Why Small Businesses Need an Annual Insurance Checkup

Annual insurance reviews are a critical practice for small businesses. They can help reduce insurance costs while ensuring coverage keeps pace with the company’s evolving needs. Skipping this review can result in coverage gaps, leaving new business services, equipment or locations underinsured—or worse, completely uninsured. When done with the help of an insurance professional, an annual review offers several benefits to small businesses. This article explores the benefits of annual reviews, highlights key areas to assess and provides tips for conducting a productive policy review.

A survey from insurance company Hiscox found that 75% of small businesses are underinsured. Completing an annual insurance checkup can help businesses identify coverage gaps and secure the policies necessary to fill them.

The Importance of an Annual Insurance Review

Conducting an annual insurance review is a crucial strategy to keep a small business’s coverage aligned with its needs. Annual insurance reviews offer several benefits, including:

• Improved coverage accuracy and regulatory compliance—Business operations and regulations constantly evolve. Businesses may purchase new equipment or vehicles, add services, hire employees or change locations. New laws may also affect coverage requirements for workers’ compensation, commercial auto or professional liability insurances. An annual review helps ensure your policies reflect these changes and remain compliant.
• Cost efficiency and improved understanding—A thorough insurance review can prevent both over- and under-insurance, identify redundant or outdated coverages, and reduce overall costs. It also refreshes business owners’ knowledge of their policy terms, helping them make more informed decisions.
• Confidence and risk readiness—Knowing that adequate coverage is in place can instill confidence in employers, clients and other stakeholders. This knowledge provides trust that the organization is prepared for the challenges it may face in the upcoming year and is ready to adapt to the emerging risks it encounters.

Areas to Assess in an Annual Review

Each business will differ, but when conducting an annual insurance review, key areas to analyze include:

• Property and equipment values—These can fluctuate each year and may require adjusted coverage.
• Revenue and income levels—Significant changes can impact business interruption or liability coverage needs.
• Business interruption and liability limits—Reviewing these helps avoid being over- or underinsured.
• Policy exclusions—Understand what’s not covered and explore options to fill potential gaps.
• Employee count and payroll—These directly affect workers’ compensation coverage.
• Vehicles and drivers—Ensure all are listed and adequately covered under commercial auto policies.
• Cybersecurity and data protection—Review cyber coverage in light of evolving threats.
• Contracts, leases, locations or business structure changes—These can introduce new liabilities or insurance obligations.
• New or updated regulations—Stay compliant with changing legal insurance requirements.

Tips for a Productive Policy Review

The following tips can help ensure a successful insurance policy review:

• Review existing coverage to understand what protections are currently in place.
• Work with an insurance agent or broker who can assess your coverage needs, help you stay compliant with regulations and ensure policies are aligned with your business’s operations.
• Keep detailed records of operational changes from the past year to help identify any new exposures or coverage needs.
• Examine your claims history to spot trends or areas of concern, and take steps to mitigate ongoing risks while ensuring adequate coverage remains in place.
• Ask about new products and available discounts that may offer broader protection or cost savings.

Conclusion

All small businesses can benefit from conducting an annual insurance review. These yearly checkups help ensure coverage keeps pace with evolving needs while identifying potential cost savings. Contact us today to learn how we can support your business.

---

Price & Ramey is committed to helping you, your family, and your business. For additional risk management guidance, contact us today.

Disclaimer: This article is for informational purposes only and does not constitute legal advice. Employers should consult with legal counsel or safety professionals for specific compliance recommendations.