When You Don't Have Enough Insurance Coverage

This is a true story about a business owner we'll call "Joe". When he was just a young boy, Joe knew he'd own a business some day. He started out small, and built his company slowly but steadily. After years of hard work, it was three times the size of his start-up. Exciting times! Each year, during his annual review, Joe's insurance agent asked him if he had enough coverage for his equipment, office furnishings, etc. And each year, Joe said yes.

A fire ignited one evening which resulted in a major loss. While walking through what was left of the building, he began listing items he could remember. It was easy with the big equipment, but not so easy with the smaller stuff. There were so many items he couldn't even recognize. However, that really didn't matter in the end. You see, he was not properly insured as Joe had assumed, and before he was even 1/2 way done listing the big stuff, he had already maxed out his insurance policy coverage.

When in the busy world of business ownership, days fly by and you just don't realize how much you accumulate. Office equipment, production equipment, furniture, electronics, appliances and even decorative items. They all add up. And when purchasing these personal property items one at a time, you don't realize how much you own. You're unaware of the investment you've made to furnish your growing business.

It's important to know the value of your business assets so you can be properly insured - an inventory created and then kept current will provide this information.

Joe is still in business, but his business is back to the size it was when he started decades ago. The proper insurance, backed up with a thorough inventory, would have provided a much happier ending.

(This is true for a home as well. Think of how much more you have than when you were single, just starting your family, or even just a few years ago. It's best to have an inventory so you know tht you have sufficient insurance coverage.)

In addition to disaster preparedness and recovery, you've just read a prime example of why it's important to have a thorough, up-to-date list of your contents. There are other - often unrealized - benefits that an inventory of the contents in a business, church or non-profit organization will provide:

• AVOIDING DUPLICATE PURCHASES has proven to be a huge benefit. Prior to an inventory to refer to, business owners and others with purchasing authority would buy equipment and tools, then find the identical item later. When there is a list of all of these items available, you can check to see if another department has something that you can borrow. In these economic times, just eliminating a few unnecessary purchases would pay for an inventory service.
• KNOWING WHERE THINGS ARE is a money-saver and a time-saver. We were told of a church that had recently moved. Since the janitorial staff couldn't locate extentions cords, tools and other equipment, they purchased new. Of course, now there are many duplicates, and think of the time spent first searching, then buying, these items.
• WHEN SEEKING A LOAN OR LINE OF CREDIT from a bank, a complete inventory list and photos will help support your business documents when you want to remodel or expand. Some banks are now asking for an inventory before they will approve the loan.
• WHEN SELLING A BUSINESS, it is essential to know the true value of your assets. Items are accumulated over the years, and you'll want to make sure you have a thorough listing of all the contents, showing the full value of your business.