Is Your Business Underinsured? How to Find Out Before It’s Too Late

Many business owners assume their insurance policies will fully cover them in the event of a disaster, lawsuit or other unexpected losses and expenses. However, being underinsured is more common than many realize and could leave your business vulnerable when you need coverage the most. Understanding whether your current insurance is adequate may help you avoid costly surprises down the road.

6 Steps for Assessing Your Current Coverage

Evaluating your insurance coverage doesn’t have to be overwhelming. Here are some key steps that may help you determine whether your business is sufficiently covered:

1. Review your policy limits. Compare your current coverage limits to the actual value of your assets, including property, equipment, and inventory.
2. Evaluate business interruption coverage. Consider whether your policy includes enough coverage to sustain operations during a temporary shutdown.
3. Assess liability exposures. Think about potential legal risks, such as customer injuries, data breaches or employee claims, and whether your liability coverage reflects those risks.
4. Update for business changes. If your business has grown, added new services, or expanded locations, your insurance may need to be updated accordingly.
5. Consult a professional. An insurance broker or risk management advisor can help identify gaps and recommend adjustments tailored to your industry and operations.
6. Check for exclusions. Carefully read the fine print to understand what’s not covered. Some policies may exclude certain natural disasters, cyber incidents, or professional errors.

The Consequences of Being Underinsured

Being underinsured can have serious financial and operational consequences. In the event of a major incident, your business may be forced to cover significant out-of-pocket expenses. This can strain cash flow, delay recovery or even lead to permanent closure. Taking the time to regularly assess your insurance coverage now may help you avoid these outcomes.

We’re Here to Help

Contact Allee Agency Inc today to discuss your coverage needs and procure appropriate policies.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.