All small business owners need insurance. The type of insurance is dependent upon several factors including whether you hire employees, the location of your business, and the type of business you operate. One thing all business owners have in common when it comes to insurance is this: Costly mistakes.
Indeed, making mistakes when it comes to choosing and maintaining insurance can be incredibly costly. Here’s what to avoid:
1. Insured Entities
At the very top of your insurance policies will be the named entities. Leaving even a single entity off can mean losing your shirt should the need arise to make a claim. Every single entity that has a stake in your business must be included in your insurance policy. This means that you, as the owner, must be included, along with any separate operating company included in your business.
It’s not unusual for small business owners to set up LLCs, or limited liability corporations. You may have an LLC that owns your office or building, another that employs your workforce, and another that handles your books. Each entity needs to be insured by all of your policies.
2. Low Coverage Limits
There are very few instances where your coverage will be too high. On the other hand, one of the most common mistakes that business owners make is setting limits too low. Don’t attempt to set coverage limits on your own.
Create a spreadsheet for your insurance agent and seek his help in determining how much coverage you require. Your spreadsheet should include a list of and value for all of your physical property, the contents of those properties, your business income, and any other assets that belong to your company.
3. High Deductibles
Don’t fall into the trap of setting your deductibles incredibly high just to save a few dollars on your premiums. If you run your business properly, you stand little chance of being sued.
In the case of a fire or theft, a high deductible may be out of your reach, causing you to be unable to replace your possessions or restore your property. Low deductibles are more than worth
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