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When NOT to Buy Insurance

When NOT to Buy Insurance

There are many good reasons to purchase insurance. Hayes Brokers can tell you every single one of them. But when should you NOT buy insurance?

When (After) You Have A Claim

Many businesses try to control costs by not purchasing certain types of insurance when they are suggested or offered by a broker. The most common types of insurance that are declined are: comprehensive and collision coverage for vehicles, directors & officers liability insurance, property insurance, flood insurance, and cyber liability.

Unfortunately, insurance cannot be purchased after-the-fact to cover a claim. If a tree falls on your car and you call your insurance agent to add comprehensive coverage that day, you’ll get comprehensive coverage, but it will exclude prior damage. The next time a tree falls, you’ll have coverage. This time, no coverage.

In the case of coverage like Directors & Officers Liability insurance, a claim for damages may not come to light for months, or even years. D&O cannot be backdated to cover prior claims.

The best time to purchase coverage is before a claim happens Since you don’t know when a claim might occur, the time to purchase coverage is now.

When It Isn’t Yours

You can purchase insurance on anything or anyone at just about any time. However, the insurance policy will not pay you unless you have an insurable interest in the person or object.

For instance, you can purchase insurance on your next-door neighbor’s house. However, if his house burns down, you won’t receive a check, since you have no insurable interest in the home.

What is insurable interest? It is a concept that says if a person or object is harmed or damaged, you will suffer a financial loss. The only financial loss in the event of losing your neighbor’s home would be those insurance premiums you paid for no reason.

When You Don’t Have Exposure

There are many reasons to review your insurance portfolio every couple of years, if not annually. Your insurance needs will change over time and coverage that you needed in 2006 may not be what you want or need in 2020.

When is the last time you’ve checked your drivers’ list, your insured vehicles, your equipment list, and your certificate holders? Are you still carrying coverage for items you no longer own or people you no longer employ? Are you still providing proof of insurance to companies that you no longer do business with? Have you been renewing flood policies through the National Flood Insurance Program (NFIP) on buildings you no longer own?

Hayes Brokers offers a risk management analysis that isn’t just for new clients or new businesses. As your business changes, your insurance needs will change. We can help you determine if the coverage you have is the coverage you need. Call us today.

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