Unsure as to whether you and your business have adequate insurance coverage? Just imagine it’s 4 a.m. and you just got a phone call to let you know that the building your company calls home has burned to the ground.
“Trying to walk through that loss scenario is probably the easiest way to try to visualize what your coverage needs are,” says John Nixon, president of Asperta Ltd. “What are you going to do? Part of that conversation is how you are going to notify your employees. What do I need to get back in business? What were the things I had purchased before that I’ll need to repurchase? How do I get them quickly, and how do I maintain my employee payroll while this is happening?”
Nixon, who is also the property insurance consulting firm’s founder, says a good start to being prepared for the worst is to have a good sense of what you’re responsible for.
“It’s your stuff,” Nixon says. “It’s your contents and the building that you’re in if you own or are responsible for the insurance in the building. Have an inventory of what you have and have that [is] stored off-site. Keep it up to date on at least an annual basis. Those are basic business practices (that) I think businesses are actually better at than a homeowner because they have accounting departments and they have to keep track of that stuff for tax purposes.”
You should make arrangements to walk through your building with someone from your insurance company on a regular basis to make sure you have the coverage you need.
“That’s actually how I started in the business, being the guy who inspected the factory,” Nixon says. “The amount of things I was able to show the operations manager and the president of the company that they missed. When they walk through the plant, they are not looking for that kind of thing.”
Nixon recalled a visit once where he found an ashtray bolted to the side of a paint spray booth.
“You don’t need an engineering degree to go, ‘Uh, wait a minute?’” Nixon says. “But that’s just because I was trained to look for that kind of stuff. They are looking at the quality of the product being produced, not that a guy is smoking next to the paint.”
In addition to safety, it’s also during these times that you can talk about changes that have taken place at your plant and new equipment that has been purchased.
“You know how much your business has changed over the last year or two or three,” Nixon says. “Has your insurance coverage changed over that same time period to take those things into account? If I didn’t see any policy changes to go with it, that’s going to be an indication that somebody is not keeping up with my business.”
Make time to review these types of things at a point in your calendar when it won’t get lost in the shuffle of other things, such as the end of the year closeout of the books.
“That’s not a good time,” Nixon says. “Take an afternoon to go over that and think about the changes that you have had in your facility and your operations and with new customers and new contracts. Have those things been taken into consideration? It should be part of your insurance preplanning.”
When you have your reports updated, put them in an easy-to-read format for your insurance company.
“It makes my life a whole lot easier,” Nixon says.
How to reach: Asperta Ltd., (330) 721-8715 or www.asperta.com
Rating your agent
It never hurts to test the waters a bit to see if you might be able to improve your business’s property insurance coverage, says John Nixon.
“You still need to test the market at least periodically to see what else is available and just to keep everybody’s pencil sharp so no one becomes complacent,” Nixon says. “Insurance isn’t all that exciting and there are lots of details. If it looks too simple, you’re probably not getting all the information.”
Nixon, the founder and president of Asperta Ltd., gives the example of a broker who informs his client that he has gone out to 20 different markets to get competitive quotes.
“If all I get is a one-page summary saying these are the markets I went to and I don’t get any details about how many of them declined, how close their terms and conditions were, there’s a lot of details behind that,” he says. “If all I get is, ‘I went to 20 markets, and this is the best deal for you,’ that’s not enough to make a decision or to evaluate if you are getting the best deal.” <<