Common Insurance Gaps Alberta Businesses Discover Too Late
There are changing risks, rising legal expenses and increased dependency on technology for your business in Alberta. Many businesses have insurance policies that they established a long time ago but have never reviewed as their operations changed. Unfortunately, most businesses won’t become aware of their gaps in business insurance in Alberta, until after something happens.
Familiarizing yourself with common gaps in commercial insurance in Alberta will enable business owners to proactively protect their businesses, assets and financial security for the long-term.
An experienced insurance broker in Alberta, we can tell you that one of the most common issues seen with business insurance policies is outdated liability limits. Legal fees, settlements and claim amounts have continued to increase, but many businesses continue to carry limits that do not reflect their revenues, contracts or exposures. When a serious claim occurs, adequate limits are critical to prevent your business from being liable for a sizable portion of the claim.
Another coverage gap for Alberta businesses is cyber risk; many businesses utilize email, online payments, cloud systems or store customer information. While some businesses may assume that cyber incidents fall under their general insurance policy, this is typically not the case. Without specific cyber insurance, businesses may be required to pay expenses associated with breach notifications, legal fees, regulatory fines and loss of income. This is now one of the most common coverage gaps throughout Alberta.
Many companies in Alberta fail to understand that their business interruption insurance will not only cover the cost to repair an insured loss (for example: a fire, the breakdown of machinery or anything else) but also include lost income caused by the event. In other words, the cost to repair payroll and rent (or any fixed costs) will continue while the company cannot generate revenue. For many businesses, this gap in coverage can have an extremely negative financial impact.
As more and more businesses have rebuilt their physical buildings, equipment and inventories, the value of their original construction, replacement cost and sales price for each of these will increase exponentially over time; therefore, if any of these values are not updated by the owner, the amount paid to settle a claim will likely fall well short of that building’s true cost to replace. The lack of property coverage is typically discovered after a significant loss occurs when the business has incurred some loss but the owner has to pay out of pocket.
Businesses must continuously adjust their commercial auto insurance in Alberta as they change or add vehicles, become busier, hire new drivers and/or expand their transportation services. The downside to having insufficient coverage on an automobile policy is when business owners do not realize their actual usage of a vehicle is far different from the coverage they carry until after the claim has been delayed or denied.
Another area where businesses frequently make mistakes is by not reading the exclusions, limitations and/or endorsements of an insurance policy. An insurance policy can contain limits of coverage or specific exclusions for certain activities, operations, equipment, etc., and without accurately reviewing the policy before the loss occurs or having prior notice from their agent prior to the loss occurring, business owners may not have proper coverage for all of their operations.
As businesses expand there are additional sources of risk, including new employees, locations, contracts, and services; all of these increase the risk exposure of the company.
Often when reviewing a business’s insurance coverage within Alberta it is common to find coverage that does not match the increase in the size of the company.
Having insurance is not the same thing as being correctly insured; many businesses are incorrectly insured because they carry policies which appear to be sufficient, however, in reality there are significant coverage gaps that only become obvious when it comes time to file a claim. A business in Alberta can make sure to manage any risk by conducting a proactive review of their commercial insurance policy.
A-KAN Insurance assists businesses throughout Alberta by identifying areas where they may not have sufficient coverage, reviewing limits, and aligning their insurance policies with the actual operational risks of their business. As an Alberta-based insurance broker, our primary focus is assisting Alberta businesses in maintaining their insurance coverage as they continue to grow, change, and evolve. Get in touch with us today.
