8 Ways to Know If You Should Update Your Business Insurance Policy

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1. You Offer New Products or Services

Over the past year, you may have expanded, reduced, or changed your products and services. Those new products and services may change your risk exposure and require boosting your product liability insurance. It’s worthwhile to talk to a licensed broker about it.

2. You Carry More Inventory to Accommodate a Peak Season

With a peak season – like the summer months – you might have more stock to handle the demand.

If your business suddenly needs to carry more inventory for a few months of the year, you should have a peak season endorsement or adjustments made to the limits of insurance you carry during those seasonal fluctuations.

3. You’re Changing Locations or Renovating Your Business Property

Your existing commercial property insurance is tied to your location. So, if you move to a new location or expand to open more stores or offices, your policy must reflect that. One of the factors insurance companies consider when calculating the premium for your business insurance policy is the location of your office or workspace.

If you’re not moving to new digs but are improving your existing workplace through renovations, you’ll also need to update your commercial property coverage to reflect the value of the improvements. For example, if you replace all the countertops, electrical fixtures, and flooring with more expensive and newer materials, you should ensure your property coverage limit accounts for that expense.

4. You’re Hiring or Have Hired More Employees

If your company is growing, chances are you’re hiring more employees. A recent Zensurance survey of 1,000 Canadian small business owners found that 33% intended to hire more employees this year.

However, the more employees you have, the greater your risk is. Your current policy likely covers full-time employees (talk to your broker if you need clarification), but is the amount of coverage you have suitable? 

If you have subcontractors, they’re unlikely to be covered by your policy, so ensure they have their own policies since you can be named in a lawsuit if they are found liable for damages or wrongdoing.

For instance, if you are a spa owner who rents a room to a massage therapist a few days each week, and they are sued for malpractice, as their employer, you and your business could be named in the lawsuit.

5. Your Annual Revenue Is Increasing

Suppose your business is starting to flourish, and you’re seeing increased foot traffic in your store or warehouse (congratulations!).

As your customer base and revenue grow, so too does your risk exposure. That elevates your risk of third-party bodily injury and property damage allegations or lawsuits. A significant increase in income means you’ll need to up the coverage for things like commercial general liability insurance and business interruption insurance.

6. You’re Selling More Goods Online

Whether you ramped up your business’s online presence in the wake of the pandemic or launched a new online venture selling goods and services via a third-party marketplace like Amazon or Etsy, you need to weigh how that affects your risk exposure.

For instance, if you’re a retailer with a brick-and-mortar location and are now selling more frequently online, including offering curbside pickups, you may need to enhance your overall policy or cyber liability protection to reflect that change.

Also, if you’re finding your customer base has expanded to include Americans, and you’re shipping goods stateside, your liability coverage needs to include the geographies you are serving.

7. You Travel to Customer Locations or Employees Use Their Vehicles for Business

Whether your company provides home delivery services to customers or requires employees to travel to customer locations using their vehicles or a company-owned vehicle, you need to think about adding commercial auto insurance to your policy. An individual’s car insurance coverage is not designed to cover any vehicle used for business purposes.

If your employees use their personal vehicles for commercial purposes, you may require hired and non-owned commercial auto insurance.

8. You’re Buying More Equipment

A thriving business must acquire more equipment to keep operations running smoothly.

Whether computing systems or heavy machinery, these are assets you need to protect and should be accounted for in your policy. You might need equipment breakdown insurance, for example, to pay for replacing or repairing that equipment if they cease operating correctly because of an internal mechanical or electrical malfunction.

5 Things to Consider When Reviewing and Buying Business Insurance

Your business insurance policy should be tailored to reflect and provide coverage for your unique needs. When you’re exploring your coverage options, keep these five tips in mind: 

1. Know your risk exposure

Think about your business, your industry, and the types of products or services you provide.

Now, think about all the ways things can go wrong without warning. For example, a customer could fall and be injured on your business property; a fire could gut your office and inventory, or a cyber-attack could compromise your operations.

It’s critical to clearly understand your potential risks to obtain the comprehensive protection your business needs.

2. Understand how to minimize your risks

Proactively reducing your business’s risks may decrease the premium you pay. For example, avoid having employees with poor driving records behind the wheel if you’re a delivery company or a business with commercial vehicles.

3. Prioritize protection over premium

Once you understand your risks and the type of insurance you need, it’s time to shop around. It’s wise to be budget-conscious, but don’t discount the importance of having adequate protection.

Buying the cheapest policy might save you a few bucks, but if something goes awry and you have limited or no coverage, it can cost you much more. It may even be financially ruinous to your small business if, for example, you’re sued and don’t have the coverage you need to hire a lawyer or pay a court-ordered settlement.

4. Partner with a licensed broker

Partnering with a licensed broker as your trusted advisor is essential when shopping for insurance.

A broker works for you, not an insurance company. They can help you assess your risks, answer questions, and find ways to get you an affordable policy that doesn’t leave you vulnerable.

5. Review your policy annually

Get into the habit of reading your policy thoroughly and reviewing it annually before renewing or buying a new one. 

An insurance policy is typically a one-year contract between you and your insurance provider. The more you understand your policy and its terms and exclusions, the less likely you will have gaps in your coverage or have a claim rejected if you need to file one.

How to Ensure Your Business Insurance Coverage Is Adequate

If you’re considering switching insurance providers, purchasing business insurance for the first time, or exploring your options for better coverage at a lower price, fill out an online application to get a free quote from Zensurance.

We specialize in helping all kinds of Canadian small business owners, startups, sole proprietors, independent contractors and professionals, and entrepreneurs get the low-cost protection they need.

Let our team take the hassle of finding a policy off your hands. We’ll shop our network for more than 50 insurance companies to find the policy that suits you best at a price you can afford.

– Updated August 19, 2024.