5 Insurance Mistakes Small Business Owners Make (And How to Avoid Them)
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No one is perfect.
Small business owners would like to be, but we all have to learn from mistakes. But we’re here to help you avoid a few insurance mistakes with this blog!
Let’s get into the Top 5 Insurance Mistakes Small Business Owners Make!
Letting Your Policy Lapse
We all have lapses in judgment.
But you should avoid a lapse in your insurance policy.
When it comes time for renewal, if your policy lapses you might believe that when you’re ready to reinstate your policy, it will be the same as your renewal terms.
You’d be wrong.
If your policy lapses, all the power is in the hands of the insurance company. They can offer you a policy with less coverage, a higher premium, and possibly choose not to even give you a policy.
Make sure that if you want to test the waters with other policies, you still renew your current one. It’s better to have to cancel a policy once you have a new one instead of realizing you don’t have coverage at all.
Underinsuring Their Property
Numbers matter.
When you’re a business owner, you’re always going to be looking for ways to save money. But if there is one area you shouldn’t play with the numbers, it’s insurance. In the long run it’ll become very expensive.
If you underinsure your property, if you are to have a claim and the insurance company sees that the property hasn’t been properly insured, your claim will be denied, and your coverage will be cancelled.
It is a very vulnerable position to be in, and it is completely avoidable by being honest with your insurance agent.
Not Adjusting Your Coverage as You Grow
Growing pains are inevitable.
But there is always pain you can avoid. As your business evolves, things will get better, but they will also get more complicated. That’s why it is so important to surround yourself with the right advisors.
Especially insurance.
At every renewal, you and your insurance agent should be engaged in a dialogue. Report any changes in your business and assets so the policy can be up to date and in the event of a claim, you are properly insured.
Assuming Personal Coverage Covers Business Risks
You know what they say about when you assume.
In insurance, it isn’t just a mistake, but it can be dangerous.
When it comes to commercial insurance, we can guarantee, it is not included in your personal homeowners policy or your personal auto policy. If you work from home, any commercial assets you have will have to be separately insured under a commercial policy. Likewise, if you use your car in any commercial capacity, you will not be covered if you suffer a loss during a business trip. You must also get separate commercial coverage.
As soon as you begin operations, be sure to contact your insurance agent to be properly covered.
Skipping EPLI
It’s the things you don’t know about that hurt the most.
That’s why we’re rounding off this blog with a policy that several small business owners are unaware of.
EPLI(Employee Practices Liability Insurance).
EPLI is a very important coverage, and not having it could be a glaring hole in your company. While you may think worker’s compensation might cover all your bases for your employees, it only covers work-related injury, not if your employee or prospective employee sues you for something like discrimination.
Likewise, general liability is meant for liability related to customers, not employees. As you can see this leaves you with a huge gap in your coverage. EPLI should be just as standard as these other two policies.
Don’t skip it.
We hope we’ve helped you avoid some mistakes with this month’s blog. As always if you have any questions, feel free to contact us however is most convenient!