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Why You Need an Insurance 'Checkup' More Often Than You Think Don't buy it and forget it. Here's how to review your insurance coverage -- and when.

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Running a business takes skilled multi-tasking and flexibility. There's a lot to do and only so much time in a day. You complete some tasks quickly and move on without looking back. Other things require more time and should not be just checked off and forgotten-including how you insure your business. Because as your operation changes, so do your coverage needs.

It's important to reassess your insurance coverage as your business expands, sells new products, moves to a new location, makes staffing changes, and does everything else that goes along with growth. Otherwise, you could wind up with glaring gaps in your coverage—gaps that could be financially devastating to your business.

"Insurance is not top of mind on any given day for a small-business owner," says Benedikt Sander, senior vice president and product manager at Liberty Mutual Insurance. "But a data breach or car accident doesn't wait, and these incidents can really damage a small commercial enterprise."

Rather than hope for the best, schedule—at minimum—yearly insurance "checkups," keep in touch with your independent agent, and be aware of how changes in your business could affect the risks you face.

What you can do.

It's good practice to have a yearly insurance checkup, but you also should do one whenever there's a significant change in your operations. Say, for example, you own a thriving restaurant and decide to add delivery and hire a driver who uses his personal car. One night on the job, he gets a text on his phone and takes his eyes off the road.

In those few seconds, he rear-ends the car in front of him. Since he was driving for your business, now you could be included in the lawsuit and held liable for damages. Yet, you aren't covered because when you met with your independent insurance agent, your business only had a few employees and a single location and certainly no drivers.

"If you're unsure of how a certain change may affect your insurance coverage, then call your agent," says Sander. By working with an independent insurance agent, you can make sure your insurance coverage accounts for every aspect of your operation.

A strong relationship with your agent is a good thing.

Your agent will take into account areas that you may not even consider to be an issue. Say your restaurant expands its reach by offering catering at private and corporate events. To streamline the process, you also launched online ordering capabilities.

These changes may introduce new exposures. For example, you may be more at risk for a data breach. You may also be more at risk for food-borne illness claims if meals are not transported correctly. You might assume your insurance already covers these risks, but if you keep your agent apprised, you can be sure you have the protection your business needs.

Your agent can also make you aware of ways to help reduce your risk of accidents and claims. For example, before letting your driver perform deliveries, make sure he or she has a valid license and insurance coverage and also agrees to your distracted driving policy.

Having an agent who is familiar with your business will help ensure that he or she has the necessary information to account for all possible exposures you might not even think about.

Be thorough.

Here are some questions you can ask yourself as you review your operations:

  1. What changes have I made to my business operations in the last year?
    • Have I purchased any new equipment or technology?
    • Am I offering a new service?
    • Did my business have a significant increase in revenue?
    • Am I conducting business internationally?
  2. What has changed with my staff?
    • Have I hired more employees?
    • Have any employees' roles changed?
    • Am I hiring temporary workers?
  3. What has changed with my vehicles or drivers?
    • Did I purchase new vehicles or remove vehicles from my fleet?
    • Do I have any new drivers?
    • Do my drivers use rented or personal vehicles?

Whenever you find yourself answering yes to one of these questions, it's time to call your agent. Based on your answers, your agent may recommend higher or lower policy limits, adding new coverage, or removing coverage you no longer need to account for any changes. For example, if your drivers use personal cars, you may need to add non-owned auto coverage. Your agent may also recommend umbrella coverage, which is an affordable way to safeguard your business in the event of a large claim or lawsuit. If your business accepts credit cards, data theft and cyber coverage can help your business recover if systems or customer information are exposed.

"Insurance is a small part of overall business expenses. It's not the added cost that keeps someone from updating his or her business's coverage. It's more about the business owner not being aware of the risks he or she might be taking," Sander says. "The good news is that your independent agent can provide guidance. Having an annual insurance checkup helps ensure you have the right type and amount of coverage to protect your business."