Business insurance is just as important as providing amazing services and products to your customers because it helps protect your business against all types of losses and incidents.
However, buying insurance isn’t as easy as buying a new filing cabinet or even laptop. You have multiple factors to consider and choosing the wrong policy could leave your business unprotected.
Ensure your business isn’t left regretting your insurance choices by avoiding these seven common mistakes.
1. Underestimating Limits
Every business insurance policy has set limits. For instance, would your policy cover all the equipment in a factory if a tornado hit? Business policies only cover up to the limit listed. Carefully consider the cost of your property and equipment. For worker’s compensation insurance, consider the average cost of medical procedures.
Determining the correct limit can be tricky. You want the appropriate balance of coverage and cost. Working with an agent helps you get the coverage that’s right for you.
2.Thinking Cheaper Is Better
In general, you get what you pay for when it comes to most things. Business insurance is no exception.
When you find a company that claims to offer a policy for half the cost of everyone else, it might not be the best option. In most cases, the fine print unveils a slew of restrictions and exclusions. Suddenly, your cheaper policy barely covers your business at all.
You’ll find that when you compare insurance coverage costs from reputable companies, rates may vary, but not drastically.
3. Believing Lawsuits Are Rare
Your business may have never faced a lawsuit or even had a workers’ compensation claim. That’s wonderful, but you should never count on luck alone to protect your business assets. Liability insurance covers your business in the event of a lawsuit. The premiums might seem like a waste to start with, but could your business survive losing a $1 million lawsuit?
The truth is, employees and customers accidentally fall. Equipment malfunctions and causes injuries. Cybersecurity incidents expose information. Forgoing liability insurance leaves your business vulnerable to lawsuits that could easily happen at any time.
4. Keeping the Same Policy
How long has your business had the same business insurance policy or policies? If you just keep renewing your policy year after year, you could be making a costly mistake. Take a moment to consider how much your business has changed in the past year alone. Odds are, the business is more profitable, has invested in upgrades, and hired more employees. Do your current limits provide enough coverage?
Of course, the opposite is also true. Has your business downgraded? For instance, if you’ve moved to a smaller location or a new city, a smaller policy might be best. You could easily save hundreds or thousands a year by reducing your limits.
Keeping the same policy only works if nothing has changed about your business. Even then, it’s a good idea to review everything. After all, the value of equipment and property changes over time.
5. Opting for Low Deductibles
Low deductibles sound good in theory. However, the lower your deductible, the more you pay for business insurance. It’s a trade-off to avoid paying more upfront in the event of a claim. Think back to how many claims you’ve had since starting your business.
In most cases, opting for a higher deductible helps save businesses money. While the highest deductibles mean lower overall premiums, ensure you’re prepared to pay the deductible should you have a claim. You never know what may happen or when.
For best results, consider a medium range deductible. This offers you the best value for your money. It’s also more budget friendly. You get lower premiums, but it’s easy to put aside enough money to cover the deductible should the worst happen.
6. Not Covering Loss of Income
Most businesses cover their assets and even prepare for lawsuits. However, loss of income is often overlooked. General business policies don’t cover loss of income. They pay for property damage and equipment damage. However, what happens if your business has to shut down for repairs for a month?
During that time, you lose thousands or more in income. Plus, you also miss out on potential new customers. It’s difficult to continue paying bills and loans when you have no money coming in. Ensure you buy a policy that covers loss of income if your business has to shut down temporarily.
7. Assuming What a Policy Covers
Have you read your business policy? Or, do you make the mistake many businesses do and simply assume you’re covered? It’s one of the most common mistakes when buying insurance. For instance, if you see that you’re covered for natural disasters, you might just skip over the fine print. However, if your business is in a floodplain, you might need a separate policy just for flooding.
Carefully review your policy details before buying to ensure you’re getting the coverage you need. Working with an agent helps you understand all the fine print.
Want to avoid these mistakes? Contact our agency today to get the right policies for your needs.