Reminds of the time a semi-truck had an accident in Napa valley, and killed two grape vines.
Just two.
Apparently a grape vine at a winery is worth $50,000 each…
That was cheap. His insurance got away easy.
Here are some of my notes and thoughts on insurance, why, and the costs and benefits.
If you decide not to insure your business operations, drones aside, you need to reevaluate your business viability under a self-insured financial platform.
And, you’re really taking fate into your own (your business’s) hands. A foolish move for the savings of a few bucks. Small, medium, and even large businesses leverage their money with insurance.
A few points of note to risk/ reward of insurance:
1. KNOW YOUR RISK: If you operate as a “sole proprietor,” as your business structure and filing status, your assets are ALL, business and personal, completely at risk of loss. Know your risks.
2. PAY ATTENTION: This is important: If you are structured as a business entity, and are appropriately insured, if your actions are considered fraudulent, negligent… etc. godforbid, criminal; the plaintiff(s) can move to pierce the “corporate veil,” and access ALL personal assets to fulfill the judgement(s) of the court.
Reason it’s important: Many comments are very cavalier here about mitigating their financial risk; whether it be personal or business, or a mix of both (sole-proprietor). If you are operating a drone today, the risk of loss far exceeds any gain on premiums, or the cash retained by lack of payment of them. And if you don’t believe that it’s time to step into 2023.
A small accident or event can turn into real losses very quickly.
What does loss mean: What is “real” loss? You may or may not know this yet, but if you are “a business,” acting like one using a DBA, or have an individual business entity structure, you, or you as a business operator/owner, will experience some type of loss in the normal course of what you are doing. You will lose a drone, have a small accident, cause repairable / acceptable damage to other property, or possibly (but hopefully never) cause damage and/or death in a large or catastrophic accident due to some event, action, or even decisions (yes, decisions count if you’re the boss).
So you, or your business, can/could/may survive any of these, and many small ones, possibly and depending mostly on your personal and business financial capacities. If your liability, personal or company or both, is found to be $5k. Is that a problem?
Can you pay it outright? Would you have to borrow to pay a $5k, or $15k, liability? If the answer is no, I can’t pay that, it could become a real problem. How heavy will that debt hang on your finances?
Let’s say you have an accident that injures you, and an on-site worker. They sue you and your business. The judgement is $152k for property damages and the injury settlement with Workman’s Compensation Insurance, and the short term disability insurance company. All of this, since you’re self-insured, is handled by your attorney who’s fees are additional, and expensive. But, the loss we were discussing: The worker hurt was your brother-in-law, who referred you for the small, easy, gig. He didn’t work for three months and will have some irreparable damages. (This is a made up scenario for obvious reasons)
Can you pay the judgement? If this causes pause, it should. Will it happen? Probably not, but, are you willing to roll the dice with any accident; any personal injury? Of course not. Do we want to have a self-insured line item in the balance sheet? Of course not! That could be money on the capital improvements line, or possibly the addition of another body to your operation. But,…
On another whole level, there is an injury to a person. Not life threatening, but very possibly life changing for the victim? Family, friend, or stranger, those things can weigh on your mind.
Let’s hope, pray (everyday), and assume that you will never have an event that is deemed to be your responsibility, that will involve a major accident, severe injury, or death.
But, again, are you prepared? Could you cover even one major stay in a hospital for a victim? Easily $250k to $500k for a few days and a surgery. If it’s worse, raise the stakes with the severity.
So, it must be said that insurance is designed to mitigate “possible” expenses and liabilities; on any scale. So, there are rates, which allow us to scale up or down, as needed.
Let’s say $1M liability is $18/mo. To self-insure the same liability you can get actuarial tables to help you invest correctly into your insurance account. What? No insurance account? But you claim “self-insured.”
3. What’s the big deal? Remember the reasons why you are at risk as a business owner or operator; or an individual person?
One was negligence.
Do you drive a truck or car? Any other moving object? Do you have operators insurance on the vehicle? Why? Because it’s worth the money for the protection from negligence, or accidental damage or injury. In most states, it’s also illegal.
No insurance on your drone operations; negligent?
Business insurance, or personal liability insurance (also typically called an “umbrella” liability policy), are the same. You know there is risk. It’s your determination whether or not you take appropriate steps to mitigate and control expenses and liabilities. If you know there are risks, and you discard any services (insurance) to cover you and/or your company, if applicable, then you may open the possibly to be accused of negligence. Possibly worse.?!
So, as an individual or a company, the outcome is the same.
We insure what we spend
our planning hours,
our learning hours,
and our nervous hours,
working so we, hopefully, never hear that we may have made a decision or action that will change someone’s life; whether it be a physical victim, a minor accident that precedes a major event, or an event leading to a death.
We insure to avoid loss. Anyone’s loss. Including our own personal well-being, that of our company or employees, or our personal or corporate financial health.
It’s not always a financial decision to insure. It’s a decision that reasonable, responsible people make after weighing the risks versus the savings.
It is not worth the worry, or stress, of financial responsibility to self-insure, unless you are extremely wealthy.
Example: This is horrible to read, but it is real. A gentleman went to the park with his son. A good dad! They were taking turns sharpening their RC helicopter skills for a future competition. The father was the OP and was asked by the son to invert hover (fly upside down). The father obliged, but as the copter started to invert it “slid” in a horizontal line and totally inverted just before it hit his son, blades forward, in the neck and decapitated him.
Think that stuff doesn’t happen? This isn’t fake news!
Think your drone can’t cause serious injury, damage, or a major event?
Think again.
What if it had been another kid in the park? Are you prepared? That is real world.
IMO, only my opinion, but uninsured, or thinking you are self-insured, are both similar methods of achieving very small savings by risking your personal and/or business future and financial health.
Just some thoughts on drones, insurance, and longevity of it all.
Godbless. Please take no offense to anything in my opinion. However, use it as food for thought.
I look forward to your comments!
T
