Being your own boss comes with a lot of perks: you get to work on something that you’re passionate about and you get to do it on your own terms. The downside is that you’re also the one losing sleep over the risks that come with owning a business. One way to mitigate risk is with insurance; however, many small business owners – especially those that work from home – neglect this important safeguard. Are you falling victim to one of these common myths about small business insurance?
Myth #1: My business is so small, I don’t need insurance.
Almost 50 percent of business owners don’t have business insurance, either because they are afraid it’s too expensive, or they don’t understand it. Regardless of the size of your business, it is your livelihood and it is worth protecting. And the smaller your business is, the bigger an impact one incident could have on its viability.
Myth #2: My home insurance covers my home-based business.
Your home insurance policy provides you coverage for your home as a residence, not as a place of business. Not only does your home insurance not cover your home-based business, but if you haven’t disclosed that you’re running a business out of your home, it could void your policy. So if you haven’t already, your first order of business is to alert your current insurance provider that you’re running a business out of your home. Some won’t provide coverage for home-based businesses, so you might need to find a new company.
Myth #3: I don’t need to let my car insurance provider know that I own a small business.
First, it’s important to know that your car insurance only covers your car; it doesn’t cover any business-related inventory, materials or tools that could be stolen or damaged in an accident. In addition, using your personal car for business use could void your policy. And although you may have advised your insurance company that you do occasionally use your vehicle for business, you’ll want to be clear about what that means.
Take this story for example: A woman disclosed to her insurance company that she was using her car for some business; however, she didn’t realize that her insurance wouldn’t cover her if she was using it for deliveries. When she submitted her claim, it was denied because her car was wrecked while delivering her product to a customer. If you’re not sure how your small business impacts your car insurance coverage, call your provider to find out the details.
Myth #4: I don’t need liability insurance for my home-based business.
Even if you’re running a business from your home, you likely need liability insurance. Liability coverage will protect from the following:
- If someone is visiting your home for business purposes (like a courier), slips and falls
- If you are successfully sued because of problems with your product or service
- If you cause damage to a client’s property when you’re working off-site
Myth #5: I don’t need to worry about a cyber-attack on my business.
Think your business is too small to be targeted in a cyber attack? The scary truth is that small and medium-sized businesses are increasingly targeted by cyber attacks, and small teams and budgets mean they are often less prepared. The data is sobering: 43 percent of cyber-attacks are on small to medium sized businesses; small businesses pay more than triple the cost for cyber-fraud than larger businesses; and almost 60 percent of small businesses go out of business within six months of a cyber-attack. In addition to boosting your cyber-security, cyber insurance coverage could protect your business in the event of a breach.
If you believed any of these myths, it might be time to rethink the insurance – or lack of insurance – you have for your small business. Protecting your livelihood will give you peace of mind, and let you focus on the hard work of running your own business.