8 Business Insurance Purchasing Mistakes and How to Avoid Them
If you’re going to run a successful business today, you must ensure you cover all of your details. One of the main details you’ll need to stay on top of is ensuring you have the right type and amount of business insurance coverage.
The business insurance industry in the United States is worth approximately $244 billion today. This means you will have several options when finding the best coverage available.
And when you’re shopping around for coverage, avoid some of the most common business insurance purchasing mistakes by following a few of the tips below.
1. Not Fully Considering or Understanding Your Business
Before anything else, make sure that you understand your business model. Having a solid grasp on your business model means that you will understand the inherent risks that you’re taking on and be able to cover your company accordingly.
Every company has a set of business risks to deal with. For example, a restaurant will have more fire risk than other businesses since you run a kitchen and cook several meals daily. A driving fleet will need more auto insurance coverage than a company that doesn’t have any vehicles.
Learn the full scope of your business to purchase the exact coverage that will keep your company running smoothly.
2. Failing to Address the Minimums
Next, ensure you also get a handle on the minimums you need to have for your insurance to be fully valid. Each industry will have a different set of minimums for certain types of coverage.
You need to make sure that you at least carry liability insurance coverage. This type of insurance coverage protects your company from any damages or injuries you are at fault for. Your industry might also have minimums for property insurance, weather damage insurance, and other types of coverage based on your work.
3. Only Addressing the Minimums
While you must handle the minimums, opting for only the minimum coverage also poses a problem. Being underinsured means your company is perpetually at risk for damages it can’t pay for.
Take care of your minimums, but make sure that you also spring for additional coverage to protect your company’s most important aspects. It’s better to have more coverage you never end up using than to find yourself underinsured when calamity strikes.
4. Not Thoroughly Reading the Policy
Do your due diligence before signing on the dotted line for a business insurance contract. Failing to read the policy will cause you to sign up for a plan with details you’re unaware of.
Read through the paperwork so that you know all of the clauses, rules for early termination, the premium rates throughout the next several months, and more. Since this is a legally binding agreement, it’s only right that you familiarize yourself with every detail. If necessary, get another set of eyes on the contract to know for sure.
This can include forwarding the contract to your attorney or human resources (HR) manager to know exactly what you’re signing up for. Always know the insurance terms and conditions that you’re agreeing to so that you can honor the plan while protecting your business.
5. Choosing the First Insurance Company That You Come Across
You also need to make sure that you explore your options for coverage. Several insurance companies offer business coverage, so get at least four to six different estimates before deciding on a plan.
Start reading online reviews from the best companies in the business. Find out their different options for insurance policies, and make sure that you look up the company’s Better Business Bureau (BBB) grade.
Once you know that you’ve found a quality company that is professional and thorough, you can begin exploring price quotes.
6. Only Getting One Quote
Companies also make the mistake of only getting a single quote before signing up for coverage. Start exploring and comparing insurance costs early so you don’t feel rushed to decide. Find at least five price quotes you can compare before deciding on a policy.
You can look into several options, and it’s easy to get quotes online, so thoroughly explore your options to save money.
7. You Didn’t Ask About Bundles
Insurance bundles offer an excellent way to save money on your coverage. For example, your company might need health insurance for employees, automobile insurance for its vehicles, and additional fire protection for the structure.
Rather than purchasing these types of plans separately, bundling them often makes the most sense. Bundling your insurance allows you to save money while getting everything you need in a single plan.
8. Never Adjusting or Scaling Your Insurance Coverage
Finally, many companies make the mistake of never adjusting their insurance coverage when they need to. The insurance needs that your company has on day one won’t necessarily stay the same throughout the years.
As your company grows, expands, and changes, you will likely need to purchase more coverage and different types. Never hesitate to make these adjustments when the time comes.
Avoid These Business Insurance Purchasing Mistakes
If you can avoid these business insurance purchasing mistakes, you’ll have a good chance of properly covering your company from unforeseen circumstances.
McMahon Insurance Agency is happy to help you address all your major insurance needs. If you’re interested in exploring some plans for your business, contact us on our website or call us at (609)399-0060.