When is the right time to update your insurance?
Your insurance is designed around your business as it exists at a particular point in time. But businesses don't stand still. You might take on new work, expand your operations, change how you use your premises or start offering something you didn't previously provide.
Your annual renewal provides an important opportunity to review your insurance, but it shouldn't be the only time you consider whether your cover remains appropriate. Significant changes to your business throughout the year can also affect your insurance requirements.
While these changes are positive signs of business development, they can also alter the risks your business faces. If your insurance arrangements are still based on the circumstances of your business several years earlier, there may be a gap between the business you operate today and the risks your insurance is designed to address.
Here is a list of changes that may warrant an insurance review:
1. Your products or services have changed
Introducing a new product or service can change the nature of your business and the risks associated with its activities. For example, a business that has traditionally provided one type of service may begin offering installation, maintenance or other services that introduce different liability exposures. Similarly, businesses that begin manufacturing, importing or distributing new products may need to consider whether their existing insurance arrangements remain appropriate.
A change in activities does not automatically mean additional insurance is required, but it is important that your broker understands how the business has evolved so the potential implications can be assessed.
2. You have moved or expanded your premises
A change of premises involves more than updating an address on your policy. A new or expanded location may involve different building characteristics, security arrangements, storage requirements, levels of stock or other location-specific risks, such as bush fire hazards. Expanding an existing premises can also increase the value of property, equipment and contents that need to be considered when determining appropriate sums insured.
[ Read: Underinsurance in a High-Inflation Environment: Are you covered? ]
3. You have taken on a significant new contract
A major new contract can materially change the scale or nature of your business activities. It may involve higher values, larger projects, additional responsibilities or new contractual requirements relating to insurance. For example, a business that normally undertakes small maintenance jobs may take on a large commercial project involving more people, higher-value property or work in a higher-risk environment.
Before commencing significant new work, it's worth confirming that your existing insurance is appropriate for the activities being undertaken and that any contractual insurance requirements can be met.
[ Read: Managing Insolvency Risks with Trade Credit Insurance ]
4. Your business has grown
Growth can affect insurance in a number of ways. An increase in turnover may coincide with higher stock levels, additional equipment, more employees, larger contracts or greater reliance on contractors and suppliers.
Similarly, a significant increase in the size of your workforce can alter your exposure to workplace risks, while expanding into new locations or markets may introduce different operational considerations.
Growth does not automatically mean that higher limits or additional policies are required. However, significant changes in the scale of your operations are a good reason to review whether your existing arrangements remain appropriate.
[ Read: Are Your Sums Insured Up to Date? ]
5. You are using more contractors or subcontractors
Changes to your workforce model can also affect your risk profile. If your business is increasingly relying on contractors or subcontractors to undertake work that was previously performed by employees, it is important to consider how this affects your responsibilities and existing insurance arrangements.
This is particularly relevant for businesses in construction, trades, property services and other industries where subcontracting is common. It is also important to understand that a subcontractor having their own insurance does not necessarily remove the need to consider your business's own liability exposures.
6. You have acquired or disposed of significant assets
Purchasing new machinery, equipment, vehicles or other business assets can change the value and nature of the property being insured. The reverse is also true. If significant assets have been sold or disposed of, your insurance information may need to be updated accordingly. Keeping asset information current is particularly important where the cost of replacing an asset following a loss may have changed significantly since it was originally purchased.
How Coverforce can help
What matters is that your insurance reflects the business you are operating today, rather than the business you were operating when the policy was originally arranged. Our experienced brokers can review your current insurance arrangements, consider any changes to your business and help ensure your cover continues to reflect your needs. Speak to Coverforce today to review your business insurance.
The information provided in this article is of a general nature only and has been prepared without taking into account your individual objectives, financial situation or needs. If you require advice that is tailored to your specific business or individual circumstances, please contact Coverforce directly.
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