When it comes to unfortunate happenings in business, one thing you’ll be thankful for is insurance. Business insurance can protect your company in the event of an accident or a lawsuit. However, it all depends on your insurance and the type of coverage.
Some business owners think that buying insurance is easy. Just pick a policy and be done with it. However, it’s much more complex than that. And sometimes, a simple insurance mistake can break your business.
Purchasing the Cheapest Policy You Can Find
Affordability is one of the main aspects of insurance companies selling insurance. However, for a business, the cheapest policy out there might not have the right coverage. Sure, it’s cheap, but can it protect your business?
Chances are that inexpensive insurance might not have the coverage you need. Either they don’t have the coverage your business needs, or they have limitations that can make the coverage inaccessible when needed. Worse, if a single uninsured incident happens, it might even be more expensive than the premiums you’re paying.
As mentioned earlier, not all insurance has the same coverage. You have to discuss with the insurance company the types of coverage you want for your business. But why does being underinsured matter? Well, let’s have a scenario.
For example, your building worth $2 million collapsed. You file for an insurance claim, but the company can only reimburse $1 million based on your coverage. That would be a huge loss since there’s now a shortfall of $1 million that you have to pay out of pocket to rebuild that building.
Every business insurance policy has its set limits. For instance, using the last example, would your insurance cover the whole repayment of the building? In that scenario, the insurance policy didn’t. Well, that happened either because of the limitations of the insurance.
But what if it’s the business owner’s fault? That would mean that the business owner underestimated things. For example, the business owner might have thought that $1 million would be enough, but it turned out that it was twice the amount.
Now gauging the limits can be tricky. First, you have to estimate the equipment, property, and medical costs that your employees incurred when the accident occurred. If you’re having trouble with that, you can ask the help of a professional to correctly calculate the costs and type of coverage you need for your business.
Believing Lawsuits are Rare
You probably have never been involved in a lawsuit or a worker’s compensation claim; that’s why you believe this. However, it would help if you never counted on luck that you’ll never receive one in the first place. Liability insurance is the coverage that will help you cover expenses in a case of a lawsuit.
This type of coverage is one of the most common and popular among companies. You might think it’s a waste, but you never really know until you’re faced with a lawsuit. In this age where “cancel culture” is prevalent, liability coverage is the way to protect your business.
Insufficient Employee Perks
How long has your business held on to the same policy? If it’s a long time, let this be your wake-up call to finally review the policy you keep renewing over and over again. Then, take a moment to consider how much your business has changed in the last few years.
Has your business grown and taken in a lot more employees or equipment? If that’s so, then your policy might not be enough to cover all of them.
The opposite is also true. For example, if your business has downgraded recently, you might take off some aspects of your insurance to save money for your business. In short, always review your policy whenever a significant change happens in the company.
This is because lacking insurance perks or incentives can affect the productivity and motivation of your employees. They’ll feel like they’re not being valued and will opt to seek new opportunities elsewhere. Some incentives you need to prioritize with business insurance are retirement benefits, health care coverage, disability insurance, etc.
One of the most important is health care coverage. We have a simple explanation if you’re wondering about comparing medicare advantage vs supplement. Medicare Advantage replaces the original Medicare. The insurance company with added benefits will hold on to the insurance policy. On the other hand, Medicare still holds the supplement, but the plan will pay your deductible and out-of-pocket expenses.
Not Covering for Loss of Income
It’s probably one of the most underrated coverages of all. Loss of income protects you when your business has to cease operations and shut down for a few months to make way for repairs. But, of course, you don’t have any income during that time since your business is closed. That’s when loss of income comes in clutch.
Protecting your business with insurance is a great way to sustain it for a long time. However, choosing your insurance policy comes with great responsibility. That said, you might want to avoid making the mistake we talked about above.