Business ownership comes with a myriad of responsibilities. While there are also many benefits of business ownership, a lot of things rest on the shoulders of the owner. This means that many things can be overlooked as the business owner tries to take care of everything. For instance, some business owners may forget to purchase a commercial insurance policy to protect their business from all manner of risks it faces. Some entrepreneurs may remember to buy commercial insurance but forget to check the nitty-gritty of the policy. When looking for a suitable insurance policy to protect your business against all kinds of risks, be sure to avoid common mistakes that business owners normally make.
Common Mistakes Entrepreneurs Make When Buying Business Insurance
i) Buying a Policy Without Reading the T&Cs
An insurance policy is an agreement between the client, which in this case is the business owner, and the insurance company. The policyholder agrees to pay the specified premiums and in return, the insurance company agrees to compensate the business owner for any financial losses that may be covered by the policy. Before signing any contract, consumers are always advised to read the terms and conditions of that contract. Unfortunately, many people usually buy insurance policies without first checking the terms and conditions. As a result, they usually end up regretting their decision when a financial loss arises after discovering that the insurance policy cannot compensate them for their losses.
ii) Ignoring Insurance Brokers
This is the biggest mistake that consumers make. Licensed independent insurance brokers have the best interests of the client at heart. When you consult an independent insurance broker, therefore, you can expect to get the desired results. The broker will assess the insurance needs of your business and shop around for an insurance policy that best matches your coverage needs. By ignoring insurance brokers, business owners may purchase expensive policies that may not match their coverage needs.
iii) Buying Business Insurance When It’s Already Too Late
Insurance is something you buy when you don’t need it so that you can get a payout when you need it. The reverse cannot work. You cannot get a payout the moment you buy a policy. Imagine a business owner whose business gets razed down by a fire rushing to an insurance company and offering to pay the premiums in full if the insurance company can cover the financial losses that have been reported. No insurer can accept this. Every business owner should know that running a business comes with certain risks, and those risks should be insured. Business income, business property, commercial vehicles, and public liability should all be insured.
iv) Admitting Liability
One tip that any decent lawyer or insurance agent can give a policyholder is never to admit liability. When an incident occurs, the first thing the policyholder can do is call the insurance company or agent to report the incident. In case of a fire incident, workplace injury, or auto accident, the first call should be to emergency services, but the second call should be to the insurance company. Liability is a matter to be determined in court after thorough investigations of the incident have been done. The mistake many business owners normally make is admitting liability even before investigations are done. In some cases, the insurance company may refuse to make a payout if the policyholder has admitted liability.
v) Failing to Check the Exclusion Clauses
If you want to know what an insurance policy covers, be sure to check the inclusion clauses. If you want to know what it does not cover, read the exclusion clauses. This is crucial because you want to know exactly what you’re getting from a policy. One of the biggest mistakes consumers usually make is reading the inclusions without checking the exclusions.
To make informed decisions when purchasing commercial insurance, business owners should always consult insurance brokers. The ideal broker must have plenty of experience helping business owners buy the right policies. They should also be licensed, insured, and reputable.