01/ 09/ 2006
by Jeffrey Moses
The first of the year is an excellent time to revisit your insurance coverage. As your business changes and grows, your insurance needs will change accordingly. It’s wise to monitor your insurance to make sure coverage is adequate in all areas.
Before contacting your agent, review your existing business owner’s policy (BOP) for levels of coverage. In addition, review other types of coverage you have purchased, such as:
- Key man insurance
- Errors and omissions coverage
- Business interruption insurance beyond amounts covered in your BOP
- Directors and officers liability
- Disability insurance for yourself and key employees
Then write in detail all changes your company has experienced during the previous year, especially those that directly affect your existing coverage. These might include:
- Changes in company revenue
- Expanded or new facilities
- Added or upgraded equipment, including production equipment, computers and vehicles
- Added staff and company officers
- Increased responsibilities of staff and officers
- Increased size of inventory, length of inventory turnaround, etc.
These changes and others could affect your insurance needs. As always, the more coverage you purchase, the more it will cost––but securing adequate insurance coverage should be considered a prudent expense of doing business.
Because of the recent hurricanes and other natural disasters, it would be wise to discuss high levels of coverage with your agent.
Also, discuss with your agent ways you can reduce insurance costs by making risk-reduction changes to your operations or facility (installing added safety equipment, adding fireproof insulation to your building, providing safety training, etc.). These risk-reduction measures may prove cost-effective in the long run as they reduce your ongoing insurance premiums.
Other ongoing insurance issues should be discussed to make sure you're up-to-date and covered in all areas:
- Worker’s compensation
- Health insurance for staff, officers and yourself
- Umbrella coverage extending coverage to high limits
- Other special coverage for your type of industry.
The beginning of the year may be a good time to compare rates for coverage from one company to another. You may have become good friends with your insurance agent, but that doesn't mean you can't find lower rates––and service just as good––with another provider. It never hurts to compare rates. (This service is usually provided by insurance agents without charge, even for the comprehensive needs of a growing small business.)
While discussing your insurance with agents you haven't used before, ask for their opinion on your coverage. They may come up with ways to save you money, point out areas where you're not adequately covered or provide a higher level of risk assurance without undue extra cost.
