It’s Time for an Insurance Health Check!
The end of financial year is a time for people to plans for the new financial year ahead.
It’s also a great time for business owners to take stock and do a bit of planning for the business, including the goals and the direction of the business and ensuring financial and risk management strategies still meet the needs of the business. While you’re doing this it’s a great time to review your insurances to ensure your cover also still meets the needs of your business. Here are a few considerations around insurance you may want to consider in line with your review.
Are you in growth mode, looking to expand, acquire businesses? Grow sales? Perhaps the business has already grown over the last year or so and you’re at that stage of where you want the business to be?
Any changes in your business mean that there may be considerations for your insurance. Firstly, do you have the right types of cover and levels of cover? For example, if your business is growing and your level of exposure increases you may need to consider increasing the level of public liability insurance that you hold. Are there statutory requirements you need to meet (certain contracts may have minimum levels to meet)? Does your landlord require different limits?
Have you added new business activities to your repertoire since you last took out your insurance? If so you may not be insured for these, it’s worth checking to ensure your cover is complete. On the flip side if you have stopped doing some lines of work, you may be over insured!
And finally, it’s worth doing a quick review of your policy to understand exactly what your covered for so if you do need to make use of your policy there are no nasty surprises. Some things to include in your review are:
Endorsements – does your policy have any endorsements? Or does it require any endorsements? An endorsement modifies the policy by adding or excluding coverage for something that is not standard.
Reinstatements – does your policy have reinstatements? If you make a claim (or series of claims) and your Limit of Indemnity is reached, a “reinstatement” resets your Limit of Indemnity.
For example, if your policy has $1 million limit of indemnity and no reinstatements, and you make two claims totalling $1 million within the same policy period, you will need to wait until your policy anniversary for your Limit of Indemnity to be restored and to make a new claim.. But if your policy has 1 reinstatement it means that after your two claims, your Limit of Indemnity will be restored once more, allowing for future claims. Policies vary and may offer no reinstatements, 1 or 2 reinstatements or even unlimited reinstatements. Understanding this will help you understand the true value of your cover.
The insured name – have you changed the name of your business? The insured name is what ‘covers’ the business so make sure you’ve got the correct name for your cover.
Continuous Cover – is your policy a claims made policy and does your policy offer you continuity of cover? Under your obligations you need to disclose any circumstances that may lay rise to a claim. Continuous cover extends cover should a claim arise out of a circumstance you innocently failed to notify under a previous policy (note you need to be continuously insured with the same insurer to qualify for this).
Retroactive Date – the retroactive date is the date which your cover effectively commences, regardless of who you were insured with before. This is an important one as some insurance is written on a claims made basis, which means that the policy provides cover only for claims made during the policy period. Having a policy with retroactive cover means you will be covered for claims made for circumstances you were unaware of before the policy period commenced (and after the retroactive date).
This may all sound like a lot to think about but a quick check in on all of the info above can make sure your business is insurance fit for the upcoming challenges your business faces!
This is general advice only.