How To Review Your Small Business Insurance Needs

Business insurance is an essential tool for protecting your company. As your operations, market, and other factors change over time, it’s crucial to review your small business insurance needs to ensure your coverage continually aligns with your risks.

Continue reading for important advice on assessing your insurance needs each year.

Why is business insurance essential?

People sometimes ask whether they truly need business insurance. That’s a fair question and an important one! The short answer is that every company—large and small—needs insurance. Some of the reasons for and benefits of carrying coverage include:

Meeting legal requirements. Certain types of insurance can be mandatory. For example, states require nearly all businesses with employees to have workers’ compensation insurance. If coverage is mandatory for your business (and it probably is) and you fail to have it, your business can face significant penalties, fines, and even legal action.
Protecting your business from financial losses. If you don’t have adequate coverage, even what seems like a minor incident can create a major expense. The classic example is a slip-and-fall incident at your business location. A visiting customer or client slips on a wet floor in your entryway, falls, and hurts their wrist. They’ve got a little pain, but it seems to be no big deal. However, you later learn the person broke a bone in their wrist and needed surgery. They sue you for the cost of their medical care and lost wages during recovery. The total comes to more than $35,000. Without insurance, that amount (if they win their lawsuit) will come out of your bank account.
Ensuring business continuity. Imagine that a storm damages your office, making it impossible for you and your team to work there. Insurance can have what’s called business interruption coverage. Essentially, that means your policy can pay for costs associated with keeping your company operational, like renting a temporary workspace while your office is being repaired.
Building trust and integrity. When a landlord, potential client, or anyone your business interacts with asks if you have business insurance, and you can answer that you do, it shows that you’re a responsible business owner.

These are just a few examples, but they make it clear how important (and beneficial) it is to understand and meet your small business insurance needs. And it’s essential that you meet those needs continually. The last thing you want is to have insurance but not the right types or amounts because your operations or other factors have changed, leaving you responsible for costs that insurance could have covered if you had updated your coverage.

Your annual insurance review checklist

Want to ensure you always have the insurance a business like yours needs? Complete the six steps below each year to confirm you have adequate coverage or identify changes you need to make.

Review your insurance policies. Refreshing your memory on what policies you have and what they cover is an important first step in an annual insurance review.
Assess whether your business has grown or changed. Have you gone from working solo to having employees? Have you purchased equipment or other assets? Are you offering new products or services? Are their new regulations affecting your company? It’s important to understand the state of your business today.
Determine whether you have the right types of insurance. Let’s say your company recently bought a van for service calls. You’ll need a commercial auto policy to protect the vehicle and your company from liability arising from using it—like an employee causing an accident with another driver who sues your business.
Evaluate your coverage limits. Even if your insurance coverage review shows you have policies for all the risks your company faces, you can still be hit with large expenses if you don’t have enough coverage. Your insurance limits need to stay in sync with the assets and liabilities they address.
Review your policy conditions and exclusions. All insurance policies have exclusions—meaning items or incidents they don’t cover. You should be sure you understand the exclusions in your policies, especially if you will be changing your operations in some way, like offering a new service that might be excluded from coverage.
Update your insurance strategy and policies as needed. It’s possible that your coverage types and limits for the past year will continue to meet your needs in the next one. But if that’s not true, you should make any necessary changes.

It doesn’t take long to ensure you have enough of the appropriate types and amounts of insurance to protect your business. The little bit of effort required to compare your risks and policies and make updates as needed will pay off many times over if you have to file a claim that wouldn’t otherwise have been covered.

Protect your business all year long.

An annual coverage review is an essential part of protecting your business. But keep in mind that you should review your insurance policies any time your business changes—not just near the end of your policy period. Being underinsured can have severe financial consequences whenever it occurs.

Questions about business insurance? biBerk is here to help!

If your yearly insurance coverage review raises questions about the types of insurance you should have or the appropriate coverage limits, we’re here to help. Our licensed insurance experts are happy to talk with you about your operations and recommend types and amounts of insurance. You can reach us at 1-844-472-0967. We also provide lots of informative resources on our website.

If you recognize that you need a type of insurance you haven’t previously carried and don’t have any questions about it, you can get an instant online quote. You can also buy the policy, with coverage effective as early as the next day, and download a Certificate of Insurance for your records or to share with a third party like a landlord or client.

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