Thankfully, you don’t need to think about your insurance every day. In fact, once you have a decent insurance plan in place you shouldn’t need to think about it too much at all. However, touching base with your insurance policy every once in a while - even briefly - will give you a much better chance of keeping it perfectly suited to your business needs.
The first step towards touching base with your insurance is to look at it. Literally! Dig out your insurance schedule or log on to your provider and read it. Failing that, give them a call – they’ll be happy to provide you with your policy details. Your schedule should be no more than one page and take about two minutes to quickly scan.
Put the insurance schedule on your desk, and ruminate for a minute on how your business is going. Feel free to stroke your chin or play with your hair at this point.
Are you in a growth phase, or holding steady? Maybe you’re being squeezed out of your current market and need to think about pivoting into a new area. You might be considering new product lines, or ditching a service offering that hasn’t panned out. Ask yourself what the status quo is for your business, how it has changed recently and how it is likely to change in the near future.
Now, pick up your insurance schedule again and ask yourself if this policy is the right one for your business.
Does it still meet your current needs? Are all the details still spot on? Is it suited to protect your business through its next phase?
Whatever phase your business is in - good or bad, growing or slowing - you need to be regularly thinking about the information that your insurance is based on, and assessing whether it remains accurate and appropriate.
CH - CH - CH - CHANGES
A big part of keeping your insurance on track is considering what risks you’re insured against, and the amount you’ve covered for (that is, the ‘insured amount’). If the business is growing and you’ve hired new staff, this may indicate that your level of exposure has increased and you need a higher level of Public Liability insurance. On the flip side, if you’ve had a decline in sales and laid off a few staff, you might be comfortable reducing your level of cover and the associated premium costs.
Take stock of any new business activities you might have picked up. Have you changed your processes, or incorporated any new services since you last checked in? You may not be insured for these. For example, if you’ve started transporting valuable stock between locations you may need to consider the ‘goods in transit’ option in your business insurance package.
Substantial changes in revenue are another kind of change that should be monitored. Consider, for example, if this should be reflected in any business interruption insurance that you have in place.
Keep in mind, also, that you have a ‘Duty of Disclosure’ to inform the insurance provider of any changes to business circumstances that may affect your policy. Failure to do so could adversely affect your chance of a successful claim, so by looking out for significant changes you’re not only keeping you business protection in tip-top shape, you’re doing everything you can to keep your insurance compliant as well.
DO I HAVE THE RIGHT INSURANCE IN PLACE, ANYWAY?
Do a recap and check in with the types of insurance on the market. Are you covered for the things that are important to your business?
- Public Liability - This protects against the financial risk of being found liable for causing injury to a third party or damage to their property. Generally, it also includes Product Liability cover.
- Professional Indemnity - Covers professionals who provide advice or a service against legal costs and claims for damages arising from any act, omission, or breach of duty in the delivery of a service.
- Business Insurance - This can cover your work premises and contents against loss, damage or theft, and guard against financial loss arising from any interruption to the business.
- Personal Accident - If you’re temporarily unable to work due to an accident, this cover provides up to 85 per cent of your income (up to $3,000 per week) until you can work again.
- Cyber Liability Insurance - Cyber Liability Insurance protects against the expenses and legal costs of data breaches or hacking, including the loss or theft of client information.
Note that Business Insurance includes around 15 cover options; things like Glass, Money, Fixed Machinery and Portable Equipment all deserve consideration. Business Interruption is also an important option here.
And remember, you don’t need to insure everything under the sun! Just take care of the things that pose a financial risk to your business. Severity trumps probability. If an event would place the business under considerable financial stress, you should consider insuring against it (even if it’s unlikely).
The legal liabilities above are good examples of this. Both Public Liability and Professional Indemnity can result in legal costs and claims running into the millions, which would financially cripple most small businesses. They might be unlikely claim events, but the consequences are potentially severe, so it’s generally worth transferring that risk to an insurance company.
If you could cover an insurable event financially, on the other hand, you might be more comfortable retaining the risk. A good example of this might be office furniture. There might be a higher likelihood of needing to replace it, but having to run down to IKEA for a new desk probably won’t be enough to sink the business financially… we hope!
COMPARE AND CONTRAST
Lastly, don’t be afraid to call your provider and compare different policies. Not all of them are created equal, and the insurance market is constantly evolving. Each insurer has their own preferred risk, and every policy has its own exclusions and inclusions, limits and sub-limits.
Be sure to use your Product Disclosure Statement as a reference tool as well; these documents are a lot easier to read than they used to be, and include a host of important information about your policy.
THE COMPLACENCY COMEDOWN
Complacency is something of a luxury for small businesses. You have to earn the right to slack off! But, of course, getting lazy about any aspect of your business is fraught with danger, especially when it comes to insurance.
Annual insurance check-ups are key to-do items when your policy is up for renewal. But don’t forget to touch base with your insurance a few other times during the year, especially if your business goes through significant change.
Your business deserves insurance that fits like a Saville Row suit. Keep it tight, keep it tailored, and don’t forget to take the time to look at it every now and then.
*BizCover provides multiple online quotes from leading Australian insurers at competitive rates. Click here to get a quote today and protect your business.
Analysis: The misnomer of bank regulation and loan costs
By Adam Zuchetti
Analysis: Bank ‘misconduct’ a woeful understatement
By Adam Zuchetti
Analysis: Banks wrongly targeted as business custodians
By Adam Zuchetti