Running a small business is very labor intensive. It is not unusual for small business owners to work 15 hour days in the early years and with so much to think about, general administration can be a real bind. The trouble is you can’t afford to skip admin tasks. It is all very well chasing sales and building up a loyal customer base, but if you don’t do the paperwork, the whole lot will come crashing down around your feet.
Business insurance is one of the things you can’t afford to ignore, although it is tempting to do exactly that if cash flow is tight. So what are the top mistakes small business owners make when it comes to insurance policies – and how can you avoid them?
Who Needs Insurance Anyway?
Lots of small business owners start off life working from home, often in a spare room or outbuilding. In this instance it is easy to overlook the need for insurance. After all, your home insurance covers you if there is a burglary and your computer equipment is stolen or the house floods and your stock is damaged beyond repair, right? Actually, no, it probably won’t cover you. Home insurance policies are not designed for businesses, so it is important that you take out specialty insurance that meets your needs.
Buying the Wrong Insurance Policy
Buying the wrong insurance is fatal. Unfortunately it is an easy mistake to make if you don’t have a clue about why you need insurance in the first place. For example, you are probably aware that you need general liability insurance to protect you against the obvious things, but what happens if you give a client bad advice? In this instance, professional liability insurance is the one you need. To avoid making this mistake, talk to an experienced insurance broker before buying a business insurance policy.
Paying Too Much for Insurance
If you don’t shop around for insurance, you could quite easily end up paying over the odds for a policy. There are lots of comparison websites that let small business owners compare insurance providers, but if you have very specific requirements, or you need a more bespoke policy – for example handyman insurance – contact individual insurance companies or brokers for a quote.
Under insuring is a common mistake to make. It’s easy to miscalculate how much stock and other items are worth, but if you do, you could be in for a nasty shock if something terrible happens. Getting the right level of coverage is something you need to look at during the application process. Read the questions on the form carefully and think before you tick a box. Making a mistake on the application might result in a cheaper policy, but you will probably pay for that mistake further down the line.
Forgetting to Renew an Insurance Policy
You only need to be a minute past the time of renewal for insurance to lapse. No insurance company will cover you in the event of a claim if you failed to keep up with the premiums. If your memory is not so good, stick a reminder in your diary.
Insurance is there to help you pick up the pieces when it all goes wrong, so make sure you buy the right policies for your business.