No business wants to spend more than necessary on insurance and even small mistakes can impact your premiums. Avoid the following common small business insurance mistakes, reduce risk, and save money.
Buying a Cheap Policy Online
Many companies sell insurance policies online, but that doesn’t mean they’re the best deal for your business. A lower price can mean less coverage, even when you think you’ve bought well.
Independent insurance agents work for you, not the insurance companies. They understand insurance limits, terms, exclusions, and exceptions and can explain precisely what a policy offers. They search for the best policies for your business at the most reasonable cost and they’re available if you ever have a question or need to file a claim.
Relying on Your Homeowners Policy
If you operate a home-based business, don’t assume your New Jersey homeowners insurance policy protects you well. Your homeowners insurance may not offer sufficient coverage or coverage at all for business equipment, inventory, or the costs associated with a lawsuit if someone gets hurt on your property.
Solely Relying on Your Business Owner’s Policy
Many business owners buy a business owner’s policy, because it conveniently bundles several coverage types into one package. However, all insurance policies have limitations and just because you bought a BOP, it doesn’t necessarily mean you’re fully protected.
Let your agent tailor your coverage to your needs. Many times, an umbrella insurance policy provides the additional protection you, and your business needs.
Using An Agent That Doesn’t Know Your Industry
Insider knowledge can save you plenty of time and money. A good insurance agent already knows your business model and the associated risks. They can access top-rated providers that offer policies suited to your business for less.
Ignoring Risk Management
Risk management identifies, assesses, and treats risk that could potentially affect your operation. A strong risk management program can substantially lower your insurance costs and some risk management measures trigger insurance discounts too. Choose an insurance company skilled in risk management strategies to help reduce your insurance costs.
Employee classification codes determine workers’ compensation injury rates and some jobs are more hazardous than others. If you misclassify a person in a relatively safe job with a code associated with high risk, you’ll pay more.
Another costly problem is misclassifying an employee as a contractor or vice versa. Misclassifying employees as contractors can lead to repayment of back taxes, benefits, overtime, and hefty fines. Misclassifying contractors as employees means you’re spending money on their Social Security, Medicare taxes and workers’ compensation insurance, too.
If you need assistance distinguishing between the two, talk to your insurer. They’re insurance experts and can provide the answers you need.
Ignoring Online Risks
Today’s business relies on the internet for everything from accounting to sales, yet many companies choose to ignore the associated risks. Data breaches and identity theft are a growing threat, but especially to small business.
Small companies typically don’t have the resources of their bigger counterparts, and consequently they’re the number one target of hackers.
Renewing Without A Review
Businesses change and so do insurance needs. Automatically renewing without updating your policies can lead to insurance gaps and spending money on coverage that no longer serves your needs.
Rapidly growing businesses may also find themselves underinsured and will pay out-of-pocket for losses if they don’t have sufficient coverage. If your business bought new equipment or property, offers new services, changed location, or has more or fewer employees, you need an insurance update.