Cancelling Your Insurance Policy Can Cost You More Than You Think
As the financial impact of the 2020 pandemic continues to hit a vast number of Australians, individuals and businesses must make hard choices when looking for ways to maintain a sense of monetary stability.
It is painfully difficult for many to find places to cut corners. Unfortunately, one of the areas identified as optional is essential regardless of the financial climate. The area is your insurance cover.
While cancelling insurance policies may seem like a cost-saving measure, numerous reasons trimming your cover can cost more than you may have imagined.
Seven Reasons to Maintain Your Insurance Policy During Tough Financial Times
Before you give in to the temptation to reduce or chuck your insurance cover, take a moment to consider the following seven reasons to keep your policy in force.
Legal Obligations to Have Specific Kinds of Insurance
Aside from Worker’s Compensation Insurance which is compulsory in all Australian states and territories, other businesses and professions require cover to operate.
Professions where you give legally binding advice, strata management, and health care are just a few types of jobs that require specific insurance. Additionally, there may be particular amounts of necessary cover. Be sure you are not breaching legal commitments before you consider trimming or doing away with insurance cover.
Potential Compromise of Your Financial Security
If you operate your own business or if you are a tradie, you may have wisely opted to get income protection insurance. In a harsh economic climate, you may find yourself eyeing the policy and considering rolling the dice and taking your chances without income protection cover.
Opting out of your income protection insurance can prove risky. This is especially true if you are a sole proprietor, partake in dangerous activities apart from work, or are a part of a certain age or high-risk groups.
Additionally, even if you are in excellent health, cautious to a fault, and have a plethora of business partners, no one is exempt from unexpected problems that can derail the best-laid plans.
Contracts Specifying Insurance Cover
If you are a party in a contractual agreement, such as a lease, insurance types and amounts are often specified. Should you breach the contract, you are at risk of finding yourself in a worse financial situation than you were when you still paid your policy premiums.
Cost and Difficulty Involved in Getting Cover
You may be aware of the fact that the price of your insurance premiums has numerous issues which help determine how much is your cost. Several policies offer financial rewards and incentives for being a customer in good standing for specific lengths of time. These are frequently in the form of price breaks.
Additionally, a policy you purchased several years ago may cost considerably more at the time you opt to get cover again. It is also possible that certain areas are no longer insurable; making a new policy impossible to attain.
Be sure to think about these points before you decide to discontinue your insurance policy.
The Potential of Losses Associated With Your Previous Work
Be especially cautious before you discontinue your cover if you are a member of an occupation that typically holds Professional Indemnity Insurance.
Examples of these types of jobs include but are not limited to:
- Legal Counsel
- Financial Advisors
- Estate Agents
- IT Consultants
- Project Consultants
Opting out of a Professional Indemnity Policy can carry substantial risks. Your policy may very well have retroactive coverage that goes back many years. Cancelling such a policy exposes you to a variety of problems which include high financial and professional costs.
If you made an error in your work, no matter how honest or inadvertent, a Professional Indemnity Policy could save your career as well as your financial situation. Without this cover, you will need to pay for your legal team as well as any damages a court awards and necessary reputation management services.
Insurance Cover Is Even More Vital if You Cannot Operate Your Business as Usual
While on the surface it seems counterintuitive, if you cannot operate your business you need your cover more than if your company was in full swing.
Generally, insurance providers view the unoccupied property as a higher risk. The reason for this is that an empty building is a better target for theft and vandalism. Many policies require you to disclose vacancy to your insurance professional if you cannot occupy the property for a period of 30 days or longer.
You Are Subject to the Same Potential Problems in This Time of Financial Difficulty as You Were Before the Economic Downturn
Although the world focuses on the Covid-19 pandemic, all of the possible hazards that have taken a backseat to the global crisis still exist. Your commercial vehicle, stock, computers, buildings, and all of the other trappings of your business still require protection. The financial ramifications of losses due to theft, vandalism, weather, or various accidents can hurt you during an economic downturn more than ever.
How Can I Keep My Insurance Cover While Struggling Financially?
If you discover that you are in such dire straits that dropping your business insurance seems like a good idea, one of the most important things you can do is reach out to your insurance professional.
Even though you may feel as if you are alone in the pandemic’s financial crisis, scores of other companies are facing a similar situation. Insurance experts know how to help you stay the course and navigate through the present difficulties.
By turning to someone with experience in the insurance industry, you can be confident that they will explore all of the ways to trim costs while maintaining the insurance coverage necessary to protect your assets.
Do not struggle through this stressful economic time alone. Seek help from an experienced insurance professional as soon as you see issues.
*Please Note* The material presented in this blog post is for informational purposes only. It does not replace a consultation with an insurance professional and is not legally binding insurance advice.