What Is Key Person Insurance?
Your construction company has spent years developing a reputation for being professional, reliable, and honest. Your ability to meet deadlines and get projects done on time has secured you private work that keeps your business going all year round. Much of this success is due to your senior field supervisor who has the complete respect of every one of your crews, and always makes a positive impression on your clients. Then one day your senior field supervisor decides to quit construction and retire to Florida. Now what do you do?
What Is A Key Person?
The senior site supervisor in this example is referred to as a “key person” in your business. In most cases, a key person either has a strong public persona or regular contact with clients that allows them to develop a reputation. Their good work and professional results make your company look good, but those results are usually tied directly to the efforts of the key person. When that key person leaves your organization, the impact is immediate and potentially catastrophic.
The Different Scenarios
A key person leaves your company in scenarios that include:
- Leaving the industry
- Permanent disability
- Working for a competitor
While it can be damaging to have your key person go work for the competition, all of these scenarios will do serious damage to your company’s reputation. When that damage starts to affect the bottom line, that is when the real problems can begin.
The Problems This Causes
The damage that is caused by losing a key person in your company is immediate and can be catastrophic. Some of the more devastating issues include:
- Lost clients
- Difficulty in hiring new workers
- Strained relationships with vendors and clients
- The loss of exclusive contracts
- Public loss of faith in the company
Your company may have found it difficult to get mentioned in the media in the past, but the loss of a key person could be considered big news. Thanks to the Internet and social media, the loss of your key person will become common knowledge before the week is out and that is when the problems will start.
Protecting Your Business
When you run your business, you rely heavily on the key people that are an important part of your organization. You never think of what could happen if those key persons were to leave your company, but that is exactly what should be crossing your mind on a daily basis. It can become difficult to trust the people who work for you when you fear that they could become an integral part of your company and then leave, but your business does not function without key people.
As a risk management organization, we are able to set up different ways to protect your business in the event that a key person leaves. We provide a complete program that will analyze your business, identify your key persons, and then put programs in place that will protect your business if one of the key people leaves. Loss of income insurance for the immediate impact and even life insurance to help the company continue if a key person should pass away. If you do not have a professional risk management company helping to protect your business from the loss of key people, then you are not preparing for the future.