The importance of regularly reviewing your business insurance
3 minute read
Business insurance plays a vital role in protecting your company from common threats. A business without the right insurance could suffer devastating losses.
Even if you believe you have comprehensive business insurance coverage, changes to your business, the economy, the regulatory environment, or your industry may mean that your current insurance does not adequately address your needs.
In this blog, we will review the common types of business insurance, talk about why you might need updates, and give you an action plan for reviewing your business insurance at least once a year.
What are common types of business insurance?
Property insurance is crucial for all businesses with owned or rented physical assets. This insurance can help protect your premises and any contents that are owned by your business, including equipment, inventory, and technology.
Business liability insurance can help cover costs related to lawsuits against your business.
Professional liability insurance is essential for companies that provide professional services or advice, such as accounting, consulting, graphic design, or photography. This insurance can protect your business against claims resulting from a wrongful act, an error, or an omission.
Business interruption insurance can help to replace lost business income or other expenses if you have to suspend your business operations temporarily due to an insured loss.
Commercial auto insurance is crucial for businesses that use vehicles to carry out their operations. In the event that you or one of your employees is involved in a vehicle-related incident, this type of business insurance can help cover damage to the vehicle, injuries to the driver, and any liability claims made by a third party.
Product liability insurance is important for all companies that make, distribute, or sell products. This kind of business insurance can help with lawsuits related to the products.
Cyber insurance is designed to help your business recover after a security or privacy breach, and any resulting lawsuits due to these losses.
There are many other types and subtypes of business insurance. Be sure to consult with your insurance advisor to ensure you have the best coverage for your business.
When and why should you review your business insurance?
Outside of an annual review, there are a few reasons why you might need to purchase different types of business insurance or make changes to your policy, such as:
Business growth or downsizing
If you are planning on expanding your workforce, adding new products or services, expanding to new locations, or downsizing your operations, you need to advise your insurance provider in order to ensure that these changes are properly reflected on your policy. It’s also critical that any new risk exposures are reported to make sure that they are still acceptable to your insurance provider, and won’t leave you without coverage should you suffer a loss.
Changes in your business model
If you are changing the way you do business, you may need to adjust your business insurance coverage as well. For example, if you started an online business and are now moving to a physical location, your policy needs to reflect these changes, and you may want to consider new types of business insurance.
Acquisition of new assets
When you acquire new assets, a change to your level of coverage may be necessary to ensure that you are properly protected.
Expansion into new markets
When a business enters a new market or starts operating in a new geographical area, its risk profile may change. It is extremely important that this information is shared with your insurance provider to make sure that this change won’t leave you without coverage, should you suffer a loss. For example, expanding operations into an area that is prone to natural disasters may require additional property insurance coverages.
Conducting an annual business insurance review
Given all the possibilities for change and the potential consequences of being underinsured, an annual review is always appropriate, even if your business has not encountered any of the changes mentioned above.
To conduct your review, begin by collecting information about your business, your industry, and the current threat environment:
Review your business activities and record any changes from the previous year, such as changes in the way you do business, the products you sell, etc.
Assess the value of your business’ assets, including things like real estate, furniture, computer systems, and inventory.
Make note of changes to your staffing levels, including any increased use of part-time workers, gig workers, or freelancers.
Review the vehicles that are used for your business.
Go over your client contracts, particularly new ones. Assess whether those contracts include business insurance requirements, such as liability or cyber insurance.
Review the regulatory changes that affect your industry, including environmental regulations, employee relations laws, workplace safety regulations, and product safety laws and guidelines.
Next, assess the adequacy of your existing business insurance in light of the information that you have gathered. If any of it is confusing, or you need some expertise to help you with it, consider getting a risk assessment from your business insurance advisor.
Finally, consider purchasing additional types of business insurance, or increasing or lowering your coverage level as appropriate.
Get flexible and affordable coverage with TruShield
At TruShield, we know you’ve got a lot on the go as a business owner. We’ll work with you to make sure your insurance policy addresses all of your unique risks and can grow with your business. Get started by visiting our business insurance page and getting a quote today!
This blog is provided for information only and is not a substitute for professional advice. We make no representations or warranties regarding the accuracy or completeness of the information and will not be responsible for any loss arising out of reliance on the information.
