One of the most costly mistakes a business owner can make is having the wrong kind of insurance coverage for their business. Without the proper coverage a business could be responsible for costs that they were not prepared to pay. If these costs become extravagant the business can go under. The following are four mistakes that businesses tend to make that result in unexpected costs:
Failure to Update Policy
A common mistake that business owners tend to make is not updating their policy to reflect current risks. When they get the initial policy they file it away and tend not to review it until it’s time to file a claim. It’s at this time that they find out that they have inadequate coverage. By reviewing their coverage annually they can adjust their policy to cover the inherent risks.
Choosing the incorrect type of coverage can be a big gamble for business owner. If they choose to ensure for a percentage of the replacement cost they may pay out less for the policy premium but they will pay more to replace the item in the long haul. By choosing to have full replacement coverage they will ensure that there will be fewer out-of-pocket expenses to pay.
Overlooking Building Ordinances
This is a costly overlook for many business owners that own the building their businesses are in. If the building is destroyed they will have to rebuild to current building code. Without building ordinance coverage they will most likely incur huge replacement costs just to comply the current code.
No Flood Insurance
A big misnomer that many business owners have is that their regular coverage will also pay for flood damage. Unfortunately that is not the case. Floods can occur without warning resulting in destruction of property, equipment and inventory. Without a separate flood insurance policy the business owner is responsible for all the costs related to rebuilding, getting new equipment and restoring their inventory.
By taking the time to review their coverage now, the business owner can ensure that they have not overlooked anything and have the proper coverage and protection for their business.
For additional information on business insurance check out the following websites:
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