Commercial insurance is designed to protect businesses from significant financial losses in the event of unforeseen adverse events and circumstances, such as fire, theft, property damage, cyber-attack, liability claims, and many other risks.
To help your business get the commercial insurance coverage that you need to be financially protected — instead of dangerously exposed — here are key four key tips to keep in mind according to Bill Scuorzo, the President and CEO of New Jersey-based BCG Advisors.
Assess Your Risk
Before shopping around and comparing commercial insurance coverage, take a step back and comprehensively assess your risks — both in terms of volume (i.e. what risks you face) and severity (i.e. how much it would cost if a risk were to be realized). This process involves answering key questions related to strategic risk, compliance risk, operational risk, financial risk, reputational risk, and other areas that may apply to your industry, marketplace and specific business profile.
Adds Bill Scuorzo: “Many small businesses make the major mistake of underestimating the breadth and extent of the risks they face. Or just as unwisely, they assume that they don’t need to seriously assess their risk until they grow larger and become established. Unfortunately, they may never get that chance if they are financially sideswiped by the actions of a negligent employee, an on-premises injury suffered by a customer or visitor, a devastating malware attack, and the list goes on. It is also vital to clearly understand the difference between personal coverage and business coverage. For example, many small business owners incorrectly believe that their home insurance will cover them if business assets, like laptops and printers, are damaged or stolen.”
One of the biggest mistakes — if not the single biggest error — that many businesses make when purchasing commercial insurance, is failing to shop around; not only to get the best price but to ensure that they have adequate coverage and understand all the intricate policy details.
Adds Bill Scuorzo: “When businesses fail to shop around for commercial insurance, it’s typically because they’re so busy serving customers, dealing with suppliers, running advertising campaigns, and doing all of the other things required to keep the lights on, that they don’t have enough time to compare policies, or go through them to check the details. Unfortunately, they are positioning themselves in store for very unpleasant surprises down the road if it comes time to make a claim.”
Partner with an Insurance Broker
As noted above, there are many different types of commercial insurance policies, as well as carriers who underwrite them. To avoid getting lost in a maze of impenetrable “legaleze” and potentially ending up with either not enough coverage or too much coverage, it’s wise to partner with an experienced insurance brokerage firm that will work closely with you to assess your risks, and educate you on your options.
Adds Bill Scuorzo: “Licensed insurance brokers are not agents or reps who work for an insurance company. They are independent insurance professionals, and they have a fiduciary duty to offer advice and guidance that is consistently in their clients’ best interests. Simply put, reputable insurance brokers are not interested in pushing transactions and selling as much insurance as possible. They are focused on building strong, long-term relationships based on value, trust and respect.”
Annually Review Commercial Insurance Needs and Coverage
Last but certainly not least, once you connect with an experienced insurance brokerage firm and purchase an appropriate policy, don’t put the paperwork in a filing cabinet and forget that it exists. At least annually — or more frequently if you experience significant changes to your business, such as after rapid growth, purchasing new equipment, or bringing on new partners — review your commercial insurance needs and coverage, and ensure that you are adequately protected.
Bill Scuorzo concludes: “Businesses are ever changing. Reviewing your policy and coverage is a wise, and frankly necessary step. Plus, there is no downside to doing this. If everything is fine the way it is, then you’ll have peace of mind in knowing that you’re protected instead of exposed. And if you do identify gaps between what you have and what you need, proactively filling them could be the difference between keeping your business strong and successful, or facing a costly setback in the future.”