Some risks cannot be measured, and the only apt strategy is to be prepared all the same.
When talking about business liability, even a simple slip and fall on the premises can cost you a lot. Business liability insurance can save you from these financial risks, but then again, just how much liability premium is enough to cover all threats?
About 75% of businesses in the US are not adequately insured. And most small business owners are not even aware of their insurance risks. When an incident takes place, they either find themselves underinsured or without the right insurance to cover the costs of the claim. Some other small business owners think that claiming insurance may increase the premiums. Sometimes, the amount is lesser than their deductibles, so they believe it’s better to cover the expenses from their pockets.
However, it need not be so. Any unfortunate incident can be addressed properly if you know what and how much you should insure yourself for. While professional liability insurance can help cover client and contract-related risks, general liability insurance covers accidents on the premises where customers/clients get injured.
But the question is how much liability you should buy to cover unprecedented risks and why? According to most well-meaning experts, you should always go for higher liability limits.
Varying degrees of injuries
You cannot predict the kind of injury your customers/clients may suffer, so it is best to stay safe. They may have a sprain or a fracture, and you may have to pay for the medical expenses. Don’t you think that saving a few dollars every month may create bigger risks for you? What if by some chance, one of your customers suffers multiple fractures by falling down the stairs? You may regret opting for lower liability limits. Hence, it is wiser to set the bar higher and save your business from massive financial losses.
Extends protection to your customers
If you buy insurance with high liability, you are extending the protection to your customers, who will be sure that it is safe to visit your store. Of course, this is not a fact to be advertised, but the fact that you care will become apparent to your customers in several little ways. For professional liability insurance, higher limits are one of the ways to give a silent assurance to your clients/customers, especially if some untoward event happens. Many small business owners tend to ignore such subtle things and unknowingly increase their risks. So, get what you can afford to run your business seamlessly.
Safeguard your revenue
If your insurance is unable to cover all the expenses, the claims may eat into your revenue and cash flows. Many small business owners tend to find their business in trouble in situations, where they failed to predict the amount of potential financial loss. Why go through all that and buy insurance with higher liability limits? You can save on other things, like AC bills, coffee, interior décor, and expensive gadgets. But insurance should never be the place to compromise, as it safeguards your business.
Motivation to pay attention to detail
You know that liability claims can be expensive and that you are already paying a great deal to improve safety on your premises. The focus on your liability insurance is just one among those things that drive a culture of care and attention. You will be alert and go through everything in your power to prevent unfortunate incidents. The insurance will also be a kind of reminder for you to invest more in security and accident-prevention.
For example, if there is a loose tile on the sidewalk, chances are you will notice it faster than someone who does not pay as much attention to liability insurance. Again, if the fire alarm stops working or the stairs get slippery, you will take immediate measures to repair the same. We tend to focus more on areas that cost us more. Well, the higher liability limits will create a similar impact.
Different types of equipment
The limits of business liability insurance also depend on the type of business environment. If you have a neat and tidy office with minimum equipment and most of them safe for use, you may not think of buying insurance with higher limits. But if you are a building contractor working with large, bulky, and dangerous equipment every day, the limits should be higher. However, even offices do need higher liability limits sometimes. What if there’s a short circuit? What if the AC malfunctions, and there’s a big accident? Think about it! In short, higher liability limits make you conscious, careful, and reduce your risks of running the business. A small business faces numerous challenges in its lifetime. Going out there unarmed is unwise. And buying liability insurance with a higher limit could be the best way to overcome the challenges, get out there, and win.