Your business may look different today than it did when your insurance policies were written. Revenue changes, new employees, additional equipment, different services, and updated contracts can all affect your exposures and insurance needs.
An annual business insurance review helps ensure that the information used to insure and rate your business remains accurate. It can also identify coverage gaps before an audit, contract dispute, or loss brings them to your attention.
Northwest Ohio business owners can use this checklist to prepare for a productive review with a licensed insurance advisor.
Review Changes in Revenue, Payroll, and Headcount
Begin with the basic numbers used to describe your operation:
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Annual gross revenue or sales
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Payroll by employee classification
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Full-time and part-time employee counts
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Owners who actively work in the business
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Independent contractor or subcontractor costs
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Temporary or seasonal workers
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Operations performed in other states
General liability, workers’ compensation, and other policies may use payroll, sales, area, subcontractor costs, or another exposure basis when calculating premiums. Some commercial policies are audited after the policy period, so inaccurate estimates could result in an additional premium or other adjustment.
Explain significant changes rather than simply providing new totals. For example, increased payroll because you hired office staff may affect the business differently than adding employees who perform roofing or manufacturing work.
Report New Locations, Renovations, and Equipment
Tell your agent if you have purchased, leased, opened, closed, renovated, or changed the use of a business location.
Review each location’s:
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Address and occupancy
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Building construction and square footage
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Ownership or lease arrangement
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Business personal-property limit
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Inventory
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Furniture and fixtures
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Machinery and production equipment
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Computers and electronics
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Security, fire-protection, and sprinkler systems
Property acquired during the policy period may receive limited automatic coverage for a short time under some policies, but the terms and limits vary. Do not rely on temporary automatic coverage as a permanent solution.
Equipment that regularly travels away from your premises may also need inland marine or equipment-floater coverage rather than relying solely on commercial property insurance.
Discuss New Products, Services, and Operations
A new product or service can create risks that were not considered when the policy was issued.
Notify your advisor if the business has begun:
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Selling or manufacturing a different product
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Installing products at customer locations
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Offering design, consulting, or professional services
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Performing work at greater heights or depths
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Working in a new industry
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Handling property belonging to customers
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Shipping products outside the usual territory
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Providing delivery or transportation
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Using subcontractors for new types of work
A general liability policy may not cover every professional-services, faulty-workmanship, product, pollution, cyber, or contractual exposure. Depending on the operation, separate coverage or an endorsement may be appropriate.
Provide accurate descriptions of everything the business does. A policy written around an outdated or incomplete description may not align with the business’s current activities.
Review Contracts, Leases, and Insurance Requirements
Customer agreements, construction contracts, vendor agreements, and leases frequently contain insurance requirements. During the annual review, collect the agreements that create your most significant obligations.
Look for requirements involving:
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General liability limits
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Commercial auto liability
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Workers’ compensation
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Professional liability
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Cyber liability
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Commercial umbrella coverage
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Additional-insured status
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Waivers of subrogation
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Primary and noncontributory wording
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Completed-operations coverage
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Notice-of-cancellation provisions
A contract can require your business to carry coverage, but the contract itself does not add that coverage to your policy. Some requested provisions may require endorsements, while others may not be available.
Insurance policies also do not necessarily cover every liability assumed in a contract. Ask your insurance advisor and legal counsel to review requirements before signing significant agreements.
Check Business Vehicles and Employee Driving
Review all vehicles titled, leased, or regularly used by the business. Confirm that each vehicle’s ownership, use, garaging location, drivers, and radius of operation are accurate.
Also discuss situations in which employees:
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Drive personal vehicles for errands or deliveries
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Rent vehicles while traveling for work
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Use company vehicles after business hours
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Take company vehicles home
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Drive customer-owned vehicles
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Transport tools, equipment, products, or passengers
A commercial auto policy may address owned vehicles, but hired and non-owned auto exposures can require additional consideration. An employee’s personal auto policy should not be assumed to provide complete protection for business use.
Review driver lists and motor-vehicle-record procedures as well. Remove drivers who no longer operate company vehicles and promptly report new drivers according to the insurer’s requirements.
Update Property Limits and Valuation Information
Commercial property limits should reflect current building reconstruction costs and the amount of business property that could be exposed to a loss.
Review values for:
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Buildings and tenant improvements
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Furniture and office equipment
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Machinery
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Tools
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Computers
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Inventory and raw materials
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Customer property
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Outdoor property and signs
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Property at temporary locations
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Seasonal increases in inventory
Replacement cost is not the same as market value, purchase price, book value, or tax valuation. The cost to reconstruct a building or replace specialized equipment can change independently of its resale value.
Ask whether covered property is valued at replacement cost, actual cash value, agreed value, selling price, or another basis. Also review coinsurance or insurance-to-value requirements that could affect a claim payment.
Recalculate Business Income Needs
Business income coverage may help replace certain lost income and cover continuing expenses when operations are suspended because of covered physical damage. It does not apply to every reason a business might close.
Estimate how a significant property loss could affect:
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Net income
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Payroll
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Rent or mortgage payments
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Taxes
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Loan obligations
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Utilities
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Temporary operating costs
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Extra expenses needed to continue serving customers
Consider how long it could realistically take to investigate the damage, obtain permits, order specialized equipment, rebuild, restock, and return to normal operations.
Ask about the policy’s waiting period, period of restoration, coverage limit, extended business income, dependent-property exposure, payroll treatment, and any monthly or time-based limitations. Use a current business income worksheet when available.
Address Cybersecurity and Technology Changes
Cyber exposures can change quickly, particularly when a business adopts new systems or collects additional customer information.
Tell your advisor if you have:
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Changed payment-processing systems
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Added cloud software or remote access
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Begun storing more personal or financial information
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Launched online ordering or customer accounts
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Allowed more employees to work remotely
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Connected production equipment to a network
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Changed outside technology vendors
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Experienced a cyber incident or suspected breach
Review whether the business has coverage for data restoration, cyber extortion, business interruption, incident response, notification expenses, funds-transfer fraud, social engineering, and liability to others.
Coverage for these events varies widely. A general liability or standard property policy should not be assumed to provide sufficient cyber protection.
Verify Subcontractors and Certificates of Insurance
If your business hires subcontractors, review how they are selected and documented.
Maintain:
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Written subcontractor agreements
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Current certificates of insurance
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Required policy limits
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Additional-insured endorsements when required
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Evidence of workers’ compensation when applicable
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Descriptions of the work each subcontractor performs
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Procedures for tracking expiration dates
A certificate of insurance is evidence of insurance on the date it was issued. It is not the policy itself, does not create coverage, and does not guarantee that coverage will remain active.
Your policy may also treat uninsured or inadequately insured subcontractors differently for underwriting, audit, or claim purposes. Discuss those requirements with your insurance advisor before work begins.
Review Liability Limits and Umbrella Coverage
Business growth can increase the amount at risk from a serious claim. Consider whether your liability limits still align with:
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Current operations
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Customer contracts
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Vehicle use
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Property values
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Public interaction
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Number of employees
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Products sold
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Work performed away from your premises
A commercial umbrella policy may provide additional limits over certain underlying liability policies, but it does not cover every exposure or automatically broaden all underlying coverage. Confirm which policies it follows and what minimum underlying limits must be maintained.
Build a Short Annual Review Packet
Preparing a concise review packet can make the meeting more accurate and efficient. Include:
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Updated revenue, payroll, and employee figures
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A current list of locations
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Vehicle and driver schedules
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Equipment, inventory, and property values
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Descriptions of new products and services
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Major customer contracts and leases
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Subcontractor agreements and certificates
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Business income estimates
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Cybersecurity and technology changes
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A list of claims, incidents, and operational concerns
Mark which information is estimated and which is final. Keep copies of the documents provided and record any coverage changes discussed.
Review Your Business Insurance with Short Agency
An annual review cannot prevent every loss, but it can help ensure your insurance program reflects the business you currently operate.
Explore business insurance options from Short Agency Insurance. Eligible small businesses may also want to learn about a business owner’s policy, which may combine certain property and liability coverages in one policy. Eligibility and available coverages vary by insurer and business type.
If your Northwest Ohio business has added employees, equipment, vehicles, locations, products, or contracts, request an insurance quote or coverage review.
This article is for general informational purposes only and does not modify, extend, or guarantee insurance coverage. Coverage is subject to the terms, conditions, definitions, limits, deductibles, endorsements, and exclusions of the applicable policy. Contract and legal questions should be reviewed with qualified legal counsel.
