All businesses are susceptible to a variety of risks. According to Charles Spinelli despite this, many small businesses often overlook the significance of having insurance until some unpleasant thing happens. From natural disasters to vandalism and cyber-attacks to litigation; protecting businesses from such unforeseen risks is vital. So, make sure to purchase the right mix of insurance plans to get financial coverage to save the business. Again, while buying insurance most SMEs make certain common mistakes due to their lack of knowledge and pay cost for doing so. Keep reading to explore these common mistakes and make sure to avoid them.
1. Opting for Cheapest Insurance Plans
Typically, small businesses continually strive to save money as it contributes to their profitability. This makes many business owners go for the cheapest business insurance plans to save some bucks. However, doing so clearly indicates that the business is not getting full coverage of risks. Consequently, if the business encounters a major hit with business loss or claim, the owner will simply left holding the bag. So, before buying insurance, recognize the kind of risks that such a business can face and opt for the best coverage.
2. Not Updating the Insurer on Business Changes
As a business multiplies, it should potentially expand the original coverage by incorporating or enhancing the coverage limit of policies like general liability insurance that safeguards damage of business assets alongside product liability, etc. Make sure the update the insurer as well as increase the coverage limit in the event of investing in new equipment, offering new services buying a car for business purposes, etc.
3. Ignoring Workers’ Compensation Insurance
Ignoring to invest in workers’ compensation insurance can make a business pay thousands of dollars. Simply put, if an employee gets injured at work; not having Workers’ comp coverage, will make the employer pay for all medical bills along with lost wages, etc. Denying to bear medical experience will hit with a lawsuit, making the owner pay hefty compensation. Moreover, having worker’s compensation insurance is obligatory by law, and violating it can make a business owner face fines, high penalties, or even criminal punishment, says Charles Spinelli.
4. Not Understanding the Insurance Policy
Insurance companies market a range of different business policies. Reading and clearly understanding the policy while buying it is essential. Make sure to understand the particulars, what coverage it bears, the amount of premium to be paid, etc. Also, knowing the important particulars such as discounts, deductibles, limits, as well as reimbursements is important. Never hesitate to ask questions for complete clarification to understand that it matches the business needs.
5. Not Investing in (BOP) Business Owners Policy
It is another major
mistake that small businesses make as per Charles Spinelli. Noteworthy, the
Business Owners Policy is a must-have for all small and medium business
entrepreneurs as it comes as a complete package of insurances including general
liability insurance, business interruption insurance, and commercial property
insurance. General liability insurance is intended to protect businesses from
third-party claims like bodily injury, advertising harm as well as damage to
third-party property.
Similarly, business
interruption insurance bears the risk in the event the business disruption
due to natural disasters like hurricanes, floods, earthquakes, etc. It also
gives coverage of employee salary, taxes, and other operating expenses and
helps it to initiate its operation. Finally, property insurance gives
protection to commercial buildings, inventory, business equipment, etc. if
damaged.
Acquiring business
insurance is critical to avoid losses caused by natural disasters, robbery,
third-property damage, etc. Consider the common mistakes as stated above and
avoid them by working with an expert insurance agent to help make objective
decisions.
