Why You Should Do an Annual Policy Review

Small-business owners are accustomed to doing annual employee reviews, audits and reviews of existing inventory. Unfortunately, many forget the most important annual review of all – to look at your insurance needs.

There are several reasons your business might need to increase or decrease insurance coverage. Following are some of those reasons:

Property and Casualty Coverage: Have you purchased or disposed of property or equipment? If so, it may be time to update your existing policy to show changes to capital investments.

General Liability: Expansion of the physical property, new locations and expanded product or service offerings may need more layers of liability protection.

Health, Disability and Other Employee Benefits: New hires, especially those in critical positions, may change the overall status of health insurance premiums for the entire company. Take time to carefully analyze the needs of employees versus expenses to find the right balance between cost and benefit.

Commercial Auto Insurance: Whether you have an entire fleet of company-owned vehicles or simply use employee vehicles to run errands, take time to audit transportation trends. Be sure to speak with your insurance agent about mileage adjustments, accidents or other changes.

Key Employee Insurance: Critical employees, including the primary business owner, may need special insurance to protect the company in the event of a disability, injury or other situation where specialized knowledge or skill is required, especially if the business plans to seek outside investment or financing.

Umbrella Policy: Savvy small-business owners may want to invest in two umbrella policies – one for the business and one for their personal coverage. Umbrella insurance, also known as excess liability, provides protection against claims that may exceed the normal policy limits. As the business grows, it is important to increase the limits of coverage without breaking the bank. Umbrella insurance allows business owners to cut risk without making major changes to the primary policy. Instead, the insurance can grow as your business grows, simply by adding an umbrella policy to enhance the existing coverage options.

Workers’ Compensation: Workers’ compensation costs are not set in stone. Instead, they are a reflection of the overall industry, personal record and general classification structure of the company. Doing an annual audit ensures that the latest information remains up to date and potential deductions are taken into account.

Bonds: If your business deals with issues of trust and security, bonds are already a big part of your business. Changes to employee status can have a profound impact on your bottom line and business reputation. Make a point of knowing how employee conduct both on and off the job may impact your company.

Equipment Coverage: Contractors and others concerned with the loss of equipment, vandalism or destruction of property should invest in ample equipment coverage, especially if it is an expensive investment or critical to the work process of the business.