Top 8 insurance mistakes small business owners make
Running your own business lays many liabilities on your shoulders. For this reason, it’s highly essential to protect your business by having an insurance cover for both your company and employees. However, some small businesses commit costly mistakes when taking an insurance policy.
The effort to cut money and time corners often lead them into more expenditures and a whole lot of hassle down the road. Therefore, ensure you avoid these mistakes first-time commercial insurance shoppers in Ottawa make.
1. THINKING THAT INSURANCE IS NOT IMPORTANT
Insurance is an imperative asset to have for business. Before venturing into any business, you probably invest a lot of time and effort into ensuring you are well equipped to make it a success. That same effort is what you should employ into learning the basics of insurance to make sure that you find a customized coverage for your small business.
No matter what type of business you are operating, having the right business insurance coverage is highly essential to keeping your business alive. In the course of operation, you may face some challenging situations that might cause you to lose your business because you just underestimated the significance of having an insurance cover.
2. BUYING A CHEAP INSURANCE POLICY ONLINE
It’s quite easy to find and buy cheap insurance policies online. However, it’s a fact that most of these policies have difficulties paying out on a claim.
While you need to work with an insurer who understands your risks and how to mitigate them, they are “one-size-fits-all” sort of agency. Often, they have terms and conditions that are always hidden in a small print, such as you’ll not be covered for work done for clients of a different country among many other revolting terms.
It’s therefore important to find a reputable company and fully understand the policy that you are buying, and the best way to do this is to discuss it with an insurance advisor.
3. NOT INSURING HOME BASED BUSINESSES
There is a common misconception that if you have a home-based company, it’s always covered in your owner’s home insurance policy. However, this is not true. For a matter of fact, if any business activity causes damages to the insured property, it can result in the homeowner’s policy being revoked.
Therefore, it’s advisable that you talk with your insurance agent about what is covered by your current home policies and whether you need additional coverage to get your company secured. They will help you weigh your options and help you come up with what is best suited for your situation.
4. FAILING TO UPDATE YOUR INSURANCE PLANS
When you experience changes in your business, all aspects of the business are affected – including your insurance policies. If you fail to update your policies to reflect decreases in income, you may end up paying more for coverage that you no longer need.
Similarly, if your business improves and starts making more money, you should adjust your policy to avoid underinsuring.
Some of the updates that you should make include:
- When you move your business to a new location, you need to check with your insurance agent to update your Property Insurance and General Liability Insurance.
- In case you hire or fire employees because this affects your Workers’ Compensation
- If you invest in expensive new equipment or a commercial real estate, you’ll need to update your Property Insurance to include the new assets.
- If your company starts offering new services, you are needed to amend your policy because your Errors & Omissions Insurance might get affected.
5. BUNDLE BUSINESS INSURANCE POLICIES
Small business owners who prefer to buy their policies from different insurance companies end up spending more. You can save money if you buy multiple insurance policies from one company. For instance, depending on the size and type of your business, you can qualify for a business owner’s policy.
The policy combines commercial property coverage with general liability insurance at a price that’s lower than what you would have paid if you bought the policies separately.
6. NOT IMPLEMENTING RISK MANAGEMENT STRATEGIES
Having risk management measures in place can actually lower your insurance premiums. Although every insurance provider has a different criterion, talk to them about the safety measures you’ve implemented to help reduce your insurance rates.
These measures can include:
- Central station burglar alarm, which can reduce your Property Insurance premiums
- Updating old office buildings, which may reduce Property Insurance and General Liability premiums
- Security cameras to deter vandalism and property theft
- Using client contracts, which prevent avoidable E&O lawsuits
7. NOT INSURING FOR LIABILITY
Liability insurance covers financial damages for which you are legally found responsible, including court and attorney fees. Depending with your policy limits, they can shield your company when faced with cybercrime cases, negligence and omissions when providing services, if an employee or client has been injured in your premises, or sold a defective product.
8. BUYING THE WRONG COVERAGE
With a wide array of coverage for your business, you need to ensure that you buy what is necessary. Some coverage might be helpful while others are a waste of your hard- earned money.
So when shopping, look at your business policy closely before signing, understand the insurance terms and what is covered and whether you need it.
BOTTOM LINE – GET THE RIGHT INSURANCE FOR YOUR BUSINESS
The biggest small business insurance mistake you can make is failing to protect your business with the right insurance. At Gifford Carr Insurance Group, we have spent the last 6 decades building strong details and features that your small business needs in a personalized insurance package to protect your investment. We are a reputable Ottawa insurance broker that is ready to provide you with the right insurance that your business needs to get to the next level.