A well-dimensioned insurance program encompasses several types of insurance and enables a company or corporation to continue with its industrial or commercial activity in a perennial, continuous and protected manner, against risks that may result in material, physical and financial losses, putting at risk its profitability or even its existence.
It is important to highlight 3 concepts when we discuss insurance:
This is a random, accidental event that may or may not occur, or even if it is certain to occur, we have no way of knowing when it will occur.
This is a process in which we are able to identify, evaluate and create the best alternatives to avoid or minimize the occurrence of a harmful event to the operation/existence of the company.
One of the alternatives to minimize the impact that an event can have is the transfer of risk. At this point we are talking about contracting an insurance policy. It is a contract established between the insured and the insurer, where upon payment of a certain amount (insurance premium), the insurer will assume a series of risks pre-established in the contract (risks covered). An insurance policy does not prevent the occurrence of an event, but it does allow the company to receive the compensation if it occurs and to continue its operation.
There are three types of insurance
Damage insurance – aims to cover the company’s assets against the most common risks: Fire, lightning strike, electrical damage, qualified theft or robbery, external cause damage, landslide/disappearance, flooding, gale, hail, etc.
Personnel Insurance – aims to cover employees and/or employees, against accident resulting in death or disability, insurance against disease, health insurance, natural death, dental insurance, etc.
Liability insurance – its purpose is to cover any obligations that the company has to comply with to repair damages/accidents caused to third parties on account of its operation. In many activities the damage caused to a third party can be much greater than the damage suffered by the company itself, leading to a situation of bankruptcy or financial inability to continue existing.