Do you have too much coverage? Too little? Unsure?  Make Sure Your Business Is Protected.

Key takeaways:

  • Trying to save too much money on insurance can cost rather than save you money.
  • Inadequate coverage limits can leave you holding the bag.
  • By the same token, purchasing too much coverage has you paying more than you need to.
  • Choosing the cheapest possible policy can be a recipe for disaster if you need to make a claim.
  • Your insurance agent is your best source of information and the right coverage for your business.

As a small business owner, you have to watch every penny. But as the saying goes, “penny wise and pound foolish” can trip you up when it comes to purchasing insurance policies for your business. Small business insurance mistakes can cost rather than save you money.

Here’s why. Business insurance policies help cover costs for property damage and liability claims. Without them, that money (and it can be a lot) comes right out of your pocket. In addition, in the state of Florida, workers’ compensation insurance is required, and if you don’t have a policy, you face fines, fees, stop work orders, and expensive lawsuits. 

To top it off, even if you have all the policies needed to protect your business, you might be paying for more coverage than you need, or not have enough to truly protect your business. Confused? That’s okay. Let’s clear things up and look at the most common small business insurance mistakes before you talk to your agent. 

Here are the policies you need for your small business

It’s probably best to take at least a brief look at the insurance policies you should have as a small business in Florida. These include:

  • Workers’ compensation – Required by law in case an employee is hurt doing their job.
  • General liability – Covers bodily damage claims from others, such as slips and falls.
  • Commercial property – Protects your company’s physical assets.

These are the three main policies you need but you can also add professional liability, business income, cyber liability, commercial auto, business auto, and commercial umbrella insurance. Your agent can recommend the appropriate policies for your particular business. Now let’s explore those common small business insurance mistakes and what you can do about them.

The most common small business insurance mistakes

1. Choosing the cheapest policies possible 

Remember the saying about being penny wise, yet pound foolish? You need to make a profit, but choosing insurance simply based on its price isn’t the way to save money. You can cut corners elsewhere. Without a high enough coverage limit, your cheap policies can leave you holding the bag – and it won’t be full of money.

2. Failing to update your policies when things change

Your business is growing, and that’s great! But have you outgrown your insurance coverage? Your general liability policy, in particular, might have limits that are too low to cover your increasing assets. Don’t get caught short – failure to update your policies can have serious consequences on your bottom line. 

Call your agent and update your policies if:

  • You move your business to a new location
  • You either hire or fire employees
  • You buy new equipment
  • You add new services to your business
  • You have revenue growth

3.Not buying enough coverage to begin with

Did you know the cost differentiation in doubling your coverage is often maybe 10% more? Many small business owners don’t understand that. This is why it’s important to talk to your agent to determine the proper coverage amount for your industry and any additional policies they recommend beyond the basics. 

4. Paying for unnecessary coverage

Now that we covered “not enough,” let’s cover “too much.” It’s foolish to buy more insurance than you need. There’s no need to have $1 million coverage for a building worth $500,000, and those old computers sitting in your office might not be worth what you think they are. Your agent comes in very handy here to help you pick policies, coverage limits, and the deductibles that work for your business. 

5. Not buying workers’ compensation insurance

As we’ve already mentioned, workers’ compensation insurance is required by law in Florida, and not having it can land you in a world of hurt with a stop work order as well as fines. To be specific, there’s a minimum fine of $1,000 or double what you would have paid in workers’ comp premiums for the period they’ve been out of compliance in the past two years. And if you falsely claim workers are independent contractors,  you’ll pay additional fines per worker.  

6. You don’t know your insurance details

It’s very important to read your policies before you sign them. These policies are long and detailed, but they are legally binding contracts. If this task seems like too much for you, use your attorney. Important coverages that are missed can cost you dearly. Details, details, details.

7. Sticking with your insurance company no matter what

An independent insurance agent sure can come in handy. You might have what was a great policy with insurer A, but then your premiums start to climb up. Don’t hesitate to ask your independent agent to shop around for you to find the best policy fit. Your business depends on it. 

8. Failure to invest in a business owners policy

We talked about necessary coverage above. Usually, those coverages are bundled into a business owner’s policy (BOP) that also includes business interruption insurance, which can cover payroll, lost income, operating expenses, taxes, and other things if your business is destroyed in a covered incident. It’s important to note that your personal policies will not cover business losses if you have a home office. Talk to your agent about this important coverage.

9. Lack of risk management strategies

Risk management strategies can mean lower premiums for some types of insurance. Again, speak with your agent to find out if your business qualifies for these lower premium costs for things like:

  • Security cameras and anti-theft systems
  • Client contracts that prevent lawsuits
  • Employee training programs aimed at injury avoidance

Small business insurance mistakes can really cost you. Remember that one lawsuit can put you out of business and one hurricane could mean you lose everything. It’s important to avoid these small business insurance mistakes, so take action and call your agent today.

Avante Insurance: No small business insurance mistakes here!

Don’t risk your business by operating without the right insurance with the right coverage limits. At Avante, we’ll work with you to build the comprehensive coverage you need with a deductible that works for you. Reach out today, because you never know what tomorrow will bring. At Avante, we’re always standing by.

This blog and website are made available by the publisher for educational and informational purposes only. It is not to be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state.