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Governments own and manage a wide range of public assets, from buildings and infrastructure to vehicles and equipment.
Protecting these assets is vital for ensuring the continuity of essential services and the safety of the public. That’s where government insurance comes in.
In this post, we’ll explore the different types of insurance available to public entities, why they’re important, and how to file a claim if something goes wrong.
What Is Government Insurance?
The purpose of government insurance is to provide coverage that safeguards public assets and resources against potential losses and hazards. As a government agency or entity, you should consider the potential risks that you face and ensure that you have adequate insurance coverage in place to mitigate these risks.
One of the most significant benefits of government insurance is that it can help to ensure that essential public services are not interrupted in the event of an unexpected loss. With insurance coverage, you can be confident that you will be able to quickly recover from a loss and continue providing the services that your community relies on.
Government insurance can also help to protect your agency or entity from legal liability. Liability insurance can cover the cost of legal fees and any damages awarded in court if your agency is found to be responsible for injury or property damage.
Moreover, it is imperative to recognize that government agencies are also not immune to advanced cyber-attacks initiated by bad actors. Cyber insurance can help to protect your agency from losses resulting from data breaches, network interruptions, and other types of cyber-attacks. This becomes more relevant with a surge in the number of cyber-attacks in recent years.
The State of Ransomware in State and Local Government 2022 report reveals that ransomware attacks have become a growing threat to government organizations, with 58% of state and local government agencies being hit by these attacks in 2021. This marks a substantial rise of 70% compared to the previous year.
The rise of ransomware attacks highlights the need for government agencies to have comprehensive insurance coverage to protect their public assets and resources. To mitigate the risks, nearly 80% of state and local government organizations have acquired cyber insurance coverage.
Hence, government entities need to assess their risk and ensure that they have adequate insurance coverage in place to protect against losses from cyber-attacks.
Types of Insurance for Government Entities
There are several types of insurance available to protect government entities from potential risks and losses. These policies can include property insurance, liability insurance, workers’ compensation insurance, and cyber insurance, among others.
Understanding the different types of government insurance available can help you assess your risks and ensure that you have appropriate coverage in place.
Property insurance is designed to protect government-owned assets, including buildings, equipment, and vehicles, against damage or loss from events such as natural disasters, theft, and vandalism. Property insurance can help you stay confident that you will be able to quickly recover from unexpected events and continue providing essential services to the public.
Government entities can obtain liability insurance coverage to safeguard against claims of negligence, injury, or property damage. This insurance can cover the expenses of legal defense and any compensation awarded by the court. Liability insurance can ensure that your government entity is protected from potentially significant financial losses.
Workers’ compensation insurance is designed to offer protection to government employees who suffer work-related injuries. This coverage provides benefits such as medical treatment, wage replacement, and disability compensation to aid injured workers in their recovery and facilitate their prompt return to work.
The U.S. Centers for Medicare & Medicaid Services reported that the National Health Expenditures (NHE) reached $4.3 trillion in 2021, equating to $12,914 per person. The report also highlighted that Medicare spending grew to $900.8 billion, accounting for 21% of total NHE and an increase of 8.4% from the previous year.
As a type of government insurance, healthcare insurance, such as Medicare and Medicaid, is essential for providing affordable healthcare to citizens. With the increasing cost of healthcare and rising NHE, government entities need to have effective healthcare insurance policies in place to ensure that healthcare services remain accessible to all citizens.
Importance of Insurance for Entities Collaborating With Government
Entities that do business with the government, such as contractors and vendors, face unique risks and liabilities that require specific insurance coverage. The importance of insurance for government contractors cannot be overstated, as it can protect businesses from financial losses and legal liabilities that may arise from government contracts.
For government contractors, having professional liability insurance is a vital insurance policy. This insurance coverage can offer protection against allegations of professional negligence or mistakes made during work. By obtaining professional liability insurance, you can secure your business against possible legal expenses and compensation resulting from errors or omissions in your work.
General liability insurance is another essential insurance policy for government contractors. It can provide coverage for third-party bodily injury and property damage claims that may arise during your work. This coverage can help you avoid costly out-of-pocket expenses and protect your business from financial loss.
Government contractors may need to consider surety bonds, which are financial guarantees that the contractor will fulfill their contractual obligations. Surety bonds assure government agencies that the contractor will meet their obligations, and they can also offer protection to the contractor in the event of contract disputes or non-payment.
The U.S. government is the world’s largest customer, awarding billions of dollars in contracts each year to a variety of businesses. However, with the potential for financial losses and legal liabilities that may arise from government contracts, entities doing business with the government must ensure they have the appropriate insurance coverage in place to protect their business.
According to the information available on the website of Sahouri Insurance, an insurance consulting firm, the U.S. Government awarded $637 billion in government contracts in the fiscal year 2021 alone. The importance of insurance for entities doing business with the government cannot be overstated, as these businesses face unique risks and liabilities that require specific insurance coverage.
The Process of Filing Government Insurance Claims and What to Anticipate
When you need to file a claim with government insurance, you need to understand the process and what to expect. First, you should gather all relevant documentation related to the incident or loss, such as police reports, witness statements, and receipts for any expenses incurred. Then, you can contact the government agency or insurer to initiate the claims process and provide them with the necessary information.
Depending on the type of insurance and the complexity of the claim, the process can take some time. You may need to provide additional information or documentation, and there may be an investigation into the incident or loss to determine eligibility for coverage.
You also need to understand the limits of government insurance coverage. While it can provide protection for certain types of losses, such as property damage or liability claims, it may not cover all types of incidents or losses. You should review the terms and conditions of your policy or coverage carefully to understand what is covered and what is not.
As per the Federal Bureau of Investigation (FBI), the insurance industry is massive and generates over $1 trillion in premiums annually, with more than 7,000 companies operating in the sector. However, the extensive size of the industry leads to a higher incidence of fraud and illegal activities, resulting in a substantial cost to the economy.
In fact, insurance fraud (excluding health insurance) is estimated to cost more than $40 billion each year, with the average U.S. household bearing the burden of $400 to $700 annually due to increased premiums. This is significant information to keep in mind while filing for government insurance claims, as fraudulent activities can hamper your chances of receiving compensation for legitimate claims.
Government insurance plays a crucial role in safeguarding public assets, ensuring that governments can continue to serve their constituents even in the face of unforeseen circumstances. From property damage to cyberattacks, various types of government insurance can protect against a range of risks.
However, you need to note that filing insurance claims can be a complex process, and it’s essential to be aware of the steps involved and what to expect. Moreover, insurance fraud is a serious concern in the industry and can have far-reaching consequences for both individuals and businesses.
By understanding the importance of government insurance and taking steps to prevent fraud, governments can ensure they are well-prepared to handle any challenges that come their way.
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