A client recently reminded me of a costly problem many business owners overlook: when changes happen in the business, but the insurance company isn’t notified. The result? You could unknowingly void your insurance coverage and lose the ability to make a claim.
Two Common Scenarios
1. Purchasing Vehicles or Equipment: Even a simple corporate structure usually involves at least one individual and one corporation. Things get complicated when ownership and insurance don’t align. For example, if you buy a business pickup truck in your personal name to access an employee discount, but it’s insured under your corporation, the coverage could technically be placed in the wrong name.
The Fix: Keep your insurance professional updated with the correct ownership details. A quick conversation can prevent a major headache later.
2. Moving Business Assets: Another issue arises during transactions such as a Section 85(1) rollover. This is a tax strategy where an unincorporated business transfers assets into a corporation. Unless you update your insurance policies to reflect the new ownership, you may not have valid coverage for your assets.
The Fix: After any significant structural or tax-related changes, confirm with your insurance professional that your coverage reflects the new reality.
The Simple Recommendation
Don’t assume your insurance agent automatically knows about changes in your business. Take the initiative and schedule a proactive review of your policies, the ownership of each asset, and how they are insured.
A good insurance broker will stay on top of this for you, but ultimately, you’re the one who stands to lose if coverage gaps exist. Protect yourself by making the call.
