How often should a business review its insurance coverage?

Quick answer: At minimum, every business should review its insurance program at each annual renewal. Any significant business change, such as new employees, new locations, new equipment, or a new service line, should also trigger an immediate mid-year review.

Insurance is not a one-time purchase. A policy that was right for your business two years ago may leave you significantly underinsured today if your operations have grown, your payroll has increased, or your property values have changed.

The annual renewal is the natural checkpoint. Your agent should walk through changes in revenue, payroll, property values, and the nature of your operations. Even if nothing dramatic changed, inflation and rising replacement costs mean that a property limit set three years ago may cover only a fraction of what it would cost to rebuild today.

Beyond the annual renewal, review your coverage immediately when you hire employees (workers compensation requirements and payroll-based premiums change), purchase or lease new equipment or property (it needs to be added to the schedule), add a new location, launch a new product or service line (new activities can introduce new liability exposures), or sign a new contract or lease (most commercial contracts require specific coverage types and minimum limits that your current policy may not satisfy).

Building and equipment replacement costs have risen substantially over recent years. Carriers and industry groups recommend re-appraising commercial property values at least every two to three years to keep coverage in line with actual replacement cost. A co-insurance clause in your policy can reduce your claim payout if your insured value falls too far below replacement value.

An independent agent who works with multiple carriers is best positioned to do a comprehensive review, compare current market options, and flag coverage gaps before they become claim problems.