Your business is probably a lot like you; it rarely stands still. Because of that, your insurance needs could be evolving too. Even if you started out with slam-dunk coverage for your situation, you may want to take another look.
Here's when you might want to reevaluate your business insurance:
1) Your current policy is expiring
Before the expiration date of your policy, you should receive a quote to renew your policy, if not the renewed policy itself. Many business owners automatically renew their policy without a second glance. But it is important to take a closer look.
First you'll want to check with your agent or broker to make sure everything is accurate. You might carry general liability insurance with a rate based on square footage.
If you're renting space in a building, you should double-check you aren't being charged for the total square footage of the building, rather than the space you are renting. (Yes, that happens sometimes.)
Also, be sure to let your agent or broker know of any changes your business has made or may make in the coming year. They could have suggestions for coverage you didn't think about.
Most importantly, ask if you can get the same or better coverage for a better price.
2) Your revenue suddenly jumps
If your revenue suddenly goes up, good job! But if you have general liability insurance, your premium rate could be based on revenue, which means it's audited annually. If you don't update the revenue estimate on your policy, you could be faced with a less-than-pleasant bill at the end of the year.
You'll also want to keep in mind that if your estimated revenue is way off the mark, many insurers will look upon it negatively, which may keep you from getting a good deal at renewal.
3) You make a change in operations
You may be a software designer who invents a brilliant new tech device. But before you start manufacturing it and selling it on the side, make sure your insurance actually covers this very different business.
Instead of calling it a “game-changer," your insurer may prefer a different term: “material increase in hazard."
Your carrier could require a different rate, or not have an appetite for your new venture at all. Many states even allow them to cancel your policy. Fortunately, your agent or broker can connect you with the right coverage for conquering the world.
4) You enter into a contract
Partners and vendors often ask you to carry specific types of insurance before they'll work with you. Show the contract to your agent to see if you need to add coverage.
Also, keep in mind that many large clients (think: big business or government) use standard template contracts that may have huge insurance requirements that don't actually apply to your service. If the revenue you'll make is lower than your new payment, don't be afraid to renegotiate or ask for a waiver.
5) You put on a special event
People love bouncy houses! And beer! (Usually not the same people.) Before you host a big public event with lots of activities, run the plan by your agent. Your carrier may be perfectly fine with a small company dinner or picnic, but needs to be informed about events that could be:
- Open to children
- Held off-premises
- Attended by over 100 people
- Staffed with volunteers
- Fun (or in insurance-speak, “potentially dangerous")
For situations like these and others, you may need additional coverage. Otherwise, your policy may not be renewed and you could be turned down by another carrier if something goes wrong. The good news? In most cases, your agent can easily hook you up with a special event policy so you can enjoy the party!