Commercial insurance is essential for any business, but purchasing a plan (or multiple) is not as simple as it sounds. There are dozens of types of business insurance, and plans can be customized to cover a variety of things that can cause risk to your company. Because of this complexity, it can be easy for business owners to make some of the wrong choices when purchasing a policy.
If you are in the market for commercial insurance, here are some of the pitfalls and mistakes to avoid.
Not Buying the Right Types of Policies
Do you need general liability insurance? Errors and omissions insurance? Property insurance? The list can go on, and the types of commercial insurance you need for your business depend on many factors, including:
- The type of industry you are in
- Whether you sell products, services, or both
- If you have a physical office location
- If you travel for business
- Where you are located
If you are just getting started, check with your local municipality and chamber of commerce to see if there are any types of insurance your business must carry by law. Otherwise, work with a reliable agency to choose the right policies for your business.
Choosing the Wrong Amount of Coverage
Lower amounts of coverage can result in leaving your business open to risks, but purchasing too much coverage will leave you “over–insured.” This means you are paying too much for coverage you will not need. It’s important to understand your needs as a business, how your business and its employees operate, and the risks involved in order to build a policy that maximizes your coverage while keeping it affordable.
Be open and honest with your insurance agents as to what you need.
Not Reviewing Your Policy as Time Goes By
Many businesses purchase a policy when they start out, but fail to adjust it as time goes by. As your business grows, your needs and liabilities can change. Make sure to review your policy with your provider once a year in order to add coverage as needed.
Misunderstanding What An LLC Protects
Many people ask why they need liability insurance. After all, they are a limited liability company (LLC). While LLC’s protect your personal assets from business-related liabilities, this does not make your company immune from liability. You still need to purchase liability insurance to protect your business.
Not Accounting for Home Offices
As more people work and run their businesses out of their homes, it’s important to understand that homeowner’s policies generally do not cover business-related equipment, even if that equipment is stored in your home. If you are running a business out of your home, work with your insurance agent to properly designate what is a personal asset and what is a business-related asset.
Forgetting About Your Employees
Do you have a workers’ compensation plan? It’s easy to focus on protecting your business, but remember that your employees are a vital part of that business. Not only does carrying a workers’ compensation policy protect your business, but it also helps your employees and makes your company a more attractive place to work. Plus, it may be required by law that you carry it, depending on where your business is located.
Disclaimer: this is for informational purposes only and is not intended to be legal advice. If you need legal counsel, please contact an attorney directly.
Need commercial insurance for your business? We can help. Get in touch with The Patrick J. Thomas Agency today.