Deciding to open your own business can be one of the most exciting yet daunting things you can take on in life. The fact is that when you're running your own business, you are thrust into a minefield of potential mistakes and missteps that may cause your company harm in the future. One of the first obstacles you're going to face right off the bat is purchasing business insurance. Unfortunately, many business owners rush to obtain it in order to open their doors as quickly as possible. Therefore the following includes a list of 10 things to avoid when dealing with business insurance.
Going for the Cheapest Package
If you ask any business owner what is the most important part of crafting their budget, they are likely to tell you that saving money is the most important part. A business owner needs to look for areas where they can save money in order to survive; that's a fact. However, there are exceptions to this rule. Purchasing a cheap insurance package can save you money at the time of signing but may end up costing you even more once you've figured out that the plat doesn't cover as many areas as you would have liked it to cover.
Skimming Through the Policy
When you're presented with an insurance package, you are likely to be told that it's perfect for your company. The fact is that insurance agents will sell you on the headline of the policy rather than what's found within it. It is your responsibility to take the time to stop and read the policy carefully. A common issue that business owners face when they don't read the policy carefully is finding out that certain restrictions were placed on things they thought would have been covered. A few items to look out for include deductibles, coverage limits, and reimbursement policies, to name a few.
Potential Income Loss not Covered
When a person opens a business, especially within locations that contain extreme weather, they are going to ensure that any damages caused by mother nature are taken care of. However, there is one area that is constantly overlooked by new business owners. Potential income loss is a very real thing that may happen if you need to close your store down for repairs. Ensuring that income loss is added to your insurance plan is critical, helping you get back on your feet. Fortune Insurance is one of the top-rated companies that may be able to assist you with further questions regarding potential income loss.
Not Taking Customers/Vendors into Consideration
Although business insurance is mainly thought of as a protection plan for the company and its owners, the fact is that clients also want to feel safe when doing business with you. Therefore a common mistake new business owners make is not taking the customer or vendor into consideration. This means understanding what type of coverage is going to ensure that they feel safe and confident to work with you in the future. It is important to discuss this matter with your insurance agent as they may be more knowledgeable regarding the amount you would need to satisfy this area of your coverage.
Staying too Long
If you have a great insurance agent along with a great plan, then it's okay to remain within it as long as you want. However, as a business owner, you must also recognize the signs that it's time to move on. If you begin to notice that your preferred insurance company is changing too much of their policy to the point where it costs you more, then it's time to reevaluate your contract with them. Doing this reevaluation early can potentially save you money and a few headaches in the future.
Not Taking Growth into Consideration
The goal of any business is to grow throughout the years. However, with that, growth also comes new obstacles that you need to keep in mind. Insurance is one of those areas that is going to be greatly affected when you begin to see growth in your company. This is because your company would be worth more than the coverage you purchased at the beginning. Failure to upgrade or negotiate certain parts of your coverage can result in paying more in the future.
Not Adding Workers Compensation for Contractors/Leased Workers
The success of your company largely relies on the safety of your employees. This is why so many business owners are eager to obtain a means to provide workers compensation. However, there have been instances where a company forgets to also cover other types of employees, such as contractors and leased workers. Failing to cover these types of workers can result in big lawsuits that can cripple a small business who is just starting out.
Denying General Liability Coverage
If you're starting a business under an LLC (Limit Liability Company), then your personal assets are protected under law. However, it does not mean that everything is going to be covered in terms of your business. For example, if your employees damage another place of business during their visit, then you may be liable for those damages. You may also be liable if someone enters your location and is injured.
Being Over Insured
Protecting the business is something that owners think about a lot at the beginning. This worry about losing money or potentially their entire business will lead a business owner to over-insure themselves. A good thing to keep by your side when looking at plans is an insurance checklist. This will allow you to understand what coverage you do and don't need.
Withholding Important Information
It's understandable to want to hide your problems, but in business, everything eventually comes out. An insurance agent will also act as a fact-checker, and thus it is not recommended to withhold any important information from them. Sure, it can lead to a better deal, but if and when that information is disclosed, then you may have your contract voided, leaving you at risk of losing everything.