It’s very important to have the best protection you can possibly get for your business. Sure, you might not ever need it, but just having it gives you priceless peace of mind. However, once you have the right insurance, that does not mean that you should just forget all about it until your bill is due or you have to take advantage of it.
You should re-evaluate your insurance at certain times to make sure that you always have the right protection. If you don’t, you could find yourself holding the bag and paying for damages, legal costs, and other things you don’t want to pay for. Here’s when you need to re-evaluate your business insurance.
Business Valuation Changes
How much your business is worth will play a factor in how much your insurance needs to cover. If you experience growth, then you will also have to increase your coverage. In the unfortunate case that your business declines, you can keep your coverage the same if you want. However, you will probably also want to cut your costs, which you may be able to do with your insurance premiums. There is no point in paying for what you don’t know.
New or Fewer Assets
Just like the value of your business can change, so can the assets that it has. This can include getting new equipment, new property, technology, or vehicles. There may be new or additional insurance that you need to make sure everything is protected. If you fail to update your insurance when you get new assets, you will find that you have to pay to replace or repair them if something bad happens.
Your team members are your most important assets, and they must be protected. If you’ve never hired anyone before and you are starting to, then you will need to add workers’ compensation to your coverage. It is required in most states. Also, many states have a requirement for providing health insurance and other benefits when you hit certain staffing levels. Not just that, but it’s most often the right thing to do to protect the people who make your business possible.
Anytime Your Current Policy Expires
When your current policy comes to an end, your insurance provider will send you a quote for the next coverage period. Every time this happens, take a look at the quote and see if everything still applies to your business. Most providers will simply renew the exact same policy, and most business owners will go with that. However, you should always double-check and re-evaluate it.
Go over everything yourself, and ask your broker any questions you might have. You may be getting charged too much, such as the incorrect square footage of your building, or you may have coverage that you don’t actually need. There may also be new options, such as engineering insurance or yoga teacher insurance that cater to specific types of business.
Never just go with your current policy when the price or the coverage might not be appropriate for you anymore.
You Change Products or Introduce New Ones
Your liability insurance should cover how much risk the product you offer can present. However, if you’ve changed your products in some way that makes them riskier, or less risky, then you can adjust your insurance accordingly. For example, if there was a danger of swallowing for children, but you’ve done something to reduce that danger, you may be okay with less coverage.
Also, if you introduce new products, they may come with a certain amount of risk that you didn’t have before.
A Change in Operations
Running a business means juggling many moving parts, priorities, and processes. If you change something, it could lead to more or less potential liability.
For instance, you should have coverage for your inventory in case of fire, water damage, or theft. Your premiums for this coverage will reflect the usual amount of inventory you have on the premises. If that changes, such as you decide to use a shipping model that requires more inventory in-house at any given time, then your coverage needs to reflect that.
You Enter Any Sort of Contract
When you enter into a business contract with partners or vendors, you may need to show that you have certain types of insurance for them to agree to it. Also, if you are working with large corporations or the government, they may request more coverage than you actually need. See if you can negotiate a lower limit than what their normal insurance template requires.
You Assume More Risk of Any Kind
Insurance is all about risk. The more likely something is to cause damage or harm, and the more expensive that harm could be, the more you will have to pay to insure against it. If your business takes on any form of additional risk, then you should be checking with your insurance provider to make sure you have the right coverage.
Never assume that your current policy will extend to whatever new aspect of your business you are adding.
Does your business put on special events? You may require special or increased coverage. The activities you have could be risky, and the more people that attend, the more risk there is. For example, children can fall out of bouncy houses, and angry parents could bring a lawsuit against you.
Special events also tend to have food, and if someone gets sick, then they may also claim your business was negligent in preparing it. Special events tend to be very risky, so always make sure you are covered, and weigh the cost with the benefits.
As you can see, your business insurance should not remain static. If your business is growing, then you need to adjust it. If you make any changes, then you have to re-evaluate.
The worst thing that you could do is assume you have coverage when you actually do not and end up having to pay out of pocket or declare bankruptcy because you didn’t have the right insurance.