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Friday, September 22, 2023

6 Business Insurance Myths that Entrepreneurs Should Never Believe


Insurance is hardly easy to understand. Even the most knowledgeable and skilled business leaders often feel underqualified to read and understand insurance policies. As a result, untrue myths are incredibly pervasive in the world of business insurance — which makes it even more difficult for entrepreneurs and business leaders to acquire the insurance coverage they need to thrive.

It is time for the most common myths about business insurance to get busted. Here are six business insurance myths that you might believe and the truth that can inform your insurance-related decisions into the future.

Business Insurance Is Too Expensive

Business budgets tend to be tight, and savvy entrepreneurs look for every possible way to eliminate expenses and keep costs low. However, skipping business insurance will always cost you more than your monthly premiums. In time, all businesses are threatened with at least one lawsuit, and business insurance can offer protection from the immense expenses of legal representation and compensatory damages. Without business insurance, your business might be able to weather a storm of litigation — but only if you have saved diligently into an emergency fund utilized for only such an occasion. Ultimately, if you do the math, you will find that business insurance is the much more affordable option, and it allows you to utilize more of your business capital for growth.

Only Major Corporations Get Sued

Your business is small, and you make a point of operating it ethically. Thus, you won’t ever be named in a lawsuit, right? Unfortunately, the opposite is true. Most big companies have the financial resources to fight lawsuits effectively, leaving plaintiffs unable and unwilling to pursue legal action against them. In contrast, small businesses are much more attractive targets, as few small businesses have extensive legal teams and thus are more likely to capitulate to plaintiff demands. The Small Business Administration estimates that between one-third and one-half of all small businesses are involved in litigation each year. This alone should convince you to protect yourself with business insurance.

Well-crafted Contracts Prevent Lost Lawsuits

Undeniably, contracts are essential for managing risk. However, contracts do not cover every event that can lead to a lawsuit. What’s more, the strongest contracts cannot prevent you from being sued; you will need to spend money on legal representation even if you do not ultimately need to pay a judgement. In contrast, insurance can cover all costs associated with legal defense. Contracts and insurance work together to all but fully eliminate certain types of risk.

Businesses Without Storefronts Don’t Need Insurance

Your business does not have a physical location where customers can visit and peruse wares, but you still need some form of liability insurance to protect you from other industry risks. If you see clients face-to-face in any capacity, you can benefit from general liability insurance; if you offer services to clients, you need professional liability insurance; if you have employees, you need employer liability insurance. You can talk with an insurance provider today to better understand your unique business situation and the insurance that can keep you safe.

Home-based Businesses Are Covered by Home Insurance

You run your business out of your home — and doesn’t home insurance cover all sorts of activities that occur under your roof? Home insurance is rather comprehensive, but most policies carve out clauses that restrict business use within the home. In fact, if you store inventory or see clients in your home, not only is your business exposed to risk but your home itself might suffer from reduced coverage.

Business Insurance Always Includes Unnecessary Coverage

Some business leaders believe that insurance is expensive because business policies are typically weighed down with coverage that does not even apply to them. This might be true if you opt for a cookie-cutter business owner’s policy, but if you work with an insurance provider to choose the exact coverage you need, you can cut costs and improve the quality of protection you receive. No two businesses are exactly alike, so business insurance providers are usually willing to work with business owners to modify their offerings and make everyone happy.

A failure to understand business insurance is not a good excuse to ignore it. Your business benefits greatly from specific forms of coverage, so you should work with an insurance provider to keep your business safe into the future.

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