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Small Business Insurance: Fact vs. Fiction

As a small business owner, you have a full plate of responsibilities every day. You wear many hats, and you may even have your own personal finances tied with your business finances.


As a small business owner, you have a full plate of responsibilities every day. You wear many hats, and you may even have your own personal finances tied in with your business finances. Every dollar is precious, and you’re cautious about spending those dollars. But you also need to mitigate the many risks you’re juggling, and the right insurance coverage is crucial.

Unfortunately, insurance is one area where many business owners have bought into some common myths – with costly consequences.

There are plenty of misconceptions about business insurance floating around. Let’s look at 10 of the most common and do a little myth busting.

  1. I have plenty of coverage. It’s easy to put off reviewing your insurance policies before renewal. But business exposures change quickly, and you should regularly review your policies to make sure your coverage, limits, and deductibles are always adequate. For example, business auto liability limits are often too low. Ask your agent if you should consider an umbrella.
  2. My general liability insurance policy will protect me. Every policy has exclusions, so make sure you know exactly what your general liability insurance policy does and doesn’t cover to avoid an unexpected surprise. Tip: Ask your agent if cyber liability exposures such as a data beach would be covered.
  3. My employees are trustworthy – I don’t need employment practices liability coverage. Business owners want to believe their employees would never sue. But employment practices liability is the fastest growing area of litigation for small businesses, so you’re taking a big risk without EPL coverage.
  4. Errors & omissions coverage is only for doctors and lawyers. Whether you’re a marketing consultant, wedding planner, website designer, real estate agent or other consultant providing advice for a fee, you have E&O exposure. If you give bad advice that ends up costing the client, you could be facing a costly lawsuit.
  5. My small business won’t get sued. Big or small, any business can get sued for a number of reasons. And if you get sued and are found liable, it could devastate your small business. Make sure your liability coverage is adequate for today’s exposures.
  6. Business interruption coverage is included in my GL policy. Buying into this myth can cost you dearly if your business is shut down by natural disaster, equipment failure, or other unforeseen event. With your income at a standstill and bills still piling up, you’ll be thankful to have this coverage.
  7. We don’t need cyber liability coverage. Small businesses are generally less protected than larger businesses, so they can be an easy mark – and the bad guys know it. Cyber crime is one of the fastest growing risks to businesses of all sizes, and if you have private data that needs protecting, you’re vulnerable.
  8. I use my personal vehicle, so I don’t need business auto coverage. Most personal auto insurance policies exclude coverage for business use, so if you have an accident in your own vehicle while running a business errand, it’s likely not covered.
  9. I work from home and don’t need business insurance. Your homeowner’s policy may not cover any business-related damages that occur in your home office. Even if some of your business property is covered, that coverage may not apply when you travel for work. Ask your agent if you would benefit from a simply general liability policy.
  10. My property insurance includes flood coverage. False again. You need a special flood insurance policy to have flood insurance protection – even if your business is not located in a flood zone. Get details here.

Before you purchase your next policy or renew your existing coverage, talk to you independent agent. We’ll help you separate fact from fiction and make sure your business is fully protected.