Purchasing commercial insurance is one of the most important steps you can take in protecting your business.

But too often, owners make the mistake of treating insurance as if it were a one-size-fits-all product, and neglect to obtain a risk assessment before deciding on coverage.

If you have ever shopped for insurance with an “apples-to-apples” approach, or asked your broker to simply copy last year’s coverage at renewal time, you may actually be risking your investment more than protecting it.

What Does an Assessment Cover?

Say it’s renewal time, and you’ve been pleased with your insurance company, your coverage and your premium. You figure since your business hasn’t dramatically changed, you’ll just ask for the same coverage you had last year and rest assured your business is protected.

But sometimes seemingly small changes actually have a large impact. A risk assessment ensures your broker knows your business well enough to identify risks and paint the clearest picture of your operation to the insurer. In a professional risk assessment, you can expect:

• A complete review of your company’s operations and exposures, strategies and challenges
• Suggestions for adjustments and improvements to current coverage, as well as optional coverage designs
• Planning for implementation of techniques that can reduce your risks

Identifying New Exposures—and Potential Savings

As your business changes, your risk profile changes. Any shift in size or the way you operate your business will affect the coverage you need. A risk assessment will identify the changes in your business that may spell increased exposure to loss, such as:

• Employee headcount
• Outsourcing of services
• New lease agreements
• New products or services
• Use of new technology

For example, the evolution of business in the digital age has added a host of operational risks. Before Sony and Target were hacked, few small businesses were looking to protect their networks from cyberattacks.

Today, any business that stores client and employee information (electronically or hard copies) needs network and information security protection. A risk assessment is key to identifying coverage that works for the way you work now.

Conversely, not knowing your current risk profile could mean you’re paying for coverage that you don’t really need. A risk audit also can reveal ways to save money—by agreeing to a higher deductible so that you can lower the cost of your premium.

Who Should Conduct Your Risk Assessment?

Look for a broker who has an understanding of your industry and an awareness of specific risks associated with it, and who has a solid relationship with insurance carriers that are dedicated to insuring your industry.

Insurance programs must be customized, so choose a qualified, consultative adviser who is interested in getting to know you, your team and your vision for your company’s future. Choose someone who will invest the time and effort to engage in a thorough risk assessment of your business.