Insurance can be complicated for today’s small to medium-sized business owner. With so many priorities to juggle, insurance often isn’t at the forefront of their mind, which can result in mistakes. The following are some of the most common Business Insurance mistakes we’ve come across:
1. Not Buying Insurance At All
This is the biggest mistake a business owner can make with their insurance. In some cases, the business owner may think that the benefit doesn’t justify the cost or maybe they don’t realise that they need coverage. What these business owners may not realise is that even if you operate under strict rules and meet all your obligations, certain circumstances can occur without warning that will have a negative impact on your business. Without insurance, you will have to absorb the financial impact yourself, which may be significant enough to put you out of business.
2. Buying the Wrong Insurance
There is a wide range of insurance policies available on the market to protect you and your business against a variety of risks. Each contains complex fine print, clauses and conditions, which can be difficult to understand. Business owners who don’t work with an insurance adviser to help them assess their risk and secure the most appropriate cover to protect their business run the risk of having to absorb costs that are not covered by the policy in the event of a claim.
3. Buying Inadequate Coverage
Some business owners that do purchase insurance often don’t buy enough to cover their potential losses. In this case, the mistake often isn’t realised until it’s too late and the business has to make a claim, which can leave them significantly out of pocket. In the event of a claim, having inadequate coverage is only slightly better than not having any coverage at all.
4. Misunderstanding Terms of Coverage
Business owners who buy the right amount of the right coverage can still have problems with their insurance if they don’t take the time to understand what is excluded from their policy. Most business insurance policies have certain exclusions, which business owners may not realise that they’re not covered for until the time of a claim.
5. Thinking Going Direct is cheaper
In the Australian insurance market, there are a wide variety of cheap direct insurance policies available that are pitched as attractive options to the busy business owner. However going direct is not necessarily cheaper. A good insurance adviser can negotiate cost effective insurance pricing for SME customers and will recommend policies that suit your occupation or industry. Furthermore, direct insurer products are often more general and have more exclusions to allow for ‘cheaper’ pricing. In the long run, if the cheap policy doesn’t cover your needs, it may well be the most expensive mistake you make when a claim is not covered.
A professional insurance adviser can help you avoid making these mistakes with your insurance. Your adviser can make sure that you get the most appropriate cover for your business, and ensure your business is fully protected.
Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.
The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.