Business insurance is something business leaders deal with every year and most find it confusing and aggravating. Business leaders we speak with are frustrated with their insurance. They don’t have time to thoroughly evaluate what they are getting… they don’t fully understand the coverage especially the exclusions and how they may affect a loss… they are not even certain that they are getting the “best” deal.
The US Department of Labor estimates that 40% of businesses never reopen after experiencing a disaster. Twenty five percent of surviving businesses will lose their market and shut down within two (2) years of a misfortune.
Proper Business Insurance is Essential!
The 4 most common & expensive business insurance mistakes are that the business does not:
1. Perform a Risk Assessment – The biggest assumption a business makes is that the current insurance program is set up properly. The real problem is that an assessment has not been performed to evaluate what are the true risks and exposures of the company business operations. Often the focus is on the premium not the coverage. Without knowing what the true risk and exposures are you can’t intelligently purchase the proper business insurance. Thus, the program is flawed from the start.
2. Review Insurance Coverage in Detail – Business insurance policies are contracts. Insurance companies and their claims adjusters know the significance of every word in the contract and it is important for you to know how the policy will respond to a claim. Most exclusions are not discovered until a loss has occurred. Coverage gaps, underinsured and even over-insured issues exist if the policies were not reviewed properly with an eye toward recovery. If not written correctly from the start then it will not respond the way you need it to.
3. Focus on Safety Programs and the Big Picture – Many companies use the purchase of business insurance as the only approach to their formal risk management program. This is a big mistake! Not paying attention to safety and loss control is where many companies miss the boat in terms of the ultimate savings. Safety and loss control programs should be instituted with the big picture in mind and geared toward the protection of company assets and human capital.
4. Competitively Market the Insurance Program in a Professional Fashion – Business leaders rely on their brokers to solicit quotes and bring the best options to the table. In the property and casualty world only one broker can work with a particular insurance company. All brokers do not represent the same carriers or even all of the carriers. Not all brokers can deliver the same price and product; therefore to get the best results, the effort must be managed and reviewed properly. Remember, a brokerage is a business just like you – motivated by profits.
The Brokerage service is vital but like other business dealings organizations should perform a due diligence study on the broker you are going to do business with, the carriers they represent and their ability to provide needed services. Ultimately organizations should receive Stewardship Reports that outline standards of excellence that a broker will adhere to when servicing your account.
We’ve seen too many businesses that have relied on the same broker for many years only to find out that they were paying the highest business insurance rates for years while still not having the right coverage.
When was the last time you adequately reviewed your business insurance coverage?