Common Business Insurance Mistakes: Protect Your Business and Avoid Unnecessary Risk
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As a small business owner, it’s easy to assume that insurance may not be necessary or that you’re immune to the risks that larger companies face. But experience shows that accidents, misunderstandings, and claims can affect businesses of any size. Understanding common insurance mistakes can help protect your business from costly and stressful situations in the future.
Let’s look at some frequent errors people make when it comes to business insurance—and how you can avoid them.
1. Assuming You Don’t Need Insurance
Many small business owners think that if they don’t charge for a service or operate on a small scale, they’re safe without insurance.
Unfortunately, this isn’t the case. If you provide a service of any kind—even for free—you could still face claims. Any interaction with clients or the public can expose you to potential liability.
It’s also common for business owners to believe, “It won’t happen to me.” You might pride yourself on professionalism and high standards, but accidents and misunderstandings happen, sometimes in surprising ways. And even if you’re not at fault, a claim can still be filed, leaving you with the responsibility (and costs) of defending yourself. With the right insurance, however, you’re protected from these unexpected situations, allowing you to focus on running your business with peace of mind.
2. Not Checking Subcontractors’ Insurance
If your business contracts with other people or companies to perform tasks on your behalf, ensuring they have their own insurance is essential. If a subcontractor lacks coverage, your insurance might not protect you in the event of a claim related to their work. This could leave you vulnerable to financial risk.
Westminster Insurance provides flexibility, so you can add relevant coverage options and ensure comprehensive protection that accounts for subcontractors when needed. By verifying their coverage upfront, you save yourself from potential complications later on.
3. Failing to Update Your Policy
Your insurance policy is based on the services and practices you specify when you sign up. If your business evolves—such as adding new services or areas of expertise—you need to update your policy to reflect these changes. For example, if you initially insured yourself as a Coach but later become qualified as a Management Consultant, you need to add this new service to your policy. Without this update, you won’t be covered for the new work you’re doing.
Updating your policy with Westminster Insurance is straightforward, and it’s often free to add extra practices. This flexibility ensures that as your business grows, you remain fully covered without any gaps.
4. Cancelling Insurance Prematurely
Sometimes businesses close, and people retire, but claims can often arise months after the incident they relate to. If you cancel your “claims-made” policy too soon, you might lose coverage just when you need it most.
A “claims-made” policy requires that the policy is active when the claim is filed, not just when the incident occurred. Westminster Insurance makes it easy to keep your policy active for as long as necessary, providing the reassurance that you’re covered against potential claims from past activities.
5. Responding to a Claim Yourself
When a claim is made, it’s only natural to want to respond. If you feel responsible, you might be inclined to apologize; if you believe the claim is unfair, you may feel the urge to defend yourself. However, it’s crucial not to respond directly to the claimant beyond acknowledging receipt and informing them that your insurer will handle the matter.
Attempting to respond on your own can inadvertently imply fault, even if that’s not your intention. When you’re covered by Professional Indemnity, Public Liability, and Medical Malpractice insurance with Westminster Insurance, our Claims Team takes over the process, protecting your business and handling everything from investigation to negotiation. This professional support lifts the stress and hassle from your shoulders, allowing you to stay focused on running your business.
Avoid Common Mistakes with Westminster Insurance
These common mistakes demonstrate the importance of having the right insurance in place and keeping it up to date. At Westminster Insurance Ltd., we understand the unique needs of small businesses and offer tailored insurance packages, including Professional Indemnity, Public Liability, and Medical Malpractice Insurance. We also provide additional coverage options, like Cyber & Data Insurance, Employers Liability Insurance, and Personal Accident Insurance, so your policy can grow with your business and your needs.
Our friendly agents are ready to discuss your needs without the frustration of automated lines or long waits. Just call us at 01305 839 939 for personal assistance or get a quick, hassle-free quote here.
Don’t let an oversight put your business at risk. Ensure you have the protection you need to face any challenge confidently.
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