Commercial insurance provides an important safety net that ensures the survival of your business, especially in critical times. Over time, your business is likely to evolve and change due to one reason or another. When this happens, you should review your commercial insurance coverage to ensure its adequacy.
Keeping this in mind, here are four specific situations that would require you to perform a commercial insurance review.
1. When the Size of Your Business Changes
Income protection insurance is one of the main facets of commercial insurance. According to the Wall Street Journal, income protection is one of the policies you ought to have to protect your business from unforeseen circumstances. The premium necessary to give you adequate coverage is usually calculated based on your income projection. This calculation method means that your premium will increase or decrease based on your expected earnings. If you don’t review your commercial insurance coverage after a significant change in business size, your company will either be underinsured or will end up paying an unnecessarily high premium.
2. If You Have Moved Your Business
Your commercial insurance should protect your business against location related dangers such as burglary and natural disasters. These perils are usually more prevalent in specific locations than in others. Therefore, the location of your business is an essential consideration during the calculation of premiums. A change of place may result in a change in terms of your coverage. The importance of your business’ location in determining terms of the coverage makes information on where you are situated critical to your insurance contract. This means that changing your business’ location without informing the insurer is likely to be considered a breach of the insurance principle of utmost good faith. Such a breach may be enough to make your contract void.
3. When Your Risk Has Changed
The level of risk in your business determines the terms of your coverage. This is why insurers insist on a risk assessment before entering into a contract with you. The findings of a risk assessment procedure inform the insurer on the high-risk areas in the business, and they use it to calculate the premium. On the other hand, you can note the areas of high risk and take measures to mitigate them. For example, you can burglar-proof your premises or put in place a more stringent employee vetting system. These two measures reduce the risk of burglary and employee theft, respectively. Notify your insurer once you have put the measures in place so that they may review your policy. You should also do a business insurance review when your risk has increased. A good example is when your business is bringing in a substantially higher amount of cash. Your insurer will advise you on any necessary changes required in your policy.
4. If You Have Acquired New Equipment or Partners
The growth of a business usually necessitates the acquisition of equipment. You may acquire new equipment or upgrade your old ones as per your growth. Such additions would increase the business’ value, which means a higher risk for the insurer. Make sure you ask your insurer to review your cover to ensure its adequacy for the new value of your business. A new partner means that the business will have to take out life insurance for one more person. Establishing a new partnership, therefore, is also a time for you to review your commercial insurance.
You should review commercial insurance in any of these four situations. For more questions on commercial insurance, contact our experts at Pittman Insurance Group, LLC. Our dedicated team is eager to help you with your questions.