Should I Cancel or Non-Renew my Business Insurance during COVID-19 closure?

We are now weeks into the COVID-19 Business Shutdowns and many business owners are looking for ways to cut overhead costs. One thing that many of our clients are asking is “Can we cancel our insurance since our business is not operating?”

There is no simple answer to this question as every business is different.  There are several things to consider such as the value of inventory and property that is still at the business location, as well as contractual requirements of your lease.

Property and Liability can easily be protected by a short term Vacant Commercial Space policy, which may be less expensive than your current business policy. Keep in mind, that when you are ready to reopen, we will have to go back out to the insurance market to get you a new policy. We are unsure how the insurance industry will react to this unprecedented event, so we could potentially wind up with a more expensive policy.

Since premium for many policies is based off revenue, we can go to your current carrier and request a premium reduction due to less revenue. For Workers Compensation, we can adjust payroll calculation to reduce required premium.

Employment Practices Liability Insurance (EPLI) are “Claims Made” policies, meaning if you cancel the policy, there will be no coverage for prior events. There will likely be an increase in these claims as the crisis continues, so be sure to keep this policy in force.

If you would like more information on reducing insurance costs, while still protecting your business, please contact me at [email protected]. Our agency specializes in unique needs of small businesses and would be happy to take the time to help you through this.

John R. Russo

President, KJE Consultants, LLC