Running a business comes with plenty of challenges, and insurance is one area where mistakes can be costly. From underinsuring key assets to misunderstanding policy exclusions, commercial insurance missteps can leave your business exposed to financial loss. Whether you're a seasoned business owner or just getting started, here are some of the most common insurance mistakes along with tips to avoid them.
1. Underinsuring Your Business Property
Many businesses only insure property based on purchase price or outdated estimates. But construction costs, equipment prices, and inventory values can rise over time. If you suffer a loss and your coverage doesn’t reflect your property’s true value, you may be left paying out of pocket.
How to avoid it: Make sure your property is insured at replacement cost, not actual cash value. Conduct regular reviews to update building, contents, and inventory limits.
2. Choosing the Wrong Deductible
It’s tempting to choose a higher deductible to lower your premium, but that can backfire in the event of a claim. If the deductible is more than your business can comfortably pay, you might delay repairs or go without needed replacements.
How to avoid it: Select a deductible that balances affordability with financial protection. We can help explore different options to find the right fit.
3. Overlooking Liability Exposures
Not all liability is covered by a standard general liability policy. For example, professional services, cyber threats, and employee-related claims may require separate coverage.
How to avoid it: Identify all potential exposures, including cyber, employment practices, and professional errors. Talk with one of our agents to help identify any coverage gaps.
4. Failing to Update Policies After Business Changes
Growing your team, expanding your services, or purchasing new equipment all affect your risk profile. If you don’t update your policy to reflect these changes, your coverage may fall short when you need it most.
How to avoid it: Schedule annual policy reviews and reach out anytime your business undergoes a major change, we’ll help ensure your coverage keeps up.
5. Assuming Home-Based Businesses Are Covered by Homeowners Insurance
If you run your business from home, don’t assume your homeowners policy covers business-related losses. In many cases, it doesn’t.
How to avoid it: Ask about a home-based business endorsement or a standalone business policy that protects your equipment, liability, and income.
6. Not Getting Proof of Insurance from Vendors or Subcontractors
If a subcontractor causes damage or injury, your business could be held liable if that subcontractor is not properly insured.
How to avoid it: Always request a certificate of insurance from vendors or subcontractors and ensure it includes sufficient limits and the appropriate coverage types.
Protect Your Business the Right Way
Avoiding these common mistakes starts with a clear understanding of your risks and an insurance policy tailored to your business. The right coverage can give you peace of mind and empower you to grow with confidence. Contact us today for a business insurance review, and let’s make sure your business is insured where it counts.