What Insurance Gaps Should Family Business Owners Review?
Short answer. Review whether the company's coverage matches its operations, assets, people, and exposures. Check limits, exclusions, overlapping policies, and who is insured. Then consider property, liability, key-person, and other coverage relevant to the business. Have an experienced independent insurance professional review the policies with your attorney and CPA where needed.
Family business owners should compare insurance with the risks the company faces. A policy list alone does not show whether important exposures are covered. Policies may overlap, exclude a risk, or contain technical conditions that matter when a claim arises. Review the terms with an experienced insurance professional.
Map the Business's Exposures
Start with the company's operations, property, contracts, workforce, and customers. Include suppliers and locations, then consider what could interrupt operations, cause injury or property damage, lead to a claim, or leave the company unable to meet a commitment. Account for assets the business owns or uses, plus personal assets owners have tied to company obligations.
Compare those exposures with the policies in force. The Single Family Office describes insurance review as an assessment of technical coverage against the real risks a family faces, and notes that policies may have overlapping coverage, exclusions, or technicalities. For a family business, ask the reviewer to explain in plain language what each policy covers and excludes. Confirm who is insured and what steps the business must take to preserve coverage.
Check Limits, Exclusions, and Changes
Look at property coverage, general liability, excess or umbrella coverage, and life insurance where relevant. The right mix depends on the company's activities and assets, as well as its liquidity and ownership arrangements. Do not assume a policy covering one site or entity extends to another company in the group. Confirm how named insureds and additional insureds are described, along with covered locations and business activities.
Review exclusions and conditions that could affect a claim, including requirements for notices, security, maintenance, or documentation. Consider whether a new product or service, a new location, or a customer requirement should be reflected in the policies. When the business changes, update the insurance review and make sure contractual insurance obligations are understood. If owners have personal guarantees or other exposures, ask how those commitments interact with the company's coverage.
Assign Ownership of the Review
Name someone responsible for maintaining the policy schedule, tracking renewals, and collecting certificates or other records. Give the board or owners a concise report identifying major coverage, exclusions, open questions, and decisions needed. Keep copies of the policies and related correspondence in a controlled, accessible record system. This helps during a claim, business transition, or ownership review.
Use an independent insurance professional with experience relevant to the business, and ask them to explain proposed changes and their reasons. Your attorney can review policy language in relation to contracts and liability questions. Your CPA can help assess financial implications. Insurance decisions depend on the company's circumstances, so avoid relying on a generic checklist alone. A periodic audit and records review can help owners confirm that policies and business records remain aligned.
As the company grows or ownership changes, revisit the review. Make sure new activities and entities are included, along with new assets. Ensure someone has authority to notify the insurer when material facts change. This makes insurance part of the company's risk review, alongside its policy documents.
Read next: What should owners do when a major customer threatens to leave? and How can a family business reduce the risk of losing a critical supplier?
The goal of the single family office is to assess the technical coverage of the insurance against the real risks that the individual or family faces.
Sources: The Family Office Book, The Single Family Office. Informational only, not financial, legal or tax advice.