Business insurance is a great way to protect you and your business, giving you confidence and peace of mind. With the right insurance plan, you can focus on growing your business instead of making contingency plans for what to do if something goes wrong.
However, the combination of a busy schedule and so many choices for business insurance can make it easy to overlook important considerations when choosing and maintaining your coverage. Here are six common pitfalls to avoid when it comes to business insurance.
1. Not having business insurance
One of the most common mistakes people make is skipping business insurance altogether. Your business is a primary source of income and has the potential to provide you with future financial security as well.
Insurance is a necessary aspect of owning a business because it protects an entity that’s not only an asset but one that provides for you and your family. It provides the scaffolding you need to build your business without having to hyper-focus on what could go wrong. Having the right kind of business insurance helps protect many business owners who may feel they can go without it, such as those with online stores, vacation rentals, or other small ventures.
2. Not exploring your options
Insurance, especially business insurance, is never a one-size-fits-all solution. Due to a lack of time or experience, many business owners are tempted to choose the first policy they are presented with. But business insurance policies are as unique as the businesses they protect. Therefore, it is essential that you consider all of your options.
Further, an insurance package that works for a similar business may not adequately protect yours. You may end up overspending or getting inadequate coverage for unique aspects of your business. Also, you need to choose an insurance agent that is familiar with what your specific kind of business needs. They can then help you choose the policy that provides the best overall protection.
3. Paying for policies you don’t need
Some business owners may feel “the more coverage the better,” but that’s not always the case. It’s easy to choose a business insurance package that comes with too much coverage, and then you end up spending more money than you need to.
Some business owners end up over-investing in insurance because they’re trying to get coverage for something they think they may need in the future. For example, if you plan on storing inventory in a warehouse, you may be thinking you should get warehouseman's legal liability insurance right now, even though you haven’t yet added that to your business model.
It’s best to get the coverage you need at the moment and then upgrade your insurance if and when it’s necessary. You can speak to your local insurance agent to learn more about what you need right now.
4. Not updating your insurance plans
When your business changes, your insurance should as well. This includes changes to the type of business you conduct as well as many staffing changes.
For example, if you have had to downsize your business due to a lull in the economy, you may have had to significantly reduce your number of employees. This may impact your worker’s compensation insurance needs.
Also, if your business moves or starts operating in a different area, you may have to adjust your insurance accordingly. To ensure you have the coverage you need, it’s best to reevaluate your business insurance every time there’s a change in your business.
5. Not carefully reading the policy
Whenever you purchase or restructure your business insurance, you should invest some time in carefully reading the policy. Instead of merely skimming through it, it’s a good idea to take a systematic approach by doing the following.
- Make a list of your business assets and their approximate values.
- List out your employees.
- List every asset or element of your infrastructure for which you may need coverage.
- Write down the natural disasters, legal situations, or adverse business events your business could encounter.
- Compile this information and evaluate whether your policy provides enough coverage.
- Jot down any questions you have or anything you’re not 100% sure about and set up an appointment with your local insurance agent to address these concerns.
6. Not including general liability
Some business owners mistakenly feel they don’t need general liability insurance. While a corporate structure like an LLC can protect some of your personal assets, there are several liabilities you might still have to deal with, such as the following.
- If an employee accidentally damages a client’s property
- If you get sued
- If someone gets injured at your business and incur medical costs
With some forethought and the help of an agent, you can get the protection you need for your business, allowing you to rest easy and focus on success. Find a trustedchoice.com independent insurance agent to ensure you don’t fall prey to any of these pitfalls.