Successful businesses constantly assess things. Perhaps that means pinpointing weaknesses or looking at areas of strength for potential opportunities in the future. Let's assume you're ready to take your business to the next level, and your current insurance policy no longer fits. Canceling business insurance may benefit your business if the policy no longer serves your needs. While you make plans to replace your current policy with a new one, it's essential to weigh your options to avoid making a mistake.Here are some things to consider before canceling business insurance.
If you opt for canceling business insurance without a replacement plan in place, it could leave your business exposed if damages occur. Some insurance policies offer a grace period if you delay renewing your policy. However, canceling coverage is an entirely different scenario. It's recommended that you avoid any gaps in coverage, as that could leave you vulnerable to a potential lawsuit if a liability dispute arises. You will also be responsible for covering any loss out of pocket. Remember, there is a statute of limitation for potential issues. You could be sued for negligent actions that occurred a year ago. Canceling business insurance also impacts your premium. Insurance companies may take note of the gaps in coverage and raise your insurance premiums. It's recommended that you have stable insurance in place before canceling your current policy.
If your business is going through financial issues, you'll likely opt to cancel coverage if the insurance rates are too high. However, this approach could cause more harm in the future than good. Perhaps you opt to purchase a cheaper business insurance policy. While the price may align with your budget, the policy includes limited coverage. If you are having challenges paying your premiums, it's recommended that you speak with your insurer. They may be able to alter your insurance policy so that it's easier on your budget and you can avoid losing important coverage.
If you have a claims-made policy, canceling it may not be in your business's best interest. The policy adheres to a specific structure for you to receive your benefits. Perhaps you performed a service and made a mistake. Your professional liability insurance was in place to cover any damages. Now you've decided to drop the coverage, but your client is suing for losses your mistake caused. Since you decided to drop the professional liability coverage, you are now left unprotected against the allegations. It's recommended that you research prior acts or tail coverage. Tail coverage assists with claims after your insurance is canceled. Prior acts coverage may be available on your new insurance policy. This type of coverage protects you against allegations of past damage.
There are some cases where canceling business insurance isn't necessary. Perhaps you only need to adjust some parts of your policy. If you are replacing old tools or purchasing new equipment, it's recommended that you speak with your insurance provider before canceling your policy. They can modify your current policy to protect the new assets. Maybe you're planning to expand your business by opening up branches in some new locations. If you decide to re-locate, you can still keep your current insurance in place. Your insurer can help you change the coverage in your policy to align with your current needs. Canceling is the preferred option if your business no longer offers a service. For example, canceling your commercial auto insurance makes more sense if you no longer offer delivery services.
It's recommended that you assess all of your options before canceling business insurance. Our team at Kneller Insurance Agency will help you make the right decision. Contact us today to discuss your intended policy decision.