You know the drill — New Year’s means resolutions. For business owners and managers, the new year also means an opportunity to examine all the ways you might want to better protect all that you have worked for in year ahead. Below are a number of reviews you should resolve to check off your list to mitigate overall risk.
1. Liability Levels – Whatever existing business policies you have in place, they all come with various levels of professional or business liability coverage (if you make a mistake, injure someone, cause harm, etc.). However, those liability levels might have been set years ago and don’t reflect the current economic situation. You may also have more business (and personal) assets you need to protect as the result of an error. Make a point of scheduling a liability level review with your broker or agent as soon as possible in the new year.
2. Replacement Value – The 2021 word of the year could easily be “inflation.” You’ve seen it no doubt as you purchase supplies, pay for equipment and even deal with higher employee wages. Don’t forget to factor in the costs of goods and services for any replacement value levels on your existing policies. While you may have had an accurate cost forecast for replacing your building or equipment in 2021 or even 2020, everything has increased, sometimes by a factor of 30 – 50% or more. If you face a loss, be sure you aren’t short when it comes to the necessary cash to replace losses at current market prices.
3. Loss of Use – An important part of your overall insurance package is ensuring that you are covered if you are unable to use your business or facility. Whether by natural disaster or even just an external issue that makes you unable to open or operate (such as something like a nearby gas leak), you may not be able to generate any income. However, hard costs continue to accumulate and a Loss of Use provision gives you compensation to help manage recurring expenses. The new year is a good time to review your Loss of Use coverage and raise limits if necessary.
4. Examine How New Laws Affect Your Liability – Every January 1 brings new laws that affect business owners across the board. 2022 will be no different and be sure you are up to date on new regulations that might open you up to new liability issues. For instance, some California business owners (warehouses and distribution centers) will now need to follow state AB 701, which deals with employee quotas and breaks and meals.
In a nutshell, the new law says that “if a current or former employee believes that meeting a quota caused a violation of their right to a meal or rest period or required them to violate any occupational health and safety law or standard, they have the right to request, and the employer is required to provide, a written description of each quota to which the employee is subject and a copy of the most recent 90 days of the employee’s own personal work speed data.” (per AB 701 text) This means an employer may be exposed to litigation risks if they do not manage reasonable quota levels allowing for legally mandated break and meal times.
5. Discuss New Options With Your Broker – Insurance carriers also use the new year to roll out new products and offerings. Whether it is time for your renewal or not, it’s not a bad idea to schedule time with your broker or agent to look at any new policies or rider/add-on coverages you may want to add to your suite of products in 2022.
6. Identify Ways to Reduce Overall Cost – In addition to looking at options to add to your policy, also take the time to examine ways to potentially remove unnecessary riders or coverages to reduce your overall premium expense. For example, if you are paying an add-on rider to cover a piece of equipment that you may replace with something else or not even use, consider removing that rider off your policy to lower your annual premium.
7. Re-Evaluate Risk vs. Cost – Building off the same concept of reducing overall cost, also take some time in the new year to look at your risk versus cost levels for each part of your policy. If you are concerned with a large deductible if you have a claim and are OK with a higher monthly or annual premium as a hedge, discuss lowering your deductible levels with your agent or broker — he or she can help you find the right balance of an overall expenditure versus your level or risk tolerance in the new year.