Why every business should review insurance policies annually

So what should you be reviewing each year?

Every year it is important to review changes that have occurred in the following areas:

• Buildings cover
  Buildings sum Insured should be based on the rebuilding cost of the property and not the market value and should factor in the extra costs of rebuilding, such as the cost of removing debris or professional fees.
• Stock sums insured
  Ensure that sums insured for stock are sufficient to cover the cost of replacing stock from a wholesaler or supplier and should cover the highest level of stock held throughout the year.
• Business interruption
  Have the right level of business interruption cover. This should include having an appropriate sum insured and an indemnity period that will be sufficient to allow for any issues that could delay a business from recovering after a claim.
• New equipment or tools
  Have you purchased new machinery, computers, point-of-sale equipment, vehicles, or specialist tools? These need to be reflected in your property, contents or all risks cover.
• Increased wage roll
  If wage roll increases, your employer’s liability cover should be updated. Wage roll is a key rating factor, so accuracy matters.
• Higher turnover
  An increase in turnover is great news for your business, but it can impact policy ratings and risk exposure. Make sure your declared turnover is up to date.
• Expanded or renovated premises
  If you extended your premises, moved location, added storage units, or renovated your workspace, your sums insured may need adjusting.
• Additional vehicles or drivers
  New vans, company cars, or additional drivers should be reflected in your motor schedule. Failing to update these changes could invalidate certain claims.
• New services, products, or business practices
  Are you offering new services? Working off-site more? Expanding delivery operations? Even subtle changes can impact public liability or professional risk.

The risk of not updating your cover

Missing an annual review may not seem like a big issue, until something goes wrong and you will wish that you had taken the time to do so. Common issues that can result from not updating your cover can include:

• Claims being reduced because the sums insured were too low.
• Gaps in cover remaining undisclosed until a loss occurs
• Missed opportunities to benefit from reduced premiums through improved risk management

These implications can have a severe impact on a small business, especially for those businesses who are already operating within tight margins.

Review regularly and save your business big problems later

In most cases an annual review can take just 15 minutes and doesn’t need to be complicated. It’s important to always remember to review the business you have today, not the one you had years ago. Your future self and balance sheet will thank you.