In this short article, Adrian Kitchin, Managing Director of Insurance Advisernet Australia and New Zealand explains how you can be sure you’re getting the best insurance for your business. An important path to peace of mind for the business owner, allowing them to get on with business without having to worry if they are covered for any eventuality.
1. Examine your risks
The first step to knowing if you’ve got the right insurance is to examine your business for areas of risk and opportunity. Where do you make your money, at what points in the manufacturing or distribution of your product are there potential risks? You might run a food business – where could your food get contaminated or spoiled. You might be a consultant – where could your advice cause damage for your client? You might run a heavy goods distribution business – where are the dangers for your production staff?
Any smart business owner will be able to review their business and find areas where risk is higher. They also intuitively understand where they make money in a business. They know who their key staff are, they know their most popular products.
Insurance that is best for your business protects the areas of highest risk and it also ensures the most profitable areas of your business can proceed without interruption.
2. Get advice
The benefit of using a broker is they don’t work for the insurance company – they review multiple insurers and then help you match the risks you’ve identified above to the best offer in the market. They are working for you, not the insurance company – so getting an expert to look at your risks, noting any you might have missed and then reviewing policies for the best match to your circumstances is a smart way to operate as a business owner. You have an accountant to manage your tax obligations, a lawyer to manage your legal obligations – it pays to have that 3rd advisor, the insurance advisor, to be there to manage your risk and insurance obligations.
3. Look for gaps
One of the biggest gaps in insurance is underinsurance. As property values change or business turnover increases, inevitably the sum insured will become inadequate, so ensure you have the right insurance with the right values covered.
4. Be active with your insurance
Work with your adviser. Don’t wait for renewal once a year to check your covers. Put in place a regular review, maybe once a quarter when you do your BAS reports. Have a checklist you go through on key items to check on insurance covers. It doesn’t mean you have to update the policies, but at least you’ve checked to see if any new risk has opened up that could lay uncovered for months until the next annual review. Any circumstance changes should be communicated to your adviser in any event. New staff, new clients, new properties, new car, new contracts, sale of assets are all triggers for the active business owner to get in touch with their advisor.
5. Don’t use price as an indicator of GOOD insurance
It is incredibly important for a business owner to be very careful of using price as an indicator that they have the best insurance. Often the best insurance isn’t the cheapest. Insurance isn’t a commodity product – there is often a trade off in pricing whereby the cheaper insurance doesn’t have as many inclusions, or more exclusions. Sure, aim for a good deal and a good adviser will do this anyway., but have a policy wording that reflects your exposures first, then worry about price as a secondary aspect of your purchasing decision. Any trade offs in cover should be done in a conscious manner based on the right advice. Don’t be caught buying cheap insurance and then finding out when it comes to claiming an event that you aren’t covered. I have never met a business owner concerned about their premium when their claim is being paid.