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6 Reasons how changes to your Business could affect your insurance

Did you know by making changes to your business you could impact your insurance policy? Any business which changes its strategy should consider how it may affect its cover.

For example, if your business is a shop which then decides to ‘make things’ ie., produce or manufacture then you must notify your insurer as you are no longer purely a retailer.

Every business needs a plan, and it should be reviewed constantly to ensure it is heading in the right direction. Changes along the way are inevitable because all businesses have to adapt to changes in the market where they operate to remain profitable.

Many business owners are unaware how adjustments to their plans may impact their insurance policy, or that they have to inform their insurance provider of their intention.

To help make it clear, we have highlighted the business changes which could affect your insurance. For each, you must notify your insurer otherwise it could dilute or negate your policy.

  • Changes to your business’ current activities
    Your insurer will have provided cover based on your business’ current activities, for instance product and public liability which safeguards you against any injury or damage caused to a third party as a result of the services or products you provide.
    Should you decide to diversify into other markets, informing your insurer is vital to ensure you are still fully covered. You must always provide a true picture of your business’ trade activities as this will enable your insurer to provide the adequate level of cover required.
  • Changes to your stockholding
    If you are expanding the chances are your stockholding will increase. This will impact your business contents cover which protects you against risks like fire, theft and water damage.
  • Changes to your work premises
    You may also be planning to move or develop your premises; again this could affect your policy. Your insurer will need to be told about the structure, condition and security of the new premises so your policy can be amended accordingly.
  • Changes to your company structure
    If you move from being a sole trade to a Limited Company you are changing your legal entity and effectively you are a new business. You may require a brand new insurance policy to accommodate the risks involved between the two.
  • Changes to your company finances
    Financial changes like an increase in turnover will also affect your policy under the level of Business Interruption cover you need. If you are bringing more money in your level of cover will need to increase.
  • Changes to your employees
    Employing more staff will affect your insurance cover because your original policy will only have covered the number of employees you had when it was originally set up. Increasing your workforce without informing your insurer may invalidate your employer’s liability cover which is a legal requirement for any business where staff are employed.

Recent research conducted by the Federation of Small Businesses revealed more than half of the UK’s small businesses believed expanding their products and services was key to their survival; one in four saw an increase in profit over the last year, and over half were planning to focus on innovation this year.

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