A client reminded me recently of a common issue that may arise when the accountants orchestrate a change in the business, but the insurance company isn’t advised of the changes…
Potentially stopping a company from the ability to make an insurance claim!
There are two common scenarios when this may happen:
Purchasing vehicles or equipment – Even the simplest corporation structure has at least one individual and one corporation. Structures add different entities for insurance purposes. If you purchase the business pickup truck in your personal name because you get the employee discount, but it’s insured through your corporation, the result? The insurance is technically in the “wrong place”.
The solution is usually quite simple – advise your insurance professional of the correct ownership.
Moving business assets – The second situation arises when there is a transaction like a Section 85(1) rollover. There are some tax gymnastics for transferring an unincorporated business into a corporation. The tax maneuver basically moves all the business assets from an individual or partnership to a corporation. This change needs to be recorded on your insurance policies. If not, you may not have the proper insurance coverage!
There is one simple recommendation: Get in touch with your insurance professional and perform a proactive review of all the assets insured and the ownership of each.
Good insurance agents should be on top of this, but why not take the initiative and make sure?