If the insured has no current activity, there might be no risk exposure to consider. That is, if the insured is not doing anything, not owning any property, not producing any product, not driving any auto, in effect not reacting in any way with the public or any person at all, then the need for insurance is minimal or nonexistent. But if the insured is in any way engaged with everyday life, for example, owning property (even if not being used in an active business), there are risks to consider. Fires or tornadoes could cause property damage; children playing on the premises or even walking on the premises pose a liability exposure if they get hurt while on the premises.

As for past activity, from a liability standpoint, if the business had insurance in the past and any losses occurred then, that should be taken care of by past policies. But, if a loss occurs now and the loss is due to a product the insured use to make or from work the insured did in the past, and the insured no longer has liability insurance, he is on his own when it comes to paying for the injuries or damages. Today's general liability policies require the BI or PD to occur during the policy period in order for the insurance to apply. So, if there is no policy, there is no insurance coverage.

In summary, if the business has any past or present risk exposures, it needs insurance. The only reason not to have insurance would be if there were a 100 percent guarantee that there are no risk exposures, no exposures to any kind of loss whatsoever on the part of the entity. An inactive business status is no reason to let insurance coverage lapse.