If there's a lapse in your business insurance coverage, several consequences can arise:
Loss of Protection: The most immediate concern is that you'll be without coverage. If any claims, losses, or damages occur during the lapse, your business will have to cover all expenses out of pocket, which can be financially devastating.
Difficulty in Re-establishing Coverage: Insurers often view lapses unfavorably. You might find it challenging to get a new policy, or you may be offered coverage at a higher premium. Some insurance providers might also deny specific coverages based on the lapse.
Contractual Violations: If you have contracts or agreements in place that require your business to maintain continuous insurance (e.g., with clients, landlords, or lenders), a lapse can put you in breach of those contracts. This could lead to penalties, fines, or even termination of agreements.
License Suspension: The state you are licensed to conduct business in may suspend your contractor's license.