Insurance Horror Stories Abound! Here Are 7 Tips to Prevent Disaster, From Business Owners Who Learned the Hard Way

It’s just about the last thing an entrepreneur wants to hear: Your product has started to explode.  Insurance horror stories are far too common, with founders who thought they were secure left reeling when disaster actually strikes. Here’s the advice that entrepreneurs have for dealing with the industry.

1. Do your due diligence before signing.  Not all insurers are made equal.  Researching the reputations of the insurance providers is crucial.  Gett first-hand knowledge, or just as many reviews [as you can], because there are absolutely horrible insurance agencies out there.
2. Know what’s covered before you need it covered.  Even if you don’t want to think about your insurance except in the case of an emergency, get ready to use it from day one. Read through your policy thoroughly and create a process for what you’re going to do when things go sideways.  Having your legal counsel review your policy can also be a good option.
3. Act like you’re uninsured, even though you aren’t.  It definitely is worth getting insurance just in case something bad could happens, but it’s more on the business owner to make sure that it doesn’t happen,” “Having business insurance, yes, it protected us in the end—but it almost also cost us the business.
4. Have more than one layer of protection.  Entrepreneurs should think about getting supplemental coverage from a smaller agency.  Big firms feel like they can push you around.  If you’ve got a little firm, you’ve got a better relationship with them; you’ve probably got one person you talk to. They’ll fight for you.
5. Be wary of contractors.  Insurers often don’t have enough adjusters to cover the entirety of a territory that’s been ravaged by a major natural disaster—so they farm it out to third parties. The resulting incentive system, he says, can be perverse. Contractors aim to resolve claims quickly to get paid and secure future contracts by minimizing expenses.
6. Get flood-ready.  If the water is about to come in from below, you should probably go chop a hole in your roof and let the water come in from up top, because you’re covered for that but you’re not covered for the rising water.    People tend to not know their policy. They think that they have insurance to cover their loss, and then they come to find out that they’re really not covered at all.
7. You paid for your insurance—so use it.  A lot of small-business owners think that if [they] make a claim, they’re going to get dropped or their rates are going to go way too high, so they don’t really push too hard. But that’s what you have insurance for—and the insurance carrier knows it.  So file the claim, and get your money.