How to Ensure Your Business Is Adequately Insured
Essentially what commercial insurance is about is protecting your business assets from losses that you might have trouble recovering from financially without. It is important to understand the extents of your coverage in order to determine what you are and what you are not covered for – otherwise, you may risk being underinsured for when you need to make a claim.
A lot of the time being underinsured happens because business owners believe that commercial insurance is too expensive or that certain assets that they own and use in their daily operations are not worth insuring. Other times this happens because business owners do not understand their coverage or what their insurance requirements are.
An important question to ask yourself as a business owner is what you would do if something disastrous happened unexpectedly and severely damaged your business property or interrupted your operations. Would you have enough finances to go off for the repairs and replacements, or would you have to close your doors for good? No business wants to be in that position, which is why it is important to ensure that your enterprise is sufficiently insured. Here’s how to ensure your business is adequately insured.
Consider the factors that contribute to underinsurance
There are a lot of influences that affect your business’ underinsurance. Whether you own your business’ property, rent, or manage, it is essential to ensure that the insurance coverage you have is adequate to protect every aspect of your operations from its physical structure to the contents within. Here are a few things you may need to consider when it comes to your business’ insurance to ensure your coverage is adequate to protect you from the unforeseen.
Your property’s rebuild value
Not ever business or property owner is aware that their building’s market value is not the same as the cost of rebuilding. For instance, if you needed to rebuild entirely following an event where everything you owned was destroyed, you may find that the costs are far higher than the initial cost for when you purchased the property. When your policy names the market value and not the rebuild costs, you may find yourself in a situation where you are underinsured. To avoid this, have a professional value your property every few years to assess the overall cost of materials, labour, architectural costs, and more. Having accurate figures may spare you from having to pay too much of the overflow and will keep you covered if anything should happen.
Renovations or modifications to your property
As mentioned in the previous point, your property’s value will not be the same as when you initially purchased it. For instance, what if you were to add another office? Or upgrade the air conditioning system? This will alter your insurance coverage. It is advised that you inform your insurance provider of these changes before anything should happen to ensure that you have protection. If you fail to do so, you might be underinsured.
Also, certain renovations or modifications may make you eligible for certain discounts. For instance, if you were to install certain approved security or alarm systems in your business’ building, you may be rewarded with lower premiums. This is because having these systems implemented lowers your business’ risk of being vandalized or, if a fire should happen on your property, increase your odds of having firemen reach your business in time before any severe damage can be done.
Other aspects of your business’ property
There is more to your business property than just its physical structure. What about parking lots? Does your property include any detached structures, such as storage sheds? Make sure that when you are purchasing a policy you include any and all extra features of your business’ property or review your business’ needs with an insurance broker as the additional perspective can prove helpful for when you need another opinion. You may need to consider an additional floater if your business contents include a lot of high-value belongings, electronics or equipment.
Risk factors where you live
Sometimes, underinsurance happens because businesses are not aware of the risk factors that their area exposes them to. Commercial enterprises may need unique insurance programs tailored to their particular needs in order to cover them for any area-related threats, such as extreme weather, floods, crime and more.
For instance, if you were looking to see if your auto insurance in Calgary or home insurance in Calgary was sufficient, you might first have to understand what specific risks your car or property faces in the area that you live alongside the overarching issues like theft, fire and collisions. Calgary, for the sake of this example, may experience small earthquakes but nothing of the sort which would result in damage or injuries. Vancouver, on the other hand, is near the fault line of two tectonic plates meaning that it is at risk of experiencing some pretty catastrophic earthquakes. For residents of Calgary, earthquake insurance is an easy pass-up. For a Vancouver business owner, that wouldn’t fly.
In summary, there are a lot of components of your business that you will need to review when selecting a policy in order to ensure it is adequately insured. It would be a nightmare to discover you are underinsured when the time comes to make a claim. When you are reviewing your business to assess whether your insurance is adequate, take into mind these factors:
- The rebuild costs of your business’ property
- Any modifications or upgrades you have made to your building
- Other features of your property, such as detached structures or parking lots
- Risk factors specific to where your business is situated
One of the most effective ways to avoiding underinsurance for your business, its physical structure and contents is to work with an insurance broker. Having an expert at your side is beneficial for a number of reasons when it comes to your insurance needs, especially since insurance brokers know specifically how to assess your individual circumstances and can find you an accurate level of coverage that won’t leave you underinsured. If you are unsure as to whether your current level of business insurance is adequate for your industry and requirements, discuss with an insurance broker.