Is Your Insurance Keeping Up With Your Business

Growth strategies are an integral part of small business success. Many business owners don't just want to stay at the same level - many want to grow their sales, customers and profits.But when a small or medium business grows quickly, often the last thing on the owner's mind is updating their business insurance policy.

More often than not, business owners don't quite know what this growth means in terms of their insurance coverage and many don't realise that they might end up with inadequate protection.

In many cases, business owners also don't understand the risk they are placing themselves in by failing to reassess their insurance to maintain pace with the growth of their business.

There are many key reasons to revisit insurance coverage and they include:

- Increase in stock, outgoings or turnover
- Equipment purchases
- Increase in staff numbers
- New premises
- Change of ownership or taking on partners

Here are some examples of where business insurance could have made all the difference:

1. It's a brand new building - it won't happen to me...

A fire broke out in a small supplies store on the bottom floor of a new, three-storey building. The fire spread very quickly, engulfing the building and the fixtures, fittings and stock of almost all the tenants.

One retailer had recently grown their business quite rapidly, with the premises bulging with stock in the lead up to their peak trade period.

Despite several approaches from their insurer and an analysis of the existing insurance program which revealed chronic lack of insurance protection from Business Interruption - there was no cover.

The fire, water and smoke damage resulted in a total uninsured loss for the retailder of approximately $400,000.

The real resulte of saving maybe $1,000 - $2,000 of insurance premium is that the business has gone out of existence and the owners have lost the franchise.



2. My business has grown but do I really need to up my insurance levels?

A small business owner has no Business Interruption or Equipment Breakdown insurance on his policy.

After a period of growth for the business, the owner requested a review of his insurance just prior to renewal, which identified some gaps in his cover.

The owner was reluctant to accept the recommended policy changes due to the associated increase in premium. After the insurer worked with him to point out what was truly at stake in the event of any loss - which included loss of profits - he decided to proceed with the increased insurance protection.

Approximately a year later a fire broke out around his premises, and he was forced to close down. As a result of his increased and new insurance coverage, he was able to get back on his feet and having Business Interruption insurance meant that his loss of profits, while waiting to reopen his business, were insured.

Ted Brumby works hard in his own business. He gets a bit stressed out at times but mostly things go his way. Over time, Ted has learned that things that business owners take for granted, like public liability insurance, are primordial. Thus, according to Ted, the first decision that must be taken when opening or managing a business is to choose a good business insurance.