Fire

Is your business adequately insured in the event of an unplanned event? (image via public domain image.com)

One of the mostly costly mistakes business owners make is not having the right kind or amount of insurance in place to protect their business and their income.   Thinking they understand the ins and outs of business insurance, they forge ahead without working with an expert or getting a true picture of their true needs and the insurance coverage they need to mitigate their exposure.  Unfortunately, making this kind of mistake can actually cost more than just money; it can cost you your business.

Here are 6 common mistakes businesses make with their insurance.

  1. Not Buying Insurance

This is by far the biggest mistake business owners make.  Whether it seems like the benefit doesn’t seem to justify the cost or they don’t realize they need coverage, not buying insurance is the biggest mistake any business can make.  Business owners don’t realize that it only takes one lawsuit to wipe them out.  They feel that as long as they follow the rules, operate legally, and do what they are supposed to do, they will be ok.   What they don’t realize is that even if they are sued and win, the cost of defending themselves against even an unfounded lawsuit may be enough to bankrupt their business.

  1. Buying Inadequate Coverage

Many businesses that do purchase insurance don’t actually buy enough to cover their potential losses.  Business owners don’t realize this mistake until it’s too late and they are stuck paying for attorney fees and legal settlements out of pocket.  Purchasing inadequate coverage is only slightly better than not having any coverage at all.

  1. Buying the Wrong Coverage

Alongside buying inadequate coverage is buying the wrong coverage.  Business owners who don’t work with an insurance professional to assess their risk and secure the right coverage to protect their business from losses, run the risk of having to cover costs that are not covered by the policy they purchase.

  1. Going Without Business Income Coverage

Business income coverage which is also called business interruption insurance provides financial support when something interrupts your ability to conduct business.  Going without this coverage can endanger the business as much as going without liability or property coverage.  For example, there is a fire in a retail shop that destroys or damages all the merchandise forcing the shop to close for three weeks.  The business owner’s property insurance covers the lost merchandise, but without business income coverage, the business owner has no way to recover the lost income from having the shop closed for three weeks.

  1. Misunderstanding Coverage

Business owners who buy the right amount of the right coverage can still run into problems if they don’t understand what things are specifically excluded from their policy.  Most business insurance policies are full of exclusions and business owners who don’t understand these exclusions can be left holding the bag when they thought they were covered.

  1. Carrying Low Deductibles

Business owners can decrease their costs while still protecting their business by increasing the deductible on their policies.  Carrying a low deductible on your policy may seem like the better business decision because it offers more protection, but it may not be the right decision for your business.  High deductibles reduce your overall operating costs while offering protecting you from the kinds of losses that could compromise your business.

The best way for business owners to ensure they have the coverage and protection they need is to work with a qualified insurance professional.  Their agent or broker can assess their needs and then help them find the best insurance package to meet them.

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Car Insurance Rates

Do you know what affects your car insurance rates? Image via harry_nl on Flickr

If you have recently gone through the process of reassessing your car insurance policy, you know that it can be a confusing and sometimes frustrating experience.  The difference between one company’s quote and another company’s quote can be minimal or massive and it isn’t always easy to compare apples to apples since companies package their products differently.  Since most companies use complex actuarial formulas to determine their rates and proprietary processes for quoting, you may not ever be able to understand why two policies that seem the same can carry such different price tags.

However, you do have some control over the cost of your car insurance if you understand how your decisions and your actions can impact the rates insurance companies are willing to give you.

Here is an overview of the 7 most important things that can affect your car insurance rate and which you can change to get a better price.

1.     You

Unfortunately, some of the factors that contribute to your auto insurance rates are things about you that you can’t change like your age or gender.   There are some personal details that affect your rates, like where you live and what you do for a job that can change how much you pay for car insurance.  If you are thinking about moving to another town or state, it may be worth it to find out if your insurance rates will be higher or lower in your new location.

2.     Your Car

According to the Insurance Information Institute, the cost of your car insurance is driven in part by the car you drive.  The insurance company looks at things like the original, replacement, and repair costs, safety rating, and prevalence of theft for your car to determine your rate.  This is why it costs more to insure a brand new car even if your driving record and coverage remains the same.

3.     Your Driver Profile

Insurance companies also look at how many miles a day you drive to and from work as part of determining how much your policy will cost.  The more miles you drive, the more likely it is that you will be in an accident and file a claim which makes your rates higher.

4.     Your Driving History

How you drive has a big impact on your car insurance costs.  If you have points on your license from past moving violations, your costs will be higher.  Companies consider your driving history as an indication of how safe a driver you are and safe drivers don’t do things that result in moving violations.

5.     Your Credit History

Depending on the state you live in, your credit history may be a factor in how much you pay for car insurance.  Insurance companies believe that people who are conscientious about their financial affairs are less likely to take risks behind the wheel.  Additionally, actuarial research has shown that how you manage your money can predict how many insurance claims you are likely to file and how big those claims are likely to be, according to the Insurance Information Institute.

6.     Coverage

The coverage you choose including limits, deductibles, and exclusions can have a big impact on the price you are going to pay.  If you choose comprehensive coverage, your costs will be higher.  If you choose a higher deductible, your costs will be lower.

7.     Claims

Your auto claim history is also a factor in how much your insurance will cost.  If you have a history of claims, your rate will be higher as past claims history can be an indicator of the likelihood of future claims.

While there are many factors that affect your car insurance rate that you cannot control, there are some things you can do to keep your cost low.  Drive carefully, stay on top of your credit score, and choose the right coverage for your needs to keep the price you pay for your auto policy as low as possible.


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