This guide outlines the 5 most common misconceptions about insurance for small businesses — and why the myths are incorrect.
Protecting your business from sudden catastrophes is possible only with small business insurance. There are common myths surrounding this type of insurance that have deceived small business owners.
Insurance for small businesses: 5 myths
So today, we decided to take the concerns out of this process and debunk five common myths that will help you understand things more clearly and guide you in making sound judgments.
My Business is Too Small for Insurance
One of the most common myths is that small businesses do not require insurance. However many people think their small business is not at risk or that whatever potential losses might crop up they can absorb. All businesses, small or big, are vulnerable to property damage, theft, and bad publicity if accidents happen on the premises leading to compensation claims.
Even a small incident can cause economic hardship or bankruptcy when you aren’t insured. Insurance acts as a safety net by helping to shoulder the expenses of these risks. Having the right insurance, whether you are a one-man show or have a small team, is very important.
Full Protection with General Liability
While general liability insurance is important, it should not be the only thing businesses rely on. It is a common misconception made by most small business owners to think general liability insurance equals sufficient coverage against all possible risks.
Employees should not assume that they will be protected for all of their activities by general liability insurance since there are several cases where it may not apply, such as professional errors and omissions or employment injuries/business interruptions. Professional liability insurance, workers’ compensation, and business interruption coverage might be required for your industry or specific usage. Assess your unique business risks, then adjust coverage.
My Home-Based Business Doesn’t Need Insurance
Most home-based entrepreneurs assume that their homeowner policy will take care of business-related accidents. The problem is that most homeowner’s insurance policies do not provide coverage for business activities.
Businesses have many of the same risks as those with physical storefronts or offices. Wherever the store is located, equipment damage, liability claims, and even a break-in can happen.
This is why insurance for small businesses that addresses your home-based operations can play a vital role in the protection you receive. This might entail covering your general liability, professional liability, and business property insurance.
Insurance is Priced Too High
These small business owners frequently cite cost as the primary reason they do not insure themselves. One notion many hold is that small business insurance costs so much it would put them out of business, particularly for startups or any company with a tight operation budget. Of course, if something goes wrong, the costs are far smaller than what could have been lost in an uninsured event.
Factors such as business type, location, and coverage needs will impact the premiums for insurance along with claim history. Certain insurance packages, such as business owner’s policies (BOPs), combine coverage types at a lower cost. One way to minimize these risks, and the potential compensation a claim can demand from your company is taking out small business insurance.
I Need Insurance Only When My Business is Successful
Many people think they only need insurance for small businesses when their company is at a certain size or revenue point. But the truth is, there are risks in starting a business from day one. When you wait for your brand to grow before deciding to purchase insurance, the consequence is that you may be setting yourself up for tremendous financial losses right from the get-go.
Insurance may be wise from the outset. You can use it to win contracts, leases, and clients who want proof of insurance.
Conclusion
Knowing the truth about small business insurance will help secure your firm from unforeseen events. They enable you to make decisions as far as what kind of coverage your business might have.
Remember that every logistical operation comes with risks regardless of whether from the biggest to the smallest businesses on earth and insurance for small businesses is simply a way to invest for peace or perhaps financial security.
