Business insurance is a must-have in a world fraught with accidents and filled with consumers far too ready to sue your company. A savvy business owner stays informed and avoids the pitfalls of insurance coverage. Consider the following common business insurance mistakes to watch for when you are obtaining coverage.
Both too much and too little business insurance coverage are problems when talking about what policy to purchase. As Goldilocks taught us long ago, the perfect solution is just right. However, these figures are not always easy to calculate on your own.
Too little insurance means not having enough to cover everything that might happen. As a result, you end up shelling out cash to address the gaps in coverage. Whether you have the money or not, your business takes a serious hit.
On the other hand, being over insured costs you right out of the gate. While you may be convinced that more coverage protects you against all scenarios, the return on investment falls flat. Remember, more is not always better.
Ensuring Adequate Coverage
Meeting with a knowledgeable insurance agent to determine adequate coverage is a valuable investment of time. His or her expertise calculates what you can afford and what you need. Just right insurance coverage protects you from financial ruin in times of hardship while not unnecessarily depleting valuable dollars to pay for it.
With seemingly endless insurance options, determining the correct type of coverage proves tricky. However, choosing the wrong policy or forgetting to add an umbrella could leave you stranded when unforeseen events hit.
Get to Know Your Goals
An insurance agent discusses and gets to know your business and goals. Will you need professional liability insurance? Property insurance? Workers’ compensation? Product liability insurance? Or, something else? Conversations with an agent help identify the coverage which best fits your company, products or services, and situation.
With the overwhelming nature of insurance choices, business owners are tempted to breathe a sigh of relief after signing on the dotted line never to look back again. However, unfortunately, the task of determining proper coverage is not a one-and-done proposition. Revisiting your policies over time is a wise course of action as the needs of your business change.
Healthy businesses grow. As yours becomes larger and more profitable, your insurance needs may change. Re-evaluating a policy’s effectiveness and adequacy given current circumstances should be done regularly. Otherwise, you may find yourself with inadequate coverage when you need it most.
Limited Policy Coverage
Terminology and limitations to policies become important to review and understand before paying for insurance coverage. Not fully understanding a contract can leave you unexpectedly unprepared when accidents occur.
Claims Made Policies
Disappearing policies are there when you sign them but fail to appear when needed. On the front end, these contracts look legit. However, if a claim which occurred during the time of coverage is filed after the policy expires, you have no protection. The subsequent claim is denied, and for this reason, policies covering “occurrences” prove more reliable than “claims made” policies. In other words, a claim which occurred during the coverage period, no matter its file date, is paid out. While a bit pricier, “occurrences” policies offer greater peace of mind and protection.
Owner Left Behind Policies
In many cases, general policies cover a company and any damage caused by something unrelated to the job. For instance, a home repair company may not be covered for shattering the window being installed, but your policy would find protection to correct the adjoining wall dinged during construction. Policies must state that “your work” is covered. Otherwise, payment for damages comes out of your pocket. While these policies are more costly, they may be beneficial depending on your line of work.
Not Considering Location or Details
Where you do business impacts the type of coverage you need. Assuming you are covered no matter where you set up shop is a grave mistake. Again, be quick to read the fine print of your contract. For instance:
— Are both properties covered if your work operates out of your residence and commercial buildings?
— Do you need a policy separate from your homeowners insurance if your business is home-based?
— Is your online business adequately covered for cyber attacks, customer information theft and interruption of service?
Take Time for a Review
Perhaps the biggest mistake, and one that leads to many of the others is failing to review a policy with a broker, misunderstanding the details, and not correcting errors and omissions. After all, a contract explains what you are purchasing. Get familiar with your business insurance policy and find out what it means.
Do not be shy about asking for clarity or explanations on language or coverage. Once the policy is in effect and tragedy strikes, you cannot make changes. Again, many of the pitfalls of business insurance are avoided by eliminating this one mistake.
Thank you for reading our blog! How can we help you? Contact us today.