Mistakes you should avoid when taking out your business insurance

2024-07-10 10:05:58

Shops are a fundamental part of the Spanish business fabric. One of the most important tools to protect them and to guarantee the viability of the business is insurance. But, when signing a policy, it is necessary that all details are clear and verified by the client.

The accuracy of the information provided not only guarantees the validity of the contract, but also protects the insured from possible inconveniences in the future. Errors or ambiguities in the data can lead to erroneous premiums, inadequate compensation and poorly provided coverage or guarantees.

For this reason, Mapfre insists on the importance of a detailed review of the contract and the need for clarity in every detail of the document to ensure the rights and responsibilities of the insured and the insurer. To this end, the company was a pioneer in the sector when it incorporated sample photos within the General Conditions of Multi-Risk Commercial Insurance. This improves the most important problem, inaccuracy in asserting protections against theft. These images show the various protective elements that a property may have, or the materials, etc. to help the client identify what to include in their return

Likewise, and to facilitate the improvement of contracts for its clients, Mapfre has analyzed more than 600 claim files that show the 5 most frequent mistakes when contracting insurance for a business as detailed below:

1. Not adequately asserting existing theft protections. It is extremely important that the clients ensure that the protections included in the policy correspond to reality. Properties with high levels of protection (metal locks, alarms, doors with more than two closing points to the frame) benefit from significant discounts. For this reason, when the accident occurs, and not all holes are protected or the protections do not correspond to their definition, the rule of equity is applied.

The IS equity rule It is used when there is some variation in the premises which would result in paying more premium than what is charged, for example, the policy stating that there are fire extinguishers in the premises and it is verified that they have not caught fire. In the example, if the premium charged for having fire extinguishers was discounted by 10%, the compensation would also be reduced by 10%. This is one of the mechanisms implemented to compensate for insufficient premiums in the event of an accident where the identified risk does not correspond to the contractual risk. It must be taken into account that the premium must be adapted to the factors that make up the rate.

2. Another of the most common errors is related to the sums insured which corresponds to the building (called continent) and furniture, machinery and stock (known as matter). The insured always sets the insured amounts, and before signing the contract that binds the insurer, they must verify the accuracy of the amount they contract, which must be true. Since the insurance sector is one of the most regulated, if in the event of an accident the contract amounts are lower, the rule of underinsurance is applied, another of the mechanisms established by law to ensure solvency guarantee for the group of insured persons.

The IS underinsurance rule It is used when the amounts declared in the policy are lower than those identified in the claim. In that case, the company compensates in the same proportion as it insures. For example, if a shop declares that it has €10,000 in stock, and after an accident the expert verifies that there is €20,000, the compensation will be reduced by 50% because, with €10,000, the company is only insuring half of what is actually on the premises?

One of the important issues is that it is not enough to declare the amounts correctly at the beginning of the policy, but at least At each maturity it is necessary to review whether there is an increase in capitalfor example, due to renovations to the premises or an increase in stock due to increased business

3. Likewise, another mistake was made failure to adequately report details of the location of the risk. When a client is going to sign the policy, they must check that the location of their business included in the contract is correct, since, for example, a location within a shopping center building means a lower premium, unlike in case of being i. industrial estate, which incurs a surcharge. The inaccuracy of that fact would involve the application of the rule of equity.
4. Failure to confirm the regime of ownership of the premises This is another one of the most common mistakes made when signing a policy. This information is important since the premises being operated as a tenant or owner is related, among other things, to the scope of coverage of the building or container, to the furniture, to civil liability and, therefore, with the. cousin. Likewise, an inaccurate statement implies that the rule of equity applies.
5. Last but not least, we see an error do not give details of the presence of combustible materials or unsound construction. Many clients who insure their business do not carefully review the information included and forget to include combustible materials such as wooden beams or sandwich panels used on roofs or cold rooms (it consists of two sheets of metal which contain combustible material. ). Similarly, weak materials on the walls or roofs, such as sheets of fiberglass, uralite or plain metal sheet, imply a higher premium, so if they are not declared, the rule would also apply in the event of an Equity accident

In addition, the insurer recommends that its clients, when necessary, ask any of Mapfre’s professionals, who can advise them and inform them of the best insurance solution in each case. It must be taken into account that both the insurer and the insured share the responsibility of verifying what is contracted, and each company has an interest in ensuring that contracts are easily understandable to clients, who do not have to use terminology master of insurance. In this sense, Mapfre works with a continuous improvement model so that customers’ expectations are fully met, at the time of the event, that is when the quality of the insurance is assessed.

Likewise, the company offers an insurance catalog tailored to the specific needs of each company, both in terms of size and type of business. This adaptability and focus on transparency and understanding of the contract ensures that, at the critical moment of an incident, companies can have the protection they need, exceeding their expectations.

Finally, proper insurance contracting and management is essential for business continuity. And it is important that both the intermediary and the client correctly determine each element to be confirmed. Mapfre, with its innovative approach and commitment to continuous improvement, is positioned as a key ally for companies, helping them face challenges.