actually a great way to perform the critical function of risk management.  How does it work?  Read below.

For example, let’s say you’re a business owner who owns a plumbing company with 50 plumbers, 50 trucks and you own a 5 acre tract of land which contains your warehouse building and your administrative offices.  You own all the land, the offices, the trucks and the warehouse building.  Accordingly, you’d likely want to separate out your ownership of these various assets in the following manner:

 A)     You’d want to change the ownership of the trucks from your personal name (or from the one, single LLC or corporation that currently owns everything associated with your entire business) to a different, separate LLC - let’s call it “Truck, LLC.”  By putting your equipment into Truck, LLC, you’ve separated it from the other assets you own (i.e., the 5 acre tract of land, your warehouse and your administrative offices) so that, if an accident was ever caused by one of your 50 trucks, the other assets won’t be exposed or made vulnerable to any claims arising from such truck accident;

B)     You’d then do the same thing with your warehouse (i.e., Warehouse, LLC), your administrative offices (i.e., Administrative Office, LLC) and perhaps even certain pieces of plumbing related equipment (i.e., Related Equipment, LLC) which have their own unique, high liability risk factors such as: high voltage generators, tractors, backhoes, lift equipment, etc…).

This way, if any of these different categories of assets ever cause an accident (or are ever involved in an accident), all the other assets in the other LLCs will be neatly protected within their own separate, legal entity.  Is this method completely fail safe?  No.  But it’s a great way to begin doing some risk management for your company.  

Chris Griswold is an attorney in Oklahoma City. He specializes in Commercial Real Estate Law, Business Transactions, and Estate Planning. You can find him on the web at