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  • 7 reasons why you may need to urgently update your business insurance

    Every company strives for growth, whether that’s increased end of year profits, a bigger team, or moving its operations to larger premises. Business growth is the ultimate indication that your company is doing well – and while it’s important to acknowledge and celebrate these milestones, it’s also vital that any change in circumstance is reflected in your business insurance cover too.

    7 reasons to update your business insurance

    As most modern business owners will be aware business insurance takes on many forms, from policies that protect your employees in the event of an accident at work, to those which cover loss, theft or damage to your office or its infrastructure. What all these policies have in common is that they protect your business financially at times of risk, offering you a lifeline that could be the intervening factor between keeping business in the black, or facing financial (or reputational) ruin.

    Even organisations that already have comprehensive business insurance in place have a responsibility to review these policies regularly to ensure their level of cover is still relevant. Remember, an insurer relies on you to communicate any change in circumstance that, if left unreported, could render a policy void or inadequate. As your business grows in size and stature, so too does your protection needs – and it’s at this point, it may become necessary, to revise or upgrade your existing business cover accordingly.

    Here are seven of the most common scenarios that mean a change to business insurance may be required:

    1.  A change of office or operating location

    As your business grows in size you may find the limitations of your existing head office or warehouse space too restrictive for your employee headcount or stock level demands. While no one will penalise you for switching your operation to a new address, it’s vital that any business insurance policies covering your existing premises are updated accordingly. Fail to alert your insurer to a change of address, and you risk not only being covered for your new building but also for any equipment or business assets you store there.

    The same is true if you decide to downsize your operation and move to a smaller operating space. Your insurer will still need to update the information they have on file, and will likely need to recalculate your premiums to reflect your change of circumstance. This could even lead to a lower policy price in cases where the office space has significantly reduced in size, or has better provisions to protect against natural disasters and security breaches.

    2. Hiring more employees (or letting existing ones go)

    As soon as you make your first workplace hire you effectively become an employer, at which point it’s necessary to take out employer’s liability insurance that protects those who work for your organisation. This type of business insurance policy is generally calculated on employee headcount, so as your business expands and recruits more staff, you’ll need to up your employer’s liability protection to include everyone that works for you.

    Similarly, if your business enters a period of financial hardship and it’s necessary to make a series of redundancies, or the scope of your operation changes and employees are consequently required to work in locations other than those stipulated in your insurance, you need to let your insurer know. All of these seemingly incidental changes have an effect on employer’s liability insurance, which could put your company at risk if left unreported.

    3. Expanding your company’s product portfolio

    If your business is one of the millions worldwide that manufactures consumer products or component parts for B2B customers, you’ll need to have comprehensive product indemnity insurance in place to protect you in the event of a defect in your production line. With a faulty or defective product liable to cause injury, profit loss or, in the most extreme cases, fatality, ensuring your organisation is adequately protected in the event of a claim brought against your company is paramount.

    As you introduce new products to the market, it’s important to include these within your insurance itinerary, specifically if your insurer requires you to individually insure each product in your catalogue. As well as offering you cover that protects against a negligence claim, this type of insurance can also extend to loss or damage of physical stock, or breaches of your intellectual property, so it’s a vital one for manufacturing companies to keep updated.

    4. Increasing (or decreasing) your business’s vehicle fleet

    If you operate a fleet based business, you’ll need to have car insurance that protects you in the event of damage to your vehicles and drivers, which could have a detrimental impact on productivity and your ability to fulfil contract requirements with clients. As your fleet expands in size your insurer will need to be kept informed accordingly, to ensure every business vehicle operating under your company’s banner is adequately insured.

    Likewise as your fleet ages, or sustains any extensive damage, which could impact its reliability on the road, your insurance needs could be subject to change. At such times it’s important to have a frank and honest conversation with your fleet insurer, as failure to disclose such details might qualify as a breach in your policy terms, and render your protection invalid, putting your entire operation, not to mention the wellbeing of your drivers, at risk.

    5. Winning new clients or entering new operating territories

    Converting new customers to your product or service is all part of growing a business successfully, but it can also impact your existing business insurance, particularly if these contracts require different ways of working, or exporting your business outside of its usual geographical remit. If, for example, you suddenly switch your manufacturing to a new factory, or you begin accepting customer orders from a new international territory, it’s vital these changes are registered with your insurance provider, who can update your existing cover accordingly.

    Doing business outside of the UK can be subject to different laws and legislations other than those we abide by in Britain. If you start shipping items overseas, or travelling to client meetings outside of the UK, you’ll need to ensure your product and employer’s liability insurance is enough to cover these activities. Fail to do so and you risk being out of pocket financially in the event stock goes missing in transit, or an employee suffers an accident abroad while performing under the scope of his or her role.

    6. Changing the nature of your business offer

    One of the ways businesses seek to survive in uncertain economic times is by remaining agile and adapting their offer to suit changing market needs. If your business has recently entered a period of transformation, that means it no longer offers the primary service or products covered by your business insurance policy, it’s imperative you seek out renewed protection that reflects your change in circumstances.

    Even if your business premises, company name, and team matrix remain the same, altering the scope of your company’s main service or function can have a knock-on effect when it comes to the level of protection your business, and its employees, require. In cases where a company revises any (or all) of its business offer, it’s vital your insurer is kept informed so they can update your insurance policy terms and advise you of any further protection requirements you may need.

    7. Merging with another company (or striking out on your own)

    If your company merges with another organisation, or similarly parts ways with one to form its own independent operation, your business’s insurers will need to be kept in the loop to avoid a lapse in cover for either organisation. In cases where two companies join together, if both have prior business insurance with different providers, a new joint policy will need to be established that treats both businesses as one unified entity.

    If your company branches off and becomes an independent arm of another organisation than as well as taking out business insurance for liability, you’ll also need to consider Director’s and Officer’s insurance for the leadership team in charge of your organisation. This type of business insurance is becoming increasingly commonplace to protect the structure of larger organisations, particularly ones where the founding partners have a stake in the company’s financial affairs. Director’s and Officer’s insurance ensures that, should a claim arise against your company, the personal assets of those in charge are protected.

    The seven scenarios we’ve outlined here represent just a fraction of the common changes to business practice that are known to have a direct bearing on a company’s business insurance protection. However, these examples are not all-encompassing reasons why it may be necessary to update your business insurance, and we highly recommend you alert you insurer to any change of business circumstance, no matter how seemingly small or insignificant.  

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