7 Insurance Strategies to Shield Your Business from Disaster
It’s a business owner’s nightmare: a product exploding, theft, or a natural disaster wipes out everything. But, these nightmares can become reality, but with the right precautions, you can protect your business. Here’s advice from entrepreneurs who learned the hard way.
- Do Your Homework Before Committing
Leah Caplanis, CEO of Social, a sparkling wine brand, faced a massive product recall after a co-packer error caused cans to explode. Her experience highlights the importance of choosing the right insurer.
Caplanis recommends researching insurance providers thoroughly. Get firsthand accounts and read reviews to uncover potential issues. She emphasizes that not all insurance agencies are created equal. Good research can save your company.
- Know Exactly What’s Covered
Caplanis advises business owners to understand their insurance policy from day one, even if they don’t want to think about disaster.
Make a plan: Read your policy carefully and create a plan for what to do when things go wrong. She points out that policies often have specific steps and deadlines for filing claims, and missing them can void your coverage. It is wise to ask your legal counsel to review your policy.
- Act as if You’re Uninsured, Even When You’re Not
Ryan Negri, an entrepreneurial growth coach, experienced this first hand. His company suffered multiple warehouse thefts, causing significant financial losses, and delays in payouts from insurance.
Negri recommends getting insurance, but then be vigilant. Implement strong security measures and risk management practices as if you didn’t have insurance at all. Insurance is a safety net, but it’s not a replacement for proactive risk mitigation.
- Have Multiple Layers of Protection
Negri’s case showed the value of having supplemental coverage with a smaller agency. Big firms may be less responsive to the claims of their clients, but smaller firms will often provide personalized attention, as you are more than just a file number to them. They will also fight for their client.
- Be Wary of Contractors
Ron Shimkus, president and CEO of Electrostar, which restores electronic equipment after disasters, warns that insurance companies often use third-party contractors, particularly after major events like natural disasters.
The incentive for contractors may be to settle claims quickly and to keep expenses low. Work with your own contractors and legal counsel to confirm all claims are settled fairly.
- Get Flood-Ready
Shimkus advises businesses to prepare for potential flooding. It isn’t just big box stores that should worry, small businesses are often unprepared. Without adequate flood insurance, businesses can face financial ruin. Consider the specific terms of your policy to ensure coverage.
- Use the Insurance You Pay For
Caplanis and Negri, despite their frustrations, recognize the necessity of insurance.
Shimkus encourages business owners to file claims when needed to avoid paying for insurance that doesn’t benefit them. This is why you have insurance. Don’t hesitate to use it, and get your money.
This article provides essential insights for business owners to safeguard their ventures. By following these tips, you can better protect your business against potential disasters, and safeguard your financial future.
