The Insurance Information Institute (III) recommends reviewing all your insurance needs, including commercial insurance, at least once every year. This is important because it gives you a chance to insure your underinsured and uninsured property fully, avoid over-insurance, and even lower some insurance costs. Commercial insurance review is necessary, especially when your business has experienced significant changes such as increased or reduced costs, revenues, and risks.
Keeping this in mind, here are five instances when you should review your business insurance.
1. You’ve Implemented Risk Mitigation Strategies
If you have implemented the necessary risk mitigation strategies, you should review your commercial insurance policy for a possible reduction of insurance costs. This is because high risks translate to a possibly large number of claims within a short time, and so insurance companies charge more for the same. For example, a high-risk driver can pay up to 50% more in auto insurance premiums than a low-risk driver. Ways to mitigate risks at your business premises include, among others, installation of burglar alarms to prevent theft, installing firewalls to prevent cyberattacks, and adding smoke detectors and fire extinguishers to avert fire damage.
2. You’ve Relocated Your Business Premises
According to the California State Legislative Office, areas such as San Diego, Santa Cruz, Clearlake, and San Jose in California are prone to natural disasters such as floods, wildfires, and earthquakes. Naturally, businesses located in such areas will pay higher premium rates for their commercial insurance policies to cater to the high risks. If you’ve relocated your business premises from such areas to a safer zone, you should consider reviewing your commercial insurance to avoid over-insurance. Similarly, you should increase your insurance coverage if you have relocated from a safer zone to a high-risk area.
3. Your Business Has Changed in Size
Many operational changes happen in companies due to factors such as increased or reduced costs and revenues, which may cause the business to either shrink or grow. For instance, most companies downsize by laying off employees and cutting off supplies to save on operational costs, as reported by the U.S. Society of Human Resource Management (SHRM). Typically, when the size of your business changes, your costs and revenues will also change, making it essential for you to review your commercial insurance. If you have upsized your company, you will need additional insurance for your new employees, new machines, and the new premises.
4. You’ve Made Major Purchases
Major purchases bring about significant changes in the operational costs in terms of maintenance and overhead costs. Such purchases also attract additional insurance coverage to protect them against breakdowns, theft, and vandalism. For example, a Magnetic Resonance Imaging scanner is one of the most expensive medical equipment in the U.S., costing nearly $270 million, as reported by the Medical Device Diagnostic Industry (MD+DI). This means that if you purchase such a machine in your hospital, you will need to increase your insurance coverage to cover the device against named perils.
5. You’ve Changed Your Products or Services
Generally, some products and services can be riskier than others, causing more lawsuits and compensation claims. For instance, low-quality pharmaceutical products and medical devices cause more harm to users, with the Food and Drug Administration (FDA) recalling more than 300,000 units per pharmaceutical product between 2014 and 2019 in the U.S., as reported by Statista. If you’ve changed your products or services to high-risk ones, you should increase your commercial liability coverage to protect your business from lawsuits.
These are some of the incidences which might compel you to review your commercial insurance. To ensure stability and financial independence in your business, buy the right insurance coverage. For assistance with all your business insurance needs, contact the experts at Udell Family Insurance today. We are ready to assist you with all your coverage needs.