It takes a lot of hard work and determination to set up a small business. Startups face many challenges such as getting funding, finding innovative product ideas, and competing in an already established market. These challenges keep surfacing and every hindrance that decides the future of the startup. Running a newly established business also has an unknown number of risks. It is extremely important to determine your risk absorbing capacity and start an insurance plan for your business. A startup also implies continuous changes to the structure of the business and it is crucial to notice these changes and update your small business insurance needs with every change that takes place.
Below are some of the most common mistakes that startups make while choosing small business insurance:
- Purchasing the Cheapest Policy: For a startup, the funds might be tight. In addition, it is a no-brainer that startups prefer saving money wherever they can. However, when it comes to insurance, do not get attracted by the low-cost option. Cheaper policies indicate a lesser coverage. It is the best to compare multiple small business insurance policies and choose according to the risk assessment of the business.
- Planning on your own: while it may seem cost-effective to do everything on your own, Startups should not attempt choosing an insurance policy alone. Small Business Insurance policies are complex and it is the best to hire an agent who can evaluate the needs. The intricate details of the policy can be a horrendous task to deal with without help of an agent.
- Assuming that natural calamities are covered: Most property insurances do not cover natural calamities like earthquakes or storms. While such events are very rare, it still makes a lot of sense to know your policy and measure your risks.
- No umbrella liability: Umbrella liability insurance provides an added layer of liability coverage over your auto insurance, your general liability, etc. This additional coverage can prove to be a godsend in case of an unexpected event beyond the coverage of individual policies like auto and property insurance.
- Exclusions can be dangerous: Keep an eye on the page of your coverage policies called “exclusions”. The exclusion list can be long and can cause serious damage if not studied well. Even if you hire an agent, it is critical to do your homework on exclusions and clarify your doubts with the agent.