Small business owners often focus on cutting costs. Although it's smart to keep costs low, one area where cutting corners can do serious damage is your Business Insurance coverage.
Being underinsured means you have coverage, but not enough of it, and when something goes wrong, that gap can leave you paying thousands out of pocket. For many small businesses, it's the difference between recovery and closing for good.
In today's Aegis blog post, consider some real-world examples of how being underinsured can hurt your small business. Also learn why so many small business owners depend on Aegis Insurance & Financial Services to keep them protected and well-insured.
Scenario 1: A Restaurant Fire
A Houston-area restaurant has basic Commercial Property Insurance, but no Business Interruption coverage. After a kitchen fire shuts them down for 3 weeks, their insurer pays for equipment and building repairs, but not for lost income.
This leads to payroll, rent, taxes, and supplier invoices piling up.
Loss: $48,000 in missed revenue and ongoing expenses.
If they had carried Business Interruption coverage, most of that loss would've been covered.
Scenario 2: Retail Inventory Theft
A boutique owner insures her store's property but hasn't updated her Commercial Property inventory coverage in over a year. When a break-in wipes out $75,000 in merchandise, her policy only covers up to $25,000.
Loss: $50,000 in unreimbursed inventory.
Insurance should reflect your business today, not where it was a year or two ago.
Scenario 3: A Slip-and-Fall Lawsuit
A small grocery store has General Liability insurance, but with a limit of only $100,000. After a customer slips and breaks their leg, the total claim (including legal fees and settlement) exceeds $250,000.
Out-of-pocket cost: $150,000.
That one claim could nearly bankrupt the business because they're underinsured for incidents like this.
Why Does Underinsurance Happen?
• Outdated policies not reviewed as the business grows
• Choosing the cheapest option instead of the right coverage
• Not understanding coverage limits, exclusions, or gaps
• Assuming "it'll never happen to me"
How to Protect Yourself
1. Review Your Policy Annually
Your business changes, so your insurance should too. Stay aware of how policy updates and insurance industry changes can impact your coverage.
2. Understand Your Limits
Make sure coverage limits match your revenue growth, current inventory levels and value, and potential risks.
3. Work with a Commercial Insurance Specialist
Partner with an agent that understands your industry, and avoid settling for one-size-fits-all coverage.
Don't Let a Gap in Coverage Sink Your Business
Underinsurance isn't just risky, it's also expensive. One unexpected event can undo years of hard work.
If you're unsure whether your coverage is keeping up with your business, now's the time to get answers.
Call Aegis Insurance & Financial Services today at 713-850-7622 to speak with a Commercial Agent or schedule a consultation. Let us help you close the gaps before they cost you.