Why business insurance must be reviewed every year

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You’ve read all the articles, you’ve reviewed all the available policies, and you’ve done the smart thing and acquired business insurance. You’re good to go, right? You can just hold your policy until the end of time (or the transfer of your business) and never worry about it again.

Not so fast.

It’s important to review your business insurance on a regular basis to keep an eye on potential changes, discounts, and coverage solutions. You need to make sure that you have the right amount of insurance as your business develops and grows. Since most policies renew annually, it makes sense to review your insurance as you come up to your annual renewal date. This makes changing any policies easy and efficient.

Why is reviewing your insurance important?

Since most people are more familiar with car insurance than business insurance, let’s do some comparisons. When you buy a brand-new car, the insurance is usually more expensive. You might choose more complete coverage, including warranty extensions, insurance against non-payment of your car loan, or insurance for your windshield and windows.

Then, as a car ages, most people find their premiums drop. They pay off the loan and no longer need the financing insurance. Their car gets older and has a few dings and scratches, so paying for a higher level of comprehensive coverage doesn’t make as much sense.

“With your business, there are similar issues,” says Sam Meenasian, Director of Operations of Business Insurance USA. “You choose one level of insurance when your business is just starting out, based on what you are doing at that point in time. Over time, your business expands, and you might need to expand your coverage.”

If you don’t review your policy regularly, you can find yourself either overcovered, and paying too much, or undercovered, and too exposed when disaster strikes.

What should you look at with your insurance agent?

When you sit down with your insurance agent, it’s a good idea to have a comprehensive picture available about what has changed with your business from last year to this one. What has happened to your anticipated revenue? Do you have more employees? Have you opened a new location?

Ask questions of your agent. If you’ve been with the company for a length of time, do you qualify for a discount based on your time as a client? Would you get a lower rate if you joined any of the professional organisations in your state or county? Does the company offer a discount to mentors or community volunteers?

Perhaps you have more online business, and need to insure against cyberattacks of some kind. Maybe you move to a new location and need to re-evaluate your renter’s insurance.

It may also be a good idea to have quotes from other companies available when you speak to your agent. Showing them what you can see as available options in the community may encourage them to offer you their most competitive rate. It will also give your agent a chance to explain what is different about their coverage, and why another company might offer you a rate that seems lower, but ultimately leaves you more exposed. This will help you make the best possible decision about where to insure your company.

You may be able to afford more coverage

Most companies that are just starting out get the bare minimum of insurance coverage because of financial reasons. Their company may be on shaky financial ground, and this could be the first big regular cash flow commitment they make outside of basic business expenses like payroll and inventory.

Then, as your company grows, you may move to the high-end market and offer additional benefits to your workers. If your company is doing better overall, perhaps it’s time to add on a more comprehensive worker’s compensation policy, or to pick up that rider which covers you if your business is interrupted. If you’ve added vehicles to the company fleet, you may need additional auto coverage.

By setting a regular time to review what you are currently covered for and what is available, you give your business a chance to re-examine its current insurance availability and make sure that the policies you have are right-sized.

Don’t neglect business insurance

Just like health insurance and car insurance, insuring your business gives you and your family protection against unanticipated events which can cause serious difficulties with your livelihood. Even if your business is mostly a hobby, having an insurance policy could protect your family and your assets, depending on the situation that evolves.

Insure your business as soon as you can, and then complete an insurance review each year to make sure that you have the coverage you need, and that your business is protected.

Insurance claims: Know the ‘no-claim bonus’ fine print

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Cape Town – Insurers commonly offer consumers a ‘no-claims bonus’ if they make no claim against their policy for a specified period of time.Unsurprisingly, the prospect of this financial reward is attractive to consumers, so much so that many choose not to claim from their insurance to avoid losing the cash-back reward or discount on their insurance premiums in years to follow.This is particularly true in the case of third-party claims, where consumers feel someone else is responsible for an accident.Detrimental to your finances

However, holding out on placing a claim with your insurer is often financially detrimental in the long run. So says Chris Barry, managing director of Heavy Commercial Vehicle Underwriting Managers (HCV), who warns that many consumers are at risk because they do not fully understand the implications of not claiming from their insurers.

Barry explains: “An insurance policy is a contract between a consumer and their insurer that provides the consumer with certain rights. By paying a monthly premium, consumers are contracting their insurer to provide professional services including management of the claims process, protecting their rights and negotiating with other insurers on their behalf.

“When consumers decide against claiming through their own insurance and instead, in their private capacity, approach the insurer of the person or company ‘responsible’ for the accident, they are not protected by contractual law because their contract is with their own insurer.”

Barry believes that the ‘no-claims bonus’ has created an environment in which consumers pay for services they are then discouraged from using.

“Settling claims is a complex, admin-intensive negotiation process that consumers are not equipped to manage on their own – that is partly why they should retain an insurance company. A ‘no-claims bonus’ is a marketing tool that ultimately does consumers a disservice because in the event of an accident, they are without the support of their insurance company when it is needed most.”

Protecting the ‘no-claim bonus’

Does it really matter if consumers decide against claiming to protect their ‘no-claim bonus’? Barry believes that doing so places other drivers and the insurance industry at risk.

“After an accident, consumers may drive in unrepaired vehicles that aren’t roadworthy while they attempt to settle their claims – this endangers other road users. The impact on the insurance industry is significant too. There is an emotional impact on employees dealing with consumers who aren’t their clients. Conflict between consumers and insurers brings the whole industry into disrepute.”

For the promise of a ‘no-claims bonus’ it is the individual consumer who suffers most, in terms of time, frustration and lack of legal representation, says Barry. He points out that the Insurance Ombudsman has no jurisdiction over third-party claims.

“The Insurance Ombudsman will investigate consumer complaints against their own insurer – again, an insurer only has an obligation to their own policy-holders,” Barry adds.

Ultimately, no insurance policy should be purchased on the basis of a no-claims bonus. In fact, consumers should consider asking for a cost-comparison to determine their premium without a ‘no-claim’ bonus.