Annual Small Business Insurance Audit Guide
Every small business goes through different cycles of profit and loss, as a result your risks and potential exposures are being similarly affected. At the same time, commercial insurance coverage is also continually evolving and changing; cyber liability coverage didn’t even exist at the turn of the last century. Nothing in either your business or the insurance industry remains static. This is why you should re-evaluate your insurance coverage at least once a year. A regular insurance audit will help you plug any coverage holes that might severely impact your bottom-line should an unexpected loss occur.
Ask yourself: How much risk are we prepared to accept for our small business? Essentially, anything that you are not prepared to take on needs to be covered by suitable insurance coverage.
To measure the amount of risk in evaluating the commercial insurance needs of your company, there are a number of key areas that we could help you examine. The primary areas you should re-evaluate annually are:
General Liability
How much liability protection does your company currently require? The amount of coverage you had previously purchased was probably adequate at the time, but remember: your business has changed since then and so has your liability exposure. What was suitable for your needs last year may no longer be sufficient if your company has grown and expanded. The larger your growth, the more you become exposed to potential, increased, and significant liability.
Commercial Property Insurance
Business property evaluations go up and down as commercial real estate values fluctuate. You could now be paying too little or too much for the necessary coverage. The same applies to your equipment, machinery, and your inventory. Adding or subtracting in these three areas, while factoring in appreciation or depreciation, can dramatically affect not only the premiums you pay, but also your overall property insurance coverage in the event of a significant loss such as a fire or natural disaster.
The cost of a business property insurance policy will depend on your business size, the amount of protection you want and any state required limits you’ll need to meet. The best way to get a true idea of cost is to get a quote specifically for your business and to review it carefully to make sure all of your concerns are truly covered.
Workers’ Compensation
The premium you pay is largely dependent on the roles of each and every employee from the shop floor to your managerial staff. If the roles of your personnel have changed relative to how your business has grown, shrunk, or evolved, then you need to re-evaluate these changes relative to the premium rate you pay for each worker. The premium cost changes or differences for workers compensation insurance can be substantial.
Business Interruption Insurance
You might have enough insurance to get your business re-built and your equipment replaced in the event of a disaster, but did you also factor in your business operating expenses? Many companies neglect that part of the equation and fail to develop a disaster recovery plan. Even if your company has a plan, what about the vendors that are key to the survival of your business? Your own business might be fine, but in some other part of the state or country, a key manufacturer or supplier could get nailed. Did you know that you could extend your coverage to cover this circumstance too?
Insurance Protection of Executives
The size of your company doesn’t matter. If you have employees, you can face claims for sexual harassment or wrongful dismissal. You may not have considered the need to purchase employment practices liability insurance before, but if your company has grown that expansion has increased your risk to potential claims.
Similarly, if you sponsor a 401(k) plan for your employees, and its performance has not met expectations or an employee feels the investment was mismanaged, do you have adequate fiduciary, directors, and officers liability to handle such claims?
Commercial Auto Insurance
Commercial Auto Insurance, also known as business auto insurance, helps your business cover the financial costs resulting from an auto accident if you or an employee is found at fault. Commercial auto insurance helps pay for damaged property and medical expenses – even in the event of a fatal accident.
The cost of a commercial auto insurance policy will depend on your business size, the amount of protection you want and any state required limits you’ll need to meet. The best way to get a true idea of cost is to get a quote specifically for your business and to review it carefully to make sure all of your concerns are truly covered.
Cyber Liability and Data Breach Coverage
This type of insurance designed to cover consumers of technology services or products. More specifically, the policies are intended to cover a variety of both liability and property losses that may result when a business engages in various electronic activities, such as selling on the Internet or collecting data within its internal electronic network.
To mitigate the risk of civil litigation and other penalties when a data loss or theft occurs, a cyber liability or data breach insurance policy can provide access to professional assistance to help businesses comply with applicable laws and regulations.
Summary
To safeguard your business from potential risk, an annual insurance audit is a must. You may discover that changes in your business may have exposed you to new risks. Likewise, insurance premiums are a significant expense, and you might find that you are paying too much or covering exposures that are no longer relevant.
Let us help you make an informed decision about your business insurance needs. Our licensed agents specialize in helping small businesses obtain the best coverage at the best price, give us a call today at 888-834-8619.
