4 Insurance Mistakes That You Need to Avoid as a Business Owner
According to the Insurance Journal, more than 70% of U.S. businesses are underinsured. This is just one of the many insurance mistakes business owners make, putting their businesses in jeopardy. For instance, if your business is either uninsured or underinsured, it is unlikely to recover from a huge loss. It is worth noting that while business insurance coverage is vital, you should also watch out for common business insurance mistakes that can sink your business.
Some of the commercial insurance mistakes to avoid include:
Ignoring Some Coverages
Businesses, both large and small, are exposed to various risks, including, among others, business interruption, cyberattacks, fire, natural disasters, and lawsuits. To protect your business from such perils, you should always carry enough commercial insurance. Unfortunately, it is easy to avoid coverage for perils that are less likely to happen, a mistake that many small business owners make. For instance, just because you’re doing everything right does not mean that someone cannot sue your business. That said, avoid ignoring some coverages even if you think you don’t need them.
Assuming That Business Insurance Is Expensive
About 40% of businesses in the U.S. are uninsured. One of the reasons for this is the high cost of business insurance, which is partly due to the presence of many insurance brokers and agents who overprice their policies. It is worth noting that while commercial insurance may be expensive, it is significantly lower than what you’re likely to lose if your business suffers a major loss due to a disaster. Moreover, if you own a small business, you can lower your insurance costs by purchasing a Business Owner’s Policy (BOP) that covers both business property and third-party liability claims. In fact, carrying a BOP is a great way to insure your small business without necessarily spending much.
Not Reviewing Coverage Needs
Per the Insurance Information Institute (III), you should review your coverage needs at least once annually. This is because, as your business grows, you will also need to increase your insurance coverage to prevent underinsurance. For instance, if you hire more employees, you should consider increasing your workers’ compensation coverage. The bad news is that some business owners purchase business insurance and leave it at that. Typically, reviewing your coverage needs every year ensures that you spot the gaps in your coverage and fill them. This way, your business will be fully covered in case of a peril. Similarly, if you downscale your business operations, you should review your coverage needs, too.
Purchasing Generalized Coverages
Although many businesses can be similar in different aspects, you should always purchase insurance policies tailored for your business. This is because different businesses have varying insurance needs. That said, apart from the basic coverages such as property insurance, workers’ compensation, and commercial general liability, ensure you also purchase specific policies that directly relate to the type of business you operate. For example, a professional liability policy, also known as errors and omissions, will be necessary if you run a professional service business such as a law firm. Additionally, ensure that your insurance provider customizes your insurance coverage to the size that suits your business.
When purchasing business insurance coverage, you should avoid the mistakes discussed in this post. Looking for reliable commercial coverage? Let the professionals take care of your insurance needs. At Little & Sons Insurance Services, our team of experts has been providing California residents with customized insurance services since 1922. Contact us today for reliable business insurance.