Jason Tassie is a UK entrepreneur and founder of Know Your Business
Most founders are able to tell you how much their business has changed in the past year.
They will have hired people, moved premises or started selling into new markets. Ask when they last reconsidered their business insurance, however, and the answer is often no not yet, I’ll do it at renewal.
That is the problem. Insurance is commonly treated as an annual administrative task when it should really move with the business. This is because growth changes risk and there is a danger that the insurance does not change with it.
Hiring changes more than the payroll
Taking on employees is one of the clearest examples. Most businesses must have employers’ liability insurance as soon as they become an employer, with cover of at least £5 million from an authorised insurer. But founders should not think of hiring simply as a compliance trigger.
The Government’s guidance on employers’ liability insurance is a useful starting point for understanding the legal requirement.
A new product can create a new liability
Launching something new is exciting and a commercial decision, so insurance may not be part of the conversation. But it should be because you may be creating risks that did not exist when its existing cover was arranged.
The important question is does our insurer understand what our business actually does today? A broad description supplied several years ago may no longer accurately reflect where the company’s revenue or risk now sits.
International growth changes the picture again
Selling overseas can be another big change. New territories can mean different legal environments, contractual requirements, supply chains and exposures. Even if the product itself has not changed, where it is sold and who buys it may have. International expansion should therefore trigger an insurance conversation rather than waiting for the next renewal date.
Premises are more than an address change
Moving from home into an office, opening a shop or taking on a warehouse is an obvious milestone, but businesses can underestimate how many things change with it. You may suddenly hold substantially more stock, own equipment, receive visitors or become responsible for different physical risks.
The reverse matters too. A company that has moved towards home or hybrid working should not assume risk has disappeared because fewer people are in the office. Equipment may now be spread across employees’ homes, staff may access company systems remotely and founders should check whether existing home and business policies properly reflect how the company operates.
Do not wait for renewal
The simplest solution is to stop treating insurance reviews as something that happens once a year. Instead, connect them to business milestones. Hiring your first employee, moving premises, signing a major contract, entering a new country, launching a product, buying expensive equipment or materially increasing turnover should all prompt the question: has this changed our risk?
That does not necessarily mean buying another policy every time the company changes. It means making sure the cover, limits, exclusions and information supplied to the insurer still match reality.
Put insurance on the growth checklist
Fast-growing SMEs are usually good at creating processes around growth. A new employee triggers payroll and onboarding. A new office triggers utilities and IT. A product launch triggers marketing and sales. Insurance deserves a place on the same checklist.
One useful habit is to conduct a short quarterly ‘what changed?’ review. Do not begin with the policies. Begin with the business. How many people work here now? Where are they working? What are we selling? Where are our customers? What assets do we own? What contracts have we signed? What would now cause us a serious financial loss? Only then compare those answers with the cover in place.
For a broader overview of common cover and legal considerations, see Know Your Business’s guide to UK business insurance requirements.
The key principle is straightforward: do not ask whether your business is insured. Ask whether the business described in your insurance documents is still the business you are actually running. If the two have drifted apart, it is time for a review.