Businesses that don’t understand their vulnerabilities risk catapulting into failure when an unforeseen accident or injury happens on its property or as a result of its products or services. Buying business insurance to protect the hard work put into a company makes good sense.
But, even if a company has insurance, does it have the right coverage? With so many insurance choices available, how can an owner or manager be sure they’ve made the proper selection?
When it’s time to select policies, ask these eight questions to ensure that coverage is complete and comprehensive.
1. Has this policy been selected primarily because of its low cost?
The basic instinct to save money protects many businesses during rough economic times. However, when it comes to protecting property with insurance, the least expensive plan may not provide a sufficient level of coverage.
Each industry has its own particular set of risks, and insurance agents are trained to understand and assess them. Consider checking coverage provided versus cost with an independent agent in Massachusetts, such as Haberman Insurance, to review options. Low-cost policies may not provide the financial assistance required when something goes wrong. Obtain a list of choices, compare coverage levels, and review them with an agent before committing to a plan.
2. Has the insurance policy been read and understood?
Insurance documents are complicated. They are filled with numbers describing the limits of coverage, deductibles, and timetables for reimbursements. Many purchasers neglect the critical step of reading the policy, so they don’t understand what is covered and when a claim will be honored.
Read through the plan before signing and ask questions. During this read-through, areas that aren’t covered sufficiently for an individual business may be found. This advanced knowledge is critical. The policy can be amended, or additional policies can be attached to ensure that coverage is complete. Policies that aren’t understood can be filled with unwelcome surprises.
3. Is the business covered from income loss if it’s forced to shut down for a prolonged period of time?
Loss can’t only be defined in terms of physical loss, such as damage following a storm or in a fire’s aftermath. Often called business interruption insurance, most policies cover a specific list of events such as hurricanes, fires, or other natural disasters. These policies may also cover ongoing expenses such as rent and utilities during the time that routine business operations stop.
Check to see if the plan under consideration includes this. It can be the difference between taking out a hefty loan to stay afloat and resuming normal activities without undue financial hardship after a catastrophic event.
4. Does the long-time insurance provider continue to meet the needs of the company?
This question applies more to businesses that have been around for a while and have stayed with their insurance provider for years without review. However, it’s a good idea to remember when signing a policy for the first time, sometimes change is necessary.
Make sure that the agency remains well versed in the company’s particular industry. Agencies change through time, and their policies may become less friendly. At renewal, be sure that the coverage remains relevant and that the quality of insurance doesn’t decline over time.
5. Are the company’s customers and vendors covered by the policy?
Vendors and customers are an essential part of a business that is often overlooked when selecting an insurance policy. Do not forget them during the review process. List the needs of each and determine whether or not these critical partners are covered as well. It only takes one instance of failure to protect to damage a reputation. Describe the services provided to you and by you that affect these important players in detail to determine levels of coverage required.
6. Has the business grown since the last time a business insurance policy was selected?
Insurance policies should be reviewed on an annual basis. Pull out records to determine the degree of business growth to determine if enough coverage is in place. If the business has gained assets, expanded its employee, or added new services or products, it’s a good bet that coverage should be amended to adequately protect the enterprise-;plan to review after year-end reports. Most companies close out their financial statements on December 31, so considering insurance needs should be on the list shortly after the first of the year.
7. Has a Worker’s Compensation policy been included?
Massachusetts’ law requires that all businesses have a Worker’s Compensation Insurance policy in place. Standard coverage includes direct hires, but the policy may be amended to include short-term contractors as well. Should an accident occur at the business and a policy is not in place, high fees will be applied by the state in addition to costs for treatment or lost wages that may be ordered by a court. It simply does not pay to fail to get this policy.
8. Is General Liability part of the insurance package?
General liability insurance covers a wide range of occurrences. If an employee damages a piece of property while away from the store or if a visitor slips and falls, general liability insurance is available to cover the costs.
Think of it as a homeowner’s insurance for the company. The cost of an accident can wipe out an entire year’s profits and place a business into jeopardy. Instead of hoping that something bad won’t happen, it’s better to be protected when something does happen. Don’t make the mistake of thinking that the company is too small. It’s a basic plan that delivers miles of protection.
Buying business insurance for the first time is absolutely not an easy thing to do. To get the right coverage, an owner or manager should ask themselves these serious questions to make sure that the business is appropriately protected.
Since each business is unique, it is vital that the policy is tailored to fit the company. Make sure to take the financials into consideration as well as the services and products provided. The right insurance will help keep a business afloat when times are difficult.