Running a business means constantly adapting. You may hire new employees, purchase equipment, expand into a larger location, introduce new services, or increase revenue from year to year. While these changes are signs of growth, they can also change the risks your business faces. Unfortunately, insurance coverage does not automatically adjust every time your company evolves.
That is why scheduling an annual business insurance review can be an important part of protecting your company. Reviewing your policies gives you an opportunity to make sure your coverage still reflects your current operations, property, employees, vehicles, and potential liabilities.
Even businesses that have not experienced dramatic changes can benefit from reviewing their insurance. Policy terms, replacement costs, business values, and exposures can change over time. An annual conversation with your insurance professional can help identify potential gaps before they become a problem.
What Is a Business Insurance Review?
A business insurance review is an evaluation of your company’s current insurance policies and coverage needs. The goal is to compare the protection you currently have with the way your business operates today. During a review, an insurance professional may look at policies such as general liability, commercial property, commercial auto, workers’ compensation, cyber liability, professional liability, and business interruption insurance.
The exact policies that need to be reviewed will depend on your industry and operations. A construction company, for example, may have very different exposures than a restaurant, professional services firm, or retail business.
Why Your Business Insurance Needs Can Change
Many business owners purchase insurance and then renew similar coverage year after year. The problem is that a business can change significantly during that time. Consider a company that started with five employees working from a small office. A few years later, it may have 20 employees, additional equipment, company vehicles, higher revenue, and a much larger workspace. The insurance program designed for the original operation may no longer accurately reflect the company’s current exposures.
Even relatively small changes can matter. Adding a new service, storing more customer information, purchasing expensive equipment, or allowing employees to drive for business purposes could introduce risks that were not considered when the original policies were purchased.
5 Reasons to Schedule an Annual Business Insurance Review
1. Your Business Has Grown
Growth can affect nearly every part of your insurance program. If your revenue has increased, you have hired additional employees, or you have expanded your operations, your existing limits may need to be reconsidered. Growing businesses may also encounter new types of risk that were not relevant when they were smaller.
An annual review provides an opportunity to discuss these changes and determine whether your current policies continue to align with your operations.
2. You Purchased New Property or Equipment
Businesses regularly invest in computers, machinery, furniture, inventory, tools, and other assets. Over several years, these purchases can significantly increase the value of business property. If your commercial property insurance still reflects older values, you could discover that your coverage does not align with the current cost of your assets.
Replacement costs can also change. Equipment, materials, construction, and labor costs may increase over time, making it important to periodically revisit the values used when establishing insurance limits.
3. Your Workforce Has Changed
Hiring employees is another reason to review your insurance. Changes in payroll, employee responsibilities, and the number of workers can affect certain types of coverage, particularly workers’ compensation insurance. New job responsibilities can also introduce different workplace risks.
For example, employees who previously worked exclusively in an office may begin traveling to customer locations or operating company vehicles. Those changes should be discussed with your insurance professional.
4. Your Business Uses More Technology
Technology has become essential for businesses of nearly every size. Companies routinely store customer information, process electronic payments, communicate through cloud-based platforms, and rely on digital systems for daily operations.
As your reliance on technology increases, your exposure to cyber incidents may also change. A business insurance review is a good opportunity to discuss whether your current cyber liability coverage reflects the type and amount of data your company handles, as well as the systems it depends on.
5. Your Liability Risks Have Changed
Businesses frequently introduce new products, services, partnerships, contracts, or customer experiences. Each of these changes can create new liability exposures.
For example, a company that begins offering professional consulting services may have different insurance considerations than one that only sells physical products. Likewise, signing contracts with larger customers or vendors may introduce insurance requirements that your business previously did not encounter. Reviewing your coverage can help determine whether your liability policies are appropriate for your current activities.
A Business Insurance Review Can Help Identify Coverage Gaps
One of the primary reasons to regularly review business insurance is to identify potential gaps in coverage. A coverage gap can occur when a business faces an exposure that is not adequately addressed by its existing policies. These gaps may develop gradually as the company changes.
Imagine a business that begins delivering products using company-owned vehicles but never updates its insurance program. Or consider a company that starts storing sensitive customer information without evaluating cyber insurance. A business insurance review gives you the opportunity to discuss these developments before a loss occurs.
Don’t Forget About Business Interruption Coverage
Physical property is only one part of protecting a business. Companies should also consider what would happen if a covered event temporarily prevented them from operating. A fire, storm, or other covered loss could force a company to close its location while repairs are completed. During that time, the business could continue facing expenses such as payroll, rent, loan payments, and utilities.
Business interruption insurance may help cover certain lost income and operating expenses following a covered event, subject to the terms and limits of the policy. As your revenue and operating expenses change, it can be worthwhile to review whether your business interruption coverage continues to reflect your company’s financial situation.
Review Your Insurance When Major Changes Happen
An annual review provides a useful routine, but business owners do not necessarily need to wait until renewal time to discuss significant changes.
Consider contacting your insurance professional when your business:
- Moves or opens a new location
- Purchases major equipment
- Adds company vehicles
- Hires a significant number of employees
- Introduces a new product or service
- Experiences substantial revenue growth
- Begins operating in new markets
- Signs a major contract
- Changes ownership
- Makes significant changes to its technology or data systems
Keeping your insurance professional informed can make it easier to evaluate how these developments may affect your coverage.
What Should You Bring to Your Annual Insurance Review?
Preparing some basic information can make your review more productive. Start by documenting important changes that occurred during the previous year. This might include updated revenue and payroll figures, employee counts, equipment purchases, property improvements, vehicles, contracts, or new business activities.
You may also want to discuss your plans for the coming year. If you expect to open another location, hire employees, purchase expensive equipment, or expand your services, your insurance professional can consider those plans when discussing your coverage. The more accurately your insurance program reflects your business, the easier it is to evaluate potential risks.
Make Your Business Insurance Review Part of Your Annual Planning
Insurance should evolve alongside your company. A policy that worked well several years ago may not necessarily reflect the business you operate today. Regular reviews provide an opportunity to reassess your risks, update important business information, and better understand how your insurance program works. Making an annual business insurance review part of your normal planning process can help you stay informed about your coverage as your company grows.
At Crest Insurance Group, we work with businesses across a wide range of industries to help them understand their risks and evaluate their insurance options. Instead of waiting until a claim reveals a potential coverage issue, take the time to review your policies and make sure they continue to align with your business.
Contact Crest Insurance Group to schedule a business insurance review and discuss your company’s current insurance needs.