Mistakes to Avoid While Purchasing Business Insurance
Businesses of all sizes and fields are always exposed to some level of risks. Purchasing business insurance is a good way to pacify such risks as it covers loss of revenue. However, you have to be smart in choosing the right insurance that best suits your business. Let’s discuss 4 major mistakes that you must avoid when purchasing business insurance:
1.Underestimating the importance of a business insurance
Entrepreneurs should never underestimate the risks their business might suffer from. Experts recommend buying the insurance even when your company cash flow and financial resources are strong enough to withstand the risk. Many business owners I have talked to in Wooster, Ohio fail to understand that they even are business owners. They may only operate the business part time in addition to their full-time job and just look at it as a way to earn some money on the side. If you accept compensation for a service or product you are a business owner and your personal insurance contracts depending on the company may deny coverage or not have any available for the nature of your loss. Also, you may have exposures that you never even thought about unless you speak to a local Ohio Insurance Agency.
2.Buying the wrong insurance
This is, by far, the biggest mistake a business can commit. However small the risk may be, you must work with an insurance agency to assess it and secure the right coverage that best protects your business from unpredictable losses. Otherwise, you may suffer not only the obvious risk itself but also the insurance costs. Business insurance policies are often confused by business owners who think it covers them for any type of business they do. This is not the case; Insurance policies cover the named insured for a specific business classification or type. This can be an issue if you start with one LLC for your siding business and have a 2nd LLC that owns your shop. Each LLC may need their own policy or at least listed as additional insureds to be covered. Another example is if you took a job that is outside that classification of siding and didn’t tell your agent/company.
Inadequate can cause significant loss to your business, as it cannot cover all the expenses required to make a claim. In fact, you will be forced to pay for solicitation charges and legal settlements out of pocket. Thus, purchase a business insurance coverage that is adequate for your company. Things like contractor’s tool and equipment or business interruption and additional expense are often neglected by business owners only looking for coverage to satisfy their clients.
At times, some less expensive business insurance policies may tempt you to buy them. However, most of them may not mitigate the primary risk your organization. Under insurance is also not going to help you. In fact, it will simply burn your own company’s finances.
5. Not purchasing insurance from knowledgeable agents
Buying insurance is not an easy job. In fact, it requires a great deal of research, risk assessment, and many other aspects of your business. That is why successful entrepreneurs always utilize expert advice from a reputable insurance agency who has already handled many clients with a business similar to theirs. And when your business is located in Wooster, Ohio, a well-versed agent/broker is no exception.