The past two and half years has seen virtually every industry and company re-evaluate how they conduct business.
Readjusting to a post-pandemic world is at the forefront in many of their plans and strategies as they look towards operating in a different world compared to the one we had at the start of 2020.
But despite adjusting their operations in substantial ways, many may be using the same insurance coverage they adopted prior to the pandemic, not realizing that COVID-19 could lead to new risks and exposures for them.
We reached out to insurance experts Amanda Scheerer at Josslin Insurance and Shelley Sutton at Dumfries Mutual Insurance Company to share their thoughts on what businesses can do to ensure they are properly prepared.
Q. How has the pandemic changed the approach SMEs are taking when it comes to insurance coverage?
Amanda: Post-pandemic inflation has had a huge impact on valuation of buildings and equipment. Before the pandemic, it was common to adjust rebuild, or replacement cost every couple of years, but with current inflation rates we recommend that business owners review the rebuild or replacement costs listed on their policies at each renewal.
In addition to inflation, we find rebuild time after a major loss is longer. We’re seeing a few our clients increasing their indemnity period for business interruption from 12 months to 18 months. This accommodates for the extended building periods and will allow business to survive during the rebuild and keep key people from leaving for another workplace.
Shelley: It really depends on the type of business. Contractors, for example, are busier than ever, selling work sometimes a year out. If they have stock, they are insuring it at replacement cost to protect themselves from the unpredictability of the market in the event of a loss.
SMEs have to protect their assets. Insuring to limits helps to do so and the need for business interruption coverage for insured perils should be considered and weighed out. Limits are higher due to building material increases (inflation) and shortages of both materials and labour. Overall, SMEs are being more careful about understanding the coverage they have and the premiums they are paying.
Q. Does having a portion or all of staff working remotely require businesses to consider adjustments in their insurance coverage?
Amanda: If you have people working remotely as a business owner, you should ensure that company-owned assets like computers and other work-from-home equipment is covered under your insurance with an off-premises coverage extension. That extension was normal in certain industries even before 2020, but with so much company equipment now in people’s homes, it’s more important than ever to make sure your Business Insurance Liability policy has it now.
Finally, if your employees are meeting clients in their own homes, you may want to extend your liability coverage as their personal insurance will not cover them in the event a visitor is injured.
Shelley: With staff working from home comes more need for cyber security and cyber coverage if the storage of stock and equipment has changed you may need to update your agent or broker to ensure you are covered at other locations (office equipment, stock etc.). Companies need to insure equipment for off premises. If building(s) are unoccupied coverages could be void. Businesses should check with their insurer.
Q. What are some new trends when it comes to insurance coverage that businesses may not be aware of?
Amanda: As mentioned before, many of our clients are extending the indemnity period on their business interruption coverage to account for the longer rebuild times.
Because of cybersecurity concerns, many businesses are now installing multi-factor authentication on any devices that connect to their systems. They are also ensuring that any personal devices their employees use for work (bring-your-own-devices) have sufficient security on them, so they don’t infect the business systems.
Finally, more businesses are using contractors to deliver their products and they may not be aware that they need non-owned auto coverage. If a restaurant owner employed an independent delivery driver with his own auto coverage and that driver is in an accident while working, the restaurant would also be named in the claim. Having a non-owned auto extension on the business’ commercial general liability policy with protect the owner in this situation.
Shelley: As large companies double down on their efforts to protect themselves and their clients, cyber criminals are targeting smaller businesses that do not have the resources to protect themselves. Comprehensive cyber coverage for ransomware, malware, data breaches, phishing attacks, remote desktop intrusion and more is critical for today’s business whether you are an online retailer or a contractor – protecting your own information and the information of your clients is your responsibility.
Q. What are some of the common concerns or questions you’ve been receiving from businesses regarding their insurance coverage?
Amanda: The biggest concern we’ve been hearing from our clients is about the cost of rebuilding. It’s a good idea to ensure that the property and equipment values on your insurance are current. Many policies include a co-insurance clause, which limits the amount paid on a partial claim. If you’re building or contents are underinsured, you may be responsible for any shortfall.
Shelley: Saving money is high on their radar as well as having adequate limits considering rising building costs.
Q. What advice would you offer business owners when it comes to insurance coverage during the pandemic?
Amanda: If your people are working from home and your building is partially or totally vacant, please notify your insurance provider as this could void some coverages you may have. The same goes for any building owners who rent to tenants. Many are experiencing challenges in finding tenants, so please let your insurance provider know if you have vacant units to ensure you remain covered.
Shelley: We still advise clients to purchase as much liability coverage as they can afford. It is important to read your policy and understand exclusions when day-to-day operations change if you are unsure, call your broker or agent.
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