Five Insurance Mistakes Small Businesses Should Avoid
Running a small business involves juggling plenty of responsibilities, and insurance isn't always at the top of the list.
However, making assumptions about your insurance arrangements could leave your business facing unexpected costs if something goes wrong.
At LBH Insurance, we've been helping businesses with their insurance since 1949. Here are five common mistakes worth avoiding.
1. Choosing Insurance Based on Price Alone
Keeping business expenses under control is important, but the cheapest insurance policy isn't necessarily the most suitable.
Different policies can have different levels of cover, excesses, exclusions and conditions.
A lower premium might seem attractive until you discover that something important to your business isn't covered.
Our advice: Look beyond the price and make sure you understand what your policy actually provides.
2. Not Updating Your Insurer When Your Business Changes
Businesses rarely stay the same.
You might employ additional staff, purchase equipment, move premises or introduce new products and services.
Changes like these can affect your insurance requirements, and some may need to be disclosed to your insurer.
Failing to provide relevant information could create complications if you need to make a claim.
Our advice: Keep your insurance broker informed when your business changes, rather than waiting until renewal.
3. Underestimating the Value of Your Business Assets
Have you considered how much it would cost to replace your equipment, machinery, stock or other business assets?
Many businesses invest in new equipment or increase their stock levels without reviewing the amounts they're insured for.
If your sums insured are too low, you could find yourself having to meet part of the cost of a claim.
Some policies also contain an average clause, which can reduce the amount paid following a claim where underinsurance applies.
Our advice: Review your insured values regularly and consider replacement costs rather than relying on outdated figures.
4. Overlooking Business Interruption Insurance
Imagine a fire or serious escape of water forced your business to close temporarily.
You might have insurance to cover certain damage to your premises or equipment, but what about the income your business loses while you're unable to operate?
Business interruption insurance can provide protection against certain financial losses following events insured under the policy.
However, the circumstances covered, financial limits and indemnity periods vary.
Our advice: Consider how your business would manage a significant interruption and whether your existing insurance arrangements provide suitable protection.
5. Not Understanding Your Policy Conditions and Exclusions
Insurance policies contain terms, conditions and exclusions that can affect whether a claim is covered.
For example, your policy might include requirements relating to security, fire protection, property maintenance or what happens when premises are left unoccupied.
Not understanding these requirements could cause difficulties when making a claim.
Our advice: Take time to understand your policy and ask your broker to explain anything you're unsure about.
When Did You Last Review Your Business Insurance?
Insurance is something many business owners arrange and then put to the back of their minds until renewal.
But as your business develops, it's important to make sure your insurance arrangements continue to reflect your circumstances.
At LBH Insurance, we understand that every business is different.
As independent insurance brokers, we take the time to understand your requirements and help you explore appropriate insurance solutions.
Whether you're a small business owner, established company or growing enterprise, we're here to help.
Call us on 01702 347889 for a no-obligation, competitive quote—and peace of mind that your cover reflects both your risk and your reputation or email enquiries@lbhinsurance.co.uk.
