The prospect of an insurance inspection is more likely to stir up feelings of dread than eager anticipation, but inspections can provide your business with opportunities to reduce risk.
Although it may seem like an insurance inspector is trying to “catch” you at something bad, their real goal is to identify hazards before an accident happens so you can correct them and reduce your exposure.
Insurance inspections can consider many factors — the physical building, security, equipment, processes, and other elements that could contribute to liability risks. For general details on business coverage and how insurers view risk, see Business Insurance: Agencies, Coverage Value, CGL Clauses & Risk Reduction.
Many savvy risk managers and business owners will request an occasional inspection to pinpoint risks and ask for recommendations on correcting safety issues. For specific environmental or property checks, see Lead Inspections.
The next time an inspector comes to your business, consider it a learning opportunity: walk around with them and ask them to explain their concerns and findings so you have a clear understanding of what you can do to reduce risks and, potentially, qualify for lower premiums or special discounts.
Ask the inspector ahead of time if he or she can set aside time after the inspection to meet with managers and discuss the findings. Face-to-face discussion is the best way to understand recommendations, how they can be implemented, and how they can benefit your company.
Once you receive the final report, complete recommended corrections within the given time frame and request extensions only when necessary. A cooperative attitude helps the inspector — and the insurer — see you as a better risk.
Instead of dreading an inspection, consider it a perk provided courtesy of your insurance agent. If you want a proactive review, ask your agent.
Frequently Asked Questions
What does an insurance inspection typically look for?
Inspectors look for physical hazards, safety procedures, security, maintenance issues, and any conditions that could lead to a claim.
Will an inspection automatically raise my rates?
An inspection itself does not automatically increase rates; findings can influence underwriting decisions if significant unaddressed risks are found.
How should I prepare for an inspection?
Prepare by reviewing safety protocols, ensuring equipment and exits are clear, having documentation available, and being ready to discuss any improvements made.
Can I dispute an inspector's recommendations?
Yes; discuss concerns directly with the inspector during the follow-up meeting and provide evidence or context to request reconsideration.