ADVICE
PICTURE : CHRIS BOOTH
Advice - Gallagher client director Ian Miller .
The top five insurance mistakes every business should avoid
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Insurance is vital to protecting every business ’ s assets , employees and operations . However , it ’ s easy to make mistakes regarding insurance coverage that could leave a business vulnerable .
Here , Gallagher client director Ian Miller ( pictured ) describes the top five insurance mistakes that businesses should avoid when navigating the complexities of commercial insurance .
1 . Underinsuring your business Over time , the value of a business ’ s assets and the cost of rebuilding or replacing them can increase due to inflation . Failing to account for inflation in coverage limits can leave your business underinsured . Regularly review coverage limits to ensure they keep pace with inflation . Ensure you understand the total value of your property , equipment , inventory and liabilities to ensure proper coverage .
Your business evolves , and so do its insurance needs . Regularly review and update your policies to avoid being underinsured or facing coverage gaps . Reassess annually or after significant changes .
2 . Not creating the right programme Standard insurance policies may not cover all the unique risks your business faces . Depending on your industry and operations , consider additional coverage options such as cyber insurance , business interruption ( BI ) insurance , or public liability insurance .
Insurance policies often have exclusions and limitations that define what is not covered . Failing to understand these provisions can lead to unpleasant surprises when filing a claim . Carefully review your policy wording and seek clarification from your insurance broker if needed .
Location affects insurance premiums and coverage . If your business is in an area prone to natural disasters , floods or crime , ensure your insurance covers these risks .
3 . Overlooking the importance of risk management In today ’ s complex business environment , effective risk management is not just a luxury - it ’ s a necessity . Despite this , many companies make the critical mistake of overlooking the importance of a robust risk-management strategy when it comes to their insurance needs . This oversight can lead to significant financial and operational repercussions .
Risk management involves identifying , assessing and prioritising potential risks to a business , then taking coordinated actions to minimise , monitor and control their likelihood or impact . Without this foundational step , businesses are essentially leaving their fate to chance . They may be unprepared for unforeseen events like natural disasters , cyber-attacks , employee injuries or supply chain disruptions .
4 . Failing to analyse data and claims trends Businesses are inundated with data , but many fail to harness its full potential when it comes to insurance . Ignoring the valuable insights that can be gleaned from analysing claims data and trends is a significant oversight . By not delving into past claims , companies miss out on identifying patterns that could inform future risk-management strategies .
For instance , a consistent spike in employee liability claims in a particular department could indicate underlying safety issues that need addressing . Similarly , an uptick in property damage claims during specific seasons might reveal vulnerabilities that could be mitigated with preventive measures . Without this analysis , businesses are essentially flying blind , unable to pinpoint areas of concern that could be rectified to reduce future claims .
Moreover , understanding claims trends can also lead to more informed negotiations with insurers . When businesses can demonstrate a datadriven approach to risk management , they are often in a stronger position to secure favourable terms and premiums . Conversely , a lack of awareness can result in generic policies that may not be tailored to the business ’ s unique risk profile , potentially leaving critical exposures unaddressed .
5 . Not consulting with an experienced insurance broker Insurance can be complex , and making uninformed decisions can have severe consequences . Working with an insurance broker who understands your industry , such as Gallagher , can guide you through the process of selecting appropriate coverage for your business .
Avoiding these common insurance mistakes is critical to protecting your business and ensuring its long-term success . By investing time and effort into understanding your insurance needs , working with knowledgeable professionals and regularly reviewing and updating your policies , you can avoid potential pitfalls and ensure your business is adequately protected .
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