Three tips to keep your business insurance effective

When’s the worst time to review your insurance policy? When you need it the most.

But for many businesses, that’s the reality. It’s only once they have to make a claim that they review their existing policy or carefully read the fine print.

Here’s the good news: your business doesn’t have to get caught unaware. In recognition of National Insurance Awareness Day, here are three tips to make sure your coverage — and your premiums — are working for you now, during, and after an incident.

Tip #1: Review your existing insurance policy

To swiftly bounce back after a disruption, make sure your policy is up to date. Before an incident occurs, it’s essential to review your coverage for specific loss situations, understand your limits and co-insurance amounts, and be clear on the terms and timelines.

Different insurers can use different wording in their policies, but business interruption coverage usually covers short-term financial losses (about 12 months) from events that stop your operations. This can include issues like not being able to access your premises, or problems with the supply of goods or services — problems that many businesses face during unexpected disruptions.

However, like all insurance, business interruption policies have exclusions — like losses from strikes, lease breaks, or contract penalties. Knowing exactly what your policy covers is key to planning an effective loss strategy and analysis.

For natural disasters, your business might need different types of policies. For instance, the growing number of wildfires in Canada has led to evacuation orders, restricted access to premises, and power outages that stall operations. In these cases, coverages like civil authority interruption, ingress/egress, and services interruption can protect your business from significant losses.

And, while you’re reviewing your policy, check if it covers professional fees for preparing claims.

Tip #2: Make sure your insurance values are relevant

People often think natural disasters, like wildfires or floods, will raise insurance premiums. And depending on your business, they might.

But if you’ve had closures, drops in sales, and dwindling profits, your insurance values might be lower, which could actually decrease your premiums. Additionally, in today’s tough insurance market, your insurer might not offer the same level of coverage your business needs.

Accurately filling out your business interruption worksheet helps ensure a fair claim outcome. It’s important to think about how you can reduce the loss because this isn’t included in the worksheet.

Insurance premiums are based on your business interruption insurance values. If your revenue has dropped or you no longer have a particular revenue stream, you might be paying for coverage you no longer need. And lower insurance values mean lower policy premiums.

You can confirm your insurance values by engaging a claims professional and conducting a maximum probable loss study. Make sure to consider factors like industry trends, consumer demands, pricing, and potential supply chain issues.

The best time to review your insurance values and see how they impact your employees, customers, and business outlook is now — before you need to submit a claim.