Requesting business insurance quotes is one of the most important steps to protect your company from financial risk. From general liability to workers’ compensation and property insurance, having the right coverage can save your business from costly lawsuits, property damage, and employee-related claims.
However, many business owners make critical mistakes when requesting insurance quotes. These errors can result in higher premiums, inadequate coverage, and unexpected fees. Knowing what to avoid will help you secure the best protection at a fair price.
This guide outlines the most common mistakes business owners make when requesting insurance quotes and how to avoid them. By following these tips, you’ll be better prepared to choose the right provider and policy for your business.
1. Not Knowing the Type of Coverage Your Business Needs
One of the biggest mistakes business owners make is requesting a “general” insurance quote without identifying the specific types of coverage their business requires. Different businesses face different risks, and a one-size-fits-all policy may leave you exposed to potential liabilities.
Why It Matters
If you don’t know what kind of coverage you need, you may end up paying for insurance that doesn’t fully protect your business. Worse, you could have significant coverage gaps that leave you financially vulnerable.
How to Avoid This Mistake
- Identify Industry-Specific Risks: If you own a restaurant, you’ll need food contamination coverage. If you’re in construction, you’ll need tools and equipment insurance.
- Assess Your Business Activities: Do you work with customers in person? Do you drive for business purposes? These activities may require general liability or commercial auto insurance.
- Consult a Broker or Advisor: A licensed insurance broker can help you identify the exact coverage you need for your industry.
Key Types of Business Insurance
- General Liability: Covers third-party injury, property damage, and advertising injury.
- Commercial Property: Protects physical assets like buildings, equipment, and inventory.
- Workers’ Compensation: Required in most states if you have employees, covering workplace injuries.
- Professional Liability (Errors & Omissions): Protects against lawsuits for professional mistakes or negligence.
- Commercial Auto: Covers vehicles used for business purposes.
2. Providing Inaccurate or Incomplete Business Information
When requesting quotes, you’ll be asked for key information about your business, such as industry, number of employees, annual revenue, and location. Providing inaccurate or incomplete information can result in inaccurate quotes or policy cancellations later on.
Why It Matters
If an insurer discovers discrepancies after you purchase the policy, they may increase your premiums or deny coverage. Worse, they could void your policy entirely, leaving you unprotected.
How to Avoid This Mistake
- Be Honest About Your Business Details: Accurately report the number of employees, business revenue, and industry classification.
- Disclose Risky Business Activities: If your employees operate heavy machinery, disclose this information. If you ship products internationally, note it.
- Double-Check Your Application: Review all entries before submitting your request for a quote to avoid errors.
If your business details change (like hiring more employees or opening a new location), notify your insurance provider to avoid policy issues.
3. Focusing Only on the Lowest Price
It’s tempting to choose the cheapest insurance policy, but price isn’t the only factor to consider. Low-cost policies often have lower coverage limits, more exclusions, or higher deductibles. If you file a claim, you may find that you’re underinsured or face significant out-of-pocket costs.
Why It Matters
A cheap policy may save you money now, but it could cost you thousands later. If a claim isn’t fully covered, you’ll have to pay the difference out of pocket.
How to Avoid This Mistake
- Look at Coverage Limits: Make sure the coverage limits are sufficient to protect your business in the event of a major claim.
- Review Policy Exclusions: Check for common exclusions, like flood damage or cyberattacks, which may require separate coverage.
- Focus on Value, Not Just Price: Compare quotes based on coverage, deductible, and policy terms — not just the monthly premium.
While saving money is important, choosing a policy that fully protects your business is a smarter financial decision.
4. Ignoring Policy Exclusions and Fine Print
Another mistake is not reading the fine print on the insurance policy. Policy exclusions list specific situations or damages that are not covered. If you file a claim for an excluded event, your insurer will deny it — and you’ll have to pay the costs yourself.
Why It Matters
If you assume that everything is covered under a “general” policy, you may be blindsided when your claim is denied. Exclusions can include floods, cyberattacks, and certain types of property damage.
How to Avoid This Mistake
- Ask for a List of Exclusions: Request a clear, written list of what is and isn’t covered.
- Consider Riders or Add-Ons: If the policy doesn’t cover floods or cyber incidents, ask about adding coverage for these risks.
- Work With an Agent or Broker: They can explain complicated policy language and identify gaps in your coverage.
For example, if you’re in a flood-prone area, make sure your commercial property insurance includes flood coverage, as it’s often excluded from standard policies.
5. Skipping Prequalification and Provider Research
Not all insurance providers are the same. Some have better customer service, faster claims processing, and lower fees. Failing to research insurance providers before requesting quotes can result in poor service when you need it most.
Why It Matters
If you end up with an insurer known for slow claims processing or denied claims, you’ll face long delays and financial headaches. Some insurers also charge hidden fees or policy change fees.
How to Avoid This Mistake
- Research Provider Reviews: Look for customer reviews on Better Business Bureau (BBB) and Trustpilot.
- Check Financial Stability: Use AM Best to see if the insurer has strong financial health (look for an “A” rating or better).
- Review Claims Processing Times: Ask how long it takes to file and receive payment for claims.
Choosing a reputable, financially strong insurer is just as important as selecting the right coverage.
6. Requesting Too Few Quotes
Requesting only one or two quotes may prevent you from getting the best deal. Insurance providers offer different rates for similar policies, and some are more competitive than others. By getting multiple quotes, you can identify the provider that offers the best value.
Why It Matters
You may end up paying significantly more for coverage if you don’t shop around. Some insurers charge higher premiums simply because they can.
How to Avoid This Mistake
- Get at Least 3 to 5 Quotes: Use online comparison tools or work with an insurance broker to receive multiple quotes at once.
- Ask for Detailed Quotes: Request itemized quotes so you can compare premiums, deductibles, and coverage limits side by side.
- Don’t Forget Smaller Providers: Big-name insurers are popular, but smaller, regional insurers may offer better rates and personalized service.
The more quotes you collect, the better your chances of finding affordable, comprehensive coverage.
7. Failing to Update Your Coverage as Your Business Grows
If your business grows (new hires, new locations, or higher revenue), your insurance coverage may no longer be sufficient. If you don’t update your policy, your coverage may be too low, and a claim could exceed your coverage limits.
Why It Matters
Your premium is based on business size, revenue, and employee count. If these factors change, your insurer needs to know. Otherwise, you may not have enough coverage to pay a large claim.
How to Avoid This Mistake
- Update Your Coverage Annually: Schedule a policy review each year, especially if you’ve grown.
- Notify Your Insurer of Changes: Report new hires, new locations, and major purchases to your insurer.
- Increase Coverage as Needed: Adjust coverage limits to ensure they meet the needs of your larger business.
A growing business needs more protection, so make sure your coverage grows with you.
Frequently Asked Questions
How many quotes should I request for business insurance?
Aim for at least three quotes so you can compare premiums, deductibles, and coverage limits.
What is the most important factor when choosing an insurance policy?
Coverage limits are the most critical factor. Ensure the policy fully protects you against your biggest risks.
What happens if I underreport my revenue or employee count?
Your claim could be denied, or your insurer may retroactively increase your premiums.
How often should I review my business insurance coverage?
Review your coverage annually or whenever your business experiences growth, such as hiring new employees or opening new locations.