5 Business Insurance Gaps That Could Cost You in 2026
- Adam Overmyer
- 8 hours ago
- 6 min read
A small business owner called me recently after purchasing their insurance policy online.
They had done what many business owners do — filled out a few forms, selected some limits, paid the premium, and assumed they were properly covered.
On the surface, everything looked fine.
They had general liability. They had property coverage. They had what appeared to be a standard commercial package.
But once we sat down and reviewed the policy together, a different picture emerged.
There was no umbrella coverage required by their landlord. Business income limits didn’t reflect their current revenue. There was no Employment Practices Liability. Cyber coverage was minimal.
Because we take the time to understand how a business actually operates — not just what boxes are checked on an online form — we were able to identify meaningful coverage gaps.
The result?
We strengthened their overall protection, added appropriate umbrella coverage, corrected their business income limits, and improved the structure of their policy — while also making their insurance program more cost-efficient.
The issue wasn’t that they were uninsured.
The issue was that they were underinsured — and didn’t know it.
In 2026, that’s one of the biggest risks facing small and mid-sized businesses.
Here are five business insurance gaps that could cost you this year.
1. Liability Limits That Are Too Low (And No Umbrella Protection)
For many businesses, $1 million per occurrence has been the standard general liability limit for years.
The problem is that claim severity has changed.
Medical costs are higher. Legal defense costs are higher. Settlement values are higher.
We’ve seen a noticeable increase in business owners requesting $5 million commercial umbrella coverage — and for good reason.
A commercial umbrella policy provides excess liability protection over your general liability, commercial auto, and employers' liability coverage. If a serious claim exceeds your base limits, the umbrella steps in.
Without umbrella coverage, a large claim can move from being an insurance problem to a business survival problem.
In 2026, carrying only minimum liability limits is one of the most common — and preventable — business insurance gaps.
2. No Cyber Coverage (Or Inadequate Limits)
Many small businesses still believe cyber insurance is only necessary for large corporations.
That assumption is outdated.
We’ve seen claims involving:
Phishing attacks
Funds transfer fraud
Ransomware
Compromised payroll systems
Vendor-related breaches
Even businesses that don’t store large amounts of data rely on email, cloud systems, and third-party vendors.
Another common misunderstanding is assuming professional liability automatically covers cyber-related losses. Often, it does not — or it provides very limited protection.
In 2026, cyber exposure is an operational risk. Without proper cyber liability coverage, recovery costs can quickly exceed what a small or mid-sized business can absorb.
3. No Employment Practices Liability (EPLI)
Employment-related claims continue to increase — even among businesses with only a few employees.
Common claims include:
Wrongful termination
Discrimination
Harassment
Retaliation
Wage disputes
Even when allegations are unfounded, defense costs alone can be significant.
Many business owners believe:
“We’re too small to be sued.”
“We treat everyone fairly.”
“We’ve never had an issue before.”
But employment claims don’t require intent — only an allegation.
Without Employment Practices Liability Insurance (EPLI), legal fees and potential settlements are paid out of pocket.
For growing businesses, this is one of the most overlooked business insurance gaps.
4. Business Income & Extra Expense Coverage Gaps
When most business owners think about insurance, they focus on physical damage — the building, equipment, or inventory.
But what happens if your business can’t operate?
Business Income coverage replaces lost income when a covered loss forces you to temporarily shut down.
Extra Expense coverage helps pay for the additional costs required to continue operations elsewhere.
Business income coverage is often included in a Business Owners Policy (BOP).
Here’s where gaps often appear:
Revenue has grown, but income limits weren’t updated
Restoration periods are too short
No Extended Period of Indemnity
Extra Expense misunderstood or undervalued
In today’s environment, rebuild timelines are longer. Materials cost more. Permits and inspections take more time.
If your business cannot reopen quickly, the financial impact can exceed the physical damage itself.
Business income protection is often one of the most misunderstood components of a commercial policy — until it’s needed.
5. Outdated Property Limits and Missing Ordinance & Law Coverage
Construction costs have increased significantly over the past several years.
Yet many commercial property policies still reflect valuations from years ago.
Common issues we uncover during reviews:
Buildings insured below replacement cost
Tenant improvements were not properly scheduled
Equipment insured incorrectly
No Ordinance & Law coverage
Ordinance & Law coverage becomes critical after a significant loss. If a building must be rebuilt to meet current building codes, upgrades may be required.
Without this coverage, those additional costs fall on the business owner.
Underinsurance doesn’t feel urgent — until there’s a claim.
In 2026, property valuation gaps remain one of the most common commercial insurance problems.
Why Business Insurance Gaps Are More Dangerous in 2026
The commercial insurance environment has evolved.
Claims are more expensive. Recovery timelines are longer. Cyber threats are more sophisticated. Employment-related claims are increasing.
The businesses most at risk aren’t necessarily uninsured.
They’re underinsured.
And most don’t discover that gap until it’s too late.
When Was the Last Time Your Business Coverage Was Reviewed?
If you’re unsure whether you even have the right foundational coverages in place, start with our guide to essential business insurance for small businesses in 2026.
If your policy hasn’t been reviewed in the past 12 months, there’s a strong possibility:
Your liability protection may be insufficient
You may not have umbrella coverage
Your cyber exposure isn’t properly addressed
Your business income limits don’t reflect current operations
Your property values haven’t been updated
Insurance shouldn’t be a one-time transaction. It should evolve as your business evolves.
If you’re unsure whether your current policy aligns with your operations and risk exposure in 2026, it may be time for a structured coverage review.
At The Overmyer Insurance Agency, we work closely with small and mid-sized business owners to identify hidden business insurance gaps before they turn into financial problems. As an independent agency, we’re not tied to one insurance company — which allows us to compare options, adjust limits strategically, and structure coverage around how your business actually operates.
Our goal isn’t just to place a policy. It’s to build a protection strategy that grows with your business
.
Identifying business insurance gaps before a claim happens can make the difference between a temporary setback and a permanent disruption.
If you’d like a second set of eyes on your current coverage, we’re here to help.
Frequently Asked Questions About Business Insurance Gaps
What are the most common business insurance gaps?
The most common business insurance gaps include:
Liability limits that are too low
No commercial umbrella coverage
Missing or inadequate cyber insurance
No Employment Practices Liability (EPLI)
Insufficient business income coverage
Outdated property replacement values
Many businesses have policies in place, but the limits or coverage structure no longer reflect how the business actually operates.
How do I know if my business is underinsured?
Your business may be underinsured if:
Your revenue has increased but your business income limits have not
You’ve added employees but don’t have EPLI
You rely heavily on email, cloud systems, or online payments but lack cyber coverage
You carry only $1M in liability coverage with no umbrella
Your property values haven’t been updated in several years
A structured coverage review is the best way to identify business insurance gaps before a claim happens.
Is $1 million in general liability enough for a small business?
In many cases, $1 million may not be sufficient in 2026.
Medical costs, legal fees, and settlement amounts have increased significantly. Many landlords and contracts now require higher limits.
This is why more business owners are adding $2M, $3M, or even $5M commercial umbrella policies to increase their overall liability protection.
What does a $5 million commercial umbrella policy cover?
A commercial umbrella policy provides excess liability protection above your:
General liability
Commercial auto liability
Employers liability
If a covered claim exceeds the limits of those underlying policies, the umbrella policy steps in.
Many business owners are choosing $5M umbrella limits to protect against larger verdicts and contractual requirements.
What is business income coverage and why is it important?
Business income coverage replaces lost income if your business must temporarily close due to a covered loss, such as fire or significant property damage.
Extra expense coverage helps pay for additional costs needed to continue operations at a temporary location.
Without adequate business income limits, a business may survive the physical damage — but struggle to survive the downtime.
Do small businesses really need cyber insurance?
Yes.
Even small businesses are targets for phishing, ransomware, and funds transfer fraud.
Cyber insurance can help cover:
Data breach response costs
Legal fees
Regulatory notification expenses
Ransom payments (when applicable)
Business interruption caused by cyber events
Cyber exposure is no longer limited to large corporations.
How often should a business insurance policy be reviewed?
At minimum, your business insurance should be reviewed annually.
You should also review coverage when:
Revenue increases
You hire employees
You sign new contracts
You expand locations
You purchase new equipment
You change operations
Regular reviews help ensure you don’t develop coverage gaps over time.
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