An economic downturn can be a turbulent time for businesses in every
sector. Sinking revenues and economic uncertainty can increase the chances
of litigation, and even companies that successfully weather economic
downturns relatively unscathed can still face specific long-term uninsured
risks. For this reason, Robertson Insurance & Risk Management has
compiled these tips to effectively manage your company’s exposures as it
adapts to economic downturns.
Supply Chain Dependency
It’s no secret that in times of economic downturn, cutting costs is a
necessity. However, it is important to remember that the financial security
of your business can hinge on that of your partners, vendors and suppliers.
In a tough economic climate, do not rely on the insurance coverage of your
business partners to protect your assets or protect against third-party
liability claims. Any member of the supply chain can be held responsible
for its counterparts’ torts. A distributor, for example, may be liable for
a claim filed against its manufacturer when it goes out of business.
Therefore, in order to protect your company, it is a wise long-term
investment to expand your coverage limits. While it may be tempting to cut
costs by limiting coverage, this decision could expose you to severe
liabilities due to your supplier’s shortcomings. If you currently deal with
foreign manufacturers or if you’re considering outsourcing for the first
time, talk to Robertson Insurance & Risk Management about covering the
Rely on Solid Contracts
In times of economic change, it is more important than ever to ensure your
protection through thorough, seamless contracts. They should clearly
outline both parties’ obligations and discuss dispute resolution policies
to avoid messy and expensive disagreements. An indemnity term can be
included in contracts with foreign suppliers in which the supplier consents
to the jurisdiction of U.S. courts and indemnifies its sellers here in the
event a claim involving one of its products. Remember, however, that this
contractual indemnity is only as valuable as the manufacturer’s ability to
It is never a good business decision to sign into a contract hastily, but
especially in difficult economic times, be sure to explore all the risks
and legal ramifications. Small companies who partner with larger companies
are often strong-armed into making decisions with which they are not
Changing to Survive
For many businesses, change is an intelligent way of reacting to an
economic crisis. It allows you to explore new customer bases and offer
additional products or services. While expanding in either of these ways
can revolutionize your business and keep you afloat in tough times, it
could also expose you to additional liability you had not dealt with
When you begin to step into new lines of products or services, you will
inevitably face a learning curve, which puts you at a larger risk of facing
product liability claims. You may want to consider purchasing additional
lines of coverage to protect yourself, as your surplus lines insurance
policy may only cover claims arising from one particular product.
However, shifting or expanding your customer base may open you up to class
action lawsuits. New markets may react differently to product failure.
Thus, it is vital to be covered for potential liabilities resulting from a
change in your business. Contact Robertson Insurance & Risk Management
today to assess exposures that could be associated with your business plan.
Robertson Insurance & Risk Management are here to help!
We understand that insurance is purchased to prepare you for the worst case scenario. You can rest assured that we will develop a risk program that meets your specific needs. By offering and making use of proven insurance and risk management methods, we can provide solutions that not only protect against loss but also help to avoid or lower the risk of having certain losses occur in the first place. Give us a call at 717-625-3770