Small business owners, entrepreneurs, and startup founders know how quickly things can change in the business world. With every new service, piece of equipment, or milestone, the need to revisit your small business liability insurance becomes increasingly apparent.
Understanding when small business owners should look at their insurance policies and coverages is critical to ensuring you’re as fully protected as possible while your business evolves. The policy you last purchased may have renewed reflecting your operations at the time of purchase. Your current policy, along with your most current Certificate of Insurance (COI) is only effective if it reflects your current operations!
Before we cover the top 10 reasons to consider updating your small business insurance, you’ll want to understand why updating your insurance for small businesses might be the smart move you need to protect your investment and success. When your business changes, you may need to adjust:
- Available coverage limits and/or coverage requirements, whether by law or by clients
- Who is covered (additional insureds)
- What is covered (equipment, buildings, etc.)
- Where coverage applies and does not apply
- Other variables
Even a small change merits taking some time to consider how it could impact your insurance requirements, policy limits and coverages, the premium costs, and more. Let’s look at what kinds of changes signal a possible need to consider updating your insurance.
1. You Begin Offering New Products or Services
Every new product or service introduces fresh opportunities—and risks. Your existing insurance policy may not adequately cover liabilities associated with these additions. Without proper coverage, you could be liable for unexpected claims. Updating your insurance helps ensure your business activities are protected.
For example, you may be selling products on Etsy and assume that adding a new product like candles you made at home would be covered automatically under your Etsy seller policy. That’s not always the case. In this case, you’d need a policy that addresses covering candle makers (and thankfully, Thimble offers candle maker coverage in case that’s your niche).
2. Your Physical Address Changes
A change in your business location can bring new insurance requirements.
- Renting a New Workspace? Double-check your lease for responsibilities such as maintaining HVAC systems or changing liability limits and adding your new landlord as an additional insured.
- Moved to a New Zip Code? Areas with higher foot traffic or higher perceived risks might increase insurance premiums, while others might decrease them. Your policy is also rated contemplating your location. You don’t want to be paying too much!
Whether it’s a new lease or new zip code, aligning your insurance policy with your new situation is crucial.
3. You Added or Laid Off Team Members
Staffing changes impact your insurance needs. Adding employees means considering workers’ compensation and employment liability policies. If you reduce your workforce, you may adjust your policies to avoid overpaying for coverage you no longer need.
4. You Begin Working with Subcontractors
Are you hiring subcontractors? Your current policy may not extend to damages caused by third parties. It’s vital to ensure that you’re an additional insured on their policies so you are covered by their policies. This helps you be protected from liability arising out of their actions which are so often beyond your control.
Imagine this scenario: You’ve hired a subcontractor to handle electrical work on a construction project. During the job, the subcontractor accidentally damages a critical piece of equipment, causing significant delays and unexpected repair costs. Without you being protected as an additional insured on the subcontractor’s policy, you could find yourself responsible for these expenses. This type of risk highlights the importance of ensuring that your policy accounts for subcontractor-related issues, providing protection for both you and your business operations.
Pro Tip – Thimble offers a Certificate Manager free to customers and Thimble agent brokers to help manage subcontractor compliance. We know it’s a pain-in-the-ask to keep track of everything, so our all-in-one tool helps you ensure you’ll never miss an expiration date or gap in coverage again! Learn more here.
5. New Equipment or Damage of Essential Business Property and/or Business Personal Property
Whether you’ve invested in state-of-the-art tools or experienced physical loss or damage to your equipment that halts productivity, insurance must keep up. Coverage limits should account for new purchases. Failing to update your coverage limits could leave expensive tools underinsured, creating financial risks in case of theft, damage, or unexpected incidents.
On the other hand, damage to property on your premises can lead to costly downtime and lost revenue. Having insurance that includes business interruption coverage protection helps safeguard against these potential losses. By staying proactive with your coverage, you can keep operations running smoothly and protect your investment in critical tools.
6. Business Conditions Have Evolved
Markets and customer expectations shift constantly. From unexpected trends to major economic changes, evolving conditions could require rethinking your business structure or business operations. As the world evolves, meeting changing customer needs might introduce risks or requirements that weren’t previously relevant for your business.
Most small businesses “change from a simple business structure (sole proprietor or simple partnership) to a more complex one (LLC or Corporation). Occasionally, corporations will decide to change to simpler structures to reflect changes in their company, but that’s not as common.”1 These changes can be triggered by lender requests, or in the pursuit of better tax options or even legal protections, and ultimately impact the kind of policy, cost of policy, and policy limits.
Another example of business conditions changing could look like logistics expansion to include home delivery services. With new revenue opportunity comes new risks such as vehicle accidents or customer property damage. Without updating your coverage to account for these factors, you could face significant financial liability that wasn’t a concern before. Adjusting your policy ensures you’re prepared for the realities of your business’s growth and evolving operations.
Note: Thimble does not currently offer auto coverage as of March 2025.
7. Renovations or Improvements to Your Workspace
Freshly renovated office space? Expansion, upgrades, or adding major features like a kitchen or garage means your insurance must expand too. Keep adequate coverage for new and enhanced facilities to ensure you’re covered for related risks.
For example, if you’ve recently updated the look and feel of your premises by purchasing all new furniture, your property insurance should be updated to cover the increased value of these improvements. Without adjusting your policy, damages to the upgraded space or its equipment might not be fully covered, leaving your business exposed to unnecessary risks.
8. Adding Vehicles to Your Fleet
If you’ve added vehicles for deliveries, transportation, or service calls, review your auto insurance policy. It’s essential to have proper commercial auto insurance for all company-used vehicles.
Aside from the obvious impacts to auto insurance, added vehicles (for purposes like expanding your delivery services) could also impact other areas of your insurance. Because increased vehicle usage can raise your auto liability exposure, especially if employees are driving on behalf of the business, you may need to ensure your policy accounts for additional drivers. Additionally, if vehicles are used to transport valuable goods, you might need to adjust your cargo insurance to cover potential losses or damages during transit.
9. Protect Against Business Continuity Interruptions (and Cyber Threats!)
From natural disasters to digital fraud, having adequate business continuity and cyber insurance ensures your operations can return to normal quickly. Ensure you have policies covering extreme scenarios like cyberattacks that could otherwise lead to costly downtime.
We’ve covered these topics before in case you want to deep-dive into cyber insurance coverage checklist for small business and business interruption insurance.
10. Increased Revenue or Asset Value
Growth is exciting—but make sure increased revenue, assets, or even stock value doesn’t leave you uninsured. Expanding businesses often outgrow their original coverages. Insuring growing revenues and assets helps ensure you remain protected as your company scales.
As your company generates more revenue or accumulates valuable assets, your risk profile changes. Higher revenue streams and larger asset bases mean there’s more at stake in the event of an unforeseen incident, such as property damage, legal claims, or business interruptions. Insurance coverage that once suited a smaller-scale operation may no longer address these expanded risks, leaving potential coverage gaps.
Additionally, certain policies are influenced by your company’s revenue, such as liability insurance, which often uses revenue as a key metric to determine coverage limits and premiums. Ensuring your insurance evolves alongside your business growth shows a proactive approach to risk management, protecting your company’s hard-earned value and sustaining long-term success. Don’t wait for a setback to highlight the need for updated coverage—assess your policies regularly to align them with your growing business.
A Smarter Way to Stay Protected
Updating your small business insurance doesn’t need to take hours or involve dozens of calls. With the Thimble app, you can get unlimited quotes for all possible scenarios before you commit to adjusting your coverage when you’re ready.
Protect your growing business with flexibility and confidence.
Get a fast, free quote now
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