Stay Covered: 5 Steps for Commercial Insurance Buyers to Avoid Gaps in 2025

Businesses of all sizes across all industries face various risks that can lead to significant financial losses. To mitigate these exposures, business owners secure insurance for their operations. Many considerations go into building an insurance portfolio, and when doing so, business leaders must be mindful of policy specifics.

Failure to adequately address a business’s insurance needs can result in costly insurance or coverage “gaps” that can be detrimental to a company and its stakeholders. Such gaps can cause financial damage; organizations must often pay out-of-pocket to cover expenses when current policies don’t adequately cover a loss. Coverage gaps can also negatively impact a business’s reputation, resulting in a decline in trust and difficulty securing financing.

Insurance coverage gaps can arise due to many reasons, including the following:

• Misunderstanding policy exclusions that eliminate coverage for certain risks, leaving the business vulnerable
• Not reviewing and updating policies to meet the business’s evolving insurance needs
• Relying on personal insurance for business activities that typically exclude coverage for business activities

Steps for Avoiding Insurance Coverage Gaps

To avoid insurance gaps, take the following five steps to identify and close them:

1. Conduct a comprehensive risk assessment. Evaluate potential risks specific to their business and industry.
2. Review and update insurance policies regularly. Ensure coverage is in place if business changes take place.
3. Work with an experienced insurance agent or broker. They provide valuable advice on the coverages that businesses need.
4. Understand policy exclusions and endorsements. Thoroughly read policies and pay special attention to exclusions.
5. Ensure adequate limits and proper deductibles are in place. Avoid underinsurance and large, unexpected expenses.

Ask detailed questions and seek clarifications from your broker or insurers about what specific policies cover to ensure adequate coverage. Also, consider industry-specific insurance policies that address your operation's unique risks and bundle policies to reduce costs and avoid gaps between separate policies.

Don’t Overlook Important Insurance Coverages

Lastly, be mindful of coverage types that are often overlooked. These include business interruption insurance, cyber liability insurance, errors and omissions insurance, employment practices liability insurance and commercial liability insurance.

By reviewing your insurance needs, becoming familiar with available policies and working with trusted insurance professionals, you can secure comprehensive insurance policies that cover your company’s exposures and best suit your needs.

For more insurance and risk management guidance, contact Hylant today.

The above information does not constitute advice. Always contact your insurance broker or trusted advisor for insurance-related questions.