Why you should review your insurance programme

If you own a small or medium-sized enterprise (SME), you probably know that having business insurance is essential throughout the life of your business. But, did you know that the key to staying protected is regularly reviewing your insurance policy?

Although you may have set your insurance policy last year, it might not be relevant to your business in the current environment. Your business will go through many stages and times of change that include fluctuations in profits, staff, and workloads. Changes in society may also cause some disruption to your business, as well as new government or industry policies, not to mention the effects of large-scale events, such as the Canterbury Earthquakes or COVID-19.

These are pivotal points during the life of your business when you should consider reviewing policies and strategies across the board.

Insurance is especially important because it forms a key part of your risk management strategy. Because of its importance, insurance should not be something you set once and forget about, because your business will grow and evolve throughout the years, and this will change your risk profile. Your business may have different or new needs, and there might be elements of your current policy that aren’t relevant for the business anymore. A good insurance broker will help you make the necessary changes, explaining what they mean and any consequences, and work with the insurance company to enact them.

Insurance policies are also subject to change and, by not regularly reviewing your policy, you may be paying more or missing out on extra insurance coverage. You may also be, unknowingly, under-insuring the business, which can be a costly mistake should you need to make a claim. When to consider reviewing your insurance policy

Like your business, insurance is a scalable asset. However, this can mean that, as your business grows and develops, or is impacted by societal or industry events, insurance policies may become outdated, leaving you exposed in some areas and potentially under insured. These are three important times when you should consider reviewing your insurance:

1. When the business and/or environment changes suddenly

As businesses would have witnessed with the global outbreak of COVID-19, some things are unforeseeable. However, it is important that, when these events do happen, you consult an insurance broker and review your current policies. These events can also make it difficult to plan for the future but, by discussing with a broker, you can come up with a plan that will keep you protected as you recover or adapt to new opportunities.

Industries are also subject to various changes, policies, and new legislation. These can impact areas of your business and, depending on the legislation, it can also require a change in insurance policies to ensure you still have the most appropriate coverage.

2. In long periods of growth or reduction 3. Once a year, no matter what

For most businesses, the overarching business goal is growth. As the business evolves, you will most likely scale up and out, either in physical locations, staff, workloads, clients, partners, services, and/or equipment. For the company and its assets to stay protected, each of these new elements needs to be considered in the insurance policy.

On the other side of this is loss, whether this be a loss in profits, business, clients or purposefully scaling down. Reviewing your insurance is important in this period to ensure that you are not paying for services that are no longer needed and that your policy continues to match the business’s needs. For example, if your turnover is less than expected, your gross profit sum insured is likely to follow the same trend. At your renewal date you can work with your broker to organise a business interruption adjustment that can sometimes mean you get a credit on your insurance premiums. The beginning of each calendar year or financial year are good times to review your insurance. Although your business may not have changed dramatically during the previous year, insurance policies and premiums may change and update during this time. You may be able to find a policy with a lower premium or make improvements to your current policy with minimum, or no, extra fees involved.

Setting a regular time of year to review policies with your broker will help you to stay on top of your insurance and your risks, leading to better business practices.

To find out more about why you should review your business’s insurance policy and make sure that it’s the right policy for you and your business, give the team at BrokerWeb Risk Services a call on 0800 644 444 .

REDi Builders’ Insurance is administered by BrokerWeb Risk Services Limited and is exclusive to NZCB members. BrokerWeb Risk Services also operate the NZCB members’ only, Insurance helpline and can be contacted on redi@bwrs.co.nz or 0800 644 444.