Here are five common oversights businesses make when buying essential insurance cover, which can leave companies exposed to unnecessary risk.1. Cutting back on cover to save money
When times are tough, it makes sense to cut back on costs in some areas of your business. However, cutting down on your insurance cover may land you in big trouble.
While your budget may have changed in the last year, the way your business is run is unlikely to have, and without appropriate cover you leave yourself vulnerable.
Claims against public liability and professional indemnity insurance can be very high. If this money has to be paid from your own pocket it could easily put you out of business.2. Getting the wrong insurance cover
It’s fairly easy to buy the wrong insurance cover or buy the right cover but at the wrong level. The business insurance industry isn’t exactly well known for simple language and processes.
If did unwittingly buy the wrong insurance, however, you could face a claim being refused, leaving your business liable to pay any compensation or damages.
For example, you might buy public liability insurance but not professional indemnity insurance, thinking they both offer similar types of cover. However, if you then made a mistake when advising a client on a business matter, which costs them revenue, it would be futile to try making a claim for those costs on your public liability policy.3. Avoiding risk assessments
Risk assessments are undoubtedly among the least glamorous of business tasks. They do, however, demonstrate that you’ve taken into account all the potential risks associated with working at your business and that you’ve implemented measures to make sure your working environment is as safe as possible.
Keeping up regular risk assessments can help to reduce your insurance premiums and, if required, make the claims process run more smoothly.
4. Ignoring bad health and safety practices
Depending on the industry you work in, adhering to health and safety standards can be time-consuming and sometimes expensive, but failing to implement the correct health and safety guidelines is costly in more ways than one.
According to Section 2 of the Health and Safety at Work Act 1974, all employers have a duty to ensure that – so far as is reasonably practicable – the health, safety and welfare of all employees is looked after. Failure to comply can result in large claims, heavy fines or imprisonment as well as damage to the company’s reputation.
5. Putting off the purchase of your insurance
New business owners do not always realise the importance of getting insurance right from the beginning, or that some covers, such as Employers’ Liability, are a legal requirement.
Putting off buying insurance to save your precious start-up capital will leave your business exposed to claims by members of the public, clients or employees. At such an early stage of the business’ development, large compensation payouts could force you to close down. Choosing to pay for it later could also unbalance your cash flow.
*Rosie Beasley is marketing communications manager at business insurance comparator Simplybusiness.co.uk