Written for EO by Sarah Mueller, CoverWallet
Starting and growing a business is an exciting endeavor. But it’s also a huge responsibility, considering all of the factors that go into keeping a business afloat.
Some business owners opt to protect their organization against unexpected pitfalls with business insurance. Business insurance helps you protect your financial, intellectual and physical assets from a loss in case of problems including property damage, theft, loss of income or employee injuries and illnesses.
With so many insurance policies available today, choosing the right business insurance can be confusing and overwhelming, and making a mistake in your choice could lead to financial losses due to claims.
Don’t Fall In to These Business Insurance Traps
Before you make any decisions about the business insurance that’s right for your organization, check out these five common business insurance misconceptions to avoid:
1. “It’s good to be over-insured.” Too much of a good thing can be bad for you, even when it comes to business insurance. Yes, you want comprehensive coverage, but you’re just wasting time and money if you buy policies that your business doesn’t need. Seek professional guidance to help you better understand what insurance products you need for your operations. Create a list for risk assessment and to help you identify the type of coverage that meets the requirements. Always ask questions if things are not clear to you.
2. “I have an LLC so general liability insurance is not needed.” You may think that your limited liability company (LLC) is covered against all liabilities. Wrong! You still need protection against claims, which is where general liability insurance comes into play. Otherwise, you may be asked to shell out money for medical expenses in case there are claims for things like third-party injuries that take place within a business.
3. “Having homeowner insurance covers home-based business.” Are you planning to set up operations in your home? If this is the case, you should look into buying a policy that is dedicated to your business. As the name implies, homeowner’s insurance protects you against financial losses from claims related to your home, but it does not protect your business.
There are many different kinds of business insurance to choose from. Consider looking into something called general liability insurance. At some companies, you can bundle commercial property and general liability insurance policies into one called a business owner’s policy.
4. “I don’t need to make changes to insurance once I buy it.” There’s no point in having coverage if it doesn’t have the right coverage in place. Keep in mind that the needs of your business change and, as your company grows, it’s crucial to revisit your insurance coverage regularly to make sure it covers exactly what you need. To make it easier for you, take note of significant changes in your business and consult your insurance agent to see if they affect your policy.
5. “Workers’ compensation coverage is not necessary.” If you don’t employ people in your business, you don’t need to buy workers’ compensation coverage, right? Wrong. This is a common insurance myth. In fact, most states in the US require businesses to have workers compensation. If this is not the case in your area, consider getting this coverage to protect the business against financial losses due to medical expenses from injuries sustained at work.
Sarah Mueller is a marketing manager at CoverWallet, a tech company that makes it easy for businesses to understand, buy and manage insurance—online and in minutes.