Why on earth would someone spend time writing a “primer” for business owners on commercial insurance?
I mean, think about it. What do we usually hear about insurance?
“Insurance is like marriage. You pay, pay, pay, and you never get anything back.”Al Bundy
Or,
“It’s a rip-off, and insurance companies are just out to make money.”
And finally,
“The wordings are so confusing and full of fine print.”
Every one of those statements does hold some truth. Sometimes you do pay and never get anything back. That makes some sense. The whole premise of insurance is that “the premiums of the many go to pay the losses of the few.” You may go through your lifetime and never have a claim. You didn’t receive any money from the insurer. However, the insurer was there for you in case you did. Is that different from paying Employment Insurance all your life and never being out of a job?
As for insurance companies, out to make money that makes sense too. Aren’t you in business for the same reason?
The last statement about confusion is almost bang on. The contracts can be confusing, so you must understand the wording of that policy. It’s a contract between you and the insurer. You pay a premium to transfer some business risks to the insurance company.
There is no doubt that insurance can be confusing, and therein lies the reason why you need to take some time and learn more about how you can protect your business.
Nobody wants to be over insured so the question to ask is how much is enough? This a question that a qualified insurance broker is well equipped to help you find an answer to.
For property insurance the answer is fairly simple. What is the replacement cost value of your property? Take that figure and allow a percentage for increases over the policy term. Many insurance policies already include that provision. Does yours?
What is your appetite for risk? This question goes to the amount of deductible that you should carry. This is one of the best ways to reduce premiums. If you wouldn’t submit a small claim, why pay a premium based on low deductibles?
For business owners the place of work is important to income and any damage can result in an interruption in the revenue stream. Time becomes of the essence in restoring damaged property so the business may continue producing revenue. The expression “time is money” is never so graphically proven as when a business owner is struggling to carry on operations in the midst of property restoration. Your broker can assist you in selecting the correct form of Business Interruption Insurance, and more importantly, the correct amount to make you whole again.
Selecting an appropriate amount of Business Liability Insurance used to be an objective process based on the value of the asset needing protection from lawsuits. Our society has changed and with it the complexity of legal tangles an individual or business owner needs to manage. Your broker can assist you in identifying these exposures and how to mitigate many of them as the first step in financing the risk with the correct form of liability insurance. It is a process that should and does take some time but consider it well spent.
As for the amount, liberal courts are awarding higher damages these days, so select an amount that represents the value of your asset and add a piece of mind factor. The most-costly part of any business liability policy is in the first $1,000,000 of the limit; excess insurance beyond that is relatively inexpensive.
The short answer?Engage in best practices, self insure as much as you can afford, and buy high limits to cover the catastrophic loss that will put you out of business.
As your insurance broker, I’ll be there to advise and guide you through this process.
Make sure you have enough! email heather@thinkinsure.ca for more information and a complimentary review!
