Running a small business takes literally a 24-hour effort, seven days a week, along with a dedicated employee and customer base.
So, what happens when you, the business owner, make a mistake or two? Can it cost you the business you worked so hard to construct in the first place? It all of course depends on the mistake; some prove costlier than others.
Take obtaining the wrong small business insurance, something that can be more common than you may think. When that happens, small business owners can be on the outside looking in when it comes to staying ahead of their expenses.
In order to avoid mistakes when selecting the right business insurance, note the following miscues some business owners make:
Not shopping around
First and foremost, small business owners need to get multiple quotes when looking for small business insurance. For those who do not, they can end up missing out on savings, choosing an insurer whose customer service record leaves something to be desired, and working with an insurance company that may have some long-term financial stability issues.
It is always wise to get various quotes, then compare and contrast what they offer. If you are already working with an insurer for your homeowner, auto and/or life coverage, give them a first crack at supplying you with the right business coverage.
That being said, do not make the mistake of just assuming they have the best business insurance policy available for you. While it can save you time not having to deal with more than one agent for all your coverage needs, you could be missing out on savings if you do not shop around;
Not reading the fine print
Just as you would any other important contract, make sure you read the fine print of a small business insurance policy from top to bottom. In the event you are not overly familiar with how small business insurance works, be it for your office property, protecting you in the event a client sues you, or providing workers compensation when the law says you have to, get someone to review the policy for you.
Whether it is a lawyer or a family member or friend with a solid insurance background, know what you are signing up for. If you do not fully understand the policy contract, you could be setting yourself up for not being fully covered and/or paying too much for unwanted coverage;
Purchasing the wrong coverage
Purchasing the wrong coverage can be just as bad if not worse than having no coverage at all. When it comes right down to it, the two best-known policies for each and every small business owner and casualty and liability.
Casualty protects the business owner from events such as accidents, while liability protects you in the event someone sues your business, claiming your mistake cost them money, i.e. a financial disruption to their business from actions you took. Make sure you have the right coverage in place in order to come up on the short end should you find yourself battling a claim and/or lawsuit;
Not having the right health insurance
One of if not the biggest insurance matters of discussion these days for small business owners is health insurance. According to a recent Aflac survey, a sizable number of employees at the more than 6 million small businesses with more than a single employee are none too pleased when it comes to their health insurance coverage.
As a result, this can impact both employee productivity and motivation, not to mention the business being able to prosper and grow. The survey pointed out that as it relates to retaining employees, close to half (49 percent) of workers noted “improving my benefits package” is one factor that would help their employer keep them longer.
For the small business owner reading such results and comments, it is important to carefully determine if it makes better sense to select a high deductible plan to save money, or a lower deductible plan to keep workers satisfied. Over time, maintaining employee happiness could be more cost-effective over time, as costs for training new employees would be lowered;
Not updating their insurance
One of the other common gaffes is not updating your insurance agent when a change occurs to your business. Say for example you move out of your current office into another one in a different area of town and/or you have company equipment in storage that shifts from one storage center to another.
Should there be a theft, fire or weather-related happening, did you remember before moving to alert your agent to the change in locations? Not doing so could have an impact on the expenses you could pay when filing a claim. Another example is starting a small business that operates out of your home.
Depending on the necessary equipment required to properly run the business, not to mention the kind of work you are doing, you may require an endorsement or separate policy in order to cover both your liability exposures and investment.
In a day and age when many small business owners are looking for any means necessary to save money in running their companies, avoiding business insurance mistakes is a good place to start.
Do you have a business insurance? What tips would you suggest to new business owners when shopping for insurance? Tell us in the comments!
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