Virtually every type of business needs insurance to protect its operations. Without adequate insurance coverage, any type of liability exposure or loss could have disastrous consequences for a traditional corporation or an LLC.
Not all businesses will be able to access the coverage that they need. Insurers may perceive a business to represent too great of a risk and decline to offer coverage, limit the scope of a policy, or charge unaffordable premiums. Here are some of the most common reasons why a business may have a hard time getting insurance in Indiana.
Extensive past claims
An insurance carrier will conduct a loss history report on every business that applies coverage. Reports generally go back about five years but sometimes longer. If an insurer sees that a company has had several costly claims, it may determine that there is too great a risk of future claims.
An insurance carrier may request to see a business’ financial records. High debt to asset ratios, interruptions in revenue, or previous filing for bankruptcy may preclude a carrier from extending coverage.
Poor physical conditions
Insurers will likely balk at insuring a business whose physical premises is not well maintained. Unaddressed capital needs or noncompliance with applicable building code are probably going to be a red flag.
When an insurance carrier sees that a small business entity is not taking steps to protect itself against loss, it may be reticent to offer coverage. Security shortfalls may include the lack of an alarm system with monitoring, poor access controls, or improper storage of valuable items.