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South Africa is well into the new year, and with it comes countless new challenges and concerns that keep the country’s business owners up at night. For example, according to the 2023 Executive Opinion Survey in the World Economic Forum’s (WEF) Global Risk Report, South African executives’ five biggest fears this year include state collapse, debt crisis, the collapse of services and public infrastructure, cost-of-living crisis, and an employment and livelihood crisis.
While business owners have limited control over most of the concerns listed above, most still have control over reducing their unnecessary expenditures, mitigating new risks, and protecting their business assets by ensuring their insurance policy isn’t outdated or inadequate.
“We realise that every business is unique and that the risks businesses face every year are constantly evolving," says Philippa Wild, Head: Commercial Underwriting. “That’s why it’s crucial that business owners, whether managing a start-up or nearing two decades of existence, undergo an annual insurance ‘spring clean’. This clean-up not only gives business owners peace of mind knowing that they're adequately insured at the right price but can also save them money in the long run and minimise losses. Given the current risk environment of increased risk of natural catastrophe’s, like flooding it is even more important that businesses make sure that are adequately covered by their insurance policies”.
“One of the biggest mistakes business owners make is that they don't update their insurance policies to reflect any changes the business undergoes, often leaving them with gaps in their coverage,” says Wild.
Philippa Wild shares tips to help business owners clean up their insurance policy in 2023.
Adjust your business contents insurance
The main reason for reviewing your business insurance policy is to ensure your insurer has covered your business premises and the contents of your office for the right amount, or what's considered the 'sum insured'. Contents are usually insured at replacement value and if you are found to be underinsured, average will apply at claims stage if stated in your policy terms and conditions.
You should consider any new purchases made since the last time you updated your sum insured, for example office furniture upgrades or new additional furniture. Don’t forget to update your other business assets sums insured such as plant and machinery and ‘all-risks’ or ‘electronic equipment’ items of cover. The pace at which technology is changing could result in far higher than expected prices of your current assets or your current assets equivalent. Check your terms and conditions for when these items will be replaced on market value or new replacement value as a result of age and make sure you are adequately insured
Insurance companies usually automatically adjust your sum insured each year under certain sections of cover so that the insured amount keeps pace with inflation. This should be made clear in your policy document. However, business owners should still continually review these values to ensure they represent the correct replacement value of their assets and not solely rely on these adjustments.
Value your business vehicles
Part of reviewing your 2023 insurance policy must include making sure your fleet of vehicles is insured at their correct retail value'., This means the value a dealer would ideally sell that vehicle for, considering its age, mileage, condition, and any extras such as a tracker, canopy, or tow bar.
To help you with this, you can use our vehicle value calculator.
To avoid any gaps in your cover, you must ensure the value of the contents insured equals what it would cost to replace them today (replacement value), not the original purchase price.
Review your business premises
Lastly, if you own your building you need to review the amount your building is insured for with your insurance provider, makings sure that you increase your insured value to cover any building upgrades you did at your business premises, including informing any enhancements made to your security measures, which may impact your cover and premium.
Your business office (its structure), as well as the office equipment (the contents of the office), must be insured for their replacement value.
“It’s important that business owners ‘spring clean’ their insurance policies annually. Their financial advisor can really assist them with this process. To help clients reduce their risk of underinsurance, Santam automatically increases a client's business sum insured under certain sections of cover once a year by 10% to ensure we keep track of inflation, and of course clients are always given the option to reject this increase, where they feel they are adequately insured” concludes Wild.
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