The insurance industry in the US has always been pivotal to consistent economic growth. According to Policy Advice, in 2015, the insurance carriers contributed more to US GDP than even banks for the first time. In 2017, this trend held strong, as the insurance sector’s contribution was 3.1%, while the financial sector (banks) contributed 2.9% of the GDP. The industry also witnessed a whopping 4% growth in 2017 with health insurance being the fastest growing sector. There has been consistent growth since then.
These stats reveal mass awareness about the benefits of insurance. It’s often said that insurance has saved businesses and lives in more ways than anyone can count. From bearing the expenses of a worker, who is recovering from an accident, or someone who has a permanent disability, to saving a business, whose operations have been affected by a national or regional crisis, insurance has been the savior in many cases.
Let’s look at five such instances when insurance saved the day.
The Wimbledon pandemic coverage in 2020
Many of us are aware that the first time in history after 1945, the Wimbledon tournament has been cancelled this year due to the virus outbreak. However, what you may not know is the All England Club is getting an insurance settlement worth £100 million, based on a clause in its policy that covered viral outbreaks like this one.
This will not only help them prevent a massive loss in revenue due to the cancellation but also refund the ticket prices to the customers, who bought them in advance. They had been paying close to $ 2 million each year for the last 17 years for pandemic insurance. If they hadn’t, they would be facing enormous losses today, which ultimately makes their insurance coverage a true knight in shining armor.
However, this is just a big example of a renowned sports organization that managed to save big by opting for the right package. There are other smaller but equally significant instances of insurance success that have been mentioned below.
Cover against flooding pipes
A startup in Canada faced the dire consequences of flooding pipes that destroyed most of their office, equipment, and furnishings, causing damage requiring months of repair. The team had no other place to work, the sales were plummeting, and it was quite a disaster. However, the company had bought property insurance and business interruption insurance cover quite recently. This saved not only a lot of repair expenses but also the costs of shifting the team to a temporary office, besides taking care of the blip in the business revenue. If the company didn’t have the insurance, they would have succumbed to the losses. The insurance money also helped them replace most of the damaged equipment, thus providing the ultimate security.
Insurance against a lawsuit
Another company committed the mistake of showing their competitors in a negative light in their blog posts, as well as promoting those same ideas across social media channels. The objectionable content invited a defamation lawsuit. Despite there being not much strength in the lawsuit, the company was facing a dire future. Legal costs could be high to fight the battle with the right representation and the distraction could drain the company’s resources. But the company utilized its insurance policy to cover the legal fees and work its way through the legal process. Without that, the startup would have hit bankruptcy.
Cyber liability coverage for business
Cyber glitches and security issues are common in our digital world of today. When small businesses work with service providers (like data centers or cloud providers), they believe that it’s the host’s responsibility to secure the customers’ data. But unfortunate incidents can happen any day. Such an incident happened with an online merchant, whose old website got hacked, and as they tried to transfer customers’ data to a new website, the hackers got hold of the credit card information of over 30,000 customers. However, their insurance company had provided them with cover against cyber threats. The cover helped them mitigate the risks, inform their customers, and set up a resolution center. This also helped the company prepare for litigation against the perpetrators of the breach.
The case against the graphic designer
An accidental slip cost a graphic designer a hefty amount, as a customer, who was visiting the office, injured her left foot. She claimed that she was unable to work during the recovery period and asked the designer to bear the expenses of her medical treatment, as well as recoup the income loss.
The designer’s insurer inspected the case carefully and appointed assessors to find out the truth of the claim. The insurer also hired a law firm to obtain medical treatment and other receipts from the customer and settled the case within three months. While the medical costs turned out to be $45,000, the ones for the law firm and assessors came to be $30,000, all handled by the insurance coverage that the designer had in place. Imagine if the insurance did not cover that!
So, do you see how important insurance can be to your company and its assets, both physical and virtual?