As a small business owner, you have a lot on your plate. Obviously, making a profit and keeping your business growing are of paramount concern. In addition, there’s making payroll, staying competitive, staying on top of new healthcare and tax laws, complying with state and local regulations, etc., etc. It’s easy to overlook important changes that may have occurred in your business and need to be accounted for on your insurance policy. Your annual policy renewal is a great time to consult with your independent agent and make sure you are properly protected. Exposures can change quickly in your business and it’s easy to forget that your insurance needs to adapt to these changes. Let’s look at a few areas to consider:
- Did you add locations during the year?
- Did you add buildings to your current location?
- Any new vehicles or drivers?
- New equipment that needs to be covered under an inland marine floater?
- New products being manufactured/sold? This is critical because it could change the rating basis for your general liability.
- Vehicles sold
- Equipment sold
- Locations sold
- Reduction in inventory
- Reduction in sales
As your operation grows, you should consider purchasing additional coverages to protect your business. Here are a few to discuss with your agent:
- Equipment Breakdown – especially important if you are a manufacturing/processing operation
- Crime – this would include Money & Securities, Employee Theft including Employee Retirement Income Security Act (ERISA), Forgery, and Computer Fraud
- Employment Practices Liability
- Data Compromise & Identity Recovery
- Blanket Personal Property if you now have multiple locations
- Reporting form on your personal property if the values fluctuate
Drop or Reduce Coverages
Sometimes it makes more financial sense to reduce your insurance or self-insure some exposures. Here are a few examples:
- Drop comprehensive and collision on vehicles over 10 years old.
- Reduce the value of scheduled contractors equipment that is covered on an actual cash value basis.
- If you own an older building and likely would not replace it with as large of a building in the event of a total loss, consider insuring it on a Functional Replacement Cost basis.
- Higher deductibles on your property and auto. Consider adding a property damage deductible on your General Liability.
- If you’re comfortable with your financial reserves and loss control measures, consider self-insuring some of your exposures.
An annual review is also important to evaluate your carrier and agent. Are you getting personalized and responsive service from both? Have your claims been handled promptly and fairly? Has your carrier’s Loss Control Department been reasonable and helpful? Is your carrier financially stable? Is your agent bringing value to your risk management process?
This checklist is a good start when reviewing your insurance exposures, but make sure you consider your business’s unique needs, as well. If you resolve to start each new year with an insurance review it can lead to a productive and profitable year!