Selecting a suitable public liability insurance policy is a significant part of protecting your business from unexpected risks. Yet, many business owners make avoidable mistakes that leave them underinsured or exposed to liabilities. This article outlines some common errors to watch out for when choosing public liability insurance and how to avoid them.
Underestimating Risk Exposure *
One of the most common mistakes is underestimating the potential risks associated with your business activities. Every business, regardless of its size or industry, faces the possibility of claims from third parties for injuries or property damage. Small businesses, in particular, may assume that their lower public interaction limits their exposure, but accidents can happen anywhere, from a customer slipping on a wet floor to a contractor causing accidental damage.
How to Avoid This:
Take the time to conduct a thorough risk assessment of your business. Consider the frequency of public interactions, the nature of your services or products, and any potential hazards on your premises. Consulting with a public liability insurance broker may help you identify these risks and select an appropriate level of cover that suits your specific operations.
Ignoring Policy Exclusions *
Public liability insurance policies often come with exclusions that limit what the policy covers. For example, certain policies may not cover product-related liabilities or specific types of business activities. Business owners sometimes overlook these exclusions, leading to misunderstandings and financial setbacks when claims are denied.
How to Avoid This:
Read the Product Disclosure Statement (PDS) carefully and ask your insurance broker to explain any unfamiliar terms. A broker may help clarify exclusions and limitations in your policy, ensuring you have a clear understanding of what is and isn’t covered. It’s important to be proactive and raise questions about potential scenarios to avoid any surprises later.
Choosing a Policy because it is Cheap *
Cost is always an important factor for small businesses, however selecting a policy because it is the cheapest may prove to be a costly mistake in the long run. Low-cost policies may come with reduced coverage limits, higher deductibles, or restrictive exclusions. You may need to wait on hold for lengthy periods when making changes or if you have a claim. In some cases, you may find it hard to find someone to talk to or help you. While the savings may seem attractive upfront, inadequate coverage and poor service may lead to significant financial strain and unnecessary stress if an incident occurs.
How to Avoid This:
Rather than focusing solely on price, assess the policy’s coverage and its suitability for your business. Compare policies with the help of an insurance broker who may find an affordable option without sacrificing essential coverage. Remember that the goal is to protect your business, not just to minimise expenses.
Not Regularly Reviewing Coverage *
As your business grows or changes, your risks and insurance needs may evolve. Business owners often forget to update their activities with their insurers or review their public liability insurance policy, leaving their coverage outdated or inadequate for their current operations. For example, expanding your services or taking on larger projects may introduce new risks that require additional cover.
How to Avoid This:
Set a regular schedule to review your insurance coverage, ideally once or twice a year, or when there are significant changes to your business. During the review, evaluate whether your policy limits still align with your business’s size and activities. An insurance broker may be able to answer some of your questions and provide guidance on available coverage options.
Overlooking the Importance of Tailored Coverage *
Many business owners purchase generic liability insurance policies online without considering whether the coverage is tailored to their specific business activities. Off-the-shelf policies might not include critical cover for unique liabilities, such as risks associated with hazardous materials or specialised services. Further if your business activities cross over various industries purchasing your liability cover online may not be appropriate.
How to Avoid This:
Seek tailored coverage that aligns with the unique risks of your business activities. A public liability insurance broker may help you find or customise a policy that provides suitable protection for your business activities by talking with underwriters on your behalf, advising them and gaining approval for the specific mix of your business activities. Tailored coverage ensures that you’re not paying for unnecessary features, while still adequately protecting your business.
Conclusion *
Public liability insurance is an important safeguard for any business, but selecting a suitable policy involves can mean more than just ticking a box. By avoiding these common mistakes, you can better protect your business from unexpected incidents and financial losses. Engaging a knowledgeable public liability insurance broker to guide you through the process may help you find suitable coverage for your specific mic of business activities, understand policy details, and stay adequately protected as your business grows.
Disclaimer: The content of this blog article is intended for general informational purposes only and should not be considered as professional advice. While we strive to ensure accuracy, we make no guarantees about the completeness or reliability of the information. For guidance regarding what and how much public liability insurance cover you need, we recommend consulting with a business insurance broker. Any actions you take based on any information provided here are at your own discretion.
