Having comprehensive and structured risk management strategies can reduce or avoid the impact of risks for your business. Whether you own a local business or a multinational corporation, owning a responsible company means getting business insurance.
Your company faces different risks daily. And business insurance, also known as commercial insurance, protects your company from unexpected losses, such as legal liability, employee-related risks, and property damage.
However, with different insurance companies available, it’s easy to make expensive mistakes when choosing a policy. Depending on the specifics of the policy, acquiring insurance doesn’t always mean you have adequate protection.
We put together the six common mistakes to always avoid when shopping for business insurance.
1. Not Consulting An Independent Insurance Agent
One of the worst mistakes that can be made is not reaching out to an independent insurance agent.
There are thousands of business insurance products currently available on the market today. However, if you purchase insurance from one of the major companies, you might only hear and take their claims at face value and purchase their products.
We suggest consulting an independent insurance agency with multiple options for your specific needs. They can help you avoid the mistake of underinsuring.
2. Not Investing In Employee Compensation Insurance
Your competent and efficient employees are crucial for running a successful business. Neglecting their needs and not investing in employee compensation insurance can cause trouble for your business.
At the same time, it can cost you thousands of dollars. For instance, if one of your workers gets injured on the job and you don’t have this coverage, you’re responsible for paying costly medical bills and legal settlements. While investing in workers’ compensation may be expensive, shelling out money for an injury from out of your pocket is worse.
However, if you have employee compensation insurance, you must ensure that you correctly classify your workforce. Each classification code has a corresponding amount. Owners or agents assign classification codes to job descriptions based on risk levels. Workers in higher-risk professions can pay higher amounts for their compensation rates. Construction workers will have a higher compensation amount than a receptionist.
Incorrect or same employee classification can also cost you money.
3. Underinsuring Your Business
Purchasing the cheapest business insurance isn’t always the best protection for your company. It’s like buying the least expensive car; you won’t always get the best vehicle.
Getting cheap insurance is another dangerous way of potentially underinsuring your business. Similar situations, such as using your auto insurance for business vehicles without commercial auto insurance, spells disaster for your business.
Additionally, not having enough liability coverage, especially for high-risk jobs, neglecting worker’s compensation insurance, and underinsuring your buildings with improper commercial property insurance, do more harm than good for your company.
4. Not Updating Your Growing Coverage
Another way to underinsure your company is to not update your old insurance as you grow. While the exact coverage was ideal for you a few years ago or last year, it may not work today.
Besides your business changing since launching your first policy, equipment replacement costs, office furnishings, vehicles, and construction expenses also rise with your company.
5. Not Understanding Deductibles
Deductibles are the amount you pay out of pocket when filing insurance claims. Business owners typically make costly mistakes, such as not understanding how to calculate their deductibles, filing claims for less than the amount of the deductible, and not using a higher deductible to elevate a lower-cost premium.
At the same time, they forget the value of property increases with the deductible amount if they base it on a percentage.
6. Not Updating The Insurance Company on Business Changes
And to cap off our list of business insurance mistakes, the worst thing you can do is not update the insurance company with business changes.
As your business expands, you can outgrow your original coverage set. For instance, are your general liability insurance and property limits growing with your revenue and business assets?
Situations such as relocating, hiring, or firing employees, purchasing new equipment, offering new services, and experiencing revenue growth mean you must update your business insurance.
We Mean (Safe) Business
Risks are inevitable in any company, especially if your workers have higher-risk jobs. Investing in a reliable business insurance company can help reduce the impacts of these risks.
The Tabb Insurance offers high-quality business insurance in Conyers, Georgia for your commercial needs. Talk to an agent now, and we can help protect your business.