Consequences of lapsed commercial coverage.
Whether you have forgotten to make a payment or forgotten to renew your policy, there are instances in which business owners might accidentally allow their small business insurance to lapse. Unfortunately, there are a considerable number of risks associated with lapsed coverage. If you have accidentally allowed your small business’s insurance to lapse, then here’s what you should expect.
Risk of Accident
If an accident takes place at your workplace, then your lapsed insurance may not offer you the coverage that you need. If you have allowed your policy to lapse, then your insurance provider is not obligated to offer back-dated coverage. This means that your business would be responsible for the cost of the claim. In some instances, insurance companies may choose to offer you back-dated coverage, however they may require a ‘no-loss’ letter from the customer that guarantees that no one was injured during the incident. If you have allowed your workers compensation insurance policy to lapse, then not having this coverage is actually breaking the law. If you are unable to supply state-mandated workers compensation benefits, then your business may be subject to heavy fines and penalties.
Once you have allowed your insurance to lapse, your insurance provider will often refuse to issue you a policy in the future. Additionally, the lapse will be viewed by other insurers as a sign of high-risk behavior, resulting in higher insurance premiums. Finally, if your business is operating out of a leased building and your lease agreement states that you must meet an insurance minimum, then allowing your coverage to lapse could violate this agreement. This would result in your business’s inability to continue business operations.
These are some of the consequences of allowing your business insurance to lapse. Do you need assistance with your small business insurance? Then turn to the experts at PMC Insurance Group. Contact us today to learn more about getting competitive coverage for your small business clients.