With the clocks having gone forward, the days longer, it's time to give your business insurances a spring clean, writes RBIG Commercial Director, Stephen Hodgson.
Making sure everything is spick and span is really a year-round job, but if you've not dusted down your policies in a while, now's a good time to review the covers you have in place.
It's important to ensure that your insurances neatly match the value of the risks they should cover.
Keeping things tidy also means checking your business insurance portfolio meets your needs and wants.
Clean up with a commercial insurance review
For example, since you last conducted a commercial insurance review, the value of your property may have changed.
Rising interests rates and fears of a possible credit squeeze, have generally reduced the value of commercial property.
Sale prices per square foot are expected to have fallen by nearly 3% in the first three months of this year, although real estate specialists Robert Irving Burns expect this to slow in Q2.
Whether such market shifts could have affected the core value of your business property is debatable, but it's well worth regularly reviewing the worth of your estate.
That's not least because whilst sale values may currently be in decline, rebuilding and reinstatement costs have been impacted by substantial increases in the prices of construction materials.
Whilst the hope is that costs are now stabilising, the UK Construction Price Material Index rose by 10.4% in 2022. That figure suggests the potential for underinsurance is high if a policy is based upon outdated rebuilding costs.
Reviewing your estate will help ensure that your commercial property insurance provides effective cover, guarding against both over and under-insurance.
The right stock answer?
It's a similar story when it comes to stockholding.
Inflation has ripped through our economy, impacting different sectors to varying degrees.
In February the Consumer Price Index unexpectedly rose to 10.4%, with the rate for food and alcohol up by an eye-watering 18%. Such figures clearly could have implications for wholesale and retail businesses whose existing policies may be based upon outdated valuations.
With prices rising more generally, whatever your line of business, if you hold stock, it's worth checking your insurance matches its value.
Plant higher
The same is true of other assets such as plant and machinery. Their value may well have increased since you took your policy out, again raising the spectre of underinsurance.
In addition, as we've previously noted, supply chain disruptions could delay machinery repairs, reducing or halting operations. Machinery insurance allows you to guard against consequential loss of profits and the costs of hiring and/or replacing equipment in such a scenario.
Such business interruption insurance will cover not just machinery breakdown, but damage caused through operator error, accident, collapse or explosion.
Polishing your operations
When conducting your spring commercial insurance review, you could also consider actions you might be able to take to reduce risk and costs - including your business insurance premiums.
For example, if you have fleet insurance, you might consider putting your drivers through a defensive driving course. As well as helping reduce accident risk, defensive driving techniques can help reduce fuel consumption as drivers better anticipate traffic flows and less prone to petrol gobbling stop-starting, braking and accelerating.
Steady driving at a steady speed - 50 rather than 70mph - can improve fuel consumption by up to 25% according to government data.
The Energy Savings Trust has produced a handy guide on fuel efficient driving techniques which I'd be happy to share with you. If you's like a copy please just drop me an email.
You might also want to consider if the Cost of Living crisis might increase certain risks for your business.
Crisis planning
As my colleague Geoff Gregory noted in RBIG's guide, Adapting to new or Heightened Risks During An Economic Downturn, history suggests businesses may be at higher risk of employee theft or fraud. You might, therefore, wish to consider dedicated employee theft or dishonesty insurance.
The same is true of the risk of crime generally so checking your security protocols are suitably tight is a worthwhile endeavour, particularly if, post-Covid, you've changed the way your business operates.
Hybrid and remote working could increase exposure to cyber crime and, of course, ransomware attacks are never far from the news. If you already have cyber insurance, you may want to spend a little time checking it covers your current operating model. If you don't have what is regarded as an increasingly essential cover, talk to us now!
Client failure, is another potential area of concern. Business insolvencies soared to a depressing 13-year high of in 2022, rising by 30% as some 22,000 firms went bust.
You can protect against losses from a client failing through trade credit insurance, which covers not only non-payment but late payment of debt.
Need help cleaning up?
When it comes to cleaning up your commercial insurance portfolio, you can consider RBIG as a bit like Mrs Hinch!
With decades of experience and a breadth of expertise, there's no need for us to brush up on the availability and appropriateness of the commercial insurances from which your business could benefit.
We're here to help you quickly and efficiently deal with any 'stains' in your covers. With an RBIG deep clean, you can be confident that your business is properly protected and that you're squeezing the best value from your insurances.
If you'd like us to help you with a confidential commercial insurance review, please just drop me a line or call 0161 304 5000.
