Most owners of a small to medium-sized business recognize the need to have insurance in place; however, not having secured the proper insurance coverage can be just as costly as not having any at all. We recommend reviewing your business with an insurance professional, this will require a discussion regarding exactly who your business is and what it does on a daily basis.
It is essential to discuss your business openly when first applying for commercial insurance, full disclosure will allow an insurance agent to assess your needs and provide the coverage and limits that are right for you. Not providing detailed or accurate information is often a mistake made in an attempt to receive insurance a lower premium, but it can be detrimental at the time of a claim.
Aside from withholding information from your insurer, here are what we consider the five biggest insurance mistakes every business owner should avoid:
NOT PURCHASING LIABILITY INSURANCE
The need to have a CGL (Commercial General Liability) cannot be stressed enough to any company, regardless of size or nature of your business. Even a simple home-based business or a basic lawn cutting service in the summer months can have liability exposures. Without the proper liability protection, they could lead to costly lawsuits and settlements which result in the downfall or closure of your business. An insurance professional can advise and recommend a liability limit that is right for you. These days it is important to remember that you can never have too much liability coverage!
DECLINING THE OPTION FOR BUSINESS INTERRUPTION COVERAGE
This insurance will cover the loss of income resulting from an insured peril when your business suffers a claim. You may have to complete major renovations or sometimes an entire new rebuild, in many cases this can ruin a business without proper coverage and limits to sustain the loss of business income during this prolonged period.
BUYING INSURANCE BASED ON THE CHEAPEST PRICE
Saving money at the time of purchase will not be your priority when it comes to poor service or a claim settlement that leaves you wondering if you chose the right insurance company. We recommend that you do some research and ask others about their insurer, choosing a company with exceptional service and claims resolution should be a priority. Ask yourself what value does this company offer me above and beyond the insurance policy I purchased?
NOT UNDERSTANDING COVERAGE OR LIMITS
Ask questions! We cannot stress how important it is to understand the insurance coverage you purchase for your business. If your commercial insurance has been explained and you still do not understand, ask your agent to explain it in simple terms or provide an example of what your coverage protects. Be sure to question what is not covered as well, exclusions are plentiful in insurance and not something you want to learn about at the time of a claim.
CHOOSING NOT TO INCLUDE CYBER INSURANCE PROTECTION
You may not consider cyber to be a threat to your small business, you may be right. But if you are wrong the result can have devastating effects that can damage your finances, your customer privacy, and even company reputation. If your business involves employees and computers you already have a cyber exposure. Learn more from your insurance agent about the ever-increasing importance of cyber protection.
Article Written by Darcy Johnson
Erie Mutual Insurance Manager – Sales, Marketing & Business Development
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