The Importance of Insurance Reviews: Avoid Common Mistakes That Impact Long-Term Success
Business insurance plays a crucial role in any organisation’s risk management strategy. It provides financial protection against unforeseen events and helps businesses recover from potential losses that could otherwise cripple their operations. However, to ensure the effectiveness of insurance policies, regular reviews are essential. In this article, we will explore why insurance reviews with your insurance broker are necessary and highlight the common mistakes businesses often make during these reviews, which can have a significant impact on their long-term success.
Why Are Insurance Reviews Necessary?
Regular insurance reviews are necessary because the risks faced by businesses are constantly evolving. As companies grow and change, their risks may shift, necessitating adjustments to their insurance coverage.
By conducting regular insurance reviews with an appointed insurance broker, businesses can ensure they have the appropriate level of coverage to protect against evolving risks. An insurance review should assess whether the current policies are still suitable and correctly placed or whether additional coverage is necessary.
Furthermore, insurance reviews help businesses ensure that the premiums they pay are competitive. Insurance premiums can be a significant expense, and many companies end up overpaying for coverage they may not require. Yearly insurance reviews by your broker allow businesses to secure the best possible value for their insurance expenditure.
Apart from evaluating the effectiveness of current policies, insurance reviews can also identify areas where businesses can save money. For example, a business may discover that it can consolidate its insurance policies with a single insurer or negotiate lower premiums by increasing deductibles. By identifying these opportunities with your appointed insurance broker, companies can potentially reduce insurance costs while maintaining the same level of coverage.
Common Mistakes Businesses Make During Insurance Reviews
Mistake #1: Not Conducting Regular Reviews
Failing to conduct regular insurance reviews with an insurance broker is a critical mistake that businesses often make. Yearly reviews are crucial to ensure that policies remain appropriate and coverage levels are adequate. As businesses evolve, their risks may change, and their insurance needs must adapt accordingly. By neglecting policy reviews, businesses risk being underinsured or overpaying for coverage they no longer require.
To ensure regular reviews, businesses should assign responsibility to a manager with decision-making capabilities to work exclusively with an external specialist insurance broker. This manager should then be tasked with conducting regular reviews, assessing the changing needs of the organisation, and identifying areas where coverage may need adjustments with your appointed specialist insurance broker. Regular reviews can help businesses stay proactive with their insurance needs and reduce the risk of being underinsured or overpaying for unnecessary coverage.
Mistake #2: Focusing Solely on Cost
While cost is an important factor to consider when selecting insurance policies with your broker, it is crucial not to focus solely on the price tag. The cheapest policy may not provide the necessary coverage to protect against the specific risks faced by the business. It is essential to assess the coverage provided by each policy and ensure that it aligns with the business’s unique needs.
Businesses that solely prioritise cost when choosing insurance policies risk being underinsured or incorrectly placed with no coverage. Opting for the cheapest policy may mean missing out on critical coverage options necessary for mitigating specific risks. This can sometimes result in significant financial losses if the business experiences a loss or needs to make a claim.
When comparing policies with your insurance broker, businesses should also consider the insurer’s reputation, customer service, and claims handling process. Researching and speaking with other businesses that have used the same insurance broker can provide valuable insights. Choosing an insurance broker with a good reputation for customer service and efficient claims handling can help ensure that claims are processed promptly and effectively, potentially minimising the impact of any loss or damage to the business.
Insurance policies are intricate and multifaceted products that require careful consideration. It is highly advisable to engage the services of a knowledgeable insurance broker who can meticulously assess and compare various policies, offering informed guidance to the client. This expert evaluation empowers the client to make well-informed decisions regarding the allocation of risks between insurance coverage and self-insurance.
Mistake #3: Not Considering All Types of Insurance
Another common mistake businesses make during insurance reviews is limiting their focus to a narrow range of insurance products. For example, businesses may concentrate solely on property and liability insurance while overlooking other types of coverage, such as cyber insurance or business interruption insurance.
To avoid this mistake, it is essential to consider all relevant types of insurance during the review process with your specialist insurance broker. Conducting a comprehensive risk assessment can help identify areas where the business is most vulnerable. For instance, a technology-intensive business may need to consider cyber insurance, while a company operating in a high-risk industry should explore Industrial Special Risks (ISR) Insurance.
By considering all relevant types of insurance with your broker, businesses can ensure they have comprehensive coverage that protects against all their risks. This reduces the risk of being underinsured or facing significant financial losses in the event of a loss or claim.
Mistake #4: Failing to Communicate Effectively with Insurers
Effective communication with insurance brokers is vital throughout the insurance review process. Providing accurate and up-to-date information about the business’s operations and risks helps insurers provide more accurate quotes and ensure the offered coverage is appropriate.
Promptly communicating any changes to the business or its operations during the policy term is also crucial. For example, informing the broker of plans to expand into new markets or launch new products is important. Failure to do so could result in being underinsured or lacking appropriate coverage for these new risks.
Effective communication with your insurance broker also includes thoroughly understanding the terms and conditions of the policies being offered. Businesses should ensure they grasp the exclusions and limitations of their policies and how they may impact coverage in the event of a loss. Seeking clarification from your broker on any areas of uncertainty or confusion is crucial.
By neglecting to communicate effectively with your insurance broker, businesses risk being underinsured or having claims denied due to inaccurate or incomplete information as it is a must to disclose all the information to insurers. Effective communication helps insurers have a clear understanding of the business’s risks and enables them to provide appropriate coverage.
Mistake #5: Neglecting to Review All Policy Documents
To avoid this mistake, businesses should review all policy documents during the reviewal process with their insurance broker. This includes endorsements added during the previous policy term and any new endorsements added since the last review. By reviewing all documents, businesses can gain a clear understanding of the coverage provided by their policies.
Securing Effective Insurance Coverage: The Importance of Regular Reviews
Insurance reviews are necessary for businesses to ensure they have adequate coverage against their specific risks. Avoiding common mistakes such as not conducting regular reviews, focusing solely on cost, neglecting to consider all types of insurance, failing to communicate effectively with insurers, and neglecting to review policy endorsements is crucial. By conducting regular, thorough reviews and addressing these mistakes with your specialist insurance broker, businesses can maintain comprehensive coverage and reduce the risk of being underinsured or facing significant financial losses.
Get in touch with KBI Specialist Insurance Brokers today to discuss your business insurance coverage requirements or to schedule a review of your current coverage options.
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We are a specialist insurance brokerage with an emphasis on adding value to our clients by helping them make an informed decision. Our approach combines that of an insurance broker and consultant, where we focus on providing expert advice to our clients while customising their insurance program and risk management solutions.
Since starting in 2013, KBI is constantly growing and becoming a leader in the Australian market. Our primary point of difference is that we don’t try to be all things to all people. We work in niche areas, where we can tailor an offering, advice and broker support to meet the specific area’s needs.