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Everywhere you look today, prices are skyrocketing with no signs of stopping. From groceries to gas prices, lumber to steel, inflation is increasing across the economy. Combined with supply chain disruptions and labor shortages, these are warning signs for every business owner to conduct a policy review with their insurance advisor and ensure they are not under-insured. Here’s what you need to know about inflation in the insurance industry and why you should review your insurance policy to avoid any surprises should you need to file a claim during these uncertain financial times.
How Bad Is Inflation?
As a business owner, it’s part of the job to stay up to date on economic trends that can affect your business operations. According to the most recent Consumer Price Index (CPI) report, prices for goods and services rose 7.9% in February compared to last year. This is the fastest inflation has increased since the early 1980s. Take a look at these items that have seen some of the largest surges over the past 12 months:
Home sale prices: 18%
New cars: 12.2%
Used cars: 40.5%
Meats, poultry, fish, and eggs: 13%
Clothing: 13.5%
Furniture: 17.1%
For many business owners, raising prices for goods and services is a way to help keep business operations afloat. But that also means many of your insured items are more valuable and expensive to replace if damaged or destroyed.
How Does Inflation Affect Your Business Insurance Coverage?
Because inflation and supply chain issues have placed more value on everything we own, the cost to replace or rebuild your property may exceed your policy limits. Here’s a closer look at specific lines of coverage where inflation plays a factor and how you might be at a shortfall:
Commercial Auto. Vehicle repair expenses and prices for new and used cars have surged. The cargo van you purchased a few years ago for $40,000 may be worth more in today’s current market value. For stated value policies, it’s crucial to regularly review your stated value because it affects how insurance companies pay out claims. After a total loss occurs, your insurance company will look at your commercial vehicle’s stated amount and market value and pay whichever is less. By reviewing and correctly assessing your commercial auto’s value now, you can minimize surprises later. Business owners of auto dealerships, body shops, and repair shops should consider purchasing or increasing their garage keeper’s insurance coverage for extra protection.
Commercial Property. Construction material costs shot up dramatically in 2020. In addition, labor costs have grown due to construction worker shortages. In the event of a covered loss, it’s possible your business may experience delays or added rebuild costs, putting you at risk of exceeding policy limits. The longer it takes to rebuild your business, the more likely your business income loss will exceed your limits. Be sure to reevaluate your policies by accurately valuing your business needs and safeguarding yourself against underinsurance.
5 Steps to Minimize Your Exposure
A lot can happen in a year, especially when you own a business. You should always review your commercial insurance, whether you’ve made some changes to your operations, such as hiring additional workers, buying new equipment, or even downsizing your business. To protect yourself against underinsurance and ensure you have the proper protection, follow these steps:
Get in touch with a trusted business insurance professional.
Discuss your policy limits and coverage terms and conditions.
Conduct a replacement valuation on your business equipment and machinery.
Reassess your commercial property valuations.
Consider business interruption insurance to replace lost income in the event your business halts from a covered loss.
Figuring out your small business insurance needs and finding the best protection for your company is our specialty. Speak with one of our Commercial Insurance Specialists today at (855) 919-4247 for a quick and easy quote and an analysis of your policy coverages.
The information in this article is obtained from various sources and offered for educational purposes only. Furthermore, it should not replace the advice of a qualified professional. The definitions, terms, and coverage in a given policy may be different than those suggested here. No warranty or appropriateness for a specific purpose is expressed or implied.
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Three escalating threats have rapidly shifted the insurance landscape in Canada. Business owners in particular need to adapt their insurance programs and risk management strategies to effectively protect against these hazards. Discover how a broker can help you navigate these threats and work crucial coverages into your budget.
By Wendy Wildeman, VP, Commercial Lines
If the past few years have taught us anything, it would be the importance of assessing risk. Now more than ever, business owners must think about what could have a negative impact on their organization.
In the 15th Annual Emerging Risk Survey the top three emerging risks identified were:
Climate risks
Cyber concerns
Financial volatility
So, how do these risks impact you and what can you do to manage them?
Living in a Climate Risk Area
Extreme weather is nothing new to Canadians. We’ve experienced flooding, forest fires, severe hailstorms and blizzards in the past 10 years alone. In summer 2021 much of western Canada had record temperatures that rose above 40 degrees Celsius. In January 2020 where residents of Newfoundland experienced a historic blizzard that saw up to 93 cm of snow.
Extreme weather impacts your insurance. According to the Climate Risk Report from the Insurance Institute of Canada, severe weather and climate risks have replaced fire to become the costliest hazard for property insurance in Canada.
The Insurance Bureau of Canada reported that severe weather in 2021 caused $2.1 billion in insured damage.
While we may be at the mercy of Mother Nature, we are not helpless.
When looking at insurance for your commercial property, it’s important to identify and understand what your potential climate risks are. Are you in an area that has a history of flooding or wildfires? Have there been tornadoes or extreme storms?
Using improved construction materials can also help your buildings withstand punishing weather patterns (remember, underwriters consider construction materials when determining insurance rates).
Working with a broker to understand your policy is key to helping protect your property in the long run.
Protecting Against Cyber Criminals
Just like the weather, cybercrime is a part of our world and changes in the blink of an eye. Many experts say it’s more a question of when, than if a business will be hit by a cyber event.
New phrases have entered our lives – ransomware, social engineering, phishing – catching many off guard until they suffer a loss. Cybercrime is an area that is constantly evolving with more Canadians being targeted both personally and professionally. In 2021 Canadian Anti-Fraud Centre estimated that Canadians lost a total of $230 million to online fraud.
Navigating cybercrime is unfortunately part of running a business now. Data breaches and cyberattacks can impact businesses of any size and cyber insurers are experiencing a high volume of claims as attacks become more sophisticated. Because of this it can be difficult to obtain cyber protection at a favourable rate – but it doesn’t make it any less important.
Working with Rogers Insurance cyber liability insurance brokers who are experts in this area can ensure that you are protected in the instance of a breach. Nobody wants to learn the hard way that they can’t afford the often-catastrophic implications of a successful cyberattack.
It’s also essential for businesses of all sizes and in all sectors to take necessary precautions to protect against cyberattacks. Conducting routine IT audits and education sessions with your staff are key in helping guard against hackers, as is maintaining and improving your cyber hygiene.
Trying to Manage Financial Volatility
One only has to look back on the chaos created in the COVID-19 pandemic to understand why financial volatility made the top three emerging risks. “Expect the unexpected” could be the unofficial catch phrase of the past few years.
As seen around the world, most insurance policies did not cover loss of revenue based on an epidemic or pandemic. While the coverage did exist in specific situations (for example, Wimbledon had a policy for several years should a public health issue cause them to cancel their annual tennis tournament) this was not something the masses anticipated happening.
For many, the market continues to be volatile as they navigate the continued pressures that COVID-19 has brought. Larger organizations now have risk managers scrambling to create pandemic plans for business continuity, in addition to challenges such as global supply chain issues and labour shortages that the pandemic has exacerbated in recent years.
These issues underscore how crucial it is to prioritize extensive risk assessment and management. Working with a broker enables you to discuss how your business can mitigate such risks.
Brokers Support Your Wellbeing
Now more than ever, choosing a professional broker to assist you with your insurance program is key.
Rogers Insurance brokers specialize in a variety of industries and will help you investigate, navigate and mitigate how to best protect your property and finances.
They will work with you to help define your needs and help find the right policy for your budget. Working with someone who understands your needs and can negotiate on your behalf is key. And remember, the lowest priced product does not necessarily mean that you have the coverage best suited for your business.
Just like withholding details from your doctor could risk your personal wellbeing, the same is true for your insurance. Make sure that your conversations with your broker relay as much information as possible – otherwise you may be risking your financial wellbeing.
Wendy Wildeman is the Vice President, Commercial Lines, at Rogers Insurance. With more than 40 years of industry experience, Wendy specializes in real estate insurance, from development and construction to commercial and condominium management groups.
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To set your auto insurance rate, insurance providers look at multiple factors. Some common examples include your age, driving history, and location. However, your vehicle’s annual mileage can also affect the cost of your auto insurance rate. Why? Because insurers can use such information to determine your likelihood of filing a claim.
Whether you’re a frequent highway cruiser or seldomly drive, understanding your annual mileage and how it affects your premium will help you better manage your coverage rate.
Annual Mileage Overview
Using the latest data from the United States Department of Transportation Federal Highway Administration, we can calculate that the average person drives around 12,724 miles per year. This translates to roughly 1,060 miles per month, or about 34 miles a day.
How Does Annual Mileage Affect My Auto Insurance Rate?
The number of miles you drive per year can influence your auto insurance rate. Insurance providers will typically ask you to provide a yearly mileage estimate whenever you apply for new coverage. Generally, the less you drive, the less you’ll pay for car insurance.
As you spend more time on the road, your chance of being in an accident increases. By knowing your mileage—alongside additional factors—insurers can determine your insurance risk then set your premium accordingly. For example, a driver with low annual mileage is less likely to experience a traffic collision than a driver who commutes 50 miles daily. As a result, the low mileage driver will likely have a lower premium than the driver with a long commute.
Most providers rely on the honor system to obtain your annual mileage, although some do have telematic programs that can track such data in real-time. Examples include Mercury’s RealDrive program (only available in California) and Progressive’s Snapshot program. These programs use your driving habits to determine your rate, which may help you save. However, it’s important to remember that by registering with these programs, you allow providers to adjust your mileage when it comes time to renew. Program availability may vary depending on where you live.
Suppose you’re driving habits change drastically throughout the year. In that case, you have a chance to update your annual estimated mileage whenever your policy is up for renewal. Contact your insurance specialist to learn whether you qualify for a reduced rate if you find you’re driving less.
What are Commuting Miles?
When shopping for auto coverage, applications will ask whether you use your vehicle for pleasure, business, or commuting.
“Commuting miles” is the term used for the number of miles an individual drives to and from work. Insurance providers may ask for this information if you mainly use your vehicle for your commute. They can then determine if your annual mileage estimation is realistic with this data.
What is Considered Low Mileage?
Infrequent drivers may be eligible for auto insurance discounts if they drive less than the average driver. But what do insurance providers consider low mileage? Most companies tend to group policyholders into three mileage classifications: low, average, and high.
Though the figures can vary, insurers typically classify low mileage drivers as those who drive less than 7,500-10,000 miles a year. Drivers who fall near the national average are considered average mileage drivers. Most companies consider a yearly mileage over 15,000 miles to be high.
How to Reduce Your Annual Mileage
Although other insurance factors such as age and zip code data are out of your control, there are ways to reduce your annual mileage even with a daily commute.
Ideally, you should be living as close to your job or school as possible to limit your daily driving. But with home prices skyrocketing, moving may be easier said than done. To reduce your annual mileage, consider the following:
Set up a carpool system with your coworkers and classmates. This will also help your group save on gas if you live nearby each other.
If your commute is short enough, consider purchasing a bike and biking to work or school.
Use public transportation whenever possible.
Take advantage of park-and-ride services.
Incorporating just one of these alternatives once a week can make a notable difference in your annual mileage.
Find the Coverage That’s Right for You
Understanding the amount you drive per year can help you save when it comes time to purchase auto coverage. Using your mileage, you can compare rates from different insurance providers to find the best deal. At AIS, we work with a network of insurance partners to find the best coverage for you. To speak with an insurance specialist, call us at (888) 772-4247 or get a free online quote today.
The information in this article is obtained from various sources and offered for educational purposes only. Furthermore, it should not replace the advice of a qualified professional. The definitions, terms, and coverage in a given policy may be different than those suggested here. No warranty or appropriateness for a specific purpose is expressed or implied.
