Running a business is full of complexities, and one aspect that often gets overlooked or misunderstood is commercial insurance. However, proper insurance is an essential part of any successful business. While it can be confusing navigating the labyrinth of insurance terms, policies, and options that can be challenging, businesses cannot afford to make any mistakes. Signet Insurance Group would like to share some of the most common mistakes businesses make when dealing with commercial insurance.
Why is Commercial Insurance So Important?
Many businesses, especially those that are just starting up and or small businesses, tend to underestimate the importance of commercial insurance. They might see it as an unnecessary expense, especially if they are running on a tight budget. However, the cost of an unforeseen event such as a lawsuit, natural disaster, or data breach can be devastating and potentially bankrupt a business. Commercial insurance provides a safety net and should be considered a necessary investment, not a luxury.
Not Doing a Business Risk Assessment
Every business has their own unique set of risks, depending on factors such as industry, location, and size. Some businesses will the make the mistake of not thoroughly assessing their specific risks. This often results in not having adequate coverage. To avoid this, conduct a comprehensive risk assessment of your business and work with a knowledgeable insurance agent to help ensure you get the right coverage for your business’s needs.
Assuming Homeowner’s Insurance Covers Home Businesses
For those running businesses from home, it’s a common misconception that homeowner’s insurance will cover business-related losses. However, most homeowner’s policies do not cover home-based businesses. If you’re running a business from home, you need to consider separate commercial insurance to cover your equipment, inventory, and liability.
Not Regularly Reviewing & Updating Commercial Insurance Policies
Business needs and risks will change over time, especially in today’s fast-paced business environment. However, many businesses will fail to regularly review and update their insurance policies. It’s important to keep your policies updated to reflect changes such as business growth, new equipment, additional locations, or changes in regulations.
Investing in the Cheapest Insurance Policy
While it’s important to consider costs, choosing the cheapest policy you can find can be a costly mistake in the long run. The cheapest policy might not provide comprehensive coverage, leaving your business exposed to risks. Instead of just focusing on costs, look at the value the policy offers, its coverage, and the reputation of the insurance provider. It is important to protect yourself and your business with a good commercial insurance policy.
Not Understanding Insurance Policy Exclusions
Every insurance policy will have exclusions. Exclusions are specific situations or circumstances that the insurance policy will not cover. Not understanding or not being aware of these exclusions can lead to a false sense of security and even some unexpected out-of-pocket expenses. Always read the fine print and ask your insurance provider to clarify any points of confusion. You may want to ask your insurance provider directly about the policy’s exclusion to ensure you have complete awareness.
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