As a business owner, you likely want to reopen as soon as possible to minimize the negative economic impact on you and your employees. But as the world returns to a new normal, you might want to revisit your business strategy as your past data might no longer be relevant.
Here are some things you should keep in mind:
Premiums: finance is King. When recovering from a crisis, large deposits or high premiums can be a challenge but you need to account for any delayed payments to maintain coverage. In some cases, the courtesy period of non-payment before cancellation or renewal might be extended due to extraordinary circumstances, or offer alternative payment installment plans. As an example, some carriers might offer a Pay As You Go format for high premium policies to spread the burden of the cost whilst maintaining protection.
Adapting to the ‘new normal’: change is going to be a big part of this recovery period and that extends to business practices. We mentioned earlier the potential re-structuring of your business, but it can also be as simple as scheduling, payrolls, or your office location. It is likely that businesses will face a need for increased flexibility to better accommodate their employees and consumers. This process requires investment in both time and new (potentially digital) resources such as HR software, which leads us the next challenge:
Digitalization: If you haven’t already, now is the time to adopt more technology. It’s important to adapt to changes like changing to contactless payment methods or moving your brick and mortar store online.
Keep in mind, this will entail an adjustment period for all stakeholders.
Reactivating your insurance policies will depend on what their status was during the lockdown. Here are the most frequent cases:
Other factors that can contribute to your premium include:
A term you might start hearing is “insurance coverage gap”. It’s important to take note of the types of coverage that are required for your business, such as Workers’ Compensation or General Liability in a lease contract. These policies can be costly if legal action is taken, which might impact your business’ recovery timeline, and potentially prevent it. It is something that you should definitely check with your carrier. In summary, cross checking your coverages with your business needs will be a necessity when reopening.
As a business owner, you don’t want to think about bad events or damages that might affect your business, and that’s normal. However, it is important to stay on top of some risks that can lead to a permanent closing of your business. Of course, no one wants that!
You can easily protect yourself by periodically checking your insurance coverage. When closing and reopening your business, it is wise to double-check if you need more or sometimes less insurance based on internal changes in your business or external changes that had an effect on your operations.
We talked about reactivating your insurance policies, but that alone might not be enough. Imagine if you had to close your business because of a crisis, and you now expect your revenue to be reduced by 15% for the year. This will lower the value of your premium and therefore save you money. Or maybe after reopening you had to layoff some of your employees. In this case, you have to reevaluate your Worker’s Compensation policy and check with your insurance advisor about the changes that might apply.
Now let’s say you are a brick-and-mortar business and after reopening you decided that you want to move your business online. So, you created your website and started delivering goods to your customers. What does this mean when it comes to your insurance coverage? This basically means that you will need to add new coverages for damages that might happen online, like data breaches, identity theft or extortion by purchasing Cyber Liability Coverage.
It is wise to review your policies and talk to your advisor to make sure you are always covered. Whether you closed your business for restructuring or whether you were forced to close your business for unexpected events, you can always manage the damages that might result by ensuring you have the right coverage in place.
By now, you might be asking yourself: what type of insurance do I really need?
As we mentioned previously, one of the options you have when closing your business temporarily is to cancel some of your business insurance policies. And some of these canceled insurance policies can be crucial for the reopening of your business. Here are some of the most common insurance types to consider when you’re back to business:
General Liability: It is important to be covered with General Liability especially if you are renting a space to operate your business. It will cover you against any lawsuits filed from third parties against bodily injury and property damage.
Workers Compensation: This insurance policy can protect you and your employees in case of any work-related injuries that happen during business hours. One common lawsuit from employees towards their employer is negligence. In this case, the employee might file a lawsuit and Worker’s Compensation, also known as Workman's Comp, can cover you and your business from the resulting damages.
Professional Liability: If you provide professional services then this coverage is a must when reopening your practice or business. Professional Liability will protect you against errors or mistakes that might happen when offering your professional services. Having General Liability alone won’t save the day, you need to make sure you have the right insurance in place.
These are just a few of the insurance policies that you might need when restarting your business. Some other insurance types that you might want to consider are: Commercial Property, Commercial Auto and D&O insurance.
Closing and reopening a business is no easy thing to do. However, as a business owner, you can ensure a smooth transition by having the right insurance in place. Here are some key takeaways to help you do that:
Stay connected with your insurance advisor. Updating your advisor about changes your business is going through is key to a successful and safe reopening. Even when your business is closed, sometimes you still might need insurance, like Crime insurance, to protect your business from any break-ins or robberies.
Don’t lie to your insurer. Always keep in mind that lying to your insurer can backfire on you and create non-recoverable damages. You can avoid that by simply using our platform to compare prices and choose from a wide variety of options to help you get the coverage you need. This will also help you avoid losing time and money from claims and lawsuits.
Check for new insurance packages. If you closed your business due to a crisis or a pandemic, make sure to do your research and talk to your advisor about new policies or coverages that are available. Some new insurance types, like Pandemic risk insurance, might emerge after a pandemic and having that insurance can help you be more prepared and protected against some unexpected crisis.
Having the right insurance in place will protect you and provide you peace of mind. Get your free business insurance quotes today, or talk to one of our advisors in case you need more information
Leave your email so that your quotes will be sent directly to your inbox.
We won't spam you, we hate it too.