8 Common Mistakes to Avoid When Buying Business Insurance
Running a business can seem like a minefield full of potential missteps and mistakes. It’s easy to overspend in some areas and neglect important obligations. If you own or run a business, purchasing the right kind of insurance is a necessity. However, there are many policies available and it can be difficult to know exactly what you need. Unfortunately, many business owners rush into a decision about business insurance and end up facing problems in the future. Here are 8 common mistakes business owners make when buying business insurance and how to avoid them.
1. Choosing the Cheapest Policy
Saving money is a great priority to have when running a business, but choosing a cheap insurance policy can cost you more in the long run. Purchasing a policy based primarily on cheap monthly premiums could mean that you don’t have the coverage you need in the event you need to file a claim.
Seeking a local independent insurance agent can really pay off when comparing business insurance policies. An independent agent can gather multiple quotes and offer expert advice on local requirements. Thus, discuss your unique business with your independent insurance agent and ask for a list of policies best suited to your needs.
2. Not Taking Time to Read the Policy
Every insurance policy contains important information about coverage limits, deductibles, and reimbursement policies. Thus, the policy is likely an expansive document that takes a significant amount of time to read thoroughly. Skimming a document could lead to nasty surprises when you’re ready to file a claim.
Take the time to read the entire policy before you purchase the policy. This way, you can clarify any questions you have with your insurance agent. If you have a clear understanding of excluded losses, you can purchase additional policies to complement your existing business insurance policy.
3. Failing to Insure Potential Income Losses
Most people recognize a disaster as a situation in which your physical possessions are at risk. However, if your business sustains damages you’re likely to lose income due to downtime. When a business is closed for repairs, the income loss can be significant and getting back on your feet without coverage may be difficult or impossible.
Ask your insurance agent about the value of adding business income coverage to your policy. This coverage provides reimbursement for income lost while your company is closed due to covered damage. Additional expenses like rent and electricity may also be covered.
4. Staying With the Same Insurer Too Long
Dependability in an insurance agent is a great quality to have, but many people stay with the same insurance company simply because it’s the one they’ve always had. If your insurance company is changing in ways you don’t like or failing to meet your growing needs, you need to make a change.
Assess whether your current insurance agency is meeting your personal and business needs by answering a few simple questions.
- Are premiums rising while quality declines?
- Are your services outdated?
- Does your insurance company seem uninterested in your industry or particular business?
If you answered yes to these questions, you should consider shopping around for a company that can better meet your needs. At LoPriore, our motto is insurance that fits your lifestyle. We offer both commercial and personal insurance policies to suit unique individuals instead of pushing expensive policies.
5. Buying a Policy that Fails to Meet the Needs of Your Customers and Vendors
Every business is unique, and settling on a generic policy could mean you don’t have the coverage your clients expect. Business insurance is about more than the amount of coverage you have. Your policy specifically describes the events covered for you and your clients. Too little coverage or lacking the right coverage could mean your clients seek help elsewhere.
Before you purchase a policy, talk to your agent about the services you provide and the customers and related vendors who depend on you. Your independent insurance agent can offer advice regarding the business insurance policies that best meet your needs.
6. Failure to Adjust Your Insurance as Your Business Grows
Insurance protects your business. This means your policy isn’t something you should purchase and never revisit again. Your growing business likely holds more value than it did five years ago, or even last year, and your insurance should reflect the changes.
Keep your insurance agent updated on the changes happening within your business and be prepared to change your policy as necessary. For example, hiring new employees, purchasing new vehicles, and expanding your space are all reasons to consider changing your coverage.
7. Forgetting Workers’ Compensation
All employers operating in Massachusetts are required to carry Workers’ Compensation Insurance for their employees. Your employees are a valuable part of your institution, and their safety is an important part of your success. You also can obtain coverage for contractors and leased workers. Without Workers’ Compensation, you could face serious charges if your employees get injured on the job.
Talk to your independent insurance agent about a Workers’ Compensation policy that adequately protects both you and your employees. Thus, purchasing the correct Workers’ Compensation Policy protects your workers against financial loss and helps you avoid costly non-compliance fines.
8. Skipping General Liability
Many small business owners think they aren’t in the position to require general liability and this assumption is a big mistake. Forming an LLC protects your personal assets, but isn’t a safeguard against all liability dangers. You may still face the following liabilities as an LLC.
- You may be responsible for medical costs if someone is injured at your business.
- One of your employers damages the property of a customer, you may be responsible for the costs of repair or replacement as the owner of the business.
- Someone files a lawsuit against you, legal fees can be a threat to your business.
Talk to your insurance agent about what your current policy covers. Selecting a Businessowner’s Policy can provide you with the option of packaging property insurance and general liability for complete coverage.
Business insurance isn’t simply something that would be nice to have in the event of an emergency. It’s a necessity for every responsible business. An independent insurance agent can help you find the right package of policies to protect your unique business. Instead of hoping you’ll be covered in the event of an emergency, rest easy knowing you have the coverage you need to continue the successful growth of your business.
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