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Insurance policies can lapse either through administrative issues or lack of funds.  Letting coverage lapse is never a good thing.  Whether it is Business Auto, Business Owners Coverage, Professional Liability Insurance or Workers Compensation letting your insurance coverage lapse can be costly. 

With Occurrence Policies such as Business Auto, Business Owners and Workers Compensation letting the coverage lapse can leave permanent gaps in your coverage.  For the property exposures you pretty much know if you have a loss when the loss occurs.  But this gap could exposure your assets to uninsured liability exposures that you were not even aware of.  You may also pay more for your insurance once you decide to get coverage inforce again, as insurance carriers are concerned about risks that let their coverage lapse.

With Workers Compensation, most states require the insurance carrier to report that any lapse coverage to the workers compensation bureau of that state.  The state Work Comp bureau may fine the business for not having workers compensation in place. 

With Claims Made Coverage letting coverage lapse exposes the firm to uninsured coverage for past acts.  Remember with Claims Made Coverage, if a policy lapses and no extended reporting period endorsement is put in place coverage ceases for past acts.  While it is sometimes possible to restore prior acts coverage it is expensive.  But what can be more expensive is the claim being made where there is now no coverage.  Without a Claims Made Policy inforce, there is no carrier to report the claim to.

Uninsured losses can be devastating to a business and personally depending on the circumstances.

Posted 10:04 AM

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