One of the most important decisions for any corporation is the choice of insurance policies. It may seem like a simple process, but choosing the wrong policy or provider can be disastrous. It’s important to put in the time researching your options so you can make the best decision for your company. Let’s take a look at four specific mistakes to avoid when choosing a corporate insurance policy.
1- Choosing the Cheapest Plan Without Checking First
It can be easy to think, “Oh, we’ll never need this policy. Let’s just get the least expensive plan.” However, if a disaster does take place, the results can be catastrophic. The business may have to close down if the specific incident isn’t covered or if the level of coverage is too low.
It’s not always necessary to pay a lot of money for business insurance, but automatically going with the policy that costs the least can have disastrous consequences.
2- Forgetting to Check What Isn’t Covered
Suppose your business insurance plan needs to cover one or more buildings in multiple locations (especially across state lines). In that case, you’ll want to make sure that all area-specific natural disasters are covered.
For example, let’s imagine that the main headquarters for your business is in Delaware, but you have a satellite office in Indiana. Although tornados are very unlikely in Delaware, they’re quite common in Indiana. If your policy considers tornados to be “an Act of God” and not covered, you could end up losing a lot of money if a tornado hits the Indiana satellite office and the insurance company won’t pay.
3- Underestimating the Value of Your Property
Imagine a company buying a newer office building for all of its employees. The cost of the building and the land is $100,000. They then take out a $100,000 insurance policy on the new building in the event that a disaster strikes.
This would be a very terrible idea, as the company is also likely to have thousands of dollars in equipment, computers, and other valuable items inside those office buildings. The amount of the policy coverage should include everything that could possibly get damaged on the property and the value of the property itself.
4- Not Choosing Every Applicable Policy
Suppose a grocery store opens, and the owners take out insurance on all their inventory, employees, buildings, and delivery trucks. This is a good start, but the policy is too limited in range. It doesn’t cover customers or vendors who might slip and fall or receive another injury at the store, for example.
Policies should be tailored to the specific type of business you’re in, even if that means taking out multiple policies from different vendors (if necessary). If 90% of your business is covered but a major situation involving the other 10% happens, you could be out a lot of money.
By reading the policy, making sure everything is covered, not prioritizing price over coverage, and covering all contingencies, you can put your company on the track to success by choosing the right corporate insurance.