Mistakes When Buying Business Insurance
Forbes Entrepreneurs:
1. Buying Less Than You Ever Think You’ll Need
Whether you are looking for $50,000 or $5 million worth of coverage, add an ‘excess liability’ policy, says Britton. Excess or umbrella insurance kicks in after the initial insurance policy has been exhausted. These policies cost as little as several hundred dollars a year (a fraction of the cost of your main policy) and come in handy in the event of a catastrophe, he says.
2. Avoiding The Hard Work Up Front
Business insurance policies don’t come in pre-set sizes like sneakers, so there is no reason not to tailor your policy precisely to your needs. But doing that means knowing what your needs are, and that requires a hard look at the risks of your business, says Britton. After the policy is drawn up, scour it; make sure you’re clear on every exception specified in the footnotes. If there’s anything you don’t understand, have your insurance broker walk you through the finer points. (Note: Some exceptions are non-negotiable. For example, nearly all insurers won’t cover losses related to mold and terrorism.)
3. Not Minding The Attorney Fees
Some policies bake in fees paid to the insurance company’s attorneys, says Britton. Example: You might have an insurance policy that covers up to $1 million in claims, but the insurance company could spend $200,000 litigating the claim and use your payout to do it. Figure this out before you sign.
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