Small Business Insurance Myths

Busy woman looks at phone while sitting at desk with lamp and computer.
| 07.18.22
Susan G.

Maybe you’ve heard this one. “My business is too small to need insurance.” Yikes. Or, “I just need the bare minimum.” There are several common small business insurance myths and misconceptions we hope to clear up today. It’s essential to protect your business and your assets!

Top 10 Small Business Insurance Myths

  1. Not every business needs insurance. Oh my. This one is dangerous! There is no business out there that doesn’t need some level of business insurance. Small business owners work so hard to make their businesses successful. That effort is worth protecting. Not having any business insurance puts not only your small business at risk but also your personal property.
  2. Only businesses with employees need insurance. False. Only businesses with employees need workers’ compensation insurance (required in most states). Still, small businesses without employees need other types of business insurance like general liability insurance or a business owner’s policy, for example.
  3. Very small businesses don’t need business insurance. This is a rampant myth. You may think, hey, it’s just me selling on eBay or Etsy, for example. No harm, no foul. But even Etsy sellers need business insuran. There are inherent liabilities to owning any kind of business of any size.
  4. Business insurance is not affordable. Based on past experiences with other types of insurance (ahem, car insurance), many people believe that business insurance is out of their price range. Business insurance can actually be quite affordable! Getting an accurate quote for business insurance makes it clear.
  5. Car insurance is all I need for my car. This could be a tough lesson to learn. Car insurance typically covers your car and your medical care after an accident. But consider this scenario: you are driving your personal car to drop off an order to a customer. You glance down at your phone and don’t notice that traffic stopped, causing an accident. People in other cars you hit require medical care and their cars have damage. Will your car insurance cover the damage to the other cars or the medical care required by their drivers and passengers? No. Surprised? What you need to have in place is Hired and Non-Owned Automobile Insurance!
  6. My home-based business is covered by my homeowners policy. In truth, many home-based businesses are underinsured. It is easy to be lulled into thinking your business is covered by your homeowners policy. Unfortunately, your homeowners policy will not cover the space utilized by your business exclusively or your inventory and equipment. It also won’t protect you from liability if a customer trips in your home or any product you sell causes an injury, for example.
  7. Only doctors need professional liability insurance. Also called errors and omissions coverage, professional liability is actually appropriate for any business that involves professional advice or expertise. We’re talking to you accountants, architects, graphic designers, photographers, and more!
  8. My small business doesn’t need property insurance. When you think of property, you probably think of a home or store. In the insurance world, property means “things” basically. Anything tangible or a physical product used by your business. When considering whether you need property insurance, which is part of a business owner’s policy, consider the replacement cost for your business possessions. For some businesses, the replacement of heavy equipment would be quite costly, for example.
  9. I don’t need business insurance right away. You may think business insurance is a lower priority and something you can do later. In reality, many leasing contracts require business insurance to be in place (usually general liability coverage), and some business loans require proof of insurance. Not having business insurance can hinder your business launch or expansion. You’ll want to make sure your business is protected from day one!
  10. Cyber insurance is only for big companies. Not only were data breaches high in 2021, including small business data breaches, but cybercrime as a whole is up 600%. You need to ask yourself if your business can withstand a cyberattack. Can you afford the necessary customer notifications and potential resulting lawsuits? Will you be able to restore the lost data? Cyber insurance helps even small businesses with these kinds of costs.

We hope we’ve provided helpful business insurance facts to debunk these small business insurance myths. One of the best actions you can take for your small business is obtaining the right business insurance coverage. If you’re unsure if you have the right type of coverage, try our B2Z Coverage Tune-Up! It’s a quick quiz to help make your insurance needs clear. We’re here to help your small business get the right insurance coverage. Contact us at your convenience—we’d love to talk!

Many people believe that business insurance is out of their price range.

About the Author

B2Z Insurance is a small business insurance company that provides coverage for on-the-go business owners: simple explanations, easy application, digital quotes, and mobile claims. A product that is easy-to-use and helps you assess the unique coverage needs of your business with confidence—freeing you up to grow your business.