Top Mistakes to Avoid When Buying Business Insurance

More than just helping to cover costs that are associated with property damage and liability claims, business insurance will protect your business, your employees and even your customers. But with the number of coverage options offered by insurance companies and each of them telling you how theirs is the best deal you can get, you can easily get misled.

However, even if finding the right business insurance can seem tough, it’s really not that complicated. When shopping around for the right policy, you simply need to beat the following 15 points in mind (These are pitfalls you want to avoid when you are trying to buy the ideal business insurance for your business):

Mistake Nº 1: Buying the Least Expensive Policy

Watching your bottom line must not lead to you seeking out the cheapest options out there. If you buy a policy based on price rather than value, you run higher chances of landing in hot water when it comes time to file a claim.

Mistake Nº 2: Getting the Business Description Wrong

If you are requesting a quote online, you’ll probably have to fill in a form. Online forms typically have drop-down boxes with generic business descriptions. Getting this wrong will also mean getting an a quote for a policy that doesn’t cover all the activities of your business.

Mistake Nº 3: Not Getting Enough Property Insurance

You should be aware that getting an insurance without the adequate limits means that there’s a possibility that the disbursement you get won’t cover the totality of the replacement cost or the repair cost. This is simply because the insurance company will only cover the amount you insure and won’t cover the loss in full if the replacement and repair cost exceed that limit.

Mistake Nº 4: Not Including Business Interruption Coverage

If you want soundproof cyber protection for your business, you must not fail to purchase a cyber policy that includes business interruption coverage. You might have to pay a additional premium for that, but it will be worth it as business interruption for a small business can be disastrous.

Mistake Nº 5: Not Having Sufficient Disaster Insurance

As mentioned above, not getting the right insurance will only put you at greater risks. While you may want to limit your expenses, you should ensure yourself against threats that can damage your business the most.

Mistake Nº 6: Choosing Low Deductibles by Default

This one is just as bad as the first mistake mentioned above. The reason why you must avoid automatically purchasing damage insurance with low deductibles is that you may be buying more insurance than you need.

Mistake Nº 7: Not Adjusting Your Coverage

As your business changes over time, so will your needs. And it is inconceivable that business owners don’t do the same for their coverage. Remember to reevaluate your insurance needs several months before the renewal of the policies.

Mistake Nº 8: Not Reading the Policy Carefully

If you don’t read the policy well, you will not be aware of the numerous warranties and conditions precedent mentioned in it. This, of course, means that there’s greater possibility of your business not complying with those. And non-compliance usually leads to a claim being turned the worst case scenario, the entire policy can be invalidated.

Mistake Nº 9: Failure to Thinking About Health Insurance Options

You don’t have to wait for the renewal period to discuss health policies for your employees. Discuss your needs with your insurer and let them advise you on what’s best for your business and employees.

Mistake Nº 10: Not Willing to Change Insurer

Even if you have a great relationship with your current insurance company, it doesn’t mean you have to stick with them year in year out. Shop around and see if there are other insurers who can offer you better policies.

Mistake Nº 11: Not Purchasing A Policy that Covers for Online Sales

If you want to break into e-commerce to expand sales globally, think of getting a product liability insurance before. It will help protect you against expensive lawsuits over defective products.

Mistake Nº 12: Not Going to Right Broker or Agent

Considering that the broker will get commissions on the premium you purchase, it is important to find one that works for you and who is willing to meet your specific needs.

Mistake Nº 13: Not Listing All Entities or Locations

Since the majority of policy cover only entities that appear in the declarations, failing to accurately list all entities or location on the policy means that these entities will not qualify as named insureds.

Mistake Nº 14: Not Investing in Cybersecurity Insurance

That’s something you don’t want to overlook as more and more small businesses fall victim to data breaches and cyber hacks every single year. In the event of a breach, a cybersecurity insurance will protect the costs of your data and will also help cover the legal and technical costs of rebuilding.

The Types of Insurance Businesses Ought to Get

Do I need to get insurance for my business?

After investing so much time, money and resources to build your business, it would only be natural to want to protect it from any potential legal liability. From the space you occupy, to the people you employ, you want everything to be safe and secure. Business insurance not only provides cover costs associated with property damage, but also provides cover against risks that are unique to the business.

If you don’t have insurance for your business, you are most likely not alone. Many business owners seem to believe that insurance is just an unnecessary luxury. They’d rather convince themselves that nothing bad will ever happen to their business than commit to monthly or annual premiums. This is not a strategy we would recommend though. It would be better to play it safe and get insurance rather than having to face a financially devastating scenario. A single legal action or injured employee can lead to business owners having to pay out-of-pocket and possibly ruin a small business before it even has a chance to gain momentum.

Why do I need to get business insurance?

In most countries it is required by law to get insurance for your employees. But it may not be compulsory for insurance pertaining to the business itself or its activities. Nonetheless, as a business owner, you should plan for events such as catastrophic natural disasters or facing claims or lawsuits against the business or other employees.

In almost every state a certain amount of insurance must be held for employees operating under your business, such as workers’ compensation insurance. Covered risks under a business insurance policy include theft, injured workers’ lost wages, and more. If your business does not have a business insurance policy, the costs may come out of pocket. In some cases, this can completely ruin your business if you do not have the finances. Below are more reasons for getting insurance:

1.       To protect yourself from lawsuits.

Even though you may think you have the best clients who would never sue you. For example, litigation is often used to protect or identify liability. It might be a strategical move that a client can employ to eliminate their liability. And if you are not insured, you might end up paying hefty legal fees to defend yourself.

2.       If you have invested heavily in equipment, property, or inventory.

A business insurance policy can offer protection on your investment in merchandise and may also protect your business in case of theft or damage. If you get coverage on your investment in infrastructure, you make sure that your business can change or repair property speedily.

3.       If you have contracts with your clients.

Even if your contracts with your clients are solid and ironclad, it does not discount the possibility of having to go to a court of law. Complications happen, and since contracts do not solve every conceivable problem, sometimes lawsuits become unavoidable. Insurance will come in handy in this situation.

4.       If you have employees depending on you.

Having employees is the number one reason for getting business insurance. This is mostly for legal reasons. Consider purchasing insurance policies that protect your employees’ livelihood such as liability insurance.

5.       If you want peace of mind.

Since wishful thinking is not a real plan, consider taking responsible actions such as getting coverage. If you want peace of mind and want what is essential for the longevity of your business, you’ll want to protect your business from factors that are outside of your control.

What are the types of business insurance available to businesses?

1.      Property Insurance: 

Property insurance comes in handy if you own your building or have business property, such as office equipment, computers, and inventory. This type of policy offers protection against fire, vandalism, and theft.

2.      General Liability Insurance:

General Liability insurance provides defence and damages if your business, your products or services cause or may have caused Bodily Injury or Property Damage to a third party. It is the kind of insurance that can be helpful to any type of business.

3.      Business owner’s policy:

A business owner’s policy may cover business interruption insurance, property insurance, vehicle coverage, and liability insurance. You may also speak to an agent to alter the package so it fits your company’s specific needs.

4.      Worker’s Compensation:

Worker’s compensation provides pay replacement and medical assistance to those who are injured on the job. For the employee to enjoy these benefits, the employee will give up his/her right to sue his/her employer for the incident.

5.      Professional Liability Insurance:

Professional Liability insurance, also known as Errors and Omissions Insurance, offers defense and damages for failure to deliver professional services as per the contract.