Insurance is something every business owner should invest in. The cost of an injury in the workplace or a natural disaster can cause small businesses to close their doors permanently.
Comprehensive small business insurance has never been more affordable. On average, small business insurance costs range from an average of $400 to $800 per year.
However, many people fail to consider what can be learned from previous insurance claims and how those lessons can impact your business forever.
1. Stop Repeating the Same Mistakes
No business wants to find itself in a Groundhog Day scenario where the same insurance claims are repeated again and again. However, identifying common mistakes is essential for preventing your insurance premiums from spiralling.
Repeated errors represent a threat to the relationships with your clients, product quality, and your organisation’s reputation.
Going over previous insurance claims and spotting trends and patterns provides clues for where you can make changes. For example, one study from the University of Texas revealed that organisations ranging from BP to NASA consistently make the same mistakes and that it costs them millions every year.
While the scale of these costs will not apply to small businesses, even a single claim could see your profits wiped out for the year.
Use your insurance claims history as a learning opportunity.
2. Protect Your Customers from Harm
A simple trip or fall on your premises can easily lead to a six-figure lawsuit if the injuries are significant enough.
Unfortunately, accidents happen, which is why businesses have professional and general liability insurance policies. Go over your policies and find out more here about what liability insurance will and will not protect your business from.
However, reviewing your previous insurance claims may indicate changes that need to be made. For example, if you’ve experienced multiple claims for injuries caused by wet floors, it shows you need to alter your cleaning procedures.
Likewise, suppose slips and trips happen in a particular part of your facility. In that case, it shows that you need to implement brand-new safety procedures for customers visiting that part of your firm.
3. Reduce the Number of Workplace Injuries
Workplace injuries are, sadly, commonplace across America. Injuries range from minor sprains and muscle tears to fatal injuries. Obviously, the industry you operate in will define the level of risk you assume.
As a business owner, you have a moral and ethical duty to keep your employees as safe as possible. Accidents can and will happen, and your insurance will ensure that your employees’ medical and legal costs are accounted for, but you can use these incidents to change how you operate.
Establishing a workplace health and safety framework requires a tailored approach. Health and safety bodies can only provide general advice. You need to work those policies into your business processes.
For example, if falls caused by oil slicks are common, you may need to develop new policies for removing spilled oil at the earliest possible opportunity.
Another example could be the employee parking lot. If you receive a higher-than-average number of claims due to falls on wet or slippery ground, investing in a third party to winterize your parking lot could be the way forward.
Mitigating workplace injuries must be a priority because, beyond the immediate costs, you need to cope with lost productivity and reduced manpower, which impacts every aspect of your operations.
4. Create Better Quality Products
Insurance claims relating to products can offer further insights into your manufacturing processes. For example, claims for faulty products demonstrate that something is going wrong somewhere within the process.
Poor quality products represent a death knell for businesses in today’s world. Customers expect consistency in their products while maintaining a high-quality finish.
For example, if a dairy farmer discovers a pattern of insurance claims relating to product spoilage, they know they need to alter their harvesting and storage processes. Failing to do so means thousands of dollars lost per year.
Your insurance claims history lets you take an honest look at your processes and whether you needlessly lose money on your production processes.
5. Find Inefficiencies in Your Business
Another added benefit of reviewing your insurance claims is exposing the inefficiencies undermining your firm’s procedures.
If you’re in the food business and regularly lose 10% of your products to degradation, you need to look at how your product handling procedures are working.
Claims shed light on areas of inefficiency, even in unrelated areas. For example, insurance claims can highlight a lack of communication between workers and management. They could also unveil inefficient procedures within your HR department.
Going beyond the insurance claim itself will help you uncover those areas of improvement.
6. Lower Your Premiums
Your insurer is always watching. Clients with a long claims history represent a risk for any reputable insurer. Every claim you make will lead to higher premiums, costing you thousands over your business’s lifespan.
Taking steps to reduce the number of claims made against your business will reward you with lower premiums.
High insurance premiums are a big problem for businesses, as they cut into cash flow and lower your chances of reinvesting more of your profits into development and expansion operations.
Moving to improve your health and safety record shows insurers that you are concerned with safety and taking the necessary steps to eliminate the chances of a claim occurring.
Conclusion
Running a business without insurance is like driving without a seatbelt. Comprehensive business insurance should be considered as essential a cost as renting out an office. Insurance protects your employees, your customers, and your finances.
It is also an opportunity to take an honest look at your organization and the way it operates. Discovering areas where unsafe working conditions prevail and inefficiencies in your processes can elevate your company and take it to the next level.
What is the most important lesson you’ve learned from a previous insurance claim?
