Small business owners often have a long list of insurance policies. Between policies to protect your business, home, and family, it can seem like you’re always paying premiums and handling renewals. But taking the time to review your insurance policies with your broker isn’t something you should skip, even when it seems you don’t have time.
There are countless reasons small business owners should have an insurance policy review, but we pulled together some of the most common and important. Read through the following benefits of insurance policy reviews along with situations that warrant them, so you always know when it’s time to give your favorite insurance broker a call.
Benefits of Policy Reviews
Just as there are countless reasons for reviewing your policy, there are plenty of benefits for doing so. As a small business owner, the following should peak your interest.
Second Set of Expert Eyes
You may know you need to change certain policies when you have major life events but there are lesser known reasons for policy reviews. We’ll be covering several of them in a minute but speaking to an insurance expert like your broker is the only way to guarantee you’re not overlooking anything that deems a policy change. Periodic reviews also help catch possible errors in your policies and prevent headaches down the road should you need to make a claim.
Potential Money Savings
A policy review could reveal you’re paying for coverage you don’t need. This is one way you could potentially save money. Reviewing all of your policies opens up several doors for savings. First, you can compare rates to see if another company can offer you the same coverage for less. You may also be able to combine policies and save this way. Finally, there may be new discounts you qualify for that could shave off even more from your premiums. As a small business owner, every dollar saved makes a difference.
Avoid Legal Problems
When it comes to small business insurance, changes in revenue, services, products, or employees could require changes to your policies. Not complying could put you at risk for legal action. For example, reaching the minimum employees in which you need to offer workers’ compensation insurance might go unnoticed. But should an employee file only to find out you don’t have coverage; legal headaches can quickly follow.
Situations That Warrant Insurance Policy Reviews
Not every situation will apply to all of your policies. Some are strictly business related while others are personal. Some are a combination of both. This guide should help give you a running start on policy reviews.
You’ve Gotten Married…or Divorced
If your marital status has changed, it’s time to review your homeowners insurance (or renters insurance), life insurance, and auto insurance. If you’ve recently married, you may be able to save by bundling policies. If you’ve been divorced, separating your policies is one action you need to take.
You’ve Grown Your Family
When you grow your family with a biological or adopted child, you’ll need to adjust several insurance policies. You’ll want to make sure all of your possessions have adequate coverage, so your finances are protected. You’ll also want to update your life insurance policy and possibly increase your coverage. You may also want to take out life insurance policies on your child(ren) to cover funeral expenses should the unthinkable happen, but this isn’t always the smartest financial move.
Income Changes
As a small business owner, your income will ideally change over time. The first few years of business may not be profitable for you but as business grows, your income should do the same. You may need to increase your life insurance and if your larger income is being used to purchase more possessions, making sure they’re protected is another step to take. Talk to your insurance broker about increasing your business coverage as well as it grows.
New Real Estate
Whether you’re buying your first home, upsizing, or downsizing, your homeowners insurance policy will need to be adjusted. If you’re buying a second home, you may need to add on a vacant property policy until you sell your first house.
Taken Out a Loan
If you’ve recently taken out a loan, whether to help with business or personal reasons, adding loan protection insurance could be a smart move. This type of insurance will cover payments should you die or become ill or injured and are unable to work.
Empty Nester
When your children move out of the home and begin lives of their own — when they no longer rely on you for financial support — is another good time to review your insurance situation. You may find that this is also a great time to consider downsizing your home and home insurance to something smaller, as well as your life insurance. Or you may feel that now is a time when you need to raise your coverage so that you can leave a legacy for your grandchildren. Either way, a long talk with your insurance agent can help you make a decision that works for you.
Change in Health
Have you recently started working out, lost weight, given up a bad habit or two, and started putting your health first? Talk to your insurance broker to see if your new-found love affair with your health could affect your life insurance rates. Discounts on your premiums could be quite impressive.
Sold a Business
If you’re a serial business developer and are always selling a start-up or two, make sure you always reach out to your insurance broker after a sale. The same goes for developing new businesses. Your coverage will need to evolve accordingly. If you’ve sold your one and only business, there’s no sense in paying for policies you no longer need so don’t put off that phone call to your broker.
The Golden Policy Rule
If red flags don’t go off in your head when any of the previous reasons small business owners should get an insurance policy review come about, follow this one rule of thumb. Review all of your policies, both personal and business, annually with your insurance broker. Be ready to provide numbers and data along with answers to a variety of questions to ensure your coverage is always accurate.
