Businesses have many risks that need covering, from property damage to loss of income, and much more. However, if you are not on top of your business insurance policy, it could quickly become outdated and leave you exposed.
The consequences of an outdated policy can be quite serious. In some cases, it could leave you in serious financial trouble, whereas in others, you will just incur unfortunate and avoidable costs because you are spending more than you need to.
Let us look at what happens when you don’t update your business insurance policies with an insurance broker accordingly.
Value of Company Has Outgrown Value of Policy
Every business’s goal is to grow. However, as the business grows and its value increases, you need to ensure that the size and value of your insurance policy match the growth of the business.
The increased value of your company will no longer be covered if your policy has not been updated in a while. Your policy will only cover you for the value of the business up to the last time you updated your policy. In addition to sales and cash flow, perhaps you have added vehicles or equipment or now carry a larger amount of stock or materials. Depending on how much you have grown in the interim, you could be severely underinsured.
Therefore, it is advisable that your business insurance policy be reevaluated regularly to ensure that any growth is accounted for so that you are fully covered no matter the eventuality.
Risks Have Decreased
For most businesses, the risk profile decreases as the business becomes more stable as a going concern. There is a more significant set of risks early on, which insurance providers must take into account.
However, as a business’s customer base increases and cash flow stabilizes, the risk profile naturally goes down. If you have not updated your insurance policy with your insurer, then you are most likely paying for a higher risk profile than you currently should be. You may have added security devices or contracted a security service provider for information and systems protection. You may have implemented safety procedures or upgraded equipment or machinery that have more safety features.
It is advised that your insurance provider reevaluate your company’s risk profile so that the risks worked into your policy can be reduced where possible, thereby lowering your premiums.
New Risks Have Arisen
While the risks may have decreased as the company grew, new risks that weren’t present the last time you had your insurance policy reviewed could arise. New risks could result from a number of different things associated with your company’s growth, such as new risks associated with additional roles of employees, new machinery or equipment, new premises, information security and so on.
If you are not covered for these new risks, or if these risks are not adequately disclosed to your insurer, then you could find any claims against these risks being rejected by your insurer, leaving you in a very difficult financial position.
Coupled with this you should keep informed as to any requirements to qualify for new coverage. There are often stipulations in a policy that must be met in order to qualify for a claim. Knowing these and setting up systems to document proof of compliance can save a lot of conflict or additional time to a legitimate claim down the road.
To ensure that your business insurance is properly up to date, speak to a professional insurance broker at Prosperity QB and get the best insurance services for your money today!
