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7 Business Insurance Buying Mistakes and How to Avoid Them

Business insurance is a very worthy investment for any company. Unfortunately, around 44% of small businesses still have no sufficient insurance coverage. Without a good business insurance policy, a simple lawsuit can quickly put you out of business.

To protect your business against risk, you must get business insurance. However, with several insurance companies and policies, you can easily make a mistake while buying insurance.

Are looking for insurance for your company? Here are some business insurance buying mistakes you should avoid.

1. Not Getting Enough Coverage

Businesses are exposed to different risks. Some risks include financial, legal, security, employee, and more. One mistake that several businesses, especially small businesses, make is failing to get enough coverage.

When buying business insurance, you need to evaluate your business, understand the risks, and know the right coverage your business needs.

Every insurance policy offers companies different levels of coverage. You will not know the right policy to buy without assessing your risks. This also means that your business can remain exposed to some risks.

Therefore, consult a professional business insurance broker before buying insurance for your business to find the right policy for your company. Your broker will evaluate your business and ensure you have sufficient coverage.

2. Failing to Read and Understand the Policy

Insurance policies contain vital information about the coverage. This includes reimbursement policies, deductibles, and coverage limits. To avoid surprises when making a claim, you must read and understand the policy before buying it.

Never be in a hurry to buy a business insurance policy. Take your time to read through it and ask your broker or insurance provider for clarifications. Try not to assume that the company will automatically give you the coverage your business needs.

Policies and insurance terms and conditions change. To understand what is included and excluded in the coverage and protect your business, ensure you fully understand the policy.

3. Choosing the Cheapest Business Insurance Option

Every business wants to save money. However, choosing the cheapest option with insurance can be more costly in the long run. While finding a policy that also fits your budget is ideal, a cheap alternative may not cover your business sufficiently.

Buying a policy mainly because it offers cheap monthly premiums could mean you do not have enough coverage. When buying insurance, ensure you look at the value it provides your business, not only the price.

To avoid this mistake, talk to a broker and get quotes and estimates from different insurance companies. This way, you will compare policies from other companies versus the pricing and choose one that fits your budget and can protect your business.

Apart from the price, do not forget to consider the provider’s claims process, customer service, and financial stability. Read reviews about an insurance company and only buy from a company with an excellent reputation.

4. Not Insuring Potential Income Loss

Several business owners give more priority to their physical assets rather than their profits when buying insurance. Though businesses lose their physical assets when a disaster, such as a fire or a hurricane, strikes, they may also lose income because of downtime.

Depending on your deductibles and business operations, getting back on your feet after a disaster and the subsequent downtime can be very challenging. To protect your business from severe losses while you make repairs or move, you must also ensure the income you will lose.

As you insure your business against natural disasters or vandalism, talk to your broker about income coverage and how to include it in your policy. This coverage will reimburse the income you may lose as you close your business after a disaster.

5. Ignoring General Liability

Apart from theft and disasters, a simple mistake by your staff can lead to catastrophic damages or lawsuits. Business owners can be liable for accidents or incidents on their premises.

Liability can result from a customer’s slip and fall accident, damages to a customer’s property, product or services malpractice, and more. When someone sues your business, the time and money you spend on litigation can threaten your business and reputation.

Since litigation costs are very high, protecting your business from unforeseen risks is crucial. Commercial general liability insurance will give you peace of mind and ensure your business is fully covered.

6. Going for the Lowest Deductibles

Do not make the mistake of choosing the lowest deductible by default. If you do this, you will have to dig deeper into your pockets when filing a claim, which can jeopardize your company.

For example, suppose you have to pay $500 as deductibles, and you suffer damages worth $5000. In that case, you will only pay $500, and your insurer will cover $4500. While this is cheaper, policies with the lowest deductibles also have very high premiums and vice versa.

7. Failing to Adjust Your Policy

It is crucial to review your policy after some time. As your business grows, it holds more value and can also be exposed to more risks. For example, when you purchase additional assets, hire new employees, or move to a bigger space, your insurance policy must also adjust.

If your policy doesn’t reflect the changes in your business, you can risk severe financial losses when a disaster strikes.

Avoid These Mistakes When Buying Commercial Insurance

Now that you know the business insurance buying mistakes to avoid, the next step is to talk to a professional insurance broker and get the right insurance coverage for your business. Allow an expert to evaluate your business and get enough coverage for your business.

Central Jersey Insurance Associates is committed to offering quality insurance products and services. Contact us today to insure your business.