Take the time to re-evaluate your business insurance

Business owners often put their insurance program on autopilot, automatically renewing their policies without comparison-shopping or closely examining what has changed in their business. That might have been OK in boom times, but today, when most businesses can’t afford to waste a cent, you need to make sure that you’re getting the best deal for your premium dollar.

It’s an excellent time to save money on your liability and property insurance. Many insurance companies are reducing premiums and offering more comprehensive coverage because we are currently in a “soft,” or buyer’s, insurance market. They are offering lower rates, and you often can get expanded coverage for the same price, or even less than what you’re currently paying.

The first step is to talk with your insurance broker or adviser to make sure that your policy is still suitable for your current operation. A coverage audit will show if you are properly covered for your current exposures and have all of the insurance you need — and none of what you don’t need. Ask your insurance professional for an audit at least annually — a few months before policy renewal is an excellent time.

Additionally, have an audit whenever there is a major change in your business — for example, an acquisition, a new product line, closing or opening an office, or a significant change in revenue. If you plan to reduce your workforce soon, let your insurance professional know, so you can adjust your workers’ compensation insurance accordingly.

Keep your policy values up to date. If your business owns valuable property, such as furniture, machinery, computer hardware or other valuable equipment, or the building itself, you must know the replacement cost in order to purchase appropriate property insurance. Another thing to keep in mind is advising your insurance professional about any upgrades made to the property recently. An appraisal is a good idea because any replacement values have changed dramatically over the last 12 to 18 months due to various factors such as cost of oil, labor and other hard costs.

Many businesses have unnecessarily low deductibles. Increasing a deductible is one of the simplest and best money-saving moves, but you have to be comfortable with assuming more risk. Determine your tolerance for loss when evaluating your deductibles.

You can use the money you save to expand your protection. Getting sued by a disgruntled current or former employee who believes he or she was discriminated against or harassed is a real risk. Consider buying employment practices liability insurance, or EPLI. If an employee sues, claiming sexual harassment, discrimination in the workplace or wrongful termination, the EPLI policy will pay for a lawyer to defend your company. The policy also will pay any judgment or settlement up to the policy limits.

Many business owners skip EPLI because of what traditionally may have been higher premiums. However, now you can probably add it for a reasonable fee. Other options to consider are Internet and privacy-breach coverage, environmental insurance, professional liability (also known as errors and omissions insurance), and employee crime policies. If you have a board of directors in place for your business, directors and officers liability is strongly recommended as well.

Shop around

Always ask your insurance adviser to obtain quotes from several carriers as part of your renewal to ensure that you’re getting not only the best price, but equally important, the best quality of coverage and overall value.

This can’t be done at the last minute. Your broker should start the process about 90 days before renewal. Chances are, given current market conditions, you may be able to get more coverage for the dollar now, as many carriers are vying to keep your business and are offering more in order to do so.

While price is important, make sure that you’re getting full coverage. Take the time to learn about your insurance so you’ll understand exactly what you are covered for.

Does your broker provide value-added services beyond getting competitive quotes? Some important services to look out for include claims management, loss control (safety consulting), risk management and vendor-contract reviews related to insurance requirements. These services can help you control your risks, reduce losses and ultimately cut your premiums.

Is your insurance adviser able and available to help you re-evaluate your risk exposures and coverage needs? If not, you may need to shop for another broker. Business insurance is complex, and getting good advice before you have a claim is invaluable.

Chris Snow is account risk manager with the Portsmouth office of HUB International New England, one of the region’s largest insurance brokers. He can be reached at chris.snow@hubinternational.com.