Q. It’s renewal time, should I just mail my check?
A. The easy answer is YES-so you don’t forget. No money=no coverage. Before you send the check, there are some things you should review and renewal time is a good time to do it.
The usual changes that come to mind are:
- Has your location changed?
- Have you added or changed any services?
- Have you added new equipment or perhaps, remodeled?
- Have you incorporated or perhaps dissolved a partnership?
All these changes can affect your coverage in the event of a loss. Probably the most important change and the most overlooked is a change of location. If the location is not correct on your policy, you will have no property coverage at the new location. Since property coverage premiums are based on building information and actual physical address (street, town, state)—the company must have accurate information. Also not requesting a change of location immediately could also affect the mailing address and you may not receive renewal information and bills. Professional liability and general (premises) liability will usually follow you from location to location but some general liability policies are location specific, so again it is crucial to keep this information accurate.
If you have added a service, for example, you are now offering waxing in addition to your manicure/pedicure services, you should check with your carrier to be sure it will cover waxing. If not covered, in the event of a waxing claim, the company would not be required to respond. This is becoming a major problem as more and more salons become day spas, the new services are generally NOT covered on policies that were previously covering hair and nail services.
Also when adding a new service, such as aesthetics, new equipment is purchased and rooms redecorated to accommodate the new service. The cost for the new equipment and the redecorating should be added to your property values. In the event of a property loss, you will be paid the up to the limit shown on your policy. This amount if not reviewed could be significantly lower than your actual cash value.
A long time client of ours had a recent fire loss that destroyed her entire facility. She had not reviewed her coverage as we suggest each year. Her policy limit was $4000, which was the cost of her equipment when she purchased it many years ago. Over the years she had grown and purchased new machines and office furnishings. She estimated her loss to be $20,000., but she received the $4000. that was her policy limit.
A more devastating claim involved a client who purchased his building for cash. He failed to advise us that he had purchased the building nor did he buy the coverage from a local agent. When a fire destroyed the building, he received the money for his salon contents but he lost the $75,000. he paid for the building.
GUIDELINES: Changes in your status can alter your coverage. If you are not sure about a change you are making, call your agent. Don’t make the decision on your own. If you have not made the change during your policy term–DO IT AT RENEWAL TIME!
If you are paying for coverage, you want to be sure it is correct and will be adequate in the event of a claim.
Questions? Please contact me.
(originally published in the CA, OH, PA, and NW Stylist Newspapers)