You’re pulling together last year’s financials, reconciling payroll, accounting for new equipment, and getting everything in order for your accountant. There’s a lot of information to sift through.
In the middle of all this, you realize your business has changed significantly over the last 365 days. It’s a good thing, but now you’re wondering if your insurance matches these changes.
Insurance policies are written based on how your business operates at a specific point in time, so when operations change, coverage doesn’t update itself.
The financial picture that comes together at tax time is often the clearest signal you’ll get that a conversation with your account manager is overdue.
Common changes that surface at tax time
Knowing when to review your business insurance policy isn’t always obvious, but certain changes are worth bringing to your account manager’s attention.
Here are four that tend to show up when you’re closing out the books.
Revenue that looks different than last year
Significant growth usually means more clients, work, and liability exposure than existed when your policy was originally written. Many commercial policies are priced against a projected revenue figure at the start of the year. When your actual revenue comes in higher than that projection, your coverage may not fully reflect the business you were running.
A slower year presents its own questions, especially if your operations shifted from what your policy was originally written to cover.
Payroll changes
Adding employees, bringing on contractors in a new capacity, or reducing your workforce all affect how your workers’ compensation and liability coverage should be structured.
Payroll is one of the primary factors carriers use to calculate certain commercial premiums, and because workers’ compensation is audited at the end of the policy year, a business that grew its workforce significantly can face an unexpected premium adjustment after the fact, typically around the same time you’re already managing tax season.
An expanded scope of work
Taking on a new type of contract, serving a different client base, or adding a service line can shift your liability exposure in ways that aren’t always obvious at the moment.
Most commercial policies include a description of operations, and work that falls outside that description may not be covered the way you’d expect.
This is important for contractors, consultants, and service businesses that expand incrementally. The policy stays the same while the business outgrows it.
A location change
Your policy covers only the locations you’ve listed.
Moving to a new address, adding an additional space, or storing inventory or equipment somewhere that’s not listed on your policy can create a gap you might not know about until you file a claim.
Depending on how your policy is structured, even temporary use of a storage unit, a shared workspace, or a job site with regular operations may warrant a review.
What to do with this information
Most of these gaps develop because businesses change and policies don’t update themselves.
We work with small businesses in Bradenton and across Florida on commercial insurance reviews to make sure coverage reflects how they actually operate.
If tax season has brought any of these changes to the surface in your business, we’re glad to take a look.
Clients can simply login to their Glovebox accounts to review their policies, documents, or schedule an appointment with their account manager.
