Buying business insurance can be confusing, particularly for owners of smaller companies who may not have access to a range of advisors. At each step of the process, there is an opportunity for a mistake — and each mistake can cost your business money, or put your company at risk. Make sure that you avoid these errors when purchasing business insurance.
Common Mistakes Owners Make When Purchasing Business Insurance
When you are learning how to shop for business insurance, cost is likely one of your primary considerations. But focusing solely on the price of a policy can be an expensive error. You may have saved a few hundred dollars on a premium, but if the policy doesn’t cover a range of potential claims, you’ll pay more in the long run. For example, if your property insurance policy only applies certain types of losses (known as “specified perils”), such as fire or water damage, then it is entirely possible that you’ll have a substantial claim that you have to cover out of pocket.
Instead of looking only at the cost of the premium, evaluate policies based on the total coverage offered. Make sure that the policy you choose provides enough protection to ensure that you won’t lose your company if the unexpected happens. A benefits consultant can analyze your company’s needs and help you determine what level of coverage is right for your business.
There is More to Purchasing Business Insurance than Cost
Business owners may assume that working with an insurance agent or a benefits consulting firm will result in a more expensive policy than buying directly from an insurance company. This assumption is absolutely false. The cost of a specific policy will be the same, regardless of whether you buy it from an agent or from the insurer. But working with a benefits consultant or independent insurance agent has a significant advantage: they can get quotes from a number of different insurance companies, giving you the ability to choose the policy that best fits your coverage and budgetary needs. They may also be able to negotiate better prices for you, based on your claims history, business size, and other factors.
A benefits consultant or agent can also assess the financial stability of the insurance company, making sure that the insurer that you pick will be able to meet their obligations. Many consultants or agents will only work with highly-rated insurance companies. When picking an insurance agent or benefits consultant, look for someone who has experience working within your industry, and who has worked with clients of a similar size. A benefits consultant who is familiar with companies of a similar type and size can be an invaluable asset when it comes to buying business insurance.
Failure To Understand Every Detail
When deciding on a policy, many business owners fail to look at the fine print. Doing this can have serious financial repercussions, as you may not have the coverage that you thought you had. Business insurance policies can be complicated, and full of jargon that isn’t easily understood by anyone outside of the industry. But knowing what your business insurance policies actually cover — and exclude — is critical to solid financial planning.
A benefits consulting firm can walk you through the policy details, and help you determine whether or not a particular policy will cover the actual risks of your business. For example, if you have a commercial property in a high-crime area, you will want to make sure that acts of vandalism will be covered by your property coverage policy. If your company manufactures products, you’ll want to be sure that your business insurance covers both the manufacturing equipment and product liability. Each business’ situation is unique. A benefits consultant can assess your needs and help you pick the right business insurance policies.
Underestimating Your Assets
Part of determining the right policies and levels of coverage involves having the right valuation for your business. Many business owners fail to properly value their assets, which can include inventory, equipment, furniture, property and more. If you simply estimate the value of these items, it is possible that you won’t be able to afford to replace them if they are damaged or destroyed. A proper valuation of all of your assets will help you get the right amount of coverage for your business.
Finally, make sure that when you buy business insurance, you have properly listed all business entities and locations. For property insurance, be sure that you have listed all property that you own, including vacant land. For other types of business insurance, carefully check to see that every legal entity and insured associated with your business is covered. Taking this important step will ensure that you are fully covered in the event of a loss. A benefits consulting firm can help make sure that you have listed all entities and locations on your insurance forms.
Contact The Business Benefits Group Today
When it comes to buying business insurance, you can avoid many of these common mistakes by working with a benefits consulting firm. To learn how an agent or consultant can assist you in choosing the best policies for your company, contact The Business Benefits Group today by giving us a call or sending us a message online.