As a responsible business owner, there are some things that you need to do every year. One of those things is to make sure your insurance coverage’s are still relevant to your ever evolving business.
Many business owners get complacent and have no idea how under insured they are. They have had their policies in place for 15 to 20 years with the same coverage they had when they were working out of a small office, with a desk, one computer, and some generic bookcases. Now they’re up to 25 employees with workstations and more updated office equipment. Just as a business can be under insured, it can also be over insured. Your company may have downsized, laying off employees, or may have moved to a smaller building or office space. This all affects your coverage & costs.
Most small businesses start out with very basic insurance coverage, usually a general liability policy and a commercial property policy, often times sold together as what is known as a B.O.P.– business owner’s policy. But as companies grow, other types of insurance become important, such as the following:
♦Workers’ compensation insurance: Required in many states once a business employs a certain number of people; provides payment for medical expenses and lost wages when employees are hurt on the job.
♦Professional liability insurance: Covers mistakes in service provided by the insured, and typically pays the fees of defense attorneys.
♦Hired and non-owned auto insurance: Protects a company if an employee causes an accident while driving a rented or personal vehicle.
♦Umbrella or excess liability insurance: For claims that exceed standard policy limits.
♦Employment practices liability insurance: Provides coverage for HR issues such as violations of discrimination, harassment and termination laws.
When you conduct your annual insurance review, be sure to ask your agent or broker whether you need any of the following policies:
♦Location: Has your business moved, added or closed locations? Rates for your general liability or business owner’s policy could change depending on whether your total square footage has increased or decreased, where your new facilities are located, or what class of building you’ve acquired.
♦Business property: Have you purchased or eliminated computers, equipment, office furnishings and supplies, or add completely new items or other property? You may need to increase or decrease your commercial property policy limits. It is possible that your existing policy does not offer sufficient coverage for the new equipment and that your limits or exclusions need to be adjusted. Also, you need to find out if you are being reimbursed for replacement value or actual cash value. When you have hard-to-replace equipment, an actual cash value reimbursement may not be enough to make you whole and help you replace the equipment if it is damaged or stolen.
♦Employees: Has the size of your workforce increased or decreased? The size of your workforce can determine whether you need workers’ compensation insurance.
♦Revenue: Have your company’s annual sales increased or decreased? The more business you do, the greater potential liability you face.
♦Vehicles: Business owners should also consider any changes that have been made to the vehicles used for their business. If a new vehicle has been purchased for the business, you may need to increase the limits on your policy in order to protect its value fully. Or, if your company vehicle has lost value during the year, you may want to lower your auto policy limit in order to accommodate its reduced value. This will also reduce your premium.
♦Services: Are you offering new types of services? You may need to add endorsements to your general liability policy to cover certain types of work.
♦Clients/Customers: Are you serving new industries? Some professional liability insurers do not like it if your business is overly concentrated in servicing certain high-risk industries.
♦Travel: Are your employees on the road more in rented cars than in their own cars? If so, you may need “hired and non-owned auto” coverage.
If you haven’t been reviewing your insurance coverage each year, start now. There’s little to be gained by carrying the wrong types or amounts of insurance and potentially much to be lost. An insurance policy can only offer effective protection when the insurance company actually knows what it is that needs protecting.
Call Motz-Rusin Insurance Agency today at 760-564-3888 or go to www.MotzRusin.com for an Annual Review and to discuss any of your insurance policies.
This article is for general informational purposes only and does not provide details of what you need to do to protect your assets.