Another financial year is coming to a close, which means it’s time to reassess your business’ risk management and insurance plan. Reviewing your insurance is an essential task. If the 2019/2020 financial year has taught us anything, it is that business insurance is one of the most important investments you can make. We know you’ve probably got a long checklist to get through, so we’ve put together a quick guide to help you evaluate your insurance this EOFY.
The thought of insurance during this busy time might not have crossed your mind, and you may even be considering an automatic renewal of your current policy. While this sounds like the easier option, it may not be the best solution. Over the course of the year, your business may have undergone changes that have opened doors to new risks you might not even be aware of. Some of these changes include:
New premises or working arrangements
If you are planning to move into a new premises sometime in the next year, it is advisable that you take this into consideration when reviewing your insurance plan. According to Legal Vision, many commercial leases require tenants to take out insurance for all plate glass windows on the premises to help secure the property owner’s interest. Other structural parts like the walls, floors, and fixtures may also be the responsibility of the tenant to repair or replace for the duration of their lease.
If your employees’ working arrangements have changed as a result of COVID-19, it is advisable to review your insurance policy to accommodate these new changes. For instance, you may have provided staff with equipment to be able to work from home, so now would be a good time to review whether your current policy provides cover for these items outside of the office.
New equipment and/or vehicle
You may have purchased or sold a piece of equipment and/or bought a new company vehicle. It is important to make sure that your schedule of equipment and/or vehicle is up to date. In the event of an accident, natural disaster, or theft, you want to be sure all of your items have been included in your insurance policy. If the equipment or vehicle is declared a total loss, having an appropriate insurance plan will cover you for a replacement without taking a financial toll on your business.
If you have, or are planning to hire subcontractors to assist with your business, then you should be aware of the legal liabilities you have towards them. Should they have an accident or face life-threatening injuries at work, you and your business may be held liable. That can be a very costly expense should you not have the proper insurance cover in place. It is important that you also include a condition in their contract that makes it compulsory for subcontractors to have their own insurance if they don’t already have one.
Expanding your business is usually a positive sign, and as it continues to evolve, so should your insurance. Your current policy may not provide cover for new products or services, and that’s risky for you, your company, and everyone involved. If your business has added a new product line, then your product liability insurance must be up to date to ensure appropriate cover for your business.
Insufficient insurance coverage may lead to costly compensation that could heavily impact your business. If you’re thinking of expanding in the next financial year, it is a good idea to speak to your broker before you make any changes.
Don’t undervalue your business
There isn’t much point having insurance if it isn’t tailored to the needs of your business. It’s shocking, but there are many business owners out there who are currently underinsured. According to the Insurance Council of Australia, the most common reasons for underinsurance are:
- Not being able to afford more insurance
- Feeling that the costs of premiums are too high
- The belief that no insurance policy can ever adequately insure their business
In one of our previous articles, “SMEs are walking a tightrope”, a survey by QBE revealed that over 60% of business owners are aware they aren’t covered by a suitable insurance plan. While many in this category understand the need for insurance, the temptation to save costs on ill-fitting policies has led many SMEs down the path of being just one liability claim away from going out of business.
We understand the end of financial year is often a chaotic time for small businesses and you may have other pressing matters to attend to. However, protecting your business is crucial in the event of unforeseen circumstances. This is where we come in. The team at East West Insurance Brokers will work closely with you to assess and re-evaluate a suitable insurance plan that fits your business.
Important Note: All insurance policies have exclusions. Please refer to the Product Disclosure Statement or Policy Wording to decide whether an insurance policy meets your needs.