Inside Track to insurance renewals for SMEs

It's important for commercial insurance coverage to meet a company’s evolving needs. If your business has changed over the past year, you run the risk of being underinsured or potentially overpaying for coverage. The business insurance renewal process provides the perfect opportunity for businesses to work with your insurance broker to determine if current policies are still providing the necessary protection.
 

Our experts from Howden Insurance Brokers explain some considerations to pay attention to during this important time of the year and share some insights to get a head start on your insurance renewal.

Have you moved to a new location?

Moving from a home office to a commercial space, expanding to a new location, or opening an additional office could all trigger the need for changes to your commercial insurance policy. In some cases, insurance premiums may actually go down – especially if the new location is smaller and includes enhanced safety features.

Are your employees working from home?

Many companies are taking the opportunity, following Covid-19, to implement more work from home arrangements on a permanent basis. If this is the case, then you should inform your insurance broker as this has implications for the employee’s compensation insurance.

Has your number of employees changed?

As employees join or leave the company, employee compensation coverage levels should be adjusted. This ensures all employees are covered and businesses are not paying for staff members who are no longer with the company. The insurance renewal process is the perfect opportunity for businesses to verify they are carrying appropriate employee’s compensation coverage.

Are you offering new goods or services?

Changes in service offerings may require adjustments to professional liability insurance coverage, and businesses that update product lines should revisit the product liability coverage in their policy.

Have your business practices changed significantly?

If your business practices have changed significantly, you may need to adjust certain policies, such as general liability insurance, or add new ones, such as commercial auto insurance, to ensure the business is protected from additional risks.

Did you purchase new business equipment or physical assets?

The rates for commercial property insurance are based on the type and amount of equipment a business owns. Significant changes to the value of the business property could impact your annual premium.

Did you purchase or sell commercial vehicles?

Businesses that bought or sold a business vehicle will need to adjust their commercial auto insurance coverage if they haven’t already done so. In addition, businesses may need to add hired and non-owned auto insurance if employees use personal vehicles for business purposes. Personal auto insurance policies typically don’t cover work-related driving. A change to the company’s travel radius (i.e. travel to China) could also trigger an increase or decrease in coverage need.

Tips and tricks for managing insurance costs for your business

Reduce costs by bundling insurance coverages

Some businesses may have multiple policies with different insurance companies. For example, a business might purchase employee compensation coverage from one insurer and public liability coverage from another. By bundling all your business coverages into one policy, you may be able to reduce your total premium costs. As an added bonus, having only one business insurance policy can make managing your insurance renewals a little less time-consuming.

Re-evaluate your deductibles

A deductible is the amount of money you pay out of pocket toward a covered claim. Increasing the deductible on your business insurance policy may reduce the cost of your premium. You could then consider putting the money you saved back into your business each month. However, before choosing a higher deductible, consider how much money you'd have available to pay out of pocket to repair your business or replace its contents after a covered claim, like theft or fire.

How can your insurance broker help?

Be informed of the current market conditions

An insurance broker will have updated information about market conditions and this year is a prime example where the insurance market has changed considerably. The political unrests and Covid-19 have been major reasons for the significant change in the insurance market over the past twelve months and so it is possible that premiums will increase. Talking to your broker before finalising next year’s budgets allows businesses to plan early and not encounter any major surprises.

Review of your business insurance policies

Business needs can change rapidly. It's a good idea to review your policy with your insurance broker on a regular basis to help ensure you have the appropriate coverage for your business. You may find that you can adjust some existing coverages or that you need to purchase additional protection. It's also important to note that having insufficient policy limits may result in reimbursement claims that do not fully cover for the amount the damages caused.

Consider stronger risk management

Identifying potential business risks and having the right insurance coverage in place can be financially significant if the unexpected happens. For example, say your company experiences a data breach and you do not have data compromise coverage. This means you'd be responsible for costs related to your business's recovery, public relations response fees or any legal fees you may incur (as well as potential fines from regulators). Depending on the situation, this could mean millions of dollars out of your pocket — whereas if you had cyber liability coverage, your insurer would have helped pay for these expenses. With the ongoing trade tensions between China and the US contributing to the slowing of export growth, tighter credit controls and increase in insolvencies, trade credit insurance is also worth considering for mitigating financial loss relating to these risks.

A reputable insurance broker will provide you with an assessment of your current insurance coverage and update on market conditions, in addition, to evaluate and inform businesses of any uninsured risks. Make sure to reach out to your insurance broker at least 3 months before your renewal date. This will give you more time to explore your options and make an informed decision.