Get a Grasp on Your Business Insurance

As an owner of a business, surely one of the more aggravating expenses to swallow is for insurance.  Regardless of the various types of insurance you have acquired, you are paying meaningful sums for insurance policies you pray never to need.  Unfortunately, going without is not an option when one misfortune can instantly take down a business.  That doesn’t make it any easier to write the checks, or to hear that internal voice whispering that maybe you’re paying too much for something you never use.

It would be a mistake, however, to follow a common inclination to file the policies away unopened and hope not to think about them until next renewal.  Hopefully, you have a trusted, competent agent who sufficiently understands your business to prescribe the proper types and amounts of coverage, and before the insurance renewal is consummated, has fully explained them to you.  Nevertheless, you own the business, and understand it better than your agent ever could.  You have paid or will pay thousands of dollars for this very necessary asset, and by the way, your agent will not bear the financial burden of any uninsured damages.  You need to satisfy yourself not only that you are receiving what you believe you paid for, but that what you paid for is comprehensive enough in terms of the types, depth and scope of the various coverages to meet all your business needs.

Painfully, you should thoroughly read your insurance policies, and with a yellow highlighter in hand. As you read, some questions to keep in mind:

  • Do you understand what each policy actually covers? Not just in general but specifically.
  • How would the insurance company quantify a covered claim? Understanding this now may avoid controversy later.
  • If an event were to occur do you have the internal means to generate the necessary supporting documentation for claims?
  • Are coverages and policy limits adequate based on current and future business plans? This is a key question for rapidly changing or growing businesses.
  • Really important, are there any coverage gaps to consider filling? This is where your knowledge of the business comes in – what types of things could happen, or what types and values of assets could be at risk, and are they covered?

Alternatively, if reading your insurance policies is simply something you won’t get to, at least have someone else you trust, either your own CFO or perhaps your B2B CFO® advisor, perform this task for you.  Have them prepare a written summary for your reference, and ask them the questions above.  If there are unresolved questions, get your agent involved.  In the end, make sure this task is buttoned down, providing the peace of mind that what you worked long and hard to build is protected.

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