No matter how well-versed a business is in their insurance policy, specific definitions and exclusions can be tricky to navigate. This makes agents and brokers essential for navigating strategic coverages. (Credit: Sebra via Adobe Stock)
From slips, trips and falls to extreme weather and cyberattacks, businesses are regularly confronted with risks to operations and profitability. When left unchecked, these trends can lead to gaps in coverage.
Now is the time for agents and brokers to assess their clients' complex risks and collaborate with carriers to fill any potential voids in insurance. This may include specialized solutions for nontraditional exposures.
Understanding insurance to value (ITV)
The best way to make sure a business is adequately insured is to know the property value. Commercial property prices have been trending upwards since 2014, according to Statista. In the third quarter of 2022, the commercial property price index value in the United States reached 212.4, up from 100 in 2010.
It is important for business owners to perform regular property valuation assessments, known as insurance-to-value. This can give business and property owners peace of mind after a loss. If there is a major loss, the coverage amounts in a business' policy might not be enough to cover replacement costs at today's prices. Having an accurate assessment of the complete cost to replace the insured property can be the difference between recovering quickly or incurring additional loss from delays in repairs.
Helping with asset valuation
Getting the valuation right is helpful for property owners to avoid coverage gaps when they experience a claim and maintain access to adequate protection. For example, due to inflation and supply chain challenges, construction materials such as lumber and drywall have become more expensive. An additional cost driver is skilled labor, which is in high demand but short supply.
Added together, it costs more to repair or replace components following property damage. However, having an insurance agent or broker work with an experienced insurance company can help alleviate any complicated situations.
Protecting business property from flooding
While most business owners buy flood coverage as part of a large business insurance plan, they should also have a flood emergency response plan to prepare for, respond to and recover from a flood. This plan should include details about an evacuation plan with employee responsibilities, sheltering-in-place procedures, medical emergency information, emergency response teams, and public emergency services and contractor contact information.
It is also a good idea to have a Water Damage Prevention Plan (WDPP), which includes routine site inspections to identify uncontrolled water damage exposures and basic maintenance to make sure drains are clean of debris and diverting them to a catch basin or low point away from the building. An effective WDPP plan also incorporates technology as an invaluable component and includes backflow preventers on sewer connections and water sensing technology to monitor the most vulnerable exposures. In addition, a trained team of water damage responders should be recruited to map and label all zonal shut off control valves, as well as maintain an updated list of contractor's contacts numbers for emergency purposes.
Navigating cyber liability
Cyber insurance should also be an important part of any company's incident response plan to avoid gaps in liability. A holistic approach should be considered to provide insurance coverages that encompass data breach, ransomware, and business interruption. Threats to cybersecurity should always be taken seriously for the safety, security and stability of business operations.
Evaluating multinational exposures
It is also important to pay close attention to cues from business owners to uncover gaps in insurance and identify corresponding coverage needs. For example, is the company doing business internationally or does it have employees traveling overseas for work? Additionally, if it is not doing business internationally today, could that change in the future?
Nearly 80% of midsize businesses in the United States have some level of multinational exposure, according to The Hartford's research, yet nearly 40% of mid- to large-size businesses have never spoken with their agent or broker about their multinational risks.
In addition, 68% of business owners surveyed are worried that they don't have adequate coverage for their international operations. These concerns may be well founded. Domestic policies may not provide protection for multinational exposures, possibly leaving many mid- to large-size businesses in the United States uninsured, underinsured or improperly insured.
Tracey Ant By knowing what to listen for, agents and brokers can provide strategic coverages. No matter how well-versed a business is in their policy, specific definitions and exclusions can be tricky to navigate. Insureds may not fully understand how much they can expect when they need to take advantage of the coverage. Customer feedback plays an important role in what they do.
Tracey Ant is head of Middle & Large Commercial Business Units at The Hartford. This article first published in a Risk Monitor study conducted by The Hartford and is republished here with permission.
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