In this series of articles, we’ve been digging through the myriad of potential gaps in your business insurance coverage; gaps which could place your company at risk. Many of the gaps might not be obvious at first glance but when you think about some of the limits of coverage outlined in a typical insurance policy and consider today’s costs to repair or replace certain items after a loss, it suddenly becomes apparent that you might be underinsured in certain areas.

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Ottawa - May 30, 2012 - In this series of articles, we’ve been digging through the myriad of potential gaps in your business insurance coverage; gaps which could place your company at risk. Many of the gaps might not be obvious at first glance but when you think about some of the limits of coverage outlined in a typical insurance policy and consider today’s costs to repair or replace certain items after a loss, it suddenly becomes apparent that you might be underinsured in certain areas.

One good example of this is your company’s outdoor signage. Now, it might be the case that every day you drive past your company sign which is out in front of your parking lot and you’ve seen it so often you never give it a second thought. But that rather innocuous sign could end up causing you big headaches if it is ever damaged. It might have been erected a decade ago or more and perhaps you figure it’s not worth a whole lot of money. But if you ever have to replace it, you could be in for a shock.

Let’s suppose that one of your customers backs out of their parking space and smacks it hard. The sign, which was mounted to a concrete slab anchored into the ground, is now listing to the south. You disconnect the power to it because you are unsure if any of the wiring has been damaged. You report the damage to your insurance company and low and behold, the sign guy who comes out to examine the damage estimates the total repair cost at $40,000. You can’t believe it. It’s just a simple sign with a couple of fluorescent tubes in it. But when you add up all of the costs to fix it, that’s when it begins to make sense. The old footing needs to be dug up and replaced. A new pole has to be installed. A small crane is rented for the installation. A new wiring harness is required. But you have insurance, right? You even saw the words “Sign Coverage” on your policy so everything should be cool. But if you look closely, you might see that the limit of insurance for your signage is only $10,000. (Remember, when you look at the extensions on your policy, the limits shown are not in addition to your general property coverages, those are often stand alone amounts of coverage for those individual risks which may not be otherwise covered.) Ten grand is sometimes the basic amount stated for outdoor signage and unless you purchased additional insurance, in this case you’d be out of pocket $30,000.

While something like a business sign might seem like small potatoes when compared to the grand scheme of your business risks, if you end up having to write a cheque for repairing it, suddenly it will become a much bigger deal. If you aren’t sure how much sign coverage you have, now would be a good time to contact your insurance broker.