Do Not Reduce Your Business Insurance When Times Are Tough

It goes without saying that the current economy has taken a tremendous hit due to the Covid pandemic. That means a great of small business owners and operators are struggling to thrive let alone survive. Although you may be searching for ways to cut down on expenses in order to save money and to help with any cash flow issues, your business insurance should not be in consideration. In fact, you may need to rely on your business insurance more than ever in order to protect your assets. The following information will provide you with a few reasons why you should not reduce your business insurance when times are tough.

First and foremost, your business insurance policies are in place to protect both you and your company. In essence, it helps to cover any expenses that are related to both liability claims and property damage. You need to keep in mind that accidents can and do happen at any time. That means if you don’t have coverage or have enough coverage to cover those perils, you will end up paying out of pocket. You need to ask yourself if you can afford to pay out of pocket? Let’s take a look at a real world example. A customer/client slips and falls while visiting your business because you failed to post a slippery when wet sign after mopping the floor.

The customer sues you for damages and wins the court case due to the fact that you were at fault. The damages equal $250,000. You had taken out a business liability policy that would have covered the damages, however you significantly reduced the policy limits in order to save money. Your mindset at the time was you were paying for business liability insurance every month for years on end, and nobody had ever made a liability claim against your business. So instead of having that $1 million business liability insurance policy in place, you decided to reduce to down to $100,000. That means you are only covered for $100,000 out of the $250,000 in damages that are due.

In essence, you will now need to find a way to pay the remaining $150,000 of damages. Although you saved a few bucks each month on the business liability policy premiums, you are stuck paying significantly more money out of pocket than the amount you saved. In a great deal of cases, that $150,000 out of pocket can bankrupt a business. While it is necessary to cut down on expenses during difficult times, your business insurance should never be an option.

If you own or operate a business in the Commonwealth of Massachusetts you need to ensure that you have the proper insurance policies in place. Please consult with a professional insurance agent that specializes in providing commercial business related insurance policies. It is important to fully understand exactly what you are buying when it comes to your insurance policies. If you have any questions, please call (508) 831-0133 to contact an associate at Zawada Insurance. We are happy to walk you through the details of your insurance policies and explain your coverage options. We look forward to helping you with all of your personal and or business related insurance needs now and in the future.

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