You might think that insuring your small business is a frightening thought. However, every business needs insurance to make sure that it is protected against anything that comes its way. Not having insurance could mean the difference between surviving a calamity and having to shut your doors for good. Ideally, you would never have to use your insurance, but even then, the investment is worth your peace of mind.
However, there are a lot of misconceptions and false expectations out there, and if you fall victim to any one of them, you could find yourself in big trouble. Here are some of the most common expectations that don’t jibe with reality when it comes to business insurance.
Top 7 Most Common Insurance Issues
Expectation 1: My Personal Automobile Policy Will Cover My Work Vehicle
You might not use your vehicle for work very often, or you may not do anything particularly risky. However, your personal automobile coverage probably doesn’t apply to your work vehicle. In fact, it probably doesn’t apply to your personal vehicle even if you use it for work. If you get into an accident while carrying out work duties, you may end up being liable and not covered by your insurance. Make sure that you purchase the appropriate vehicle insurance for the vehicles you use for your business so that you aren’t left paying damages and medical bills out of your very own pocket.
Expectation 2: General Liability Business Insurance is Adequate For All My Needs
The reality is that if you want to properly protect your business, then your general liability insurance is not nearly enough. It does not cover damage to your property or anyone else’s property. It does not cover workers’ compensation or automobile accidents. You need general liability to protect you from a wide range of potential losses, but there are many more for which you need coverage. Do not think you are finished once you’ve purchased your liability coverage. Make sure that everything you have is protected, or else you will end up holding the bag.
Expectation 3: All Businesses Have the Same Insurance Needs
This is a common misconception that can cause a lot of problems. Many business owners will purchase a generic insurance package, assuming that they are all the same. However, nothing could be further from the truth. All businesses are different, which means that you need your insurance coverage to reflect that. If you are a handyman, then you need handyman insurance. If you run a grocery store, then purchase grocery store insurance right here. If you teach yoga, then there is a package for you, too. Every business has unique risks, therefore do not expect that your generic insurance policy will cover you for yours.
Expectation 4: Small Businesses Don’t Need Coverage
It doesn’t matter what size your business is. There is still a risk, and you could still find yourself with immense losses if disaster strikes. In fact, the argument could be made that insurance coverage is more important for small businesses than large ones. A small business may not have the resources to recover if they are taken to court or have to pay out lost wages and medical bills for an employee. The size of your business should not factor into whether or not you get insurance. It should only factor into how much coverage you purchase. You don’t need to have several million in coverage when your business in total is only worth a few hundred thousand, for example.
Expectation 5: If I Run My Business Out Of My Home, My Homeowners Policy Will Cover Me
More people than ever are choosing to work from home, and that includes new business owners. However, many expect that they will not have to take out additional insurance to cover a small business that operates within the home. This is simply incorrect. If you are the victim of a fire or flooding, then you could lose your equipment and inventory. In that case, your homeowner’s policy would not cover you, and you would be on the hook for the losses. Something like that could cripple your business. If you have a home office, make sure to get coverage for everything in that office, including your computer and office furniture, and insure your inventory as well. That way you can withstand anything life throws at you.
Expectation 6: Insurance Is Too Expensive And Not Worth It, You’ll Be Good On Your Own
Every business (especially your very own that you’ve created) is worth protecting, right? Do not think of any insurance as a luxury since it has more of its perks than you might think. In fact, did you know that most people consistently overestimate the price of their life, car, or business insurance? This is because most are misinformed and not aware that there are special options, add-ons, as well as different fees or additions that you can go for or deny with your business. You can always tailor your policy to fit your budget and your needs. Remember that it is always better to be safe than sorry and that most of you will want to feel protective over your business.
Expectation 7: I Don’t Need Property Insurance If I Don’t Have A Brick-And-Mortar Location
In the insurance world, “property” is not the same as your real estate. This definition applies to any product that you own and any other physical object that is much needed for your everyday routine and for you to do your job, or for your employees to do theirs. Risk comes in many forms. It can look like a fire that destroys your inventory. It can look like theft of the company car. Wouldn’t you want to be prepared for these extreme cases? For some, the property can be their warehouse, a piece of land, storage, etc. This is why you shouldn’t only focus on the monetary value of your property, but do think twice about the replacement value that will play a huge role in case your work field and your property are not insured.
These are just a few of the most common expectations that many business owners have that do not exactly match up with reality. When it comes to insurance you do not want to make any mistakes. If the unthinkable happens, then you could find yourself and your business in great peril. Always consider all the risks that you might have with operating your business, and purchase the policies that will adequately protect you from them. That way you can rest your head at night knowing that your business is safe and you can focus on growing it.