Mistakes People Make When Getting Business Insurance

This might come as a surprise to some, but getting the right insurance for your business might be one of the most important decisions you'll make as a business owner. The consequences of inadequate coverage, or no coverage, could be devastating. There is a whole world of things that can happen to you and your business. Not protecting yourself and your business with the right insurance could cost you in so many ways.

That's why engaging in a process of obtaining business insurance right for you and your company is so important. Do you know what general commercial liability insurance is? Well, if you don't, then it's just another reason why doing it right is so important. Not doing it right might cost you when you need help the most — during crisis. It's why people get insurance. It's why smart business people get smart business insurance.

Doing it right essentially means avoiding some common mistakes made when trying to get the best insurance policy for your business. Knowing what some of these mistakes are, and avoiding them in the future, will help you in your quest to simply make the right business decision when it comes to insurance.

Top 5 Mistakes When Getting Business Insurance:

1. Discounting the importance of business insurance

Business people of all types, whether it be CEO's of large business conglomerates, or even someone just working out of their home office, have their own set of reasons for getting insurance specifically for their business. But not all business people necessarily think this way. Some think it might be too costly. Some think it might not be necessary . Some may even think that they're covered by other insurance policies that they have for their property or for themselves.

Not having the insurance specifically tailored for your business often comes as a result of simply not thinking that it's necessary. But it is. Take general commercial liability insurance, for example. This kind of insurance protects businesses from the costs of lawsuits resulting from basic damages done to people or property that have even the slightest contact with what you do. Not having this coverage when someone decides to throw a lawsuit at you, even if frivolous, could cost you in terms of money and reputation.

2. Not knowing the basic issues

It's nice to think that insurance is just insurance, but it isn't. Would you get car insurance for you house? Would you get life insurance for your healthcare? Of course you wouldn't.

Yes, some of the issues involved in business insurance are similar to other forms of insurance. A good policy will, for example, protect your assets in case they get stolen. It will also protect you if bad weather destroys your business property. These are straightforward insurance issues for your business. But don't be fooled into believing that they're the only insurance issues for your business.

For example, take general commercial liability insurance. Some business owners might not even know what liability insurance actually is. It's the insurance that protects you from the financial costs resulting from a lawsuit from somebody who claims they or their property has been hurt or injured as a result of the way your business conducted itself. General commercial liability insurance is the kind of insurance those companies engaging in commercial activities get to protect themselves because people hurt themselves on their premises or one of their products did damage to someone's property. Being knowledgeable about these kinds of things will most certainly help you get the right insurance.

3. Not getting insurance early enough

There are two things that can happen to you if you don't get insurance for your business early enough. The obvious one is that you'll need it before you get it, and you'll be stuck with paying for the damages from a storm or a lawsuit yourself. The other thing that can happen is that you will not have a budget for your start-up for the proper insurance, so you'll get stuck with inadequate coverage. That's the last thing you want to happen. Therefore, to avoid it, thinking about insurance as early as possible, even at the business plan stage, will help you create the budget you need to get you adequately covered for all future circumstances.

4. Getting the wrong kind of insurance provider

Perhaps the most tempting option for someone seeking business insurance is to get it through insurance companies they're already doing business with. So, for example, you like how your house is covered, and who's covering it, so you'll seek to extend that coverage to your business, too.

The reason this is inadvisable, or should at least be looked at very carefully, is that your property insurance provider might simply not have the kind of experience with the kind of insurance you need for your business.

For example, if general commercial liability is what your particular business is in need of, even if a provider carries that kind of insurance, they may simply not have enough developed expertise to know what's right for your particular needs. Ideally, only those companies and agents who have dealt with your kind of business before can help your kind of business get you adequately covered for your particular situation.

5. Getting the wrong kind of coverage

Following from the risk of getting the wrong insurance provider, a mistake to avoid is getting the wrong kind of coverage. Ultimately, you're the person in charge of making the right business decisions for your company. You're the best person suited to look out for your own interests. No one else is. That's why it's incumbent upon you to make sure you've got the right coverage for you and your situation.

As much of the above already suggests, delegating these decisions is important. Yet, in the end, it's you who has to decide if you have the right kind of coverage for your business. After going through the entire process, collecting all the information, and talking to the right people, it's you who makes the decision. Make sure it's the right one for your business and where you want to take it.



About the Author
James Cochran is the founder of Business Insurance Now, a web-based business insurance agent. He has over 15 years of experience in the insurance industry. Cochran started Techinsurance, the parent company of Business Insurance Now, in 1997. With over 12,000 business clients, Business Insurance Now and Techinsurance have grown to become America's leading online provider of general commercial liability insurance for a wide range of small businesses. In 2007, Cochran was honored as the Small Commercial Agent of the Year by The Hartford.
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Posted by Subash at 5:44 AM 1 comments
Is it ever too early to get business insurance?

There are various things that come to mind when people start and grow their own business. They think of financing, location, and even legal fees associated with their dreams of becoming a successful entrepreneur. What they often overlook or don't consider is the need for business insurance, especially small business insurance for many, when embarking on the challenges of a starting entrepreneur. Incorporating your needs for insurance is a vital component of the start-up process.

It's never too early to think about small business insurance when starting your business. In fact, it probably wouldn't hurt to include it as part of your business plan. Depending on the kind of business you're in, and the types of risks and insurance obligations associated with what you do, the cost of insurance can be a vital component of how your start-up is financed.

General business liability insurance: Ever hear of it? If you haven't, then it's just another reason why incorporating small business insurance early into your business plans is vital.

General business liability insurance is one of the most available means of insuring a business from liability. Liability comes in all forms and a specific policy to cover you specific business is necessary.

In essence, since doing business involves some degree of contact with the public, you expose yourself to the possibility of causing injury or damage to a member of that public. It's not like the kind of insurance you get for your home, where most of the people who come by are family or friends. The likelihood of getting sued because somebody slipped and fell on the driveway you forgot to shovel is low.

However, the likelihood of getting sued because someone who had some contact with your business feels you're responsible for harm to them is much greater. That's where general business liability insurance comes in and should form an integral part of your small business insurance plan.

Given the extent to which having insurance is a vital aspect of doing business, it just follows that incorporating it into your business plans as early as possible is just doing good business.

Every single business has its own unique needs when it comes to receiving adequate coverage, which is why planning for it early becomes wise. Small business insurance can cover anything from the risk of having a tornado hit your office to the chance that someone is going to sue you for the bad carburetor you installed in their minivan that caught on fire. Having a plan in place early on to cover you particular risks will allow you to adequately assess your risks and finance your business.

It's a common mistake to assume that small business insurance is something you get after you've taken care of everything else. Although this is a better attitude than believing that business insurance is unnecessary or too costly. Purchasing business insurance late in the process can mean that you'll encounter costs you simply did not expect or, maybe even worse, which you'll have to settle for insurance that won't adequately meet your needs.

Is it ever too late to get business insurance? Of course not. But the point to keep in mind is that it's never too early to get business insurance either. Most successful businesses do one thing very well. As much as humanly possible, they try to manage the future. What does that mean? Well, it can mean a lot of things. Yet, generally speaking, it means that the smart business operator will always try to think two or three steps ahead instead of being complacent or looking back.

One of the most important aspects of looking forward for any business is the extent to which they manage risk. That's where small business insurance and general business liability insurance come in. An entrepreneur who incorporates these into their assessment of risk as early on as possible is more likely to confront the future than one who doesn't.

Since risk is extremely large when starting a business, it only makes sense that it be dealt with in all its forms almost from the beginning. The more that an entrepreneur does this early, the more they're doing to confront the risks associated with all startups.

The beauty of small business insurance and general business liability insurance is that it takes one part of your assessment of risk and essentially out-sources it to someone else — your insurance provider. If only all risk could be dealt with in the same manner. It's why getting an insurance provider you can trust early on is so important. An insurance provider who gets you covered with a plan just right for you, and does it early on, will help you deal with one of the many challenges facing a starting small business.

The need for small business insurance is vital for any new business. Without it, you're exposing your business to risks that could ruin all your other hard work and planning. It's why insurance should form an integral part of that planning and be incorporated in something as early as a business plan. Things like general business liability insurance are necessary for entrepreneurs who expose themselves to the risk of doing business with a public you might not even see or come into contact with. That's why a good package early on is the only way of doing business smartly.


About the Author
James Cochran is the founder of Business Insurance Now, a web-based small business insurance agent. He has over 15 years of experience in the insurance industry. Cochran started Techinsurance, the parent company of Business Insurance Now, in 1997. Business Insurance Now and Techinsurance have grown to become America's leading online provider of general business liability insurance for a wide range of small businesses, currently serving more than 12,000 business clients throughout the US. In 2007, Cochran was honored as the Small Commercial Agent of the Year by The Hartford.
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