In order to be successful in business or personal life, there are some things that you need to do consistently every year. The first is to create, or update, your personal or business plan and financial projections. Next, you need to develop or create your business or personal marketing plan. Third, you should pay your insurance premiums.
But paying your insurance premiums annually should not be a knee jerk activity because before you make those payments you should review your insurance policies and make sure the coverages they offer are still relevant to your ever-evolving company.
Why review your policies?
Because you are involved in the day-to-day activity in your business, you may not realize all the small changes that can occur which will affect your insurance policies. One of the most overlooked changes is the addition of new equipment which has been purchased for the business. Whether you upgrade your existing equipment and supplies or add completely new items to the roster, you need to notify your insurance company of these changes. 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. In addition, you need to find out if you are being reimbursed for actual cash value or replacement 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.
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. Conversely, 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—usually a very welcome concept to business owners.
Another consideration you should make when evaluating your business insurance each year is the addition of coverage for any new business ventures that have developed. Just because you have liability, auto and other relevant insurance coverage for your main business venture, that doesn’t mean that all other business ventures you enter into are adequately covered. New lines of business could pose increased risk to the insurer and may even have certain facets that need additional endorsements for your policy.
So before you write your policy premium checks each year, take a look at your policies and note whether or not there have been any staffing, equipment, or process changes that would affect any of them. After all, an insurance policy can only offer effective protection when the insurance company actually knows what it is that needs protecting.