When it comes to running a business, sorting your insurance is not just another box to tick. It’s the difference between staying afloat when disaster strikes to you being in serious financial trouble if something bad happens. Many businesses think they can sort it out quickly, once a year, and hope you never need to think about it again.
But here’s the thing: when something does go wrong, your insurance policy is the first place you’ll look for help. And if you’ve made mistakes when setting it up, you may not get the protection you thought you had. Worse, you might find yourself footing a bill that could cripple your business. In this article we’ve highlighted 6 most common insurance mistakes a business can make – and what you can do to avoid them.
1. Not Getting The Business Description Right
This one catches people out more often than you’d think. You’re filling in the form, clicking through options, and it asks you to describe your business. You pick something that’s “close enough” and move on. But that vague or slightly inaccurate description can be a problem later. Insurance policies are underwritten based on risk. If your business description doesn’t fully reflect what you actually do, you may not be covered for certain incidents. For example, if you describe yourself as a “consultant” but you also import and resell physical products, your policy might not cover damage or liability related to those products. It’s not just about being accurate – it’s about being complete. Make sure your business activities are fully and clearly represented.
2. Not Reading The Terms And Conditions Properly
We get it – insurance documents are long, and no, they’re not thrilling reads. If you don’t know what you’re doing they can also be confusing. If you don’t read the terms and conditions properly, this mistake could hurt you further down the line. For example you may find that if you’ve added a cover for theft, you must add specific security measures to the premises in order for it to be valid. If you miss this and fail to comply with the terms set out in your insurance document, you could be met with a nasty surprise when you’re a victim of a break-in and your insurance doesn’t pay out.
3. Underinsured Your Business
Underinsurance happens when a business doesn’t buy enough cover to fully protect its assets or liabilities. It’s often unintentional. A shop owner might estimate their stock value too low. A tradesperson might forget to include certain of their tools. A café might fail to account for fit-out costs when insuring the premises. If you have taken out building insurance and a fire occurs in your office, the insurer may apply what’s called the “average clause.” That means you’ll only be paid out a proportion of the amount that was insured.
4. Going For The Cheapest Option
Everyone wants a good deal. And with comparison sites promising instant quotes and easy savings, it’s tempting to just go with the cheapest option. But insurance isn’t like booking a budget hotel – it’s not about finding the lowest price, it’s about making sure you’ll be looked after when you need help most. Low-cost policies often come with stripped-down cover, higher excesses, and limited support. You might not notice until it’s too late. Price should be part of your decision, but it shouldn’t be the only factor. Think about value. What are you actually getting for your premium? What support is included? Who do you speak to if something goes wrong?
5. Not Reviewing Cover Regularly
Your business isn’t static – it grows, adapts, and changes over time. But too often, the insurance policy stays exactly the same from year to year. That’s a problem. Let’s say you’ve expanded your services, taken on new staff, added delivery vehicles, or moved to a larger premises. If you haven’t updated your policy to reflect those changes, you could be exposing yourself to risk without realising. It’s not just about big changes either. Even small shifts – a new hire, a rented storage unit, a new customer demographic – can affect your risk profile.
6. Not Consulting an Insurance Broker
It’s easy to think that using a business insurance broker is something only big companies do. But in reality, brokers are often most valuable to small businesses. When you’re juggling everything yourself, having someone who understands insurance and can fight your corner makes a huge difference. Without a broker, you’re left to decipher jargon-filled documents, compare dozens of policies, and hope you’re asking the right questions. And if a claim arises? You’re on your own.
An insurance broker works for you, not the insurer. They don’t just sell policies – they explain them, tailor them, and advocate for you if something goes wrong. They’re also on hand to answer questions that comparison sites simply can’t – like whether a particular extension is worth adding, or how your policy interacts with your client contracts. That kind of support is hard to find without someone in your corner.
How An Insurance Broker Can Help You Avoid Mistakes
Mistakes happen – especially when insurance is treated as a last-minute admin task. But the truth is, getting your business insurance right doesn’t have to be complicated. It just needs the right advice, a little attention to detail, and a willingness to treat your cover as something worth understanding.
Whether you’re just starting out or you’ve been trading for years, it’s worth checking in with an insurance broker. A quick review today could save you a major headache tomorrow. If you’re unsure about your current policy, or just want a second opinion, Insurance Brokers can help. They’re not here to sell you something you don’t need – they’re here to make sure you’re properly protected, whatever your business looks like.
