Business owners have many important decisions to make regarding their business, such as the location, inventory purchases, labor, and advertising. However, one decision is often glossed over and not given the consideration needed to avoid costly mistakes — decisions about business insurance. Our South Carolina business formation and planning lawyers work closely with business owners to help them avoid insurance mistakes that could be detrimental to their business interests.
Five Business Insurance Mistakes to Avoid
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- Failing to Read the Policy
Insurance policies can be very lengthy, especially when you include the riders and other addendums. However, regardless of how daunting the task may appear, business owners need to read the entire insurance policy from cover to cover. It is imperative that a business owner understands the insurance coverage and all exclusions. If you do not have the time or you do not wish to read your policy, your SC business attorney can review the policy and explain the terms. After an issue arises, it may be too late to realize you chose insurance coverage that does not meet your needs.
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- Limits are Too Low
Many individuals make this insurance mistake, but so do business owners. Whether you are trying to save money on premiums or you are not fully aware of the insurance you need, it is always better to have more coverage than less coverage. For example, carrying a million-dollar liability insurance policy might seem excessive. However, if a young person falls and is injured on your property, the damages could total a million dollars or more if that person is permanently disabled and will not be able to work for the rest of his or her life. In many cases, once you pay for the initial premium, increases in insurance or additional coverage is not as expensive as you might assume.
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- Failing to Purchase Business Interruption Insurance Coverage
Whether it is a natural disaster or other unexpected problem, an interruption to your business can be extremely costly. Purchasing business interruption insurance coverage can provide income to cover overhead and expenses while you take the necessary steps to reopen your business.
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- Failing to Purchase the Correct Insurance Coverage
Insurance policies provide a variety of diverse types of coverage, which makes choosing an insurance policy an extremely crucial decision for business owners. For example, a business owner who purchases liability insurance, but fails to purchase casualty insurance may realize too late that his insurance policy does not cover his losses from unexpected events. Liability insurance only covers losses that other parties suffer because of claims against the business. Business owners need to discuss the distinct types of business insurance coverages with their insurance agents and SC business attorneys.
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- Failing to Understand Duties to Indemnify or Defend
Another important consideration when purchasing insurance is whether the insurance company will defend you if you are sued and whether the insurance company will pay a judgment against you. Some policies may limit coverage or place exclusions on the coverage of these two issues. It is very important to understand what the company’s duties and responsibilities are in the event of claims, lawsuits, and judgments.
Consult With a South Carolina Business Attorney
If you have questions about business insurance, contact our experienced business law attorneys to discuss your options and insurance needs before you purchase an insurance policy. Schedule a consult with a business lawyer at Willcox, Buyck & Williams, P.A. today to discuss the insurance options that are most necessary for your company.