Disability Insurance for Business OwnersJune 28 is National Insurance Awareness Day. No, it’s not the Fourth of July, and you probably won’t break out the grills and fireworks to celebrate insurance. (And maybe that’s a good thing, considering the risks associated with fireworks.) Nevertheless, there is one smart way to observe National Insurance Awareness Day, and that’s by making sure you have the coverage you need.
Review Your Polices
Whether you’re looking at personal coverage for yourself and your family or commercial coverage for your company, you want to take a look at all the policies you have, as well as the policies you don’t have but might need.
For individuals and their families, the most common insurance policies tend to be homeowners insurance, auto insurance, life insurance and health insurance. You may also benefit from umbrella or excess liability insurance. Other insurance policies may be suitable based on your activities. For example, if you’re planning to travel, you may need travel insurance and possibly kidnap and ransom coverage. If you have a family office or domestic help, you may need commercial coverage, workers’ compensation and employee benefits. Insurance for watercraft, aviation, equestrian activities, investment properties and other types of coverage may also make sense, depending on your situation.
For businesses, some of the most common coverage types tend to include commercial property, commercial auto, general liability, workers’ compensation, errors and omissions, directors and officers, cyber liability, and employee benefits. You may need additional coverages based on your activities and industry.
Check Your Coverage Limits
When you look at your policies, one of the most important things to consider is the coverage limit, which is the maximum amount your policy will pay for a specific type of loss.
According to Verisk, reconstruction costs increased 7.2% between January 2021 and January 2022. As prices increase, you may find that your personal and commercial property limits are no longer sufficient. You may also need to increase your limits based on changes to your property, for example, renovations that you have had done.
Note that individual items can have separate items. For example, even if you have a homeowners insurance policy with a $500,000 limit, your limit for individual items may only be covered for up to $1,000 to $2,000. Expensive items, such as jewelry, may be worth much more, so you may need to schedule these items separately to secure sufficient coverage.
Also, consider your liability limits. Verisk says that large jury awards are on the rise due to litigation funding and other factors. If your liability limits aren’t sufficient to protect your assets, excess liability insurance can provide additional coverage.
Consider Your Exclusions and Endorsements
Insurance is insurance, right? Yes and no. While policies that offer the same fundamental type of coverage likely bear many similarities, there can also be significant differences.
If your policy contains exclusions or other requirements for coverage, you might find that you don’t have the coverage you thought you had. This is the situation many business owners have found themselves in when they tried to file a business interruption claim for loss of income due to COVID closures and discovered that their policy excluded losses caused by viruses. (This has led to litigation, but Business Insurance says that U.S. Circuit Courts of Appeal have been siding with insurers.)
Endorsements are also important. While an exclusion can limit or deny coverage, an endorsement can add coverage. If you have unique risk exposures or need additional coverage, you may be able to get it through an endorsement.
Adjust Coverage in Response to Changes
Maybe you’ve had a baby, renovated your kitchen or acquired some fine art. Maybe your business has hired new workers or expanded its services.
If you’ve had any life changes, or if your business has had any changes, your insurance needs may have changed as well. As a result, you may find that you need to increase your limits, add an endorsement, schedule an item or secure a new type of policy.
The Importance of Insurance Awareness
Most people think about insurance at only one of two times: when they’re buying a new policy and then again when they need to file a claim. In the meantime, their insurance needs may have changed dramatically. If so, they might find that they don’t have the coverage they need when a claim occurs.
National Insurance Awareness Day is a good opportunity to check your insurance coverage before a claim happens. If you need assistance reviewing your coverage, Heffernan can help. Contact us.
