/>iSummertime. The kids are getting out of school. Maybe you have a vacation planned. Down here in Florida, we make early preparations for the annual “it’s going to be the worst hurricane season on record” reports. Whatever your plans are this summer, it is also best practice to include a mid-year review of your insurance policies. This may not be as fun as hot dogs, baseball, barbeques, and beaches, but it can protect you and your business like SPF 100 sunscreen.
In Florida and throughout the Southeast, June 1 is the start of hurricane season. Have you recently reviewed your property insurance policy — whether a commercial or a homeowners policy? Are you covered for named storms or hurricanes? Most policies have a different — and usually significantly higher — deductible for hurricane claims. For instance, section 627.701, Florida Statutes, permits property insurers offering personal lines residential property insurance policies to offer alternative deductibles applicable to hurricane losses of $500, 2%, 5%, and 10% of the policy dwelling limits. That means if you have a $1 million property, your hurricane deductible could be $100,000. Are you prepared to cover $100,000 in losses in the unfortunate event of hurricane damage? As you ensure your home or business has sufficient sandbags, water, toilet paper, and other supplies, you should also make sure you are prepared to cover losses up to the amount of your deductible.
But mid-year is not just the time to think about catastrophic storm damage. Has your business grown? Have you purchased new vehicles, equipment, or real property this year? Your commercial property policy most likely has a coverage extension for newly acquired or constructed property, even if that property is not listed in your schedule of covered property. However, this coverage extension is usually limited to a short period, like 30 days. So, if you have purchased property this year, now is the time to check that it has been added to your policy’s schedule of insured property.
And it is not just your property insurance that you should consider reviewing this time of year. Have you had any recent organizational changes? Did you acquire a new business? Create a new subsidiary? Many liability policies have coverage extensions that will still cover newly acquired or created businesses, even if that business is not named as an insured in the policy. However, this additional coverage is typically for a limited period — often 30 or 60 days. Mid-year is a great time to confirm that all of your related businesses are adequately covered under your policies.
As you review your policies, you should also consider how your business has changed. Did you pick up a new scope of business, maybe a new project, or enter into new contracts during the first half of the year? Has your business changed in a way that an exclusion that did not matter when you purchased your policy now creates a gap in your insurance coverage? For example, maybe you received a great contract to expand your business into the construction of a townhouse community for the first time, but your liability policy has an exclusion for work on townhouses. That exclusion may not have mattered last year but could result in a significant gap in coverage this year. Maybe your idea of summer fun is not sitting poolside with a cold beverage and curled up with your insurance policies. But a mid-year review of your insurance policies could keep you from being burned with uncovered claims later in the year.
