If you haven’t reviewed the insurance arrangements for your small business in the last 12 months, now is a good time to do it.
As a small business owner, you’re likely to be busy juggling all the different aspects of running your business and turning a profit, so reviewing your insurance isn’t likely to be a high priority. However, your needs can change in the course of a year. Not only that, the available insurance products could also change.
If your needs have changed and you haven’t updated your insurance policies accordingly, you could find that you’re under insured. This means that, if an incident occurs, any insurance payout won’t fully cover you for your losses, and you’ll be out of pocket. In some cases, the shortfall can be significant enough to prevent you from getting your business back up and running after an insurable event.
If there have been changes and updates in available insurance policies, you could also benefit from updating your policy. You may be able to save money on your premiums or improve your level of cover at little or no additional cost.
It’s crucial to review your insurance coverage periodically to make sure you’ve got the right amount of coverage for your needs. The beginning of the calendar year is a great time to do this.
What to consider when choosing your insurance
Choosing the right insurance for you depends on a range of factors including the type of business you’re in, the value of your business assets, whether you require professional liability insurance as well as public liability insurance, and more. Here are four elements to consider when selecting insurance for your small business in 2020:
- Risk management is essential
Managing your business effectively means you need to manage risk proactively. While insurance should be one part of a strategic risk management approach, it’s also essential to take other steps towards mitigating risk in your business. This could include updating policies and procedures, implementing physical safety measures, and educating staff members to reduce their risk. In some cases, taking the right risk management measures can lead to more affordable insurance premiums.
An experienced risk management adviser can help you identify the risks in your business as well as provide advice on how to minimise those risks. Often, risk mitigation tactics carry little or no financial cost to the business, making them a no-brainer to implement.
- You get what you pay for
If you choose an insurance policy purely based on the lowest price, you may find that it doesn’t adequately cover you if an event occurs. In some cases, you may need to pay slightly higher premiums to make sure you are completely covered. It’s also important to consider your appetite for risk. If you have strong cash reserves and are willing to accept a higher level of risk, then a low premium insurance policy may be right for your business. However, if you’re keen to minimise the financial impact of a potential insurable event, then you may prefer to pay a slightly higher premium to get maximum coverage.
It’s important to note that you don’t necessarily have to choose the highest-cost insurance policies to make sure your business is covered. An experienced insurance broker should be able to negotiate the ideal coverage that not only gives you maximum peace of mind but also fits within your budget.
- Adequate insurance is a not a set-and-forget exercise
Getting the perfect insurance policy in place is a great feeling. It lets you get on with running your business with confidence that you’re covered if anything goes wrong. However, as your business grows and evolves, and as the insurance market also changes, today’s perfect insurance policy may not be perfect in a year, two years, five years, and beyond.
Speaking with your insurance broker regularly and reviewing your insurance periodically can help ensure your coverage remains perfect for your needs, even as those needs change.
- Making a claim isn’t always straightforward
If your business suffers an insurable event, you may think it’s simply a matter of ringing the insurance company and collecting your payout so you can get started on repairs, replacements, or rebuilding. Unfortunately, insurance claims are more complicated than that and your claim is more likely to be successful if you have help from an experienced insurance broker who can walk you through the process.
By keeping these four factors in mind, you can protect your business from unnecessary costs and risk.
To find out how a NZbrokers member can help you manage risk in your business, contact us today.