As most business owners do, in the early days of your business, you may have bought the first business insurance policy offered to you. As the years go by, you may renew the same policy each year without reviewing your coverage.

Here’s why that doesn’t always work; as your business grows and adapts, change is inevitable. The last thing you want is to find yourself in a position where your policy doesn’t fit the claim, and you end up paying out of pocket. Depending on the size of the claim may mean the end of your business. On the other hand, you may be paying for coverage you don’t even need anymore.

Insurance isn’t one size fits all. The industry you are in, the amount you make, and the level of risk you face all factor into the amount of coverage you have and how much you pay for it. So, when there are changes to your business, your insurance policy needs to be updated to accurately reflect your growing business needs and ensure you are covered.


Five Signs You’ve Outgrown Your Business Insurance Policy

Not sure if you’re ready for an update? Here’s a list of five signs you’ve outgrown your current business insurance policy:

1. Significant Growth in Revenue 

More money could mean more problems if you don’t update your policy. As your business grows, so does your risk exposure. A meaningful change in revenue means you need to change your coverage level to reflect the increase. Think of it this way; if you double the number of products you’re company manufactures annually, more people buy them. The more people buy them, the more risk you face. More money means more problems.

One way to protect your business from the increased exposure is to increase your liability limit. Speak with your broker to identify ways to manage your risk with business insurance. 

2. Change in Products or Services You Offer

Much like increased revenue translates to increased exposure, so does an increase in the products or services you offer. Say you are a landscaper. Depending on where you live in Canada, this type of work can be seasonal. Now say you want to increase your revenue by including snow removal in the services you offer.

Snow removal is a high-risk industry, meaning you will need to increase your coverage to cover potential claims that could result from your professional activities, such as a slip-and-fall. If you make changes to your products or services, your broker needs to know, especially if it is a high-risk product, such as an e-cigarette, or service, like snow removal. 

3. Moving Office Space

Your commercial property insurance is directly tied to your office, so if you move to a new location or expand to more offices, your policy needs to be updated. If you move to an area that is densely populated or has a higher rate of crime or vandalism, this can cause your rate to be higher as well.

4. Hiring More Employees 

There’s a trend here – as your business grows, you can afford to hire more employees. With more employees, comes more risk. Your business insurance most likely covers full-time employees. However, the limit total usually includes all employees rather than each individual (e.g., a $2M limit across all five employees). Sub-contractors are generally not covered by your policy. However, your business can still be named in a lawsuit if they are found liable.

For example, if you are a spa owner renting a room to a massage therapist three days a week and they are sued for malpractice, as their employer, you and your business could be named in the lawsuit. To ensure everyone is adequately covered, your sub-contractors should have their own liability insurance. 

5. Purchasing New Equipment 

If your business has grown, chances are you’ve purchased more equipment. It this equipment breaks down, your coverage may cover the cost to replace or repair. However, contents insurance and equipment breakdown insurance typically have a specific limit of equipment covered (e.g., $30,000), which is why you need to let your broker know when you grow, so you have adequate coverage.

How Much Does It Cost To Update My Policy?

The cost of business insurance ranges depending on several factors, including the type of industry you work in, your annual and projected revenue, and the size of your business. Changes to any of these will affect the cost of your premium. On average, as a small business owner, you can expect to spend $650 on a $1M general liability insurance policy.

As your business grows, so does your to-do list. Make sure updating your business insurance is at the top. Ready to see what business insurance looks like for your growing business? Start an online application to get started today.

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