Having insurance is essential for any business. It is not the sexiest of topics, but it’s important for entrepreneurs to know how to manage the risks in the industry they’re in. Few people love insurance. Yes, it’s needed, respected, and appreciated, but most people discuss the stress of making claims and the rising insurance premiums rather than its potential benefit. Some people find themselves under-insured, while others find their insurance broker in Perth a life saviour.
In this article, we’ll be discussing how you can manage your insurance so that when claiming time comes, things will work much more smoothly.
One of the most common mistakes people make is that they don’t review their policies on a regular basis. If your personal and business policies aren’t up to date, then you might encounter a few problems in the future. In terms of reassessing insurance policies, a minimum of once a year will suffice. You don’t want to renew on the same levels each year or stay at the value of your policy. For example, let’s say you bought plenty of new equipment the past year and all of them are worth $7 million which was estimated at $6 million previously.
While it sounds crazy to forget a million dollars, it happens more frequently than you think. People just renew their policies without even thinking about it. If you have insufficient coverage, you won’t be able to claim for your full loss.
Overinsurance is just as real as underinsurance. Occasionally, some people will downsize but forget notifying their insurer. We all hate paying extra for insurance because there’s no real benefit, but sometimes people forget updating the values in their policy and they still have reasonably high values that haven’t been reassessed.
Whenever there’s a slight change in your business activity, make sure to consult your broker. Even a slight change in your operations can sometimes be enough to breach your policy and you may not even be aware of it.
Protecting your business
There’s more to insurance than just protecting your buildings and equipment. Loss of profit insurance can protect you from losing income while you’re unable to operate. Unfortunately, many businesses don’t have loss of profit insurance or, their cover has been based on their accounting gross profit when it should be their insurance gross profit.
Every business should have this type of policy because in the unfortunate event that your property burns, the insurance company will pay you millions for the physical part you’ve insured. Of course, this doesn’t happen overnight. Usually, it takes three to eight months before it is completely paid. Your lost income is paid weekly or monthly while the claim is being sorted. You can also insure your staff’s payroll and you have the option of insuring only your full-time staff or include your casual staff members as well.
Some businesses tend to protect the full-timers only so as to avoid losing quality staff to the competition. If you have payroll insurance, then you’re good to go. Otherwise, your staff might not wait until you operate again and force them to find another job.
Making insurance claims isn’t anyone’s cup of tea. Most of us prefer to rather not make one at all. But at some point, you will have to submit a formal request to your insurance company. But before you do, make sure to compile as much information about your business as possible, especially the physical aspects like buildings, machinery, equipment, stock, and materials. The more information you have, the better.
We strongly suggest keeping backups of receipts and those sorts of things. With cloud storage available, it’s much easier to backup important documents than ever. You don’t need to provide hard copies as most insurance companies are all electric. But you may notice that some of the older companies still use traditional filing cabinets and aren’t as sophisticated with tech as other insurers. It’s still worth going through your papers and scanning them just in case you need them.
When things go haywire
It’s not all the time that insurers are helpful. Whether it’s an honest error or a less-than-ideal staff, claims can sometimes take forever to get sorted or get knocked back for reasons that are seemingly spurious. In times like this though, there is an option available and that is to hire a broker. The benefit here is that a broker has thousands of policies with a particular company to which they can leverage that and say, “you guys need to pay this”. Of course they won’t fuss with losing one client, but if they deal with the broker and they’re not cooperative, they might end up losing business as well as millions of dollars worth of premiums.
Taking the time to manage your insurance will help save you plenty of stress and headaches in the long run. Hopefully with these tips, you can optimize your insurance policies and give you peace of mind while running your business.