Every business, whether small, medium or large, is exposed to risks. You can rule out these risks by purchasing business insurance which covers for the loss of revenue. You should, however, choose the right insurance which is suitable for your business. This article discusses mistakes that you should avoid, while purchasing business insurance.
Right insurance protects your finances:
Irrespective of the size and type, every business has the possibility of facing risks; they can either be man-made or natural. Natural risks include floods, heavy rains, violent winds (storm, gales, hurricanes and the like), lightning and the manmade risks include vandalism, theft, accidents at workplace resulting in casualty, loss of business data, inadvertent leakage of data and so on.
To choose the most suitable insurance for your business, taking into account the nature of your business is very important. While purchasing business insurance, you need to consider things like products/services you offer, the customer base, availability of raw materials, whether the product needs new design/method, or any other issue that may potentially be a risk factor for your business.
Purchasing business insurance is a sensible decision in favour of your business. It is also important that you should avoid the following mistakes while purchasing the insurance.
Underestimating the importance of business insurance:
Every business has its own risks. You should not underestimate the risks your business may face. However small the risk is, you should purchase the right type of insurance for your business. Purchase the insurance even if your company finances are good enough to withstand the risk.
Getting attracted to low priced policies:
Don’t mistake low priced policies for cost effective policies. The low premium might be because the risk it covers is low. If this is the case, it might be troublesome to you in the event the expenses of compensation exceed your policy cover. You need to take an insurance cover that is, sufficiently more than the probable claim for compensation.
Avoid purchasing a smaller cover for your business. In case of higher deductibles, you will have to spend a huge amount from your pocket. A deductible is an amount that the policy holder has to pay before getting compensation from the insurer. The deductibles are small and lead to lower premiums.
As a thumb rule, check out for all the aspects such as, the cover for building (where your business is located), Employers Liability Insurance, as per rules of government from time to time, regardless of your size, type, hazardous nature, location of your business.
Under or over insuring:
Avoid under insurance, it may lead to considerable loss to your business. This is because under-insurance cannot cover all the expenses that you have to bear in the event of claim. Purchase an insurance cover that is adequate for your business.
Over insurance will also not help you. It leads to more expenses. At times you might be tempted to buy business insurance that seems less expensive. But, in reality the insurance cover that is less expensive may not cover the type of risk that your business may face.
Buying insurance from brokers/agents with no/less knowledge:
Purchasing insurance is not an easy task. It requires great deal of research. Choose brokers/agents who specialise in business insurance. Ensure you choose the ones that have good track-record in claims settlement and servicing the users.
Consider purchasing insurance from brokers. Look out for an insurance broker with great experience and repute, and who can provide you the best service at optimal costs. You should avoid brokers/agents with lower credibility.
To forge an optimal deal for your business, choose a reputed brokerage firm. Such brokerage firms deal with a range of insurance products, and are knowledgeable. Brokerage firms deal in insurance products of all insurers, claim settlement, application and submission procedure.
While purchasing business insurance, it is important to avoid the mistakes just discussed.