What to watch for when renewing business insurance

Don’t just renew your business insurance without thinking! Your business and business environment are constantly evolving, so your insurance coverage should reflect those changes. Here are 10 things to check before renewing your business insurance policy.

1. Is my policy right for my type of business?

Businesses’ insurance needs can vary widely from one industry to another. Should you insure against operating losses in the event of a fire? Building contractors can probably continue working on their construction sites even if there is a fire at their administrative offices. But for retailers, the financial impact of a fire can be catastrophic.

Many factors affect a small business’s coverage needs: its business volume, where it’s located, the building or facility it occupies, the equipment it uses, the risks it exposes its employees and customers to, and its vulnerability to potential natural and man-made disasters. These factors vary widely from one business to another, so business insurance has to be custom made.

2. Do I have an accurate appraisal of the business’s assets?

Insurance should enable you to quickly replace damaged or lost property with an equivalent new item. That makes it essential to estimate the real replacement cost of the assets the business uses. Be careful! It’s not the book value or the actual purchase price of the items, it’s their replacement cost. For example, a machine’s retail price may have changed at a different rate than the index provided in your last insurance contract. And if the machine was made overseas, exchange rate fluctuations may have exacerbated this change. That’s why it’s important to check on all replacement costs.

3. Is a professional appraisal required?

If the business owns an older building, you have to estimate the rebuilding cost, which has very little to do with the building’s value on the real estate market. This is a situation where a professional appraisal can help make sure the building is insured for the right amount.

4. Did the business move or open a new location?

Every physical space presents its own risks. A move, a new office, or a new point of service is sure to have an effect on what coverage the business needs.

5. Is my primary establishment properly covered?

While some risks are automatically covered by insurance policies, others have to be specifically requested. Your business site could be affected by sewer backups, floods, or earthquakes. It is important to consider whether you want to add protection against those risks to your policy. In the event of damage, would your insurance be enough to temporarily relocate your business or even rebuild if you had to? If you experienced a business interruption, how long before your insurance would cover you?

6. Have I installed an alarm system or taken measures to protect my property against theft?

Adding an alarm or security system can protect your property against intrusions that could lead to financial losses for your business. This protective measure could also help you save on your insurance premium.

7. How have my business activities changed?

Every organization’s activities change over time. Adding new products and services may require adjustments to your coverage. An air conditioner retailer who begins offering maintenance and repair services becomes exposed to more liability risks. Similarly, an ice cream shop that decides to sell fries so it can stay open all year must inform its insurer to cover the risks related to the deep fryer.

8. Did we hire new employees?

Hiring more staff usually means the business is growing. Even with the same number of employees, a business may have created positions to add new types of jobs that don’t have the same third-party liability risk profile.

9. Are my goods insured during transit?

Manufacturers, wholesalers, and retailers who deliver goods would be wise to check that their insurance also covers transportation of those goods. If a truck full of furniture or household appliances gets in an accident at the beginning of its delivery route, the financial losses can be considerable.

10. Should I cover specific risks?

Every case is different. Your business may run a specific risk that would warrant an endorsement on your insurance policy. For example, a contractor who uses his equipment on work sites can ask for an endorsement to cover the equipment anytime, anywhere. It may be possible to cover its full value under certain conditions. Your insurer can tailor your coverage to your particular situation. Ask for advice on what specific protections are available.