Successful businesses do not just push for growth. They also manage risk better than most. They do not wait for bad things to happen before making a move. Instead, they place themselves in a position to weather any storm. Insurance is one of the best tools for risk management. Different types can help in specific situations. It is up to each owner to choose a suitable coverage and payout limit. Unfortunately, not everyone takes advantage of this highly effective and accessible tool. False notions get in the way. Below are five common misconceptions about small business insurance:
Myth #1: Insurance is Unnecessary for Small Businesses
Most businesses start small because of their available capital. Some owners may keep it lean and mean throughout the years for ease of management. They tend to be sensitive to expenses, cutting anything they view unnecessary. Insurance could end up on the chopping block with this mindset. They may think that only big businesses need coverage because of their scale and scope. However, the reality is that all businesses need protection from sudden financial shocks and legal difficulties. Lawsuits and other problems can come when you least expect them. Insurance helps you bounce back quickly from any setback.
Myth #2: Small Home-based Operations Do not Need Insurance
People also tend to view businesses with an office, a store, or other forms of physical presence as special – as if these are serious establishments worthy of insurance. On the other hand, they see home-based businesses as too small to merit such a measure. The truth is that a business is a business no matter where it is conducted. Entrepreneurs who work from home are still vulnerable to the same issues that plague their counterparts who grind elsewhere. Consult an expert to figure out which policies are suitable for your situation.
Myth #3: Insurance is Only for Businesses with Many Employees
Small businesses tend to have few employees. Many of them only have the owner doing everything to keep it going. Others may have one or two paid staff. Such a skeleton crew simplifies the operation and reduces expenses. Insurance will certainly add complexity and cost, making owners hesitant about getting it. Consider the potential benefits before saying no. Companies are in a better position to deal with financial shocks than small businesses because of their substantial assets. They can dig deep if necessary. If anything, it is the latter that needs insurance to prevent a complete collapse in case of an accident, a lawsuit, or a disaster.
Myth #4: Family Businesses Can Ignore Workers’ Compensation
A lot of businesses are mom-and-pop shops. The parents manage the store while the kids help them out. They might also employ cousins, siblings, nieces, and nephews. It can feel like an informal arrangement that does not require insurance, but family businesses can benefit from coverage when problems arise. Owners should also remember that they still need to follow state laws regarding insurance, such as workers’ compensation for their employees. Family members do not get an exemption in some states, so check the laws in your area to make sure you are following the rules.
Myth #5: Commercial Auto Insurance is Only for Commercial Vehicles
Do you use a car for your business? In most cases, personal vehicles can get adequate coverage through personal auto insurance. Meanwhile, commercial vehicles require commercial auto insurance. It can get blurry when it comes to small businesses. You see, insurance coverage depends on the vehicle use, not the ownership. If you drive your car for business deliveries, personal policies are unlikely to cover the cost of damages during your work. Get commercial auto insurance for better protection.
As you can see, business insurance is not always straightforward. You cannot just ignore it because you want to minimize operational expenses. Follow the relevant laws in your area about mandatory coverage. Consider the advantages of insuring your small business as well. It may prove to be the best investment you will make.