7 Signs that Your Business May be Underinsured

Being underinsured means your current business insurance policy doesn’t fully cover the costs of recovery after a loss. The shortage could cripple your operations or even force you to close your business. How do you know if you’re underinsured?  Here are seven signs that your business may be underinsured. 

1. Your Coverage Hasn’t Kept Up with Business Growth

If your business has grown significantly since you first purchased your insurance policy, it likely does not reflect your current operations. For example, the cost of increased inventory, new equipment, or expanded office space may exceed the limits of your existing coverage. 

2. You’re Unclear About What Your Policy Covers

Many business owners don’t thoroughly review their policies. If you’re unsure about what exposures are covered—or worse, you’ve assumed certain exposures are included—you could be caught off guard at the time of a loss. 

3. You Operate in a High-Risk Industry

Businesses in construction or technology often face unique risks that require specialized insurance. If you’ve purchased only basic coverage, you may not be protected against industry-specific liabilities. 

4. You Don’t Have Coverage for Natural Disasters

Standard property insurance often excludes coverage for natural disasters like floods and earthquakes. If your area is prone to these events, additional coverage may be essential. 

5. You’ve Recently Secured New Loans or Signed New Contracts

Lenders and vendors typically require certain levels of insurance. If you’ve entered into new agreements, ensure that your policy meets these requirements. 

6. You’ve Hired More Employees

Adding employees to your team means additional liability. If you don’t update your workers’ compensation or liability policies, you could face penalties or insufficient coverage for workplace incidents. 

7. Your Business Relies Heavily on Technology

Cyber threats are on the rise, yet many businesses lack adequate cyber liability insurance. In today’s digital world, all companies are exposed to cyber criminals.  If your current policy offers little or no cyber coverage, you are underinsured.  

How to Ensure that Your Business is Fully Insured

1. Review Your Current Policy

Regularly review your policy with your agent. As your business grows, your insurance should evolve with it. Make a habit of reviewing your policy annually or after major changes, such as new hires, equipment, or contracts. 

2. Risk Assessment

Our Knight Vision process allows us to see things others don’t. We’ll identify potential risks and gaps in your coverage. This includes evaluating industry-specific hazards and considering worst-case scenarios. 

3. Consider Specialized Coverage

Depending on your industry, you may need policies like cyber liability, product liability, or errors and omissions (E&O) insurance. Don’t assume one-size-fits-all coverage will suffice. 

Don’t wait until disaster strikes to discover you’re underinsured. Through proactive and regular assessments of your insurance needs, you can avoid costly gaps in coverage and focus on what you do best—growing your business.