5 Tips for an Insurance Health Check
If your insurance is due for renewal or you are just wanting to do a general review of your business, it’s worth taking time to do a health check of your insurance to ensure that if the unthinkable happens and your business is hit by a major event, you not only have the right cover but also the right level of cover to keep your business going.
Here are 5 tips for conducting your insurance health check:
1. Has my business experienced any significant changes over the year?
Take a bit of time to assess your business activities. If your business has been through any big changes over the year, or since your last renewal, you should update your details with your insurer to make sure you have adequate cover.
Consider the following:
- Change in employees
- Substantial changes in revenue
- New lines of business
2. Do I have the right types of insurance for the business I’m operating?
Having the right types of insurance for your business is essential. If something goes wrong you will want to ensure that you have cover to help you get back on track.
Below are some common types of insurance available for small businesses and the risk areas that they cover.
|Professional Indemnity||Protection against financial losses for any legal action taken against for services or advice that has been provided.|
|Public Liability||Protection against the damages from a claim for personal injury or property damage that occurs as a result of business related activities, either at the workplace or at another location.|
|Business Insurance||Tailored cover to protect your building and contents:
|Management Liability||Protects businesses and business directors including their personal assets against legal costs for allegations of mismanagement, misconduct or legislative breaches.|
|Cyber Insurance||Protection against the expenses and legal costs associated with data breaches, which may occur after being hacked or from theft of client information.|
|Tax Audit Insurance||Provides cover for accounting fees that may be incurred in connection with an ATO audit.|
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That’s a pretty big list of insurances, but don’t panic, you don’t need to have every type of insurance available. Identify your risks in each area and prioritise them, the probability of each risk occurring and the potential severity of the loss associated with it. You may want to consider forgoing insurance if the financial impact is low and one that you can burden, but you should seriously consider insurance if the financial impact of an event is high – regardless of the probability of it occurring.
This is the time to ask yourself some ‘what-if’ scenarios about the impact some common situations would have on your business.
Food For Thought…
The insurable risk that most concerns SMEs relates to events that impact their ability to do business, yet 80% of those who rank ‘being unable to trade’ as one of their top concerns, claim not to have Business Interruption Insurance.
(Vero SME Insurance Index,2016)
3. Do I have enough cover to safeguard against a major event or loss?
Check that your existing policies have an adequate level of cover. If your business has grown your level of exposure may have increased, so you might want to consider upping the level of your Public Liability insurance.
Similarly, take into account any changes in nature to your business. If you have taken on extra responsibilities in the service or advice you provide, you may want to increase your Professional Indemnity insurance. Also, consider any new contracts you may enter into or updates to legislative requirements that enforce a minimum level of cover, or that require you to have specific types of insurances.
Finally review your stock, equipment, machinery or tool cover to ensure that you have enough cover for these items. If you’ve been investing in your business over the year chances are there will be more value in these items.
4. Review your payment options
Check the payment options available as some providers offer a discount for paying annually which could save you in the long run. On the other hand, if you need to free up some cash for other areas of your business think about switching to a monthly payment option.
5. Have I compared other policies in the market?
Not all insurance policies are created equal. Compare your policy with others in the market and you may find that there is a better cover for your business. This is due to each insurer having their own preferred risk. You may also find the inclusions and exclusions differ between policies, as well as limits and sub-limits for all of your insured risks.
And while your choice of insurer should not be driven by price you could possibly even save a dollar or two by shopping around.
If you are planning on a health check for your business, click here to compare your insurance.
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