In force

What is in force?

Being “in force” in insurance means your policy is active and provides coverage. It confirms that you, the insured, have paid your premium, so the insurance company must pay an insurance claim according to the policy’s terms.

For example, if your liability insurance policy is in force, it could help cover legal costs if your company is sued for an incident covered by the policy.

In-force vs. lapsed policy: What’s the difference?

An in force insurance policy is active, with the insurer obligated to cover claims as per the policy’s terms.

A lapsed policy, however, is inactive due to non-payment of premiums within the grace period, suspending coverage and freeing the insurer from claim obligations.

A canceled policy is one that’s been terminated by either party before the policy term ends, requiring a new policy for future coverage.

The importance of in-force policies for small business owners

In-force policies are essential for small business owners because they protect against risks that could devastate a business.

• Continuous protection: Being in force safeguards you against daily risks like property damage, accidents where non-employees get injured, or employee-related risks.
• Legal and contractual obligations: Certain insurances, like workers’ compensation, are legally required, so you need to remain in force to remain compliant.
• Financial stability: Active insurance provides a safety net, preventing a single disaster or lawsuit from potentially bankrupting the business.
• Business reputation: Maintaining insurance policies signifies responsible risk management and boosts reputation.

To ensure your business insurance policies are in force, you can review policy documents, contact your insurance agent or use your online account to check. At NEXT, you can review your policies or look at your live certificate of insurance 24/7 via the app or our web portal.

Not having an in-force policy can expose your business to financial risks, potential fines, contract breaches, and future coverage issues. It can also harm your company’s reputation with clients, partners, and investors.

How to keep policies in force

To maintain in-force insurance, pay premiums promptly, adhere to policy terms, and conduct regular policy reviews. Additionally, you must comply with risk management requirements, such as safety standards and hazard reduction.

NEXT makes managing insurance easy

At NEXT, we’re 100% dedicated to small businesses. With 24/7 access to your business insurance, you’ll always be prepared for whatever comes your way. All you have to do is apply online and follow the prompts to access your custom instant quote in 10 minutes.

Start a free instant quote with NEXT.