Renewing Business Insurance during the Pandemic: Tips for Business Owners
May 20, 2020
In an ideal world, renewing your business insurance is something you do after careful planning and analysis. Taking the time to review what happened last year and anticipating next year’s coming changes is the best way to ensure your new policy will provide adequate coverage at an optimal rate.
Unfortunately, during the current pandemic, many business owners are scrambling just to stay afloat—to do right by their employees and customers. Taking a deep dive into commercial auto or workers’ comp details might not be on your radar. Even if it were, how can you know which aspects of your company’s operations—job roles, gross sales, equipment needs—will be altered by the constantly evolving virus outbreak?
Glad you asked! Here’s our advice on how to renew your business insurance during these strange, stressful times:
How should we estimate payroll and gross sales?
With some experts predicting a resurgence of the virus in the fall and others acknowledging future shutdowns may occur, it’s very difficult to know exactly what your payroll or sales figures will look like over the next twelve months.
If you suspect your business is headed for a less productive year, and if cash flow is hurting you now, then your best bet—according to commercial insurance expert Tim Kane—is to go ahead and reduce reported payroll/sales figures. “It is prudent to review and lower payroll and sales conservatively,” says Kane. “But don’t go crazy.” If cash sensitivity is not an issue at the moment, stick with your original figures and let the audit work itself out.
Either way, plan to regroup with your agent mid-term—if not sooner—to see how your projection is trending. This allows opportunities to true up your estimate early, and space out any premium owed over time.
(Here’s more advice on business insurance audits and how they work normally, as well as during the COVID-19 pandemic.)
How can we potentially cut costs when renewing business insurance?
A smart strategy, says Kane, is to use this time to carefully review your commercial auto and equipment inventory. You can potentially reduce your auto and equipment premium by identifying vehicles that will be sidelined (or have already been sold). In fact, we’ve found that many of our new commercial clients haven’t always maintained accurate vehicle lists—some overpaid for coverage they didn’t need.
Do we need a different type of commercial coverage right now?
This is an important question for the many businesses who have pivoted in response to the current pandemic—offering new services or new modes of working (telecommuting) in the name of safety and efficiency. Even if nothing about your operations has changed, certain trends (like more online payments) help to highlight potential gaps in your current coverage.
For example, do you have a cyber policy to address any data breaches that could compromise customers’ payment information? One security firm noted a 20 percent uptick in skimming activity (hackers grabbing online payment data from business websites) between February and March of this year. If a skimming attack were ever to hit your business, cyber insurance could help you reimburse clients for any lost funds; pay credit monitoring services for victims along with any expenses incurred in clearing their identities.
In terms of remote employers, various cybersecurity risks are now running rampant. The Insurance Journal confirms, “companies that have quarantined workers or instructed them to work from home are prime targets for attackers.” In addition to addressing endpoint challenges and employees’ personal device usage, business owners should be consulting with their insurance agent to understand potential loss events and how different coverage could respond.
Does it make sense to cancel or non-renew business insurance for now?
No. You shouldn’t cancel your business insurance unless you are absolutely certain your business is not going to reopen. Lapses in coverage raise red flags for insurance companies. If an underwriter sees you haven’t maintained continuous coverage, getting a new policy my prove more difficult… or more expensive.
Long story short: it makes sense—now more than ever—to work closely with your Massachusetts business insurance agent at renewal time. At C&S, we’re happy to start this conversation early. You can reach us at 508.339.2951.