Is your insurance growing with your business?
Why do you buy business insurance? Let’s hope it’s not just because the bank, a landlord, or some other entity requires you to have it.
Instead, let’s assume it’s because you know you need to protect the assets and employees of your business as well as yourself in the event of an incident that is or may be claimed to be the fault of someone or something in the business. Let’s assume you realize how necessary it is to protect the property and assets of the business in the event of a disaster such as a fire.
Now, let’s also assume the business is growing gang busters. Even in this economy, it is possible for a business to grow and thrive. One problem we often see in reviewing coverage for new clients is that the risk that was initially covered has been allowed to be exposed again and therefore needs to be upgraded.
Typically, a start up buys business insurance that is affordable, and offers coverage which will protect a start up business. What often may happen is that as the business grows the coverage in place remains stagnant. That can open up or allow exposure to risk to grow as the business does. Let’s look at how that can happen.
Let’s take Tom’s Flower Shop as an example. Initially, when opening the shop, Tom put business liability insurance in place. He also purchased property insurance for the business as well as having worker’s compensation to cover his two part time employees. Overall, Tom did a pretty good job of purchasing business insurance which offered a good value and an affordable premium.
Two years later, let’s look at Tom’s Flower Shop in more detail. Business has exceeded plan both years. Tom started doing some local deliveries and has his employees use his personal car. He’s added a new walk-in cooler and expanded by taking over the space next to him. He’s had to hire four more people and two of his folks have gone to full-time as he also expanded his hours of operation to Saturday and Sundays.
Business is so good he’s added a new computer system, website, and taken a pay increase for himself.
The problem is, he never discussed any of this with his licensed insurance professional. He is unaware the huge risk of using his personal auto and letting employees operate it. He hasn’t increased the liability coverage to cover his growing business. He hasn’t increased the limits on his property insurance and looked at adding business interruption insurance and mechanical breakdown insurance. He needs to look at certain types of disaster insurance as the business continues to grow and risk grows with it.
Don’t risk your business by not updating and improving your coverage as your business grows. You may be risking all that hard work on one incident which would bring financial doom to your business and assets.