Small Business Strategy: Reviewing Your Small Business Insurance Coverage

How Can You Review Your Business Insurance Coverage?

To review your business insurance coverage, gather your current policies, confirm your business details are up to date, compare limits and deductibles with your current risks, review exclusions and endorsements, and talk through potential coverage considerations with an insurance professional. Many businesses consider reviewing their coverage at least annually and whenever their operations change.

^{Insurance products are provided by insurance carriers. Acrisure acts as an intermediary that helps you access insurance solutions. Coverage availability, terms, conditions, limits, and exclusions vary by insurer, policy, state, and business risk profile. The descriptions below are general in nature and are not a substitute for reviewing the specific policy forms, endorsements, and applicable requirements with a licensed insurance professional. This article is for general informational purposes only and is not legal or other professional advice.}

Why Review Your Small Business Insurance Coverage?

Reviewing your small business insurance policies is a good practice at any stage of business.

As your business changes, your insurance needs can change with it. New employees, equipment, vehicles, services, locations, or technology can introduce risks that were not present when you first obtained your policies. Checking your coverage periodically can help make sure it still reflects your current operations and risk profile.

A business insurance checkup can help you identify potential coverage considerations, review policy limits and exclusions, and determine whether your existing policies still align with your needs. You may find the checklist below helpful when reviewing some common types of small business insurance, and consider consulting a licensed insurance professional if you need help evaluating your coverage. Your business remains responsible for managing its own risks, and insurance is one part of a comprehensive risk management program.

How Often Should You Review Your Business Insurance Coverage?

Typically, businesses should review their commercial insurance coverages at least annually and whenever the business experiences a change in circumstances.

Consider reviewing your business insurance coverage when you:

Hire or reduce staff

• Add or replace business vehicles
• Purchase significant equipment or inventory
• Open, close, or relocate a business location
• Introduce new products or professional services
• Experience significant changes in revenue or operations
• Begin collecting or storing new types of customer data
• Enter contracts with new insurance requirements
• Experience a claim or identify a new business risk

Keeping your insurance professional informed about significant changes can help you determine whether your policies, limits, and endorsements still align with your business.

Reviewing Insurance Coverage for Your Business: A Closer Look

Reviewing insurance policies is only part of an insurance checkup. It can also help to look at your insurance program as a whole to identify potential coverage considerations, overlaps, or outdated information.

When you check insurance coverage for your business, you may find these steps helpful:

1. Gather your current policies. Collect your insurance policies, including declarations pages (which generally identify key policy information), endorsements, certificates of insurance, and other relevant policy documents.
    
2. Review your business information. Make sure the information reflected in your insurance policies, including locations, employees, vehicles, property, operations, and other key details, is accurate and up to date.
    
3. Review coverage limits and deductibles. Consider whether your existing coverage limits and deductibles remain appropriate based on your business's current operations, financial circumstances and risk exposure.
    
4. Review exclusions and endorsements. Identify any exclusions or limitations that may affect coverage and review endorsements that may modify the terms or scope of your policy.
    
5. Identify changes in your exposures. Consider how new employees, equipment, technology, products, services, or locations have changed your insurance needs.
    
6. Review contractual insurance requirements. Discuss with your insurance professional whether current coverage and limits align with any insurance requirements in your leases, client contracts, or loan agreements.

Discuss coverage considerations with your insurance professional. An insurance professional can help explain your existing policies and evaluate whether changes may be appropriate.

Business Insurance Checkup Checklist by Policy Type

You may find these checklists helpful as a starting point. Policy terms differ by carrier and policy, and coverage availability, terms, conditions, limits, and exclusions vary by insurer, policy, state, and business risk profile, so review your policy’s terms carefully and seek guidance from a licensed insurance professional when necessary.

Commercial General Liability Insurance: Key Considerations to Review with Your Insurance Professional

• Coverage limits: Whether your commercial general liability insurance policy limits correspond with your risk profile, considering potential claims related to third-party bodily injury, property damage, and personal and advertising injury.
   
• Exclusions: The exclusions in your policy and available options for risks that are not covered.
   
• Aggregate limits and sublimits: An aggregate limit is generally the maximum amount an insurer will pay for covered losses during a policy period, typically one year. Consider whether your aggregate limit is appropriate for the coverage you may need, as well as any sublimits, which are specific limits on the amount of coverage available for certain types of claims or losses.
   
• Claims history: Your claims history, to help identify patterns or areas where additional coverage might be worth considering.
   

Commercial Property Insurance: Key Considerations to Review with Your Insurance Professional

• Property valuation: Whether your commercial property insurance policy pays on a replacement cost value (RCV) or actual cash value (ACV) basis. Replacement cost generally reflects what it costs to repair or replace property with similar property, while actual cash value generally reflects replacement cost minus depreciation. If you have RCV coverage, consider whether your insured values and limits are sufficient to reflect current replacement costs, including any improvements or purchases made since your last review. If you have ACV coverage, keep in mind that depreciation may reduce the amount payable for a covered loss, subject to the policy’s terms and conditions.
   
• Business personal property: Whether your coverage includes the equipment, inventory, and furnishings your business relies on.
   
• Perils covered: Which perils your policy covers and which it excludes. Standard commercial property policies often exclude or limit certain events, such as flood and earthquake, so consider separate coverage options for risks relevant to your location.
   
• Loss of income: Whether your policy includes business interruption coverage, how business income and extra expenses are handled during the restoration period, and how long that period may last.

Business Owner's Policy (BOP): Key Considerations to Review with Your Insurance Professional

• Policy components: BOP insurance typically combines commercial general liability insurance and commercial property insurance, and it may include business interruption coverage, depending on the insurer and policy. Consider what your specific policy includes and whether each component continues to suit your current needs.
   
• Coverage limits: Whether the policy's limits correspond with your current business size, operations, and risk profile.
   
• Additional endorsements: Endorsements that may be available, depending on the insurer and policy, for risks that a typical BOP may not address, such as equipment breakdown or employee dishonesty coverage.
   
• Whether a BOP continues to suit your business: If your business has grown, added locations, or taken on specialized operations, whether a packaged policy continues to suit your operations or whether individually placed coverages may be worth considering. BOP eligibility is determined by each insurer's underwriting guidelines.

Workers' Compensation Insurance: Key Considerations to Review with Your Insurance Professional

• Classification codes: Workers' compensation premiums are generally based in part on classification codes assigned to the type of work your employees perform. Consider whether the classification codes on your policy reflect current job duties. Whether a worker is an employee or an independent contractor is a separate legal question that depends on applicable law; consider consulting an employment attorney if you are unsure about a worker's status.
   
• State requirements and limits: Workers' compensation requirements, including required benefits for medical expenses and lost wages for work-related injuries or illnesses, vary by state. A licensed insurance professional or attorney can help you understand how your state's requirements may apply to your business. Consider employer's liability limits as well.
   
• Experience modifier: An experience modifier, also called an experience modification rate (EMR or "mod"), is a factor used to adjust an eligible employer's workers' compensation premium based on its actual loss history as compared with expected losses for businesses with similar operations and payroll. It generally reflects a company's claims history over a specified period and can affect your premiums. If it rises, your insurance professional can help you understand the factors that may have contributed to the increase, including claims frequency or severity.
   
• Safety programs: Consider putting in place and periodically reviewing workplace safety programs. These may help reduce the likelihood of claims.
   
• Before switching coverage: If you are considering a change in carrier or broker, coverage terms, claims handling, and return-to-work support. A change in carrier generally does not by itself change your experience modifier, which is based on your loss history.

Commercial Auto Insurance: Key Considerations to Review with Your Insurance Professional

• Vehicle inventory: Vehicles added to or removed from your fleet, so your commercial auto policy can be updated as needed.
   
• Driver list: Your drivers, including new hires, so they are reported as your policy and insurer require.
   
• Coverage types: The types of coverage on your policy, such as liability, collision, comprehensive, medical payments, and uninsured or underinsured motorist coverage, and whether they align with your business needs and risk exposure. Personal auto policies often limit or exclude business use, and hired and non-owned auto coverage may help address certain covered liability when employees use personal or rented vehicles for work.
   
• Usage changes: Any significant changes in vehicle usage, such as increased or decreased mileage, new delivery routes, or employees using personal vehicles for business.

Professional Liability Insurance (Errors and Omissions): Key Considerations to Review with Your Insurance Professional

• Services covered: Whether your professional liability insurance policy applies to the professional services your business provides, including any services added since your last review.
   
• Coverage limits: Whether your limits correspond with your risk profile for potential covered claims of negligence, errors, or omissions, and whether they meet any client contract requirements.
   
• Retroactive date: If you have a claims-made policy, the retroactive date. A claims-made policy generally provides coverage for covered claims first made during the policy period, as long as the alleged wrongful act occurred on or after the retroactive date, subject to the policy's terms. A claims-made-and-reported policy generally requires that the claim be both made and reported to the insurer during the policy period or any applicable reporting period. If you plan to change or cancel a policy, consider extended reporting ("tail") coverage.
   
• Claims history: Past claims, to identify trends and any additional coverage or risk management steps that may be needed.

Cyber Insurance: Key Considerations to Review with Your Insurance Professional

• Data protection: Whether your cyber insurance policy may apply to certain covered data breaches, cyber attacks, and other cyber incidents that could affect your specific business.
   
• Incident response: Whether your policy includes certain incident response costs, such as legal fees, public relations support, and notification expenses, which may be subject to sublimits.
   
• Specific scenarios: How the policy treats ransomware payments, data restoration, business interruption from downtime, and wire transfer fraud or social engineering. These can vary significantly by policy and may require endorsements.
   
• Third-party coverage: Whether the policy may respond to certain covered claims made by third parties affected by a data breach or cyber incident.
   
• Security measures: Whether your cybersecurity measures align with your policy's requirements, which may also affect coverage availability. Insurance is not a substitute for good security practices, and working with cybersecurity professionals may help reduce the likelihood of an incident.

Common Coverage Considerations to Review

Businesses differ, but a business insurance review might include questions in areas like these:

• New services or products that are not been disclosed to your insurer or addressed in your policies.
• Contract requirements for higher limits, additional insured status, or specific endorsements.
• Changed values for property, equipment, or inventory that no longer reflect current replacement costs.
• Outdated employee, payroll, or vehicle information that no longer matches your operations.
• Remote work or new locations that change where your people, equipment, or data are located.
• Exclusions and sublimits that apply to risks your business now faces more often.
• Technology and data changes, such as new payment processing or customer data storage.

Questions to Discuss with Your Insurance Professional During a Coverage Review

• What changed in my policies at renewal, and why?
• Which exclusions or sublimits are relevant to my type of business?
• Do my limits and deductibles align with my contracts and current operations?
• Are there endorsements or separate policies that may be worth considering?
• How are claims reported and handled, and what role will you and the insurance carrier each play during a claim?
• Which of my risks might be managed through safety, security, or operational changes?

Getting a Second Look at Your Small Business Insurance

Regularly reviewing your business insurance can help you identify outdated information, changing risks, and potential coverage considerations. As your business grows or changes, an insurance review gives you an opportunity to evaluate with a licensed insurance professional whether your policies, limits, and coverage options continue to reflect your operations.

A licensed insurance professional can help you review your existing policies and explore coverage options based on your business's needs. 

Talk to Acrisure to learn more about your coverage options, or request a small business insurance quote. 

^{Insurance carriers ultimately determine coverage availability, terms, and pricing, and Acrisure does not guarantee coverage, eligibility, pricing, or claim outcomes.}

Frequently Asked Questions about a Business Insurance Checkup

What Documents Might You Need to Review Your Coverage?

Helpful documents include your declarations pages, policy forms and endorsements, certificates of insurance, contracts that include insurance requirements, and current information on employees, payroll, vehicles, locations, property values, and revenue.

What Is a Declarations Page?

A declarations page is a summary of key information about an insurance policy. It generally lists the named insured, policy period, covered locations or vehicles, coverage types, limits, and deductibles. It is a useful starting point for a coverage review, though the full policy, including its forms and endorsements, governs coverage.

What Is the Difference Between Replacement Cost and Actual Cash Value?

Replacement cost coverage generally provides for the cost to repair or replace covered property with property of like kind and quality without subtracting depreciation, subject to policy terms and limits. Actual cash value generally reflects the value of covered property after accounting for depreciation, so a payment may be lower than the cost of replacing the property. Which one applies depends on your policy.

What Is an Experience Modifier, and How Might It Affect Workers' Compensation Premiums?

An experience modifier, also called an experience modification rate or "mod," is a factor used to help calculate an employer's workers' compensation premium based on its actual loss history compared with the losses expected for similarly classified businesses. A higher mod may increase premiums and a lower mod may reduce them. If your mod changes, it can help to review with your insurance professional whether claims activity, payroll or employee classifications, or claims reporting played a role.

How Might Business Income Coverage Work During the Restoration Period?

Business income coverage, sometimes called business interruption coverage, may help with certain lost income and extra expenses after a covered loss temporarily disrupts operations. Policies often include waiting periods, time limits, and conditions, so review with your insurance professional how your policy defines the restoration period and what losses and expenses it may cover.

How Might Cyber Insurance Treat Ransomware and Wire Transfer Fraud?

Cyber insurance coverage for ransomware payments, data restoration, business interruption from downtime, and wire transfer fraud or social engineering can vary significantly by policy, and some coverage may be available through endorsements or be subject to sublimits. Review your policy language and ask your insurance professional how each scenario might be covered.

^{The information provided is for general informational purposes only and is not a comprehensive review of your insurance needs.  Coverage considerations vary by business, and actual coverage is subject to the terms, conditions and exclusions of the applicable policies.}