James has taken over the Mom and Pop Diner from his folks, which has more or less been a way of life for him, having grown up in the business. He’s keeping things ticking over much the same way it has always been done. His annual insurance renewal discussion with Pop’s insurance agent is this week, which is no big thing because he just drops in for an espresso and James signs up for the next year, with inflationary increases in contents and property values.

James’s agent does not engage in risk management all that much. The diner carries the minimal coverage for property damage, liability and business interruption.

No sooner has the renewal been signed off for the coming year, than a customer leaving the diner trips over a crack in the sidewalk at the base of the step to the diner’s door. The waiter sees this and helps the middle-aged lady back into the diner, where he settles her in a booth and gets her a glass of water. James’s wife is trained in basic first aid, and she cleans the lady’s grazed knee. An incident report form is filled in, just in case. The lady is embarrassed and a bit shaken, but she seems fine, and goes on her way. Not too long after, James receives a letter from the lady claiming medical bills related to her injury.

James directs the letter to his insurance agent, who lets him know that his liability cover does not extend to property adjoining the insured premises. Fabio sends the letter to his local municipality, who informs him that the sidewalk adjoining his property is his legal responsibility, and submits the by-laws as proof. James now has to foot the medical bills himself. Had his agent carried out the necessary risk management, the diner would have been covered accordingly.

For peace of mind risk management should incorporate:

• Risk Evaluation
• interviews and reviews
• Evaluate for potential loss and values and risk
• Recommendations for safety programs to protect property and assets
• Suggestions to reduce exposure to loss