When does an insurer reassess a policyholder’s exposure?

There are a few common scenarios in which an insurance company might reevaluate a piece of business and make adjustments.

1. Have you ever had a surprise premium increase when renewing your policy even though there was no significant or material change to your situation? This might be because there were significant losses to your “class” of risk during the previous policy period and so the underwriters have raised premiums across the board for your particular class of business. For example, one year there might be a lot of fire losses to restaurants, and even if your restaurant was not affected, your premiums might still go up.
2. A material change reported during the policy term might trigger a reassessment. I see this happen most often when an insured decides to allow their burglar alarm monitoring subscription to lapse. This type of change is considered material and would need to be reported to the insurance company. The result is either a premium increase or a denial of coverage, although the latter is unlikely.
3. Exposure could also be reassessed upon renewal if there is some material change. This happens a lot in commercial policies with significant product liability or business interruption exposure. If your sales or revenues have gone up from last year, or if you have started a new business unit, your insurance company will need to reassess your exposure when deciding whether to renew your policy or not.

Basically, insurance companies will routinely reassess policies during the renewal period or when some material change is reported to them in the mid-term.