SAFEGUARDS

Growing BusinessSAFEGUARDS

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  • Business Insurance Check-Up

    Game Plan

    In-Depth

    Determine Changes in Property Exposures

    Your business owners’ policy (BOP) should already provide you with substantial financial protection for the physical property your business owns, leases or rents. If you make a major investment in your business, including improvements or additions to property, your BOP should be adjusted to protect this. The best course is to add coverage for full replacement cost right away.

    The same can be said for saving money on policy coverage you no longer need. If you’ve made a significant downsizing in plant or equipment, you can probably save money in insurance premiums. In a nutshell: You need adequate safeguards for the business you operate, but you shouldn’t be paying for more than you need.

    Increases and reductions of inventory

    Inventory is an often-overlooked business asset. Yet its loss in the case of fire or accident can be devastating. If your business is undergoing change, you should make sure your inventory valuation is up to date, and that your BOP’s limits are sufficient to meet any potential loss. If your business is experiencing a slowdown, and you’ve reduced that inventory, you may be carrying more in coverage than makes sense.

    New and upgraded real estate—or a decreased footprint

    Have you recently bought or sold business property? Has your business moved from a bricks-and-mortar building to a virtual storefront? How about property values in your neighborhood? Is your property’s replacement value coverage up to date? Make sure your commercial property or business property insurance reflects your new (or reduced) exposures.

    Physical plant and equipment values

    Have you made significant improvements to your offices, store, or warehouse? Purchased new equipment? Or instead, perhaps you’ve chosen to get smaller to reduce your overhead. Any major change should be evaluated for either increased loss-related risks—or lowering your insurance premiums.

    If you’ve purchased a new piece of equipment or machinery upon which your operations depend a great deal, you may also want to consider equipment breakdown insurance or machinery insurance policy.

    Have you added new vehicles to your business’s operations? Then it’s time to update your fleet or commercial auto insurance. And remember: A review of this type of insurance should include not just vehicles themselves, but who uses them and how they’re used. For example, your current policy may be limited to a certain territory or distance; if your employees are ranging farther afield, this may need to be written into your policy. And don’t forget to consider whether employees use rentals frequently.

    Game PlanGame Plan

    Game Plan

    • If your business property coverage has increased or decreased more than 15 or 20% since your last review, call your insurance professional today for a reassessment of your policy(s). With a shift this large, you should update your coverage immediately, and not wait until annual review time comes around.
    • During your annual review, revisit the deductibles on your commercial property policy. Should a covered property loss occur, can you still afford a deductible of this size? Alternatively, would you prefer to raise the deductible and save on your insurance payment if this would fit better with your current cash flow?
    • Be on the lookout for any new property and casualty exclusions to your policy. Some insurers, for example, don’t cover policy owners for record reconstruction, should a fire destroy critical business records.
    • Investigate other providers who might better suit your coverage needs.
    • Is all of your essential business equipment, including computers and software, covered for full replacement cost?
    • Under a worst-case loss scenario, would your current coverages be sufficient to enable you to remain in business?