7 Business Insurance Myths

Insurance can be challenging to understand fully. There are a lot of confusing policies out there, that’s evident. 

As a result, more than one or two myths have spread around about which insurance policy covers what. While we can’t possibly clear up every misconception here, we’ll do our best to sort the ones that we believe are most pressing. 

That said, here are the top eight insurance myths that we’ve seen time and time again. 

You only need business insurance if you have employees. This myth is entirely untrue. It doesn’t matter whether you’re managing an entire staff of people or running the operations yourself; you need business insurance. 

Too many of the day-to-day risks that entrepreneurs face aren’t covered by their homeowner’s insurance. That leaves them open in many areas. The same applies to independent contractors who operate in a high-risk industry. 

In either case, you need to have specialized coverage to protect yourself. Check with your agent for details you need for coverage in your local area.

You only need a basic policy for your small business. 

As a general rule, you will need more than a basic policy. Every business is unique, and as such, every business should have its own set of guidelines to keep everything secure and safe. 

Some rely on their inventory, while others are concerned with sensitive information. Make sure your policy covers your business’s interests. Each state has its own recommended policy terms.

• You can skip commercial auto insurance if you only use personal vehicles for your business. 

Many standard personnel automobile policies won’t cover an auto accident, which took place during business hours. Because of that, you should consider having a commercial auto insurance policy that covers you and your employees. 

• Business insurance is expensive. 

Yet, again, this is another common misconception. There is many factors that go into business insurance based on your unique situation. Call your insurance agent and discuss your business with them.  Getting the right insurance is a small price to pay in exchange for security in your livelihood. 

• You don’t need worker’s compensation insurance if you’re a sole proprietor. 

Even though you may be able to file for an exemption in some states, talk with a professional first. In the unfortunate case that someone is injured on the job, your client would be charged with covering those expenses. 

That small detail could lose your future or current clients. Each state has its own requirements, doing your due diligence and finding out what you need will save you a costly decision long term if you take a chance without coverage.

• My business is too small to need insurance. 

Assuming that you don’t need insurance is one of the most common mistakes today. It’s not about square footage, employee count, or even your revenue. Your policies should always be grounded on your exposure to risk. 

• Home insurance is enough for my home-based business. 

Insurance companies see your business and your home as two separate things, even if you run your business from the comfort of your couch. So, you shouldn’t count on your home insurance to cover anything associated with your business. Reach out to your agent.

• Malpractice insurance is only for physicians. 

Malpractice insurance is only one part of the more significant Errors & Omissions (E&O) coverage or Professional Liability Insurance. 

It’ll cover you and your business in the case that you are sued over negligence or advice proved as harmful. 

To make sure that your business has the coverage it needs and that you don’t fall victim to one of these myths, review all of our business insurance products here.