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Getting the insurance sorted for your small business can be pretty straightforward, jump online, compare quotes and buy the insurance that suits your business. But there are a few things you may not know about small business insurance – which may help you choose your next policy or just get a little more out of your current policy.
A key thing to be aware of is that your personal insurance may not cover your business liabilities or property. If you work from home, your home and contents insurance policy might not cover all the liabilities related to your business. As an example most home and contents policies do not cover you for bodily injury or property damage to a client or supplier that may occur at your home. The likelihood of a claim is low, but the implications could be extremely costly. We always say, “if the consequences are too severe to manage on your own, you should insure it.” The low probability simply means you will pay a lower premium. To put this in perspective, a public liability policy for an SME working from home generally costs around $30 per month. This usually provides around $20M of cover. A small price to pay even if it is unlikely you will have a million dollar claim.
If you have cover for theft and there is a break in to your office, you may be able to claim for those personal items left in the office.
Whilst you can generally choose what sort of cover you want for your business, and how much cover to get, there will be some instances where a certain type and a certain level of cover is mandatory. Sometimes cover is required to belong to an industry organisation or it may be statutory, and sometimes it is a requirement to take up a contract. For example if you are providing professional services for a large corporation or the government, they may require you to have Professional Indemnity cover.
It’s wise to review and update your coverage every year. No doubt your business is on the move and changing and so your insurance needs will also be changing and you’ll want to make sure you have a policy that covers your business for now. You may need cover that you didn’t need previously, for example if you have acquired additional stock or equipment, which makes reviewing your policies is a smart thing to do.
There is often the temptation to undervalue your assets in order to save a little on the premium. A short term gain, which could cost you dearly in the long run. When you go to make a claim the insurer could discount your claim by the amount of underinsurance, so for instance if your property is valued at $255,000 and you only insure it for $200,000 – you are effectively underinsured by 20%. Even if you put a claim in for $55,000, the insurer could potentially only pay out $40,000!
Whether you are buying your first policy or renewing your current policy, make sure you jump online and compare what’s in the market to ensure that you are getting the best rate for your insurance.