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Camille Brown: Ease The Pain




Camille Brown shows how a combination of the right insurance and aggressive risk management can boost your store.

IRS AUDITS. Root canal. Most jewelers regard insurance coverage in the same category. But it doesn’t have to be that bad. Finding the best insurance deals, while looking for every way to reduce your exposure to loss, might not be fun. But it can be satisfying, and it should result in real improvements in your store. 

When you think of insurance, you probably think of insuring your inventory. But many jewelers also do repairs, appraisals, cleaning and piercings. Think of what could happen: 

> A worker doing repairs gets sick from chemical fumes in a poorly ventilated area. Now she claims she has multiple chemical sensitivity and is permanently disabled. You face a $1.5 million workers’ compensation claim. 

> An appraiser underestimates the value of a client’s diamond. It’s stolen a year later, and when the client finds out that her homeowner’s insurance was inadequate, she files a $40,000 professional-liability suit against you. 

> An employee piercing a customer’s nose hits a nerve. He sues you for $13,000 in medical bills plus $1 million for his ?pain and suffering?.  


> You clean a pearl necklace. The next day, the clasp breaks and the lady loses several pearls that roll down a storm drain. She says you’re responsible for her $4,500 loss. 

> An inexperienced, untrained worker using a torch ignites combustible materials on a workbench starting an uncontrollable fire. Your store, and possibly the entire building, is a total loss. Your customers must shop at your competitors. By the time you get going again, you estimate you’ve lost $95,000 in sales. 

Expanded services have created new risks requiring innovative insurance and safety solutions. But the old risks haven’t gone away. Today you need to make sure you have the right coverages and are not uninsured or underinsured for any significant risk. 

To control premiums, your challenge is to lower your risks in any categories you’re seeking coverage in. The most obvious of these categories is theft, and protection strategies here have already been covered extensively in Instore. However, one area that is often overlooked in protecting your store is taking steps to prevent an inside job. These are possibly even a greater risk than robberies or burglaries by outsiders. To protect yourself, know who your employees are. Have sound procedures for hiring and training employees, including doing background and references checks. Consider bonding all employees with a security agency. This may be expensive, but the savings in insurance premiums and greater peace of mind can make it worth it.  

You’ll also have to insure for employee and customer injuries. And lowering risk in these areas is essential. Remember, though, any dollars you spend to improve safety will come back to you in the form of lower insurance premiums. (There will be a long laundry list of areas for you to address: from making sure you have adequate ventilation systems in your shop to taking precautions to protect office staff from ailments such as carpal tunnel syndrome. One essential liability issue to never forget: no customers in the shop. Under any circumstances!)  
Another insurance issue you should be thinking about is whether you need any special coverages beyond the standard package policy and jewelers’ block, which covers your stock and your customers’ property when it’s under your control. Here are some types of coverage to consider: 

> Professional liability coverage. This type of coverage should be considered by stores that do extensive repairs or cleaning or body piercing. Liability suits in such situations can put a major dent in your business ? for example, if you crack a customer’s $15,000 diamond during a routine cleaning procedure, you would likely be held liable for the cost of replacing the entire diamond. Tell your broker about exactly what services your store provides and the safety precautions it takes. This will help you select appropriate coverage at the best rate. Professional liability premiums can range from $500 to $2,000 per million dollars worth of coverage annually ? depending on the services you provide, your location, size and history of past losses.  


> Business interruption insurance. This special coverage is designed to your losses if you have to shut down. For instance, if a fire or flood forces you to shut down for two weeks during the Christmas season, you could lose say, $20,000 in sales. Business interruption limits can be structured around peak seasons. For instance, you might have $20,000 per week of coverage during the Christmas season and the two weeks before Valentine’s Day and $7,500 per week the rest of the year. Prices for business interruption insurance vary according to the limits you choose.  

> Contingent business interruption insurance. If you are dependent on a particular vendor or manufacturer, you could consider contingent business interruption insurance. This might seem like overkill to some, but remember the Chicago fire a couple of years ago that closed down several major manufacturers for a long period. This type of insurance would cover the income you lost because your vendor had to shut down. What would you have sold had your vendor been able to deliver the arranged items? To calculate this loss an adjuster would take in to consideration the extra expense to you for using another vendor and their price variations. Another thing to consider is the time lost that to replace that vendor. This limit is usually set as actual lost sustained, meaning you must prove the amount lost by reviewing last years records at the similar time of the year’s sales. 

Managing insurance and safety is vital to your store’s future. But with the help of your broker and perhaps a loss-control professional, it shouldn’t be too painful. It just takes commitment.



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