You should never consider that your insurance is complete. There will be various changes to your business that can have an impact on your insurance coverage. Only through proactive, regular evaluation can you know if you have the right coverage for your business.
So what are the main reasons why you need to regularly evaluate your insurance coverage?
If you stay in business long enough, your business operations are likely to see both growth and decline periods in part or all areas of your business. This can cause you to have varying levels of risk as well as potential gaps in your insurance coverage. If your operations are in decline, you may be over-insured and paying a higher premium than necessary.
If your business has grown, then your coverage might be insufficient to fully protect you in the event of a loss or claim. This could spell financial disaster for your business. And the whole point of insurance is to protect you for those “What if?” moments in business.
Your business has numerous threats to its existence. Some of these will include claims that could potentially be made against you. For example, if you have changed roles from a professional who provides advice, whether that be medical, accounting, legal, architectural or engineering/building advice, to include becoming a business who creates and supplies a product to your clients (ie., a cosmetic surgeon who sells their own scar cream), then your business faces new potential claim threats professional liability for giving the wrong advice to product liability. If you haven’t reviewed and updated your insurance to cover this new threat, then you open your business and possible you self, personally, to be financially responsible for any claims, including the cost of legal counsel and defense.
Insurance will only cover your assets as you described them when you first purchased the insurance policy. If you’ve added new equipment, or updated your computers or server, then these won’t be covered appropriately or at all, and if there should there be an accident at your workplace, then you will need to take financial responsibility for any gaps.
Sometimes you might be paying for insurance that is no longer required by the company. An example is when an employee leaves your employ and you do not update this change with your insurance agent. This had actually happened to a client of ours and in certain circumstances even we as agents can be limited in what we can do to help rectify the situation. There are laws and we all must play by them. By checking that your policies are still required and up-to-date, you can reduce costs and reinvest this overpayment in other areas of your business. This happens all too frequently when businesses do not accurately complete their Workers Compensation insurance audit. Unnecessary overpayments hurt businesses. And a good, pencil-sharpening agent can help immensely.
Laws and regulations are changing all the time. Therefore, you might need to reassess your protection regularly to ensure that it complies with the latest legal codes and that you have taken on the correct legal protection.
When was the last time you checked your coverage? When will you do another check?
Let us know in the comments below.