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Insurance mistakes entrepreneurs should avoid

by biasharadigest
Personal Finance

Insurance mistakes entrepreneurs should avoid

Purchasing too much coverage than what you need
Purchasing too much coverage than what you need is a costly mistake. FILE PHOTO | NMG 

As a business owner it is important for you to incorporate protective solutions in the heart of your business to shield it from unexpected issues setbacks.

Not only do insurance solutions provide you with peace of mind but also ensure that you have a place to start in the event of any disaster.

However, knowing the right insurance choices to make can be tricky and below are some of the mistakes you should avoid when selecting the right policy for your business:

Failing to understand how your policy works

Insurance policies could be quite complicated, but the easiest way to understand them is to read the list of endorsements, inclusions and exclusions toknow the ins and outs of your policy.

Buying a policy based on price rather than value

Most small business owners treat insurance as a commodity and as a result purchase based on price rather than value. It is Important that the policy offers the coverage to meet your business needs. Cheap policies are not always the best for your business. Remember cheap is always expensive.

Not having sufficient disaster insurance

Small business owners are not insuring themselves sufficiently against the threats they consider most damaging. Most with less than a month of reserves consider floods, fires, and other nature-related disasters as extremely damaging. However, only a few have disaster insurance, because some think that such disasters are very rare and might not happen to them.

Forgetting about business overhead protection

While products such as liability and property insurance are often top on the mind of a small business owner, policies to protect the business should he be unable to work are often overlooked. Known as business overhead protection, these policies are structured to pay many of the business expenses should the owner become sick or injured for an extended period of time. These policies can pay for deductible expenses such as payroll, other types of insurance, utilities, and even rent/lease.

Not Understanding limits & terms of policies

One common mistake in purchasing insurance is not understanding the true implications of all the limits and terms of the policies. Insurance policies can be tricky with many industry-specific terms that need to be understood. It is crucial to read every single exclusion and endorsement in the insurance policy and make sure you understand all the details before you agree with the terms.

Purchasing too much coverage than what you need is a costly mistake need is a costly mistake every business owner should avoid. Not all types of insurance coverage are applicable for your business.

Always seek help and advice from your insurance agent or insurance company in order to help you make more informed decisions that will aid your businesses continuity while offering the best protection solutions possible.

The writer is CEO Resolution Insurance.

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