When to update business insurance coverage
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7 scenarios when a business should consider revising its insurance coverage

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As your company expands and reaches a new stage in its growth, you should congratulate yourself. Then you should start thinking about whether you need to update your insurance. Each company’s needs are different, but an insurance agent can go through the options with you. A good time to do this is at contract renewal time, but you can do it at any time, and are especially encouraged to do so if you’ve experienced big changes. 

Keep in mind that your insurance amount should correspond to your company’s value. You don’t want to be underinsured, where your losses aren’t completely covered. Here are 7 situations or policies to keep in mind as your business grows:

1. Businessowners insurance policy revisions

A businessowners policy covers the basics including property damage, general liability and business interruption costs. As your company gets bigger, the damage potential increases as well as when your company needs to shut down temporarily because of a disaster. If you bought enough coverage for your company while it was small and now it has doubled in size, your insurance should be increased to account for that change. 

2. Upgrading your building or work space

Whether you own or lease your space, you should be insured for the cost to rebuild and replace what you have in it. Did you renovate some of the offices or add on to the building? If you experience a covered loss, you will only get paid up to the maximum amount on your current policy, which may leave you holding an open checkbook to replace those upgrades.

3. Insuring new or added products

Your business might have expanded its product line. Adding products to your product line is great, as long as you have enough product liability insurance in case they’re defective. You’ll also need to be sure you have enough insurance to protect your investment in case the products are, for example, stolen from your warehouse. Without adding them to your insurance coverage, you may be underinsured and responsible for what otherwise might be a covered loss. 

4. Fidelity bonding to cover fraud

You’re probably smart enough to do background checks on employees who will handle money and expensive items. Fidelity bonding insurance covers you for those times when your employees don’t live up to their moral obligations. If they commit fraud by taking money or items of value from your company or clients, a current policy with adequate coverage means you or your clients will be made whole should the unexpected occur.

5. Vehicles for company use

It’s important to have proper coverage on vehicles your company owns or operates. But you may need coverage for when employees drive personal vehicles for company-related road trips. Talk with an insurance agent about how employees use vehicles for work, so you can get the proper coverage. Even if your employees are covered under a personal policy, your company can still be sued after an auto accident. 

6. New contracts with vendors and clients

Getting new vendors and clients is great, but sometimes the contracts obligate you to more than your current insurance covers. Some contracts may require that you carry certain types or levels of insurance, like professional liability insurance. Others might require you to add someone to your policy. 

7. Director’s and officer’s insurance

If your company grows large enough or changes its corporate structure to add directors and officers, those serving should be insured for decisions they make on behalf of the company. It’s hard to attract people to serve in this position if they are not covered by a company insurance policy. Any time you add key personnel or change the ownership structure, you’ll also want to revisit your insurance. 

Company growth is exciting, but suffering a financial loss you’re not covered for isn’t fun. It can even bankrupt a business. Take time as you grow to make sure your business is properly insured.


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