The Risks Private Reinsurance Commonly Covers

Commercial policies are written for broad, common perils. Much of what can actually hurt a closely held business sits outside them. Private reinsurance programs are written for those gaps.

This is a reference list of forty coverage lines. Which ones apply to your business depends on a formal assessment by an independent licensed actuary. Your commercial policies stay in place.

Ten lines owners ask about first

1. Administrative and regulatory actions. Costs of responding to an agency inquiry, investigation, or enforcement action.

2. Reputational risk. Lost income and response costs after an event that damages the business's name.

3. Regulatory changes. Financial loss when a change in law or regulation disrupts how the business operates.

4. Cyber liability. Losses from a breach, ransomware event, or system failure beyond what a commercial cyber policy covers.

5. Legal expense reimbursement. Defense and dispute costs that other policies do not pick up.

6. Loss of key employee. The financial impact of losing a person the business depends on.

7. Business interruption. Lost income when operations stop for a covered reason, including causes commercial forms exclude.

8. Contingent business interruption. Lost income when a customer's or supplier's shutdown stops your operations.

9. General liability: difference in conditions. Coverage for gaps and exclusions in the commercial general liability policy.

10. Directors and officers liability. Claims against the people who run the company for decisions made in that role.

Thirty more

People and employment

• Employment practices liability
• Wage and hour violations
• Workplace violence
• Work stoppage or slowdown
• Fiduciary liability
• Management liability (combined)

Customers, suppliers, and contracts

• Loss of key business relationship
• Loss of key supplier
• Supply chain interruption
• Contractual liability
• Subcontractor default
• Collection risk and bad debt
• Trade credit
• Credit default

Products and operations

• Product recall
• Product or service rework (warranty)
• Mechanical breakdown: business interruption
• Equipment and inventory, including inland marine
• Property: difference in conditions
• Environmental and pollution liability
• Communicable disease liability

Professional, legal, and financial

• Errors and omissions
• Loss of license
• Tax audit defense expense
• Financial reporting errors and omissions
• Intellectual property liability
• Advertising and media liability
• Lenders legal liability
• Crime and employee dishonesty
• Political risk

What usually stays with commercial carriers

Primary general liability, property, auto, and workers' compensation normally stay with your commercial carriers. Catastrophic risk generally belongs there too. Private reinsurance can add difference-in-conditions and excess coverage around those policies. It is not built to replace them.

How coverage is chosen

No business needs all forty. Under The Latitude Plan, an independent licensed actuary reviews your financials, operations, and existing coverage, identifies your uninsured and underinsured risks, and recommends premiums. A licensed third-party carrier underwrites and issues each policy. Premiums are priced to real, identifiable risk.

Industry matters. A contractor's list looks different from a dental practice's. See Industries for examples by sector, and the Risk and Coverage FAQ for how the plan layers with commercial insurance. How It Works covers the full process.

See it in one hour

Book a one-hour presentation of The Latitude Plan. Your CPA or attorney is welcome on the line.

This article is for educational purposes only and is not legal, tax, or financial advice.