Cancelling business insurance won’t trim your budget during the COVID- 19 lockdown, but can lead to excessive expenditures. You may be asking why you need to pay for general liability insurance when it’s highly unlikely that a customer will trip when your business is temporarily closed. Before you cancel your coverage, understand that the idea of short-term savings might cost you more in the long run.
Here are some of the risks you can face in case of insurance cancellation:
No Refunds or Temporary Suspensions
Most likely, you won’t get a full refund and would be forced to pay more for a new coverage later. You’d have to purchase a new coverage after the reopening of your business as insurance carriers also don’t allow you to suspend policies temporarily.
Many insurance providers have “minimum earned premium” clauses in their policies. You will have to pay a percentage of the total premium in case of cancellation if your policy supports this clause.
Loss of Business Licenses and Permits
Your state or city would demand a business license or even special permits for specific industries like construction. In case of business insurance cancellation, you risk having your licenses and permits revoked. Reclaiming them is expensive and time-consuming.
Damaged or Stolen Property
Though many business owners board up vacant storefronts to protect their property during the shutdown, damage and theft still occur. The costs of repair and replacement of damaged or stolen property will have to be handled by you if you cancel your coverage.
Inconveniences with Loans or Lease Agreement
If you cancel your insurance coverage, you might end up in default, despite being current with payments. Defaulting on your mortgage may cause foreclosure. If you default on your loans, the lenders can repossess them.
Consider Coverage Adjustments Instead of Cancelling Your Business Insurance
Insurance cancellation for a short period can lose you time, money, and resources. Thus, you must contact your insurance agent to adjust coverage or premium payments for individual policies.
Cancelling your business insurance would work against you, thus affecting your business. Rates would increase; hence, you need to find the best quote and lock in your rate.
You need to consider all these risks and think of alternatives instead of cancelling your business insurance policy. If you are looking for guidance on your business insurance, contact the experts at 01 Insurance. We are ready to help you with all your insurance needs.