7 Insurance Mistakes That Can Sink a Business
Most businesses don’t fail because of competition — they fail because of a preventable mistake that comes back to bite them at the worst time.
In almost every insurance review I’ve done, I find landmines waiting to go off: gaps, poor bookkeeping, under-insured risks, or coverage that was never explained.
Here are the 7 most common mistakes I see — and how to avoid them.
Mistake #1 — Having No Coherent Plan
Most owners collect policies like puzzle pieces that never fit. One policy here, another there, none of them working together.
The result? Overlaps in some areas, gaping holes in others.
👉 The fix: Work with one advisor who organizes both business and personal coverage under a single strategy.
Mistake #2 — Insuring the Wrong Things
Too many owners waste money on low deductibles or gimmicky add-ons, while leaving the real risks exposed.
👉 The fix: Put your dollars where they matter — liability, workers’ comp, vehicles, property, tools.
Mistake #3 — Playing the Short Game
Jumping from carrier to carrier every year might look like “smart shopping,” but it destroys your long-term pricing power.
👉 The fix: Stay the course for 3–4 years to qualify for loyalty credits and top-tier programs. Shop strategically, not frantically.
Mistake #4 — Ignoring the Audit
Your insurance audit isn’t just paperwork — it determines your premiums.
👉 The fix: Keep clean books, accurate payroll, and documented subs. Sloppy records = higher premiums.
Mistake #5 — Not Protecting Against the Big Loss
The $2,000 mistake you can pay out of pocket won’t sink you. The six-figure lawsuit will.
👉 The fix: Carry coverage for disasters, not annoyances. That’s what keeps businesses alive
Mistake #6 — Letting Renewals Run on Autopilot
Too many owners sign renewals without review. The problem? Carriers quietly adjust terms, raise deductibles, or strip coverages.
👉 The fix: Treat every renewal as a chance for a strategic review, not just a signature.
Mistake #7 — Choosing Price Over Partnership
The “cheapest” quote is almost always the weakest. The true cost shows up at claim time — when you realize you weren’t actually covered.
👉 The fix: Choose an advisor who builds a plan, not a salesperson chasing commissions.
