5.12.24

Avoiding Common Insurance Gaps

Insurance gaps and how to avoid them

Businesses of all sizes across industries face various risks that can lead to significant financial losses. To mitigate these exposures, business owners secure insurance for their operations. Several considerations go into building an insurance portfolio, and when doing so, business leaders must be mindful of policy specifics.  Failure to adequately address a business’s insurance needs can result in costly insurance or cover “gaps” that can be detrimental to a business and its stakeholders. Such gaps can cause financial damage; organisations often pay out-of-pocket expenses when current policies don’t adequately cover a loss. This can also negatively impact a business’s reputation, resulting in a decline in trust and difficulty securing financing. Insurance gaps can arise due to many reasons, including:

• Misunderstanding policy exclusions that eliminate cover for certain risks, leaving the business vulnerable
• Not reviewing and updating policies to meet their evolving insurance needs
• Relying on personal insurance, which often doesn’t cover business activities

To avoid insurance gaps, business owners should take the following steps to identify and close them:

• Conduct a comprehensive risk assessment to evaluate potential risks specific to their business and industry.
• Review and update insurance policies regularly to ensure adequate cover after business changes.
• Work with an experienced insurance agent or broker who can provide valuable advice on the type of cover the business needs.
• Understand policy exclusions and endorsements by thoroughly reading all policies.
• Ensure adequate limits and proper deductibles are in place to avoid underinsurance and large, unexpected expenses.
• Consider industry-specific insurance policies that address the unique risks of business operations and bundle policies to reduce costs and avoid gaps between separate policies.

For additional guidance and robust insurance solutions, contact us today.

Information provided by Zywave and contributed by Harrison Law, (Cert CII) Head of Commercial & Private Clients, Cox Mahon Ltd.