Can you remember how many times you were underestimated? That crush who never gave you any attention? That teacher who said you wouldn’t amount to much? That boss who didn’t give you that promotion you deserved? While these people were clearly wrong about you, in terms of business insurance, you can’t afford to underestimate your risks today.

No more cookie-cutter policies! 

Business insurance policies are just as unique as the businesses they protect. On one hand, “over-insuring” will drive up costs for something you may never use, on the other hand, “underinsuring” can leave unnecessary gaps that can cost you dearly in the event of a claim.  

So how can you determine the right formula?  

Here are some tips to help you make a more informed decision about your business insurance:

1. Take stock of your risks 

• Loss of material goods (total values for building, equipment and merchandise) essential to your business. 
• Business interruption losses (how much does a day, week or month of interruption amount to?). 

2. Calculate the fair replacement value of your assets

• Appraise the replacement or rebuilding cost of your property. One of the key components to protecting your property is obtaining a trustworthy and full insurance valuation completed by a qualified appraiser. An appraisal will ensure that the entire property is covered to an adequate dollar amount.
• Determine which items deserve to be insured at “replacement value”, (i.e. the cost of replacing a property of comparable quality at the current date); in “real value” (i.e. the cost of replacing a good, less depreciation according to age and wear) or in “purchase value”, or the value of the good as at the date of original purchase. 
• Adequate protection should be based on recent assessments of the replacement value of your equipment. It is strongly recommended to have the replacement/reconstruction value of your buildings and goods assessed at least every five years. 
• Note that most insurance policies include a coinsurance clause ranging from 80% to 100% of the cost of replacing your goods. If the insured value does not comply with the replacement value, the difference will be payable out of pocket, even in the event of a partial loss. 

3. Separate staff from sales 

• Determine which assets and equipment belong to the company and which belong to your employees. 
• If applicable, determine what percentage of personal property and equipment is used for business purposes (e.g. car, cell phone, tablet, etc.). 
• Remember that your employees’ personal property and equipment (including cars, jewelry, electronics, etc.) are mostly already covered by their respective auto and home policies.

4. The devil is in the details! 

• If your operation is unique in any way, don’t hesitate to mention it to your broker. Chances are, a special clause or “extension” may need to be added to your policy to ensure adequate coverage.

What is a straightforward claim process really worth? 

It’s usually when things go wrong that we realize the “real” value of our insurance policy. Choosing protection that truly meets your business needs – versus one that is competitively priced – can make the difference between a nightmare you forget by the next morning and a recurring one that haunts you for months. 

Nothing beats the assistance of a broker who understands your business to protect your business. Take control of your insurance. Contact an LMBF expert for a 15-minute call – it’s 100% informative and non-binding.