You have just started a new business, and you are shopping around for a commercial insurance policy. The good news is that you can actually create a customized policy that will meet all your needs as a business. But the bad news is that many new businesses make costly insurance mistakes. Mistakes that can dramatically affect their future. Here are what these mistakes are, and how you can avoid them:
Paying Too Much
Business coverage typically includes policies such as property insurance, business interruption insurance and liability insurance. If — instead of buying all three of these polices separately — you buy them all together in what is called a business owner’s policy (BOP), you can save a considerable amount of money.
Also, never buy more coverage than you need. If you have an asset valued at X, do not buy coverage that pays out more than X.
Finally, be sure to shop around. Do not just take the first quote you receive. Prices of insurance can vary considerably.
Buying the Cheapest Policy
Saving money on insurance is a good thing, but not if it leaves you underinsured. Make sure that your commercial policy provides coverage for everything you might need, and in sufficient amounts. When comparing policies, do not just compare the total premium, but every line item as well.
Skipping Liability Insurance
While skipping liability insurance may be tempting, resist this urge. Remember, you are responsible for anything that might happen in your establishment, to both customers and to employees, and even to vendors. You are also responsible for anything you or your employees might do that causes harm to others. This includes damages resulting from making a defective product. By getting liability coverage, it will pay for any damages you are found liable for, including court fees and attorney costs.
Also, keep in mind that some insurance companies offer industry-specific liability policies. For example, Next Insurance provides contractors insurance, which covers contracting work, such as plumbing and electrical repair.
Not Properly Covering Your Online Business
If — like many companies today — you sell products and/or services on the Internet, you need a whole host of coverages that may not normally be included in a commercial insurance policy. This includes coverage against denial of service (DOS) attacks and other cyber attacks, as well as against interruptions of service and the theft of online customer data.
Remember, if you bundle these coverages into a BOP, you can save a lot of money.
Not Reading Your Policy
Unfortunately, many insurance policy holders do not read their policy until something bad happens. It is then — all too often — that they discover that their policy is missing a vital component. Remember, while you can add coverage to your policy later, it will not cover things that have already happened.
This is why it is so crucial to carefully read your policy right away, and read it in fine detail. You must make sure that it covers everything than can possibly affect your business.
In conclusion, now that you have started a business, it is important not only that you obtain proper insurance for it, but that you also avoid the mistakes outlined here. The future of your business may just depend on it.