Do You and Your Business Need an Insurance Review?

With the economy faltering, why worry about an insurance review when you’re struggling to grow revenues, retain good employees, and control expenses?  The answer is simple:  coverage deficiencies can expose you and your business to significant risk…and…major losses. 

How do you know if you need an insurance review?  What should you consider in the review process?  What are the hallmarks of a high-quality insurance structure?  Are there any obvious red flags?  Let’s examine these questions. 

How do you know if you need an insurance review?  Ironically, you may not know…until you actually conduct the review.  That’s because most business owners purchase insurance one category at a time…over time:  residences, vehicles, business, watercraft, valuables, and excess liability.  In other words, they use a patchwork approach, one that may expose them to dangerous coverage gaps.  If this describes your approach, you’re a strong candidate for a review. 

What should you consider in the review process?  At minimum, you should think about the following questions: 

  • Does my provider offer competent technical advice?
  • Is the pricing structure correct?
  • Is there transactional simplicity?
  • Are types and levels of coverage sufficient? 

If you are not sure of the answers or if even one is unfavorable, a review may be in order.  

What are the hallmarks of a high-quality insurance structure?  They include: 

  • A sophisticated underwriter – Your underwriter should have a strong credit rating, adequate underwriting capacity, product and pricing flexibility, and claims integrity.
  • A competent account manager – Knowledge minimizes problems, so technical expertise and experience are a must.
  • An agency of sufficient organizational structure (critical mass) – Think “team”!  A team structure means access to service and technical assistance at all times.
  • A trusted advisor – This individual facilitates and enhances the review process.  

Are there any obvious red flags?  Still not sure you need a review?  Consider these questions: 

  • Personal/business liability – Are your limits adequate?
  • Multiple properties – Do you own multiple properties, possibly in multiple states?  Are they properly coordinated?
  • Valuables – Are appraisals current and accurate?  Is coverage sufficient?
  • Special ownership situations – Are special owners (i.e. trusts and limited liability companies) of real and personal property included in program liability specifics?
  • Vehicles – Are all personal and business vehicles considered and properly covered?  Don’t forget recreational vehicles like boats, jet-skis, snowmobiles, etc.
  • Business exposure – Are you operating a business in your personal residence?
  • Adequate coverage – With regard to your personal residence, has replacement coverage been considered?  Is it adequate? 
  • Disability, life, and long-term care – Have you considered these for yourself and other key employees?  How will you fund a buy/sell arrangement?
  • Domestic employees – Are worker’s compensation and other appropriate protections in place?
  • Board exposure – Are you serving on a board?  Do you understand your liability, and are you properly insured for it?
  • Forgotten items – Are things such as flood and earthquake risks addressed?
  • Aircraft – Fractional ownership interests may be overlooked.  Is coverage adequate?
  • Regular reviews – Is there a schedule for systematic review of all coverage?

As you build your business and personal asset bases, you may be overlooking these “minor technicalities”.  Doing so may cost you a bundle! 

Remember – the ultimate purposes of an insurance review are to make sure that you discover any weaknesses…and…that your coverage is excellent.

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