Not having commercial insurance could be a costly mistake to make. You need coverage to protect everything you’ve been working so hard to build. Hurricanes can hit, burglaries can happen, employees can get injured, customers can slip and fall…the list goes on and on. But, even if you do have commercial insurance, there are still mistakes you could be making, and these mistakes could end up hurting your business and your bottom line. EZ can help you navigate through some of the common pitfalls that you need to avoid, so you can make sure that your policies are working for you.
1. Your Insurance Isn’t Keeping Up with Your Business
One thing you don’t want to do when it comes to your commercial insurance policies is “set it and forget it.” Approximately 75% of US small businesses are underinsured by at least 40% because they’ve done just that. If your business grows and changes, then your insurance needs will, as well. Don’t just blindly renew your policies each year; carefully review them and make sure that you’re fully covered for your business’ current situation.
For example, you will need to make changes to your policies if:
- You expand or add a new location: in this case, you’ll need to update your commercial property insurance and your general liability policy.
- You hire (or fire) employees: any changes to personnel will mean a change in your workers comp policy.
- You purchase expensive new equipment or machinery: make sure all of your property is fully covered with your commercial property policy.
- You start offering new services: depending on what you are offering, you could need to update your professional liability or errors and omissions policy.
2. You Have Employees Who Are Incorrectly Classified
Having workers comp insurance is not only a good idea, it’s required by law. You need this type of policy to protect your workers from medical debt in case of an accident, as well as to protect your business from lawsuits. But just because this type of insurance is necessary, doesn’t mean you should be overpaying for it. One way to make sure that you’re paying the right amount for your workers comp is to check that all of your employees are correctly classified in your policy.
When you get your workers comp policy, you will need to assign each of your employees a classification code that corresponds to how risky their job is. This code will help to determine how much it will cost to insure them, and will have a big effect on your premium. There are more than 700 of these codes, so it’s easy to see how mistakes can get made! But if you are classifying all of your employees with the same code, you could be making a costly mistake. You wouldn’t want to classify all of your employees as roofers if some of them work in admin, because roofers will obviously cost more to insure than office workers. If you’re unsure if your employees are correctly classified, talk to one of EZ’s agents to help you review your policy.
3. You’re Not Minimizing Your Risks
While every insurance company has different criteria for discounts, many do take into account any measures you take to minimize your business’ risk. So it’s up to you to be proactive and see what you can do to keep your insurance costs down. For example, you can:
- Install a burglar alarm
- Use security cameras inside and outside of your property
- Update your space: older buildings are generally seen as a liability, so try to keep your workplace as up-to-date as possible
- Have contracts with you clients: taking this step can help reduce your errors & omissions risk
4. You’re Over-Insured
Being under-insured is obviously a risk: when it comes to claims, the top five most common on the list range in amount from around $8,000 to well over $30,000 or more. But if you’re working with the wrong agent, you also run the risk of being over-insured and paying for policies and extras you don’t need. You need to work with an agent who knows your industry, so that they are familiar with the risks you face and the things you need covered the most. Your agent also needs to understand the specific insurance needs of small businesses. After all, your business won’t need the same kind of coverage as a big box store or a corporation with thousands of employees. Your best bet? Work with an EZ agent who will tailor a policy to your business.
5. You Always Choose the Cheapest Option
Everyone likes to save money, but sometimes choosing the cheapest option doesn’t actually end up saving you money in the long run. When you see a policy with a super low premium, it might be tempting to snap it up – but take a step back and look into what it actually covers. It might be barest of bare bones policies, and that won’t do much to protect your business. Talk to one of our agents to get quotes on multiple plans, so you can decide which one is actually best for your business.
Doing a cost-benefit analysis goes beyond deciding whether to choose the plan with the lowest premium. You have to make sure that you’re not skimping in other ways. For example, you need to make sure that you:
- Have enough property insurance: your plan will only cover repairs and replacements up to the limit outlined in your policy, so if you don’t have enough, you’ll have to absorb the cost. In addition, your policy might have a coinsurance clause, which means you’ll incur a penalty if you under-insure your policy and then make a claim.
- Have the right insurance: sometimes it’s just not worth it to skip out on the extras, like cyber liability insurance. If you conduct a lot of business online, you’ll need to have this type of policy to protect you from things like data breaches.
- Don’t underestimate the risk of lawsuits: don’t assume that it’ll never happen to you, or that you can just handle it if it does. You need to have the right amount of liability protection to cover you for all eventualities.
6. You Haven’t Fully Ready Your Policy
Reading insurance policies is no fun, but it is necessary. You need to know exactly what is covered – and what is excluded – in your policy. You don’t want to be hit by flooding or mold damage, for example, only to find out that those things are specifically excluded from your policy. EZ’s agents can help you thoroughly go over your policy if you have any questions.
7. You Haven’t Covered Potential Losses in Income
Even if you’ve protected all of your business’ physical assets, you still need to think about protecting your most important intangible asset: your income. Your property insurance policy will help your rebuild after a fire or a storm, but it will not replace the income that you’ll lose while your business is closed. For this, you’ll need business income (or business interruption) insurance. This type of policy will reimburse you for income lost during the closure, as well as help you to pay your rent and utility bills.
As a business owner, you know your stuff when it comes to your line of work. But no one expects you to become an overnight expert on commercial insurance. There’s so much to know, and a lot of mistakes that anyone can easily make. That’s why EZ is here: our agents are highly trained and just as dedicated to their line of work as you are to yours. We can help you find the best policies for your business, and help you to avoid any pitfalls that could damage your business. For answers to all of your insurance questions, as well as fast, accurate quotes, get started with us today. Simply enter your zip code in the bar above, or you can speak to an agent by calling 888-615-4893.