Some of the costliest mistakes entrepreneurs and business owners in California can encounter are related to insurance. Quite a few of these mistakes can be prevented with the proper advice from professional insurance agents, but you certainly don’t want to learn the hard way. If you can recognize the top risks, you should be able to prevent them. Here are some adverse situations related to business insurance you should avoid at all costs.
1. Automatically Opting for Minimum Coverage
This is one of the most common mistakes made when purchasing commercial insurance in San Diego, and it often ends up being very expensive. If you only focus on paying the lowest premiums for the minimum policies required to get business permits and occupational licensing, you could find yourself on the wrong end of an expensive claim.
2. Ignoring Employment Practices Coverage
Let’s say you own a surf shop and a key vendor talks you into hiring his young daughter as a clerk. Since this is a vendor who extends you generous credit on great products that sell quickly, you agree to this proposal. After all, you can reduce your payroll by replacing an existing clerk with your vendor’s daughter who will not mind making minimum wage. If the terminated clerk figures out your deal with the vendor, he could sue your business for wrongful termination, and if you did not obtain San Diego employment practices liability insurance, the best you could hope for would be the unlikely mercy of the court.
3. Working with Multiple Insurance Agents
You have every right to shop around for insurance, but you should settle on a single agency for your business needs. Having to deal with various agents for different policies will not only become confusing but may also cause dangerous gaps in coverage.
4. Misclassifying Employees for Workers’ Compensation
If you use the wrong employee classification code when submitting paperwork for workers’ compensation insurance in San Diego, you could end up paying higher premiums if the codes are incorrect. For instance, if you misclassify your surf shop clerk as a warehouse clerk, this mistake will be reflected in a higher premium since warehouse work carries more risk than retail store work.
5. Relying Entirely on Insurance Policies
You have to learn to manage your business risks. Being up to date on paying premiums for a couple of business insurance policies does not entitle you to throw caution to the wind. You still have to think about the cumbersome claims process, deductibles and overall aggravation caused by not taking precautions. Alarm and video surveillance systems, warning signs, and safety equipment could go a long way in keeping your company in business.
6. Purchasing Unnecessary Coverage
Some insurance agencies offer online purchasing systems for various policies that do not require sitting down with an agent. The problem with some online shopping situations is that you can easily click on the wrong section or select something by mistake, which could lead to paying for policies that do not apply to your business. For this reason, you should always consult with an agent.
Turn to the commercial insurance experts at American Tri-Star in San Diego if you have additional questions about mistakes to avoid when securing policies for your company. We are also a leading provider of home, auto, health, and bond insurance. Give us a call today at 619-272-2100 to speak with one of our friendly and knowledgeable agents.