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When you insure a business with a new insurance company, the company will often send an inspector to inspect the business. This inspection is done by hired contractors and occurs soon after the insurance goes into effect.
An inspection can prove helpful to your business and the insurance company as they carry the majority of the risk when things go sideways. Not to mention the disruption your business can have after a claim.
When will the inspection happen?
The vast majority of inspections will occur within 30 days of the new policy’s effective date. The inspection may be over the phone or in person, and most of the time, the inspector will contact you and arrange a time for the inspection.
Remember that an inspection may be mandatory, and not cooperating with it will trigger non-compliance actions from the insurance company, making insuring the business more costly and difficult than need be. On the other hand, it is unlikely that you’re going to find a different insurance company to provide you coverage without an inspection, so you might as well just be done with it.
What is the inspector looking for?
Replacement cost
The principal purpose is to insure property listed on the policy adequately. When quoting a policy, most agents do their very best to get a fair valuation by consulting public records, available photos, etc…, but the most accurate way is for a person to place eyes and hands on the property.
Liability exposures
if your policy includes liability coverage, the insurance company will want to make sure that your location is safe and that you are not conducting any operations that were not disclosed at the time of the application.
What happens after the inspection?
After the inspector has completed the assignment, they will send a written report to the insurance company. The company then reviews the report to make sure everything meets the requirements of its risk management policies. If everything is satisfactory, you are not likely to hear from the insurance company at all. However, if there are issues, the company will forward the report directly to you or through your agent. In the report, the insurance company will tell you what the deficiencies are, what needs to be done, and what time frame you have to complete remediation.
You will have to decide whether the cost of meeting the requirements makes sense for your business. If you choose to make the corrections, you will need to inform your agent once the corrections are complete so that they can tell you what evidence needs to be provided to the carrier.
However, should you decide that the cost to comply with the insurance company is just too much, you may have to pay a little more for a replacement policy from an insurance company that will tolerate the risk that the deficiency creates.
Whatever action you take, communication with the agent and the insurance company is vital. The one thing that you never want to do is just ignore the recommendations. Lack of communication will undoubtedly lead to the insurance company canceling your policy.
If you have any questions about a current business insurance policy or any issues with your business insurance, please reach out to us at TWFG insurance. We are happy to help you even if you are not currently one of our clients.
