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Newsletter Archive

Managing Your Insurance
March 2005

 Before your next policy renewal date, plan to meet with your insurance agent to discuss your current coverage and determine if you require additional coverage or other changes to your policy.

 Every business needs protection from loss, damage and liability. Do you have the appropriate insurance coverage for your business? As part of managing your business, take time to assess your insurance needs to protect both yourself and your business. Planning ahead will help ensure you find the best insurance solution at the right price.

Commercial Insurance Packages

While each insurance policy is unique to its coverage, there are common considerations that the owner/manager needs to consider when purchasing or renewing their commercial and business insurance.

Generally, the insurance policy is written on an all risk basis and is subject to conditions, provisions, restrictions, deductibles and exclusions. The policy may also include extensions that expire unless the insured notifies the insurer within a certain time period. The amount of insurance and deductible are outlined in the policy schedule.

Many insurers offer packages specifically designed for small businesses that include basic coverage for business liabilities, loss of earnings, damage or loss to inventory and other areas of exposure. The business package may also include insurance related to the owner/manager and other principals in the business.

However, as each business is unique, a generic package may not be the best choice. A policy only covers what is in the fine print. For that reason, it is important to discuss the policy with your agent to determine what the policy actually covers and does not cover. A generic package may also include coverage that your business does not need. In some instances, a customized package may ultimately prove to be more cost-effective.

Some of the considerations include:

•  The type of coverage, whether all risk or specific coverage.

•  The amount of insurance, the deductible, the date the insurance is required, the term and the date of renewal.

•  If there is a co-insurance clause (which would apply separately to each location or division of property that is covered) to what limit is it subject?

•  What is excluded in your coverage? Have the exclusions been amended or expanded in the new policy?

•  In view of changes and expansion, does your company need to extend its coverage?

Extensions

Before renewing your policy, take careful stock of any changes that have occurred in the company since your last policy was drawn up. If, for example, you have acquired or now control another location, do you have sufficient coverage for these premises and contents?

There are many other types of extensions you may wish to consider such as inflation protection, coverage for property that is temporarily off premises, property in transit, accounts receivable, the company's electronic data processing equipment and similar media, valuable papers and records, property protection systems, debris removal and pollutant clean-up and removal.

For example, accounts receivable insurance covers amounts that are uncollectible due to the company's records being destroyed or lost as a result of an insured loss. Business interruption coverage offers protection with respect to the profits, gross earnings and extra expense of a business for named perils; however, this coverage may exclude electronic data processing and similar media.

When extending your coverage, be sure to ask about the maximum coverage for each extension, the deductible and whether the maximum is per occurrence.

Other Insurance Considerations

Do not forget your personal coverage. This includes life insurance to protect your family. This policy is particularly important in a sole proprietorship because the owner is personally liable for the debts of the company. Other insurance considerations for owners, partners and key employees include disability insurance, critical illness insurance and partnership insurance. Key person insurance may also be necessary to protect the business from losses if an essential person should be unable to work because of illness or injury.

Depending on the type of business and the risk involved, home business owners should review their homeowner's or tenant's insurance policy to determine whether they have sufficient coverage for the business operations or whether it should be supplemented to provide extra coverage. In some cases, a commercial policy may be required.

Make Sure You Are Covered

With insurance rates rising, you cannot afford to wait until your renewal date to find out if the new rates are affordable.

Review your policy at least 90 days before its renewal date so you are aware of any rate increases and other issues that may require research and discussion. Review your assets and exposures - vehicles, equipment, inventory, office and equipment, general liability and employer's liability. Talk to your insurance representative about your current business needs. Review your existing policy and determine any additional coverage you may need.