How Often Should You Review Your General Liability Insurance Policy?

Insurance is one of those things you set and forget, right? Not quite. Many small business owners make the mistake of reviewing their general liability insurance policy only when it’s time to renew. But waiting that long could mean missed savings or inadequate coverage. This listicle will walk you through the essential checkpoints for reviewing your general liability insurance policy, helping you safeguard your business while staying financially savvy.

1. Annually – Just Like a Health Check-Up

An annual review of your general liability insurance policy is a must. This is a great starting point because it aligns with most policy renewal dates. During this review, verify that all the information is current and that no new risks have emerged since you first took out the policy.

Example: If you’ve expanded your business operations or added new services, you’ll want to ensure your policy covers these changes. Failure to do so might leave you vulnerable to claims that aren’t covered.

2. After Major Business Changes

Any significant change in your business operations should trigger an immediate review of your insurance policy. This could be anything from expanding your physical location to launching a new product line.

Statistics: According to a survey by the National Small Business Association, 33% of small businesses reported they had experienced a significant change in their operations within the past year, necessitating an insurance review.

3. When You Hire New Employees

Adding new team members can alter your risk profile, especially if they are engaged in high-risk activities. Ensure your policy’s coverage amounts and scope are adequate to cover potential new liabilities.

Tip: Conduct a mid-year review specifically dedicated to human resources. This ensures that employment-related liabilities are fully covered.

4. Following Legal or Regulatory Changes

Laws and regulations affecting business liability can change, impacting the level of coverage you need. Staying compliant not only avoids legal hassles but also ensures you’re adequately protected.

Example: If new local laws require additional safety measures, failing to update your insurance to reflect these changes could leave you exposed.

5. Every Time You Renew a Contract or Lease

Contractual obligations often include insurance requirements. Whenever you sign a new contract with clients or landlords, check whether your policy meets these stipulations.

Tip: Make a checklist of insurance requirements before entering negotiations. This proactive approach helps avoid last-minute policy changes and ensures you’re always in compliance.

6. After a Claim is Filed

Experiencing a claim is an eye-opener for many business owners. After dealing with a claim, assess what aspects of your coverage worked well and where there might be gaps.

Statistics: Research by The Hartford indicates that 40% of small businesses are likely to experience a property or general liability claim within the next 10 years. Use these experiences to refine your policy.

7. When You Purchase or Upgrade Equipment

New equipment can introduce new risks. Whether it’s a new fleet of vehicles or advanced machinery, make sure your policy adequately covers these investments.

Tip: Keep your insurance broker in the loop about any significant purchases. They can provide immediate advice on whether your current policy needs adjustments.

8. Periodically Review Market Rates

Insurance premiums fluctuate, and what was a great deal a year ago may not be competitive today. Periodically shopping around for quotes can ensure you’re getting the best value for your coverage.

Example: Many businesses find savings by bundling insurance policies. A bi-annual market review can help identify these opportunities for cost reduction.

Conclusion

Regularly reviewing your general liability insurance policy is not just a best practice; it’s a critical component of effective business management. By keeping your policy up-to-date with your evolving business needs, you ensure continual protection and potential cost savings.