The Importance of Regular Insurance Reviews for Business Owners
As attorneys who litigate insurance claims, we’re alerting business owners to the dangers of adopting a ‘set it and forget it’ approach to their insurance coverage. Recent events, including government shutdowns, supply chain disruptions, and natural disasters like Hurricanes Florence and Helene, have underscored the need for regular reviews of insurance policies.
Lessons from COVID-19 and Beyond
The COVID-19 pandemic highlighted the importance of understanding insurance coverage, particularly for business income and interruption losses. Many businesses sought relief through insurance claims, but the outcome often depended on the specific language of their policies. The North Carolina Supreme Court’s recent rulings on COVID-related claims emphasize the significance of clear policy language and the need for business owners to comprehend their coverage.
One key takeaway from the pandemic is the impact of market and supply chain disruptions on commercial property insurance. Increased labor and material costs can render previously adequate coverage insufficient, leaving businesses underinsured. This consideration is crucial not only for businesses assessing their own insurance but also when evaluating contractors and contract terms to mitigate risks.
Gaps in Insurance Coverage: A Stark Reminder
Hurricane Helene’s devastation last September exposed significant gaps in insurance coverage for many businesses. Some lacked flood insurance, while others found the National Flood Insurance Program’s (NFIP) coverage limits inadequate. The NFIP’s commercial policy limits are capped at $500,000 for buildings and contents, which may be insufficient for many businesses.
This disaster served as a reminder that flood risks are not limited to designated flood zones. Businesses across the state must consider whether they need flood insurance and whether the NFIP’s offerings will be enough in the event of a loss.
Proactive Risk Management
Insurance cannot be relegated to a ‘set it and forget it’ approach. Regularly assessing your business’s insurance portfolio is the minimum required. Further reviews are necessary when changes occur within the business or when new market risks emerge. For guidance on mitigating insurance business risks or litigating on behalf of commercial policyholders, businesses can consult with experienced attorneys.
By understanding their insurance coverage and staying proactive, business owners can better protect themselves against unforeseen events and ensure they have the necessary protection in place.
