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When should you update your business insurance policy?

Is your insurance keeping pace with your business growth? Our experts explain the importance of regularly reviewing your insurance policy, especially at certain key points in your SME’s lifecycle.

Picture this: you have landed some new contracts and bought additional equipment to meet the increased demand. Unfortunately, a fire breaks out, destroying a large portion of the building where your operations are carried out. You realize that you forgot to notify your broker about the new machinery and that your insurance might not cover it. Besides suffering property loss, your operations will be disrupted for a period of time. Even though you’ve lost revenue, you still have significant overhead to pay. Is your business strong enough to survive this scenario?

Review your coverage

As needs change, so do the risks, says Nathalie Morin, Director, Commercial Lines, for Intact Insurance. She adds that 80% of businesses that had to suspend operations because of a loss, but who didn’t have business interruption coverage, ended up having to declare bankruptcy within a year.

This sobering statistic should prompt you to review your SME’s insurance policy with your broker and make sure it reflects any major changes in your business. You should review your policy at least once a year, and every time there’s a significant change. 

It might be that you purchase new equipment, get more contracts, expand your market share or start exporting your products, maybe even move into a larger space.

—Nathalie Morin, Director - Commercial Lines, Intact Insurance

You should contact your insurance broker at every stage of your SME’s growth or if there’s a change in business operations. If you don’t, it could cost you a lot of money in the event of a loss. You could even end up losing your business. 

“Business owners aren’t being careless here—they simply aren’t fully aware of the risks. One key development they often overlook is increased sales. When your sales go up, you should let your broker know so they can adjust the values in your insurance policy. And you need to insure not just your bricks and mortar, but your revenue as well,” says Morin. Protecting your income is the best way to ensure long-term business viability.

Mathieu Préfontaine, President of M2 Insurance, a home, auto and business insurance brokerage firm, agrees. “Thanks to e-commerce, businesses today are experiencing rapid growth, resulting in operational changes. Keeping your coverage up to date can save you a nasty surprise in the event of a loss. You should review all of your coverages on a regular basis to make sure they reflect your current operations,” he says.

A preventive approach

If you’re not sure you’ve thought of everything, your broker can refer you to Intact Insurance’s loss prevention consulting team. They can help you identify and prevent new risks for your SME during times of change. This service is a valuable tool that helps you put adequate measures in place to minimize the potential impact of these risks.

“This free consulting is a way to share our expertise with our customers. We have a team of 35 professionals who work in various areas. An expert will visit the policyholder’s premises, take a look around and identify the main risks their  business is exposed to, like fire, and liability hazards,” says Nick Cinotti, Director of Loss Prevention for Quebec at Intact Insurance.

“If necessary, the professional will recommend best practices, improvements or changes to facilities. Together, you’ll agree on a plan of action, and an appointment will be scheduled to follow up in a few months,” says Cinotti.

We focus on prevention and awareness with our customers, to minimize the risks to their businesses.

—Nick Cinotti, Director - Loss Prevention for Quebec, Intact Insurance

When it comes to ensuring the success of your growing business, make sure your insurance keeps pace. Remember, your broker is your best source for information and advice. No matter what your strategy is, they can help.

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