The economic fallout of COVID19 has placed cashflow pressure on many businesses across Australia. With this, comes cost cutting, and for some, insurance is seen as a non-essential expense when considering your other competing financial priorities.
Below we explain why you should think again before cancelling cover, and how an insurance broker can play an important role in achieving value for money from your business insurance program.
Don’t cancel your insurance because…
1. Perils still happen!
Despite the fact your business may not be operating ‘as normal’ in the face of COVID-19, insurance is still paramount!
Unfortunately, storms, floods, fires, water damage and theft still occur. Whether it be your business premises, a commercial property you lease, or a commercial vehicle, it’s important to protect crucial assets from costly damages as a result of a physical event.
Did you know? Insurance is more important than ever in the event your business cannot operate from its usual premises. Vacant properties attract a greater risk of break-ins, fire, vandalism and water damage. Be sure to tell your broker or insurer if your property or business premises is vacant for a time period that exceeds 30 days. Insurers see vacant properties as an increased risk to insure, and additional policy terms and conditions can apply. Failure to notify insurers of a property vacancy can also lead to coverage issues if a claim occurs based on your Duty of Disclosure (LINK)
2. Cover is required for legal reasons
In some industries, certain policies are legally required in order for you to operate. This may be in accordance with licensing conditions e.g. in some states, Strata Managers are required to hold a certain level of Professional Indemnity Insurance in order to provide a service.
All other risks aside, before cancelling any insurances as a cost cutting exercise, make sure you can legally operate as a business, and are not breaching any licensing terms by providing services without them, or at a coverage limit below the required level.
3. Contractual obligations
Do you have any contracts in place (past or present) that require you to hold a certain level of Insurance? Be mindful of this when looking to make any changes to your insurance policies, or cancelling cover all together. You may be in breach of a requirement under your contract or lease.
4. You may be exposed to losses from alleged errors or omissions from previous work.
Do you provide a professional service or professional advice? If so, it’s likely you have Professional Indemnity Insurance. Professional Indemnity Insurance is designed to protect against any losses alleged to have occurred as a result of any errors or omissions made in the course of carrying out your work.
Cancelling Professional Indemnity cover can be very risky due to the nature of the policy. Professional Indemnity Insurance is a claims made policy, which means that the current policy in place is the one that responds to all claims made during the policy period. Your policy may also have retroactive Professional Indemnity cover for past incidents that you were not aware of at the time of taking out the cover – these can go back many years.
If you cancel your Professional Indemnity cover, there is no insurance protection in place for any claims that come to light as a result of your past work. This is a significant financial exposure, where you will be left to foot the bill for your own legal defence costs and any damages payable for a breach of your professional duties.
Before cancelling any insurance, speak to an insurance broker. An insurance broker can help you achieve a cost-effective way forward for your business, while retaining essential insurance protection.
What does an insurance broker do?
CBN Insurance brokers are highly trained professional advisors who will work with you to identify risk exposures in your business, providing specialist advice and appropriate insurance solutions designed to mitigate these risks and protect your business in a claim.
How can an insurance broker help you get the best value from your insurance?
Professional advice & specialist knowledge
An insurance broker provides professional advice on the most suitable, and best available cover to protect your business. They assess your risks, advising you on essential covers, and also how you can structure coverage in the most cost effective way. For example, adjustment of coverage limits, excesses, cover exclusions.
Exclusive insurance markets and products
CBN Authorised Brokers have access to broker-only insurance markets with exclusive insurance policy wordings and premium rates. For you, this can mean more cost-effective premiums and policy coverage inclusions than is available to the general public, delivering better value when it comes to your insurance coverage.
As Australia’s largest Insurance Authorised Broker Network, and a member of the Steadfast group, CBN are able to negotiate and achieve these benefits for clients through economies of scale.
Claims – we advocate for you to achieve the best possible settlement
In an insurance claim CBN Authorised Brokers advocate for you. Brokers work hard to resolve your claim efficiently, communicating with you at each key stage. The technical knowledge of an insurance broker and strong insurer relationships can make all the difference when negotiating to achieve the best possible claim outcome.
CBN Brokers can offer clients premium funding facilities. Premium funding can be utilised to pay your insurance premiums monthly, spreading the cost over 10 monthly payments. This can ease the financial strain of a lump sum payment, freeing up cashflow in your business for more immediate needs
For professional insurance advice, connect with a CBN Authorised Broker.
This article provides information rather than financial product or other advice. The content of this article, including any information contained in it, has been prepared without taking into account your objectives, financial situation or needs. You should consider the appropriateness of the information, taking these matters into account, before you act on any information. In particular, you should review the product disclosure statement for any product that the information relates to it before acquiring the product. The information provided in this article is not to be taken as legal advice.
Information is current as at the date the article is written as specified within it but is subject to change. Community Broker Network Pty Ltd and Community Broker Network Authorised Brokers make no representation as to the accuracy or completeness of the information. Various third parties have contributed to the production of this content. All information is subject to copyright and may not be reproduced without the prior written consent of Community Broker Network Pty Ltd.