When it comes to purchasing goods and services, it can be easy to favour the price of the item over the quality. This same logic often extends to business insurance too. For example, some business owners might opt for the cheaper option which could leave them without the right cover in the event that they need to make a claim. Depending on the extent of the claim, this has the potential to be a very costly mistake.
So, to help you make the best decision the first time around we’ve pulled together 10 common insurance mistakes that business owners make* so you can avoid them.
Mistakes to avoid as a business owner
Making mistakes when it comes to insurance could leave you out of pocket, or worse still, without cover altogether, should you need to make a claim for an insurable event. Rather than let you make similar mistakes yourself, here are some of the common mistakes that small business owners make when it comes to insurance so you can dodge them and the hard lessons that they bring.
1. Your business is underinsured
Many business owners make the mistake of not taking out adequate insurance cover, which means they might have to foot the bill for the difference in the event they need to make a claim. Read on to find out more about the risks of underinsurance below.
While Youi’s Small Business Insurance automatically includes coverage for Public and Products Liability, this is only one aspect of business insurance. Some small businesses also rely on additional factors like tools, stock, business equipment and even a business premises to operate from and generate revenue. In these instances, it can be important to also consider additional coverage for things like tools and equipment if your business depends on these items to operate.
2. Your business doesn’t have right insurance cover
Businesses come in all shapes and sizes, which can make finding the right cover tricky. It’s important to do your research when looking for business insurance. Get to know the policies and make sure they align with your individual business needs. This brings us to our next point…
3. You haven’t undertaken adequate risk assessment
As a business owner, it’s important to know and understand the unique risks associated with your individual business. Understanding these risks can help to guide you to find the right business insurance that provides cover for these risks.
Undertaking regular risk assessments can also aid in planning for and managing risks. This can help to minimise the impact of an unexpected event and most importantly, protect your business and its people.
4. You focus on the price, rather than the coverage
There’s no doubt that price is an important factor to consider when shopping for insurance. But like many things in life, you often get what you pay for. Choosing the cheapest possible option could leave you underinsured or without important cover to protect your business from potential losses. So make sure you’re looking for the right cover at the best price, rather than prioritising price altogether.
5. You don’t reassess your business or policy annually
While it can be tempting to roll over your insurance annually, there’s a good chance that your business has changed since the last time you renewed your policy. Make sure to revisit your policy as you approach the renewal date and update any relevant information or shop around for a new policy that better suits your needs.
It’s also worth conducting an annual review of your business to see what’s changed in the previous 12 months. You might find that you need to seek out additional insurance offerings or there are aspects of your cover you can now do without.
6. You don’t disclose all relevant information when asked
A failure to disclose important information when asked can potentially leave you with a policy that doesn’t adequately suit your needs. In the event you submit a claim, it could even be rejected and your policy cancelled if you’re found to have supplied misleading information. So when purchasing a business insurance policy, be sure to share all relevant information with your insurer when asked.
7. You don’t read the PDS
When it comes to your business insurance, it’s important to know your policy as well as you know your business itself. Familiarise yourself with the PDS and policy details so you know exactly what you’re covered for. If there’s anything you’re unsure of or you have any questions, you should be able to reach out to your insurer for clarification.
8. You don’t update your policy when your business changes
Small businesses are constantly growing, evolving and pivoting, so it’s important to update your policy when things change to make sure you’re covered. Changes that call for updating your insurance might include:
- Your business moves location or opens a new site or branch;
- The number of employees changes;
- You purchase new equipment;
- You offer new products or services; or
- Your revenue has changed.
This isn’t an exhaustive list, so if your business has experienced changes recently and you’re unsure whether or not you should notify your insurer, it’s always better to be safe than sorry. Reach out to them just in case.
9. You don’t implement risk management strategies
As a business owner, it’s up to you to identify your risks and implement strategies to protect your business, its assets and its people. From developing safety procedures to installing security systems or drawing up contracts with your clients, these risk management strategies will depend on your business and its individual risks.
10. You pay for insurance you don’t need
Just as you don’t want to pay too little for your insurance, you don’t want to be paying too much for cover you don’t need. This is why it pays to get to know the needs of your business and your policy details to make sure you’ve got the right amount of coverage.
Don’t risk getting caught out without the right business insurance. Do your research to find the best policy for your business. Are you a small business in need of insurance? Check out Youi’s Small Business Cover to see if it meets your needs.
*The ’10 common mistakes’ referred to in this article are produced from general research and are not related to specific data.
The information provided in this article contains general advice only. It has been prepared without taking into account any person’s or /business’s particular objectives, financial situations or needs.