Small Business Resolution: Review Your Insurance

As we embark on a new year, it’s an excellent time for small business owners like you to review and update your small business insurance policies. Conducting an annual or periodic insurance checkup helps ensure that your business is adequately protected against potential risks.

Here’s a helpful business insurance checklist for some of the most common small business insurance policy types. Reach out to your insurance agent if you need guidance completing these reviews.

Small Business Insurance Checkup Checklist by Policy Type

Commercial General Liability Insurance

Coverage Limits: Verify that your commercial general liability policy limits are sufficient to cover potential claims related to third party bodily injury, property damage, and personal and advertising injury.

Exclusions: Review any exclusions in your policy and consider any available additional coverage options for risks that are not covered. If you are offering any new services, check to make sure risks related to those activities are covered.

Aggregate Limits and Sublimits: An aggregate limit for a general liability insurance policy is the maximum amount an insurer will pay for all covered losses during a policy period, typically one year. Ensure the aggregate limit of your policy is adequate for the total amount of coverage you may need in a policy period. Additionally, review and understand any sublimits within your policy, as these are specific caps that limit the amount of coverage available for certain types of claims or losses. It's crucial that both your aggregate limit and sublimits provide sufficient protection for your business needs.

Claims History: Analyze your claims history to help identify any patterns or areas where additional coverage might be necessary.

Commercial Property Insurance

Property Valuation: Review whether your policy has replacement cost value (RCV) or actual cost value (ACV) coverage. If RCV, ensure that your property is insured for its current replacement value, considering any improvements or acquisitions made over the past year. AVC, on the other hand, covers the depreciated value of your property rather than the full replacement cost. So, it may be important to research current actual cost values to ensure your property is insured for its current ACV.

Business Personal Property: Verify that your coverage includes all essential business personal property, such as equipment, inventory, and furnishings.

Perils Covered: Check that your policy covers common perils such as fire, theft, and natural disasters. Consider any available additional coverage options for specific risks relevant to your location.

Loss of Income: Confirm that your policy includes business interruption coverage if protection against income loss due to covered perils is important to you.

Business Owner's Policy (BOP)

Policy Components: A BOP insurance policy typically bundles commercial general liability insurance, commercial property insurance, and business interruption coverage. Ensure that each component of your specific policy meets your current needs.

Coverage Limits: Verify that the policy’s coverage limits are adequate for your current business size and operations.

Additional Endorsements: Consider adding any available endorsement options for specific risks not covered under the standard BOP, such as equipment breakdown or employee dishonesty coverage.

Workers' Compensation Insurance

Employee Classification: Ensure that all employees are correctly classified according to their job roles, as this can impact your workers’ compensation insurance premiums and coverage.

Coverage Limits: Verify that your policy meets state requirements and adequately covers medical expenses and lost wages for work-related injuries or illnesses.

Experience Modifier: An experience modifier, also known as an experience modification rate (EMR or mod), is a factor used by insurance companies to adjust an employer's workers' compensation premium based on the employer's loss history compared to others in the same industry. Essentially, it reflects the company's claims history and safety record. It’s important to review your experience modifier rate as it can impact your premiums.

Safety Programs: Implement and review workplace safety programs to help reduce the likelihood of claims.

Commercial Auto Insurance

Vehicle Inventory: Update your commercial auto insurance policy to include any new vehicles added to your fleet.

Driver List: Ensure that all drivers, including new hires, are listed on the policy and meet the insurer’s requirements.

Coverage Types: Review the types of coverage (liability, collision, comprehensive) to ensure they align with your business needs and risk exposure.

Usage Changes: Adjust your policy if there have been significant changes in vehicle usage, such as increased or decreased mileage.

Professional Liability Insurance (Errors and Omissions Insurance)

Services Covered: Verify that your professional liability insurance policy covers all professional services provided by your business, including any new services added over the past year.

Coverage Limits: Ensure that the coverage limits are sufficient to help protect against liabilities arising from potential claims of negligence, errors, or omissions.

Retroactive Date: Check the retroactive date if you have a claims-made policy to ensure continuous coverage for past services. A claims-made policy provides coverage only if the claim is made during the policy period, regardless of when the incident occurred, as long as the retroactive date is before the incident. If you have a claims-reported policy instead, it means coverage is only provided for claims reported during the policy period, regardless of when the incident occurred.

Claims History: Review any past claims to identify trends and consider additional coverage or risk management strategies, if necessary.

Cyber Insurance

Data Protection: Ensure that your cyber insurance policy covers data breaches, cyber attacks, and other cyber risks that could impact your specific business.

Incident Response: Verify that your policy includes coverage for incident response costs, such as legal fees, public relations, and notification expenses.

Third-Party Coverage: Check that your policy includes coverage for claims made by third parties affected by a data breach or cyber incident.

Security Measures: Review and update your cybersecurity measures to align with the requirements of your policy and help reduce the likelihood of a claim. Working with cybersecurity professionals can help.

By following this checklist of suggested items to review, small business owners can help ensure that their insurance policies remain up to date and provide the necessary coverage for potential risks. Regularly reviewing and updating your coverage can be a critical part of managing your business’s financial health and security.

Consult with your insurance agent for personalized advice and recommendations to help keep your business well-protected throughout the year. If you have any questions, contact us, or if you’re looking for insurance, request a small business insurance quote online.