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The Importance of Adapting Your Insurance to Your Business Growth
Watching your business prosper and grow can make all your hard work seem worthwhile. As you enjoy your success, it is important to be aware that as your business grows, risk management considerations increase accordingly. You may need to revise your business insurance because of expansion or any of various other factors.
How Do Most Businesses Get Started With Insurance Coverage?
For most business owners starting out, the cost of business insurance is an important consideration. Busy with operations, they typically allocate little time to risk management and insurance solutions. Many start with a Business Owner’s Policy (BOP), a bundled insurance package providing several essential policies, such as general liability, commercial property, and business interruption insurance. BOP packages are often purchased by owners of small and medium-sized businesses who want to handle all their insurance needs in one place at affordable rates. For businesses with employees, workers’ compensation insurance, which is not included in a BOP, is required by most states.
When Should You Adjust Your Coverage?
When businesses expand, they are likely to outgrow their original BOP packages. After reaching a certain growth threshold, a new insurance strategy may be required. As they begin earning higher profits, it will become more important to prioritize risk management and safeguard assets with the appropriate commercial insurance coverage.
Businesses are only eligible for BOPs when they employ fewer than 100 people and generate less than $5 million in revenues. Even if a business is still eligible after significant growth, it is likely they will need additional customized insurance coverage for protection against new risk exposures. Any of the following situations should prompt a review of coverage needs:
- Hiring employees: Most states require employers to carry workers’ compensation insurance once the first employee is hired. You may also consider employment practices liability insurance (EPLI) for protection against employment-related claims such as discrimination or wrongful termination.
- Changing or adding locations: If you relocate to a larger property after your business grows or add another location, it is essential to update your commercial property insurance to ensure you have the coverage you need.
- Acquiring vehicles: Your business should obtain commercial auto insurance when it purchases its first vehicle for protection in case of accidents on the road.
- Renovating commercial property: When you install new equipment, update structural features, or add additional space to your business property, your commercial property insurance coverage should be adjusted in accordance with the increase in overall value.
- Offering different services or products: If new products or services are introduced to boost your company’s profits, consult with our experienced agent to determine if you need policy adjustments or specialized liability coverage for protection against new risk exposures.
- Digitalizing operations: Using workplace technology to digitize certain operations can increase company efficiency and promote growth and profits. It may also increase the risk of a cyber-attack and your need for cyber liability insurance.
Meet with our knowledgeable agent to review your business insurance. We can help ensure your company has the coverage it needs at the lowest possible cost.