Why You Should Disclose Business Activities for Insurance

Why You Should Disclose Business Activities for Insurance

March 16, 2022 Views: 828
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When the unexpected or expected happens, you can take great comfort in knowing your insurance company has your back. However, suppose you’ve failed to disclose business activities or neglected to update your policy details. In that case, it can leave your business open to significant financial losses, whether you win or lose.

So, here are 5 reasons why you should disclose business activities.

 

1 – To ensure you’re covered

Just because you have an insurance policy for your business, it does not mean your policy automatically covers you for everything. So, a ‘she’ll be right’ attitude can have a significant financial impact that can delay or prevent you from achieving long-term business growth.

 

Why You Should Disclose Business Activities for Insurance

 

2 – Disclosure of business activities is a wise investment

Insurance is only as good as the information you provide. So, the more business activities you withhold to save money, the riskier your business future becomes.

While the cost of premiums can seem expensive, they are small compared to the cost of any legal defence fees and financial penalties you may incur.

In today’s litigious environment, no business relationship is free of risk. You may encounter unforeseen problems with employees, suppliers, investors, competitors, customers, government agencies, regulators, and creditors.

 

Why You Should Disclose Business Activities for Insurance

 

3 – To build an accurate risk profile

Your insurer will build a risk profile for your business based on the information you provide. A risk profile considers your industry, occupation, location, how long you’ve been in business, claims history and more.

The information determines how they rate your business for insurance purposes. It determines whether they can underwrite the risk and calculate an accurate premium to protect your business interests.

 

Why You Should Disclose Business Activities for Insurance

 

4 – To meet your duty of disclosure

All insurance policies have a Duty of Disclosure in the contract. Suppose you fail to disclose business activities to your insurer. In that case, they are within their rights to refuse to provide cover when it comes to claiming time.

When you accurately disclose all business activities and keep your insurer up to date, your insurer can underwrite your business risks accurately. It puts you in a stronger position at claim time.

Case Study Example:

A business entity decides to hold a ticketed music festival, but it fails to disclose the activity to its insurer. They assume that existing insurance will cover the event because they are a licensed venue. A ticket holder trips on a power cable leading to the stage and breaks their arm, leading to income loss. The business entity is sued and pays out legal defence costs of $50,000 plus a personal injury claim of $700,000.

Outcome: Due to non-disclosure of the event, the insurance company declined the claim.

 

5 – It’s a legally binding contract

Business owners must acknowledge that an insurance policy is a legally binding contract. Therefore, you should treat your insurance policy like any other legal contract.

Always ensure you understand all the terms and conditions of your policy. An experienced risk and insurance adviser can help you understand your policy, its limits, and exclusions.

It’s essential to check that the policy meets your business needs and risk profile.

 

Why You Should Disclose Business Activities for Insurance

 

Need advice on the disclosure of business activities?

Risk and insurance advisers, such as Clear Insurance, use their extensive knowledge of your industry to help you build a risk profile for your business.

They guide you through the different types of business risk and assess the level of risk your business can financially support.

The picture your adviser builds enables you to make a confident purchase at renewal time, giving you complete peace of mind.

To start your risk discovery journey, contact us today.

General Advice Warning: This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is appropriate for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement.

Clear Insurance ABN : 41601916689, AFSL : 240549 , AR Number: 465935, CAR Number: 465935

This article originally appeared on Why You Should Disclose Business Activities for Insurance and has been published here with permission.

Advisr does not provide advice and does not hold a financial service license (AFSL). All information above has been provided by Clear Insurance.

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