Business Incorporation

Coping with rising insurance premiums has become an increasingly serious issue for business both in the US and worldwide. The economic downturn of the past year or so in particular has brought this situation into sharp relief. Yet often overlooked is the fact that according to recent findings, as much as 70% of businesses are overinsuring their fixed assets!

The problem arises from a systemic lack of accurate and up to date information in the asset register, the database which keeps all the information on tangible assets. What ends up happening in this scenario is paying for insurance on fixed assets they don’t even own any longer. Another scenario is where the value of insured assets has depreciated to the extent where the insurance premiums could be lowered simply by calculating this asset depreciation.

This issue is compounded at the time of the insurance claim itself, when a lack of detailed information causes insurance companies to challenge or underpay on claims. This information includes detailed descriptions, serial numbers and proof of locations.Think of a similar parallel at home - if your house was burgled and you claimed on house insurance, imagine what the outcome would be if you failed to provide a reciept for your TV, computer and other items.

A lot of the time when an asset is replaced or thrown out, it is no longer seen as a problem by the financial people since its value on the company books has degraded to zero.What this means is that updating the asset database is not high on the to do list for many. The cost is merely put off, however, until such time as yo do need to make an insurance claim, at which point the lack of an up to date asset inventory will really cause you problems with your claim.

It probably wouldn’t come as much of a surprise to a lot of businesses to hear they dont have the best grasp of the state of their fixed assets. But I don’t feel many organizations know just how bad this is. Even less known is the extent of the savings that could be made from proper asset managment on insurance costs, and the gains in improving the success and outcomes of claims. A leading expert in fixed asset management software estimates that on average organizations are over-insuring by more than 20%. Surely that justifies some serious time and investment on making sure you have a decent asset tracking system in place.

Small Business Advice asset management, asset register, asset tracking, business insurance, business management, corporate insurance, fixed assets

Insurance for property looks after your physical assets that include records, inventory, equipment, structures, fixtures, computers, valuable papers, furnishings, etc. In addition, property insurance may also provide replacement for loss income in the event that your company will be suspended after a protected loss.

An example - you suffer a loss due to fire. Assuming you have insurance coverage for this, you may obtain payments from your insurance to offset any lost income while you recover, depending on what type of coverage you have. You should verify to see if your property insurance has that type of coverage.

Another business insurance is liability insurance. Its purpose is to shield business assets in case your company was assumed to have caused property damage or physical injury to a certain individual.

For example, your liability insurance policy may possibly pay for the expenses if there was a claim of personal injury caused by goods which you are selling. Or, it could cover the legal costs if your competitor filed charges against you for trademark infringement.

Most insurance companies bundle together the normal coverage of both liability insurance and primary property coverage in a reasonably priced commercial business insurance. You can make changes to your insurance bundle by increasing the limits of your coverage to include choices to cover special risks to your business.

Other business insurance firms have policies for particular kinds of businesses and optional coverage for particular types of risk, such as surety bond. Insurance agents can go over all business plans you might need for what your company does.

Your business, as far as you know, may face probabilities that the normal small company owners rarely face. Some examples would be: bringing equipment to worksites and being required to guarantee the tool’s security, manufacturing edible products that could be exposed to infection or making use of unsafe substances in your operation. Remember that no matter what your business does, there are coverages appropriate for the risks facing your company, including E and O insurance.

Small Business Advice business insurance, insurance for companies