Picking the right coverage and business insurance plans allow businesses to withstand tough times and keeps their employees and assets protected. At least, that’s what all insurance ads seem to claim. However, understanding the finer points of picking the right policies and coverage amounts makes all the difference.
When it comes to building a solid business insurance strategy the keyword is optimal. You need to spend the right amount of money on the right policies, following a proper risk assessment. Spend too little and you might be left high and dry when trouble strikes, spend too much and the premium can eat into your profits. To help you avoid the common pitfalls, the following are 5 mistakes commonly committed by new business owners when picking insurance.
Thinking a Standard Business Owner’s Policy is All You Need
This is probably the most common mistake. Don’t get us wrong, BOPs are great, they provide blanket protection and they usually include different types of coverages for different scenarios. However, as most business owners discover the hard way that they might not always provide a solid coverage for risks that are relevant to their business.
Judging Insurance Policies by Price and Not Value
An expensive business insurance policy may not make sense for all businesses. That being said, the cheapest policies are not always the best way to go either. Remember, it’s all about probability and no insurance firm would provide you high coverage for a low price. It just doesn’t make business sense. This means if you buy a cheap business insurance policy you might end up compromising on coverage. Even if the coverage amount is sufficient, a cheap policy is likely to have a longer list of exclusions.
Not Comparing Business Insurance Quotes
It will take you a few policy statements to understand how business insurance plans work. Once you understand the parameters, you can start comparing prices. Instead of seeking out an insurance agent representing a single company, it’s best to compare the prices online. Even if you don’t buy the insurance online, the internet fact-finding mission will leave you much more armed to pick the good policies from the bad ones.
Not Providing Enough Information During Assessment
Explaining the different facets of your business to an expert insurance advisor is a very critical step. This will allow that person to understand the risks and draw out a plan where those risks are covered. Go in details to explain how your business operates and what scenarios can halt the flow of revenue.
Not Insuring a Critical Equipment or Asset
Is there a piece of equipment, failure of which can be disastrous for your business? For a printing firm, it can be an expensive digital printer and for an office that manages client data it can be the server room. These are core components of these businesses and losing them can potentially usher in bankruptcy. If you have an asset or equipment which is that valuable to your business, it makes sense to buy a property or an equipment insurance to protect these assets.