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As a small business owner, purchasing general liability insurance is essential to protect your business from potential financial risks associated with accidents, injuries, or property damage. Unfortunately, small business owners often make mistakes when purchasing general liability insurance, and tehse mistakes can lead to costly consequences. Here are a few mistakes you need to be careful not to make:
Failing to Understand the Coverage Needs
One of the most common mistakes small business owners make is not understanding the coverage needs of their business. Often, they purchase the minimum coverage required by law or a general policy without considering the specific risks and liabilities associated with their business. It’s essential to evaluate your business’s potential liabilities and choose a policy that provides comprehensive coverage, including bodily injury, property damage, advertising injury, and personal injury.
For example, if you’re a small business owner in the construction industry, your business may face more significant risks associated with property damage or bodily injury than a small business owner in the retail industry. It’s crucial to consider all the possible risks associated with your specific business and purchase adequate coverage to mitigate those risks.
Underestimating the Potential Risks
Another mistake small business owners make is underestimating the potential risks associated with their business. They may assume that their business is low-risk and, therefore, doesn’t require much insurance coverage. However, accidents and unexpected events can happen at any time, and the cost of damages can be significant.
For example, a customer may slip and fall in your retail store, resulting in a costly lawsuit. If you haven’t purchased adequate coverage, you may be responsible for paying for the damages out of pocket, which can put your business at financial risk. It’s important to consider all the possible risks associated with your business and purchase adequate coverage to mitigate those risks.
Not Shopping Around for Policies
Many small business owners purchase insurance from the first provider they come across without shopping around for policies and comparing costs. This mistake can lead to paying higher premiums or not getting the best coverage for their business needs. It’s crucial to research and compare different insurance policies from multiple providers to find the best coverage and rates for your business.
Failing to Disclose Relevant Information
When purchasing general liability insurance, small business owners need to provide accurate and complete information about their business. Failing to disclose relevant information can result in denied claims or cancellation of the policy. That is why it’s crucial that small business owners share all the necessary information, including the nature of the business, employees, past claims, and potential risks.
For example, if your business has a history of claims or is located in an area prone to natural disasters, it’s essential to disclose this information to the insurance provider. This information can affect the coverage and premium rates of your policy.
Not Reviewing the Policy Regularly
It’s typical for a small business owner to purchase general liability insurance and forget about it. However, it’s essential to review the policy regularly to ensure it meets the business’s changing needs. As your business grows and changes, so do the risks and liabilities associated with it. So, it’s essential to review the policy annually or when there are significant changes to your business operations to ensure you have the right coverage.
For example, if you’ve added new services or products to your business, it’s essential to review your policy to ensure it covers those services or products. If you don’t update your policy, you may not have coverage for these new services or products.