Every year, plan a meeting with your business insurance agent. Discuss the types of risks your company faces, their changes, and any claims. Then, upgrade your liability insurance. Though not always necessary, an annual review is critical to know what your risks are. And, it gives you confidence knowing you have ample protection in place. Here is what you should consider.
What Claims Did You File in the Previous 12 Months?
Look back over the previous 12 to 18 months. Your business insurance agent can help you with this. Consider any claims filed with your policy. What were they for? Are those risks still present?
In some cases, businesses face claims and losses often. For example, your safety standards may be hard to meet due to the conditions of your environment. Your agent can help you in several ways here.
Identify the Most Common Risks to You so You Can Minimize Them
At the heart of the process is minimizing claims risks. Your agent can discuss with you what claims occurred. Then, you can go back to determine why they happened.
Some common reasons for accidents include:
- Lack of training?
- Not meeting OSHA guidelines
- Poor oversight
- Product failures due to design issues
- Poor maintenance
When you can fix the problem, you should do so. This reduces risks. It also keeps your business insurance costs lower.
Determine If More Coverage Is Necessary For Your Liability Insurance
Though it may seem like your goal is to stop the problem from happening, this is not always easy to do.
In some environments, the risks are always present. Customers can always get sick from your food, even when you take precautions. You may always have a slip and fall risks even with policing. In these cases, it is best to consider if you have enough liability insurance.
- How many claims did you have in the last year?
- What was the total amount paid out by the insurance company for those claims?
- What are the current limits to your existing liability insurance plan?
From this information, you can see if there are risks. Remember, if your claims exceed the maximum coverage on your policy, your company has to foot the bill here. And, with lawsuits and settlements a common concern for many businesses, it becomes critical to monitor liability usage.
At any time of the year, you can update your business insurance coverage. This is critical in situations where your coverage may not be enough long term.
FAQ’s About Upgrading Liability Insurance
What is liability insurance?
Liability insurance is a type of insurance that provides financial protection to an individual or business in the event of a lawsuit or claim filed against them for damages or injuries caused to a third party.
Why is it important to upgrade liability insurance?
Upgrading liability insurance can help ensure that you have adequate coverage in case of a claim or lawsuit. It can also help protect your assets and reputation.
What types of claims should I consider when upgrading liability insurance?
When upgrading liability insurance, it’s important to consider the types of claims that are most likely to occur in your industry or line of work. This may include claims related to bodily injury, property damage, or professional errors and omissions.
How can I determine the appropriate level of liability insurance coverage for my business?
Determining the appropriate level of liability insurance coverage for your business can be complex, but generally involves assessing your risks and potential exposure to claims. You may want to consult with an insurance professional to help you determine the appropriate level of coverage.
What are some common exclusions in liability insurance policies?
Common exclusions in liability insurance policies may include intentional acts, criminal activity, and certain types of damages or losses.
Can I add additional coverage to my liability insurance policy?
Yes, many insurance providers offer additional coverage options that can be added to a liability insurance policy, such as umbrella coverage or cyber liability coverage.
What is the difference between occurrence-based and claims-made liability insurance policies?
Occurrence-based liability insurance policies cover claims that arise from incidents that occur during the policy period, regardless of when the claim is filed. Claims-made policies, on the other hand, only cover claims that are filed during the policy period.
What is a retroactive date in a claims-made liability insurance policy?
A retroactive date in a claims-made liability insurance policy is the date from which coverage begins for claims that are filed during the policy period. Claims that arise from incidents that occurred before the retroactive date are not covered.
Can I switch from an occurrence-based to a claims-made liability insurance policy?
Yes, it is possible to switch from an occurrence-based to a claims-made liability insurance policy, but it’s important to understand the potential implications and limitations of each type of policy. You may want to consult with an insurance professional to determine if switching policies is appropriate for your business.
How often should I review and update my liability insurance coverage?
It’s generally recommended that you review and update your liability insurance coverage on an annual basis, or whenever there are significant changes to your business operations or risk exposure. This can help ensure that you have adequate coverage and are protected against potential claims or lawsuits.
Factors affecting liability insurance premium increases
There are various factors that can cause your liability insurance premium to rise. Some of these factors include:
- Claim history: If we have a history of claims, our insurance provider may consider us to be at a higher risk, which can lead to an increase in our premium.
- Changes in business operations: If we have recently expanded our business, added new services, or changed our operations in any way, this could potentially increase our liability risk, leading to higher premiums.
- Changes in coverage limits or policy endorsements: If we choose to increase the limits of our policy or add endorsements for additional coverage, this will naturally cause our premium to rise.
- Industry trends: If our industry is experiencing an increase in claims, our insurance provider may adjust the premium to account for this. Additionally, changes in regulations or new liability exposures in our industry can lead to higher premiums.
- Location of business operations: Our geographical location can impact the cost of insurance. For example, if we operate in an area with a high risk of natural disasters, our liability insurance premium may be higher.