Great news! You are about to start your small business in Canada. You have made a list of ‘To-do’ items and are now crossing each one of them as they are completed.
Somewhere in the list you have also mentioned about small business insurance. The tasks that you have marked are to learn more about insurance companies Calgary, what risks you are exposed to and to get a quote from an insurance broker to cover these risks.
At this point a thought crosses your mind that business insurance is an unnecessary expense and can be done away with. This looks tempting and you go for it.
However, this is a big mistake that you should never commit. Why?
As an entrepreneur and business owner, it is your responsibility to run the business. You are expected to exercise prudence and take an insurance cover both for yourself and your employees. Unfortunately, most business owners don’t realize the importance of insurance until it is too late.
They commit the following mistakes which can be easily avoided when buying insurance through a reputed insurance broker that works for insurance companies Calgary:
Taking an approach that insurance is not important
Most entrepreneurs spend a lot of time and effort in starting a new business. They spend months poring over their business idea and invest funds in buying expensive equipment & machinery and materials. However, when it comes to buying insurance the same enthusiasm and zeal is missing. This leads them to buying insurance without understanding its basics. Ideally, they should talk to a broker, explain their business situation and then buy insurance that covers their small business.
Purchasing any cheap insurance policy online
Small business owners tend to browse online for insurance quotes. They get misled by low price offers and commit the mistake of buying insurance without studying the terms and conditions that govern such policies. This results in their claims getting rejected due to weird clauses hidden in fine print. Hence, it is advisable to buy insurance from a reputed insurance companies Calgary after consulting an insurance broker.
Not taking insurance cover for home based business
Many small business owners operate from their homes. Legally speaking, in such a situation they need to have a business owner’s insurance to cover their home based business. A home insurance policy is simply not sufficient and in the event of any damage caused by the business to the insured property, the home owner’s policy will be revoked. Therefore, it is advisable to take a cover for home-based business.
Not making updates to your insurance plans
As a business owner, you need to update your insurance plans on a regular basis to reflect your exact business situation, including any increase, or decrease in income. This is important because if your income has increased, then you need more cover; and if it has decreased then you need less cover.
Other instances could be:
– Moving your business to a new location. This would affect your Property Insurance and General Liability insurance.
– Hiring more employees or relieving some of them affects your Worker’s Compensation.
– Investing in new expensive equipment or commercial real estate will affect your Worker’s Compensation.
– Offering new services will affect your Errors & Omissions Insurance.
Buying separate insurance policies
This is a common mistake that most small business owners commit. They don’t bundle their insurance policies and end up buying separate insurance policies from different insurers. For instance they could have saved money by buying a single business owner’s policy that combines commercial property coverage with general liability, at a price that is lower than the combined price of both policies.
Not having risk management plans in place
Most business owners are unaware that by having risk management plans in place, they can actually lower their insurance premium and thus save money. Below are some instances:
– Installing a burglar alarm could lower your Property Insurance premiums.
– Updating old office buildings could reduce Property Insurance and General Liability premiums.
– Security cameras could keep away potential vandals and thieves.
– Using client contracts could prevent expensive and avoidable Errors & Omissions lawsuits.
Not taking Liability Insurance cover
Cutting corners by not taking Liability Insurance is a big mistake that business owners commit. Liability insurance is a ‘must have’ insurance that protects your business from numerous risks in the course of day-to-day work.
This includes cases of cyber crime, negligence and omission when rendering services, non-intentional injuries to clients & employees in your premises, or damages caused due to a defective product, or service. The coverage includes financial damages for which you may be found responsible, including expenses incurred by you towards court and attorney fees.
Taking a ‘one-size-fits-all’ approach
This is a wrong approach to take in insurance because no two businesses are alike. Each business has its unique position and is faced with its own set of risks and opportunities. Therefore, before buying insurance, don’t quickly sign off on the first business insurance quote that is offered to you.
Rather, engage with a professional insurance broker and make the facts of your situation clear with full transparency and honesty. This will enable the insurance broker to create a customized insurance quote for you that is truly representative of the risks that you are exposed to in your work.
How to avoid mistakes?
To avoid mistakes it is advisable to follow some best practices when buying business insurance:
– Make a list of risks that your business is exposed to. Include potential losses or liabilities such as property, vehicles, equipment, critical supplies, data breach, or death of a key employee.
– Separate the personal items from the commercial items – for example a car or a house.
– Engage with a knowledgeable and professional broker. This will be helpful in two ways:
• The broker can suggest ways to lower your premium and reduce your risk profile.
• The broker has knowledge of your industry and knows the common risks facing it.
Most small business owners do not understand insurance and so are unable to protect their business with the right cover. To be successful and to stay protected you could talk to Beneficial Insurance Services.