Insurance is a must-have business overhead. It is critical to have the right level of coverage with a respected insurer.
As retailers, we often look at our overheads. We recently re-negotiated insurance coverage for our 3 retail shops and achieved a 30% cut in insurance costs. We reviewed the needs of each specific retail business and set about discussing these with our insurance broker, the same broker we have used for years.
We went into the discussions armed with facts about the business, accurate stock value data and accurate fixed asset value data.
Here are some of the changes we made to our insurance coverage:
- Property Cover – Annual Turnover adjusted to reflect trading, Contents including Re-Fit Costs adjusted, & Stock On Hand levels adjusted; These had drifted over time, adding to our costs inappropriately.
- Business Interruption – Gross Profit levels adjusted; This is high cost coverage.
- Money Cover – Level reduced from $20K blanket cover per store to $5K (lower limit); We bank daily so there is minimal cash on hand. Also, more and more over the counter payments are non cash so the level of cash cover was too high.
- Glass Cover – Removed for for one store as there now is no glass window as well as no internal/external glass;
- POS Equipment Breakdown – Removed; We looked at the actual costs and considered that we had not claimed in our 23 years in retail and then determined that we effectively cover ourselves through the saving.
- Excesses – Increased from $500 per claim to $1,000 per claim since we have not claimed, ever.
The critical factor for us was that in all our years in retail we have never made a claim on insurance. Then one time our shop was flooded, we claimed against the builder for the landlord for disruption and inventory damage.
The renegotiation process took an hour. Time well spent for the 30% cut in insurance costs saving achieved.
We willingly share with our POS software customers details of our own experiences like this, in more specific detail than at this blog. We are glad to be able to help our customers in this practical way as every dollar shaved from business overheads is worth considerable more than you consider retail margins.
Yes, insurance cover is important. However, pay for what you actually need.