10 simple rules to obtaining effective business insurance cover
Ensuring you have the right insurance protection for your business depends on two separate processes: choosing the right business insurance and then making sure your insurance policy remains effective in terms of cover and extent of cover given any changes in your business circumstances.
This is particularly important if your business is growing or expanding its operations.
Below is a summary of simple rules that should set you off on the correct path.
Always check with an insurance professional before making or delaying any business insurance decision.
1. Know what is stand-alone and what is extension insurance products
The insurance types shown in this section are either stand-alone products or extensions to other insurance policies.
A stand-alone product means you have to specifically request and purchase that cover.
An extension product is either added as part of another insurance product offer or is added as an additional cost.
When applying for insurance cover, make sure you know which products you require then clarify which are stand-alone and which are part of or added to these stand-alone products.
2. It makes commercial sense to be honest
You must be honest and truthful when purchasing insurance. The insurance company will ask a series of questions. Answer them to the best of your ability.
If you do not know a particular detail then call them back with precise information.
Stretching the truth to obtain insurance or cheaper insurance is a false economy. If it comes to light that the circumstances of the policy do not match the reality then the insurance can be made invalid. In other words, you have just wasted time and good money on something that has given you nothing more than a false sense of security. It is also illegal.
Processing applications, providing insurance and handling claims is what insurance companies do every day for a living. They know the tricks that customers and claimants get up to; so just play a straight game – it’s easier.
3. Let the insurance company know if circumstances change
In the hustle and bustle of running a business, it is easy to let things slip or be overlooked. Circumstances evolve: particularly if your business is expanding. This can mean that over time, the design of your insurance policy may no-longer be relevant and therefore effective. In other words, you may be paying for something that may not be of use.
Automatic renewals of insurance policies do not help in this regard. Renewals can easily be perceived as no more than a reminder of a job already completed. And all you need to do is confirm and continue with the payments.
One way around this is to not enable or allow automatic renewals in you system. You can also get more favourable prices if you place the insurance back out for quoting – even from your current insurer (allowing of course for the cost of time and money in obtaining quotes and setting up new policies).
4. Appreciate your obligations
Your obligations do not stop at simply buying insurance. The insurance company still expects you to take reasonable care and operate within the terms and conditions of the insurance policy.
5. Beware of excess
If a claim is made then be aware that many polices require you to pay the excess. For example, you might have to pay the first £100 of the claim.
6. Conditions of cover
Some insurance products and insurance companies require you adhere to certain conditions in order to obtain and maintain insurance cover. An example is making sure adequate security is installed on the premises where high value stock is stored.
It is important that such measures or conditions are maintained to ensure the insurance policy remains valid.
7. Include legal cover
With any policy, be sure to include legal cover. This means that legal costs will be paid by your insurance in the event of a claim. This is important because legal costs can be massive.
8. Get everything confirmed in writing
Insurance companies are obviously good at this but you should keep a file containing all inward and outward correspondence and confirmations of policies. And read it.
9. Insurance products can be varied and complex
There are many insurance products out there containing a multitude of cover variations and benefits. But generally, there is a loose correlation between product (convenience and benefits) and price.
Giving the correct attention to sourcing insurance is important for two reasons.
- Making the right choice protects you and your business from risk.
- Buying insurance costs you money. And if it is costing you money then don’t sell yourself short by completing generic forms online.
Online is great for first contact; but somewhere in the process you have to speak with someone, get advice, discuss your specific circumstances and expectations – and confirm this product is going to provide you with efficient and effective protection.
10. It’s not all about price
Cost-effective insurance is important but fast and informative response from your insurance provider is vital. Hopefully you are or soon will be a very busy business person. Time is money and spending all morning on the phone trying to get basic information from your insurance provider rather than servicing your customers is costly and that cheapest deal soon becomes a false economy.
So keep a note pad and pencil how much time you spend servicing your insurance application and its maintenance.
As with all things in business, every buying decision you make has to balance the cost of employee and time efficiency and convenience against the expense of the cash price.