Despite insecurity, accidents, and natural disasters, many SMEs still neglect or postpone this important item.
98% of companies are SMEs and represent the most dynamic link in any economy. When it comes to trial, they should be advised in different fields, including insurance, a fundamental ally to protect their business.
Choosing the right coverage is not an easy task as there are multiple possibilities and costs. Faced with this scenario, it is easy to make mistakes that can lead to unnecessary expenses or even risk of assets.
Protect the wrong goods
The entrepreneur tends to think about the most frequent problems instead of focusing on those that – although more sporadic – could put the continuity of his company at risk. SMEs usually insure themselves against minor risks, such as car theft, which at the macro level would not mean a root problem for the business.
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When thinking about what to ensure, the question to ask is: What kind of incident could lead to the disappearance of the company? Key aspects of the business must be protected. An SME that, after a serious accident, must stop its production, for example, six months, if it correctly contracted its coverage, it will be able to have the necessary resources to rebuild and continue.
Fire, loss of profits, and civil liability insurance, among others, should be specially considered.
Forgetting to update the insured assets
Not knowing the scope of the coverage contracted becomes the main problem in the event of a claim. The hedges imply obligations on the part of the SMEs, which in practice are not fulfilled afterward.
For example, it is common to have technical insurance that covers part of the electronic equipment or machinery. They oblige the insured to report the removals and additions of the goods as they are produced. Due to ignorance or because there is a fear of increasing costs, changes in said assets are often not reported. Not reviewing the conditions could come as a surprise when declaring a claim that you thought you had covered.
Choose the insurer only by budget
Among the biggest mistakes made is to base the choice of insurance solely on its price. The main problem is not the cost but the possibility of ending up paying for coverage that, in the event of a contingency, will not allow you to replace what was lost.
It is best to analyze in detail what the needs of the firm are to contract the essential coverage. It is true that in the insurance market, there are no easy-to-understand products for small and medium-sized companies. That is why it is important to select a responsible insurer who analyzes the situation and presents a tailored, comprehensive plan built on the exposures and possible risks.
Postpone hiring
It is essential to understand that a claim can completely stop the operation of a company, and this, especially for an SME, can spell the end of the company.
Knowing this, it is clear that the main cause for continuing without insurance is the lack of information. The ignorance of the possible risks leads to considering them, in the first instance, a nuisance for the business. But every day that you go without coverage is a potential opportunity to lose everything you’ve worked so hard for.
The ideal is to seek advice from specialized producers who understand the particular situation and know in depth the different levels of exposure and risk of the sector in which the SME operates.
Not understanding insurance as part of the cost of operations
When it comes to financial planning, taking out insurance often takes a back seat. A company aware of the risk assumed by not being insured understands that it is not something optional or accessory. Being insured helps prevent SMEs, even when the event is of great magnitude, from disappearing as such.