Why Business Insurance Should Evolve as Your Company Grows
What if years of success were actually putting your business in danger?
Chances are, you already protect the company you built with reliable business insurance. Such coverage is designed to protect your business from a wide range of threats, allowing you to focus on growing the company. However, if your business insurance growth does not match the growth of your company, you may be putting everything at risk.
With any luck, your company has grown and evolved over the last few years. But with growing success comes growing business insurance needs, and if you have not changed your policy, you may be putting your company at risk. Why is this, and what can you do to protect yourself? Keep reading to discover why small business insurance coverage should evolve as your company grows.
Why Business Insurance Isn’t “Set It and Forget It”
Many entrepreneurs are slow to get coverage updates for their company. They typically think of business policies like automobile policies: something they can “set and forget” without worrying about making any changes. However, the needs of your business will change far sooner than those of your automobile, and failing to adjust your policy accordingly puts you at serious risk. This is why conducting periodic business insurance reviews is so important.
The more your company grows, the more assets you have to protect and the more liability risk you must manage as part of your business insurance needs. Without changing your policy, an unexpected event (such as a fire or a lawsuit) could saddle you with major debt thanks to the considerable out-of-pocket expense. By adjusting your policy over time, however, you can mitigate the risk while giving yourself considerable peace of mind.
How Business Growth Changes Risk Exposure
Business insurance growth is a consequence of running a successful business. Success can increase your risk in many ways, including your risk of getting sued. That is because, after a few years of operations, your business liability exposure is greater than ever before.
Think of it this way: the more customers you have, the greater the chance that one of them will sue you over something they believe is your fault. A successful business has more customers than an unsuccessful one, but each of those customers represents a potential lawsuit. Fortunately, good commercial coverage helps cover your legal costs if any of your growing number of customers decides to sue.
Common Growth Milestones That Affect Insurance Needs
You cannot keep the same commercial policy over time. As your business changes, you need to make adjustments that reflect your company’s evolution. But how do you know when you need to contact the carrier and make changes?
Certain milestones represent the ideal time to make changes to commercial policies. These milestones include hiring employees, expanding operations, offering new services, and purchasing equipment. Below, you will discover more about these milestones and why they are so important.
Hiring Employees
If you employ others, you are required to have workers’ compensation insurance. You will need to obtain it after hiring your first employees. When you hire additional workers later on, consider making additional adjustments to help provide for your employees and abide by state regulations.
Expanding Locations
Expanding your business into another state typically means obtaining more commercial coverage for your second property. Additionally, if you expand into another state, you may need to make further changes to comply with its specific commercial regulations.
Offering New Services
Offering new services may increase your profit margin, but it may similarly increase your operational risk. Depending on the services, you may be increasing your potential liability. Before launching the new service, consult with your carrier to see whether you require any coverage updates for your business insurance needs.
Purchasing Equipment
Buying new equipment may require business insurance growth so that you can properly protect all of your assets while expanding operations. Plus, if you purchase a vehicle to use for business purposes, you will need to obtain commercial automobile coverage.
Where Coverage Gaps Often Appear
The growth of your business may lead to unexpected coverage gaps in equally unexpected places. For example, you may have good commercial property protection, but the fine print will dictate whether it will help you repair the new equipment you just bought to upgrade your company. Plus, you may discover only after you begin your high-tech company upgrade that your policy does not cover cybercrime.
The bad news is that no business policy can cover all of your needs without significant changes over time. The good news is that you can make those changes at any time. If you are unhappy with your current carrier, you can always switch to a new one. In this way, you can find a provider who can tailor policies to your unique needs while providing top-notch customer service.
When Business Owners Should Review Their Insurance
The milestones above offer great guidance on when entrepreneurs should consider updating their commercial coverage. However, even if you do not necessarily meet any of these specific milestones, it is important to regularly conduct a general business insurance review to see if any coverage updates are now needed. That is because your needs may still have changed over time, and you can obtain free quotes and switch carriers at any time.
Because of this, it is recommended that you audit your current insurance at least once a year. You can get as many quotes as you want before switching, giving you time to find a plan better suited to your entrepreneurial needs. There is always a possibility that you will not be able to find a better plan than what you currently have, but it never hurts to look. After all, this is the best way to give yourself the peace of mind you deserve while reducing business liability exposure.
How the Right Coverage Supports Long-Term Growth
If you own a business, it is easy to think of commercial coverage as a way to maintain the status quo and reduce your operational risks. However, a good policy can do more than just maintain what you have built. By tailoring policies to your exact commercial insurance needs, you can support long-term growth.
For example, adding policies such as business interruption coverage ensures that you will not lose any momentum you have built, even in the face of disaster. Additionally, adding commercial vehicle coverage can help you cover more of the town and ultimately help you expand. Finally, traditional coverage can help protect any new equipment you have purchased and any renovations you have made, which can help you better service your community and expand your business.
Coverage That Grows with Your Business
Now you know why business insurance growth goes hand in hand with the growth of your company. You know which milestones require adjusting your policy and which changes can help protect everything you have built. But do you know where you can find a carrier just as invested in your company as you are?
At InsureOne, we know it takes plenty of courage to start your own business. When you are ready to give your company the protection it needs from a carrier that respects your vision, come get a quote online. You can also pick up the phone and give us a quick call at 800-836-2240 to experience the customer service you have been dreaming of. Of course, if you want to sit down for a chat with one of our friendly agents, feel free to come find an InsureOne office near you.
FAQs
Does Business Growth Always Increase Insurance Costs?
The growth of your business will almost always require greater commercial insurance needs to match your rising operational risks. However, after scaling a business to a sufficient size, you may be able to qualify for volume discounts. And companies of all sizes may be able to save on their monthly premiums by switching to a better insurance plan.
Is Business Insurance Only About Compliance?
Your small business insurance coverage helps meet compliance requirements for companies that employ workers, use commercial vehicles, or are required to have liability protection. However, such policies offer benefits beyond compliance, including financial protection and industry-specific risk management.
Can Business Insurance Changes Be Made Mid-Policy?
As your commercial insurance needs change, you can make adjustments to your existing policy at any time. Furthermore, if you cannot find what you are looking for at your current carrier, you can get free quotes and switch to a provider such as InsureOne at any time, which is often the best approach when scaling a business.
Does Business Insurance Need to Change If Revenue Increases but Operations Stay the Same?
Yes, you should still expand your small business coverage if revenue increases, even if you have not had to worry about expanding operations. Increased revenue means you are dealing with more customers, increasing your liability risk. Basically, increased success means increased business liability exposure, and it is important for successful entrepreneurs to protect their investment with the appropriate level of commercial coverage.
Does Expanding to a New State Affect Insurance Coverage?
Scaling a business into another state will almost certainly affect small business insurance coverage. That is because different states may have different compliance requirements regarding things like workers’ compensation and commercial automobile coverage. Because of this, it is important to conduct a thorough business insurance review long before you expand.