Small Business Insurance – why the cheapest is not always the best

By Abbie Wilson    February 21, 2019

Are you operating in hospitality, providing accommodation, running a transport business, or operating a cafe?

It can be tempting as a time-poor business owner to choose the cheapest cover you find online. All business owners regardless of their size should be aware of the ins and outs of what’s included in one size fits all policies.

Coverage over price

When purchasing your small business insurance, you need to make sure that you are getting adequate coverage through your insurance policy. Remember you are buying your small business insurance to make sure you are covered if an event was to occur.

Whilst it can be tempting to buy on price, and you certainly need to be comfortable with the price, you need to consider what has been included with your policy and what may have been excluded to enable the lower price.

My mantra I tell all my clients is “coverage over price”

Buying online can lead to under-insurance

Working out the true value of coverage you require for your small business can be tricky. Often it is more than just the property, equipment and stock and can be staff, your business type or category, terminology or other fine-print you don’t think about.

Thinking you are covered and being covered are two different things:

Business Owner Case Study

One client came to me and upon reviewing his business insurance, I was shocked. He ran a business that turned over around $20m per annum. He thought he had good insurance and that all parts of his business were adequately covered. I reviewed his business insurance policy over the weekend and found it was severely lacking. For example, there was machinery in his workshop that would have cost several hundreds of thousands of dollars to replace and were simply not covered by their existing insurance policy. What was most alarming was this business employed more than 30 staff and if the business had been impacted by an insurance event and had not been able to recover, then those staff would have been left in the lurch as well. We highlighted all these shortcomings to the owner and worked with them to ensure that they were adequately covered going forward.

Three Helpful questions to ask:

1: Are you covered adequately? When did you last review your insurance?
2: Do you know what is included and excluded with your business insurance?
3: When did you last use a broker to better understand what is covered and what is lacking with your current insurance policies. They are the experts.

Remember – coverage over price.

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