Not reviewing your insurance policies can be damaging for multiple reasons:
- You could be paying for coverage you don’t need. Review the business classification codes listed on the policy and the wages associated with the classification codes. Is there a classification code listed for services that your company no longer provides? As your business changes, be sure you coordinate with your insurance agent to remove (or add) the appropriate classification codes to ensure you’re covered and covered at the right rate. Different classification codes have different rates. So, it may be that your business is handling the same amount of work and you don’t need to increase coverage, yet you could be paying for a higher rated code unnecessarily.
- Your exposure might be set too low for your general liability or workers compensation. It’s important that you keep wages by classification accurate. For example, review to be sure that with your current (and projected) staff, you are not overstating wages for your sales team that travels outside the office and understating wages for clerical staff. You will be required to complete an annual audit for workers compensation insurance to true up coverage for the policy year, but you may not always be required to complete an annual audit for your general liability. If your business has grown significantly, this could pose a problem with the level of coverage you have.
- You may have forgotten to cover new assets. If you purchase an asset for your business, make sure it’s covered! You will need to provide your insurance agent with the asset details, most importantly how much the asset should be insured for. Have you moved? If you’re in a new space since you last renewed your insurance, you may not have the appropriate coverage for the new space.
Best practice is to review your policy with each renewal or each significant change in your business. Have a conversation with your insurance agent to update them on your business so they may make suggestions to edits on your policies.
Amelia Reynolds, Director of Client Operations