Property-liability insurance Research Paper Example | Topics and Well Written Essays - 1250 words

Property-liability insurance - Research Paper Example Different insurance plans are needed that not only save the owners from many problems in future but also to satisfy the requirements of government regulatory offices and in acquiring loans from commercial banks. Property, general liability, workers’ compensation, automobile liability, liquor liability, life insurance, loss of business, food contamination, and specific peril insurance are the most commonly used contingency plans available. We will discuss these options one by one in length. Firstly, all business owners are required to have property insurance. A small amount of annual premium is paid to the insurance company against a full coverage from incidents like fire. One such incident can bring everything to ashes. National Fire Protection Association reports that fire related cases are the second highest cause after arson and constitute 14% of the total number of commercial fires in the US from 1999 to 2002 (Patrick, Nolan. 2008). Secondly, general liability insurance pl an protects from claims like ‘slip and fall’ or when a customer gets sick after eating food. Although it is named as ‘general liability’, business proprietors deal with such cases on a regular basis. Centers for Disease Control (CDC) reports that there are 25,000 food related shipments arrive per day from 100 different countries. Food and Drug Administration department manages to inspect only 1% of them (Patrick, Nolan. 2008). Therefore, food borne illness is on the rise more than ever. It makes imperative to have a general insurance plan. Beside an insurance plan that covers food borne illnesses, business owners should be careful about the inventory suppliers, technical specifics to store perishable items e.g. minimum required temperature for walk-ins and so on. Thirdly many states, like Texas, require restaurant owners to acquire liquor liability insurance. It responds to different liabilities cause by selling or serving liquor in the premises. For exampl e if some drunk and gets involved in a fight than the serving party is responsible. The worst scenario is when someone gets intoxicated, drives away, and involves in a traffic accident. Fourthly, if a worker gets injured while at work then you need worker compensation insurance. Let’s understand the importance of such liability plan with the help of a practical scenario. Suppose an employee is driving a company truck and gets cornered by another vehicle. As a result, the employee gets seriously injured. Now who compensates the employee? Since the party at fault carries worker compensation insurance so the claim will be settled down by the insurance company no matter how much it is. However, the annual premium goes high and thus affects the employer to a great deal. Fifthly, Life insurance is another optional plan that the owners may consider for themselves. In case of the owner’s demise, the heirs may not have enough to pay for his debts. In this case the business will be possessed by the lender. Many multinational companies and corporations offer this plan to their employees also. But it costs a hefty amount to the employer in terms of premium. An employees’ death on the premises raise claims, then life insurance plan addresses such liabilities towards the employer. Sixthly, Loss of Business insurance

Efficient Management of Cost Centers in an Organization Research Paper

Efficient Management of Cost Centers in an Organization - Research Paper Example EVA accepts that capital is not available for free and imputes a notional value on the capital used by a business unit after considering the inherent risk involved in a business and the weighted average cost of total capital employed in the business. The earnings for the year are then examined in detail and any unusual or abnormal earnings and expenditures are removed to derive the normal earning for that year. If such adjusted earning is more than the cost of capital, the organization has created value; else, it has destroyed it (Grant 2003). Thus, EVA encourages managers to increase operating profits without injecting fresh capital, finding avenues for investment that would generate higher returns and reallocating funds from less profitable ventures to ones that are more profitable. This approach does not depend merely on the proper management of the balance sheet but also on the level of efficiency of an organization. If the balance sheet is not properly managed, a company might c arry a lot more capital than it actually requires thus unnecessarily increasing the desired levels of operating profit that would just match the weighted average cost of capital. Again, if the company is not run efficiently it would not be able to earn sufficient operating profits so as to qualify as a value creator. Definitions of cost centres vary from country to country and it would be worthwhile to investigate how cost centres are perceived in Germany and the United States. In Germany, Grenzplankostenrechnung (GPK), a common approach to cost accounting in that country, defines a subunit of an organization as a cost centre if the output of that subunit can be measured by a single unit.