Commercial Insurance Common Mistakes
Running your own company increases your liability. As such, it’s essential to protect the firm by insuring both the company and employees. However, some business owners make some mistakes when purchasing insurance for business, which only ends up costing them money. In this read, we are going to list some of the most common mistakes in taking out an insurance policy for a business that you should avoid.
Failing to Check Your Business Credit Before Getting Coverage
Some business owners usually do not realize that the insurance company may check their credit as part of the underwriting process. Poor credit history will only make it hard and expensive to get the coverage you need. As such, you should check the business credit profile before applying for any type of coverage to see where you stand.
Failing To Get Liability Insurance
Many business owners tend to assume that Corp or an LLC will protect them from lawsuits. However, the unforeseen can happen, and lawsuits tend to be very costly and can completely shake down a business. As such, it is important for every company to have the property-liability insurance for their trade.
Failing to Understand the Limits and Terms of Insurance Policies
Another common mistake when it comes to insurance for business is not comprehending the actual implications of limits and terms of policies. Insurance policies tend to be tricky as they are full of industry-specific terms that have to be understood. As a business owner, it is important to read every exclusion or endorsement in the policy and ascertain that you comprehend everything before you agree to the terms. If you feel confused by anything, you should consider consulting your insurance agent for assistance and advice.
Failing to Provide Adequate Essential Information
It is vital that you provide all the necessary information for the insurance provider to have an understanding of what you do in order to identify and craft the ideal coverage. Every business has a different model, and so, the risks associated with each firm aren’t similar. The ability to purchase the right coverage will depend on the accuracy of the information you provide the insurance agent or company.
Purchasing an Insurance Policy Based on Price Instead of Value
Most business owners tend to treat insurance coverage as a commodity and thus end up purchasing based on value instead of price. When it comes to purchasing insurance for business, one size doesn’t fit all. It’s vital that the insurance providers understand your company and tailor the coverage to your requirements. A cheap coverage is not always the best.
Not Having The Assets Covered
Even though liability insurance is perhaps the most important type of coverage for every business, it’s equally imperative to insure business assets like property and equipment. This coverage protects your assets from damage, loss or theft. If your company cannot run without expensive equipment, then it makes sense to have adequate business equipment coverage in place.
Not Having Proper Coverage for Online Sales
Online sales boost numerous companies’ revenue, especially in this day and age, where almost everyone is using the internet. However, defective products could result in expensive lawsuits, and that is the last thing you want, especially if you run a small business. As such, you should purchase product liability coverage to help protect your company against these kinds of lawsuits. Ideally, a contingent business income or CBI insurance can also protect you from losses resulting from damages.
Failing to Get Errors and Omissions Policy
If you’re a manufacturer, then you should definitely consider purchasing an errors and omissions (E&O) policy. This policy covers the claims made by clients for negligent actions or inadequate work on products from your company. The costs associated with a huge lawsuit could tremendously deteriorate your business.
Overlooking the Cyber Insurance Policy
This type of policy protects you and your business from internet-based risks. It is made to help a form mitigate risk exposure by offsetting the costs associated with recovery after a significant cyber-related breach. Unfortunately, only about 60% of businesses have this kind of coverage. There are numerous businesses that suffer losses as a result of these risks, and having this coverage can help protect your company.
Forecasting Business Activity Inaccurately When Pricing the Policies
If you do not project proper levels of business activity, then it will result in the inaccurate pricing of your policy. If you forecast payrolls and gross sales inaccurately, then the premiums will ideally be priced improperly. This only results in the wrong cost for budgeting and can also lead to unforeseen audit bills.
Overlooking Safety Plans and Company Policies
It is vital that you devote adequate time to developing a clear set of operations as well as safety policies and ascertaining that they are strictly followed. Neglecting company policies and safety plans is a huge mistake as it directly influences potential premiums and insurance claims.
As you can see, there are numerous mistakes that are made when it comes to purchasing insurance for business. However, by educating yourself and seeking the advice of professionals, you will ensure that your company is properly insured.
