Small businesses often choose the wrong insurance polices. They end up with too little coverage, or even none at all because they had been misinformed about what business insurance is. Therefore, this article is here to help businesses navigate through all these myths and debunk them.
1. It is too expensive to buy business insurance
The value of business insurance is much more than just its price - just imagine how much of a greater financial burden lawsuits, renovations or extensive repairs will be. The reality is, smaller companies stand to gain the most from business insurance, because they are the most vulnerable to these unforeseen circumstances. Business insurance gives us the assurance that our firms will be able to tide through difficult times.
2. General liability insurance is sufficient
Many people assume that the word "general" means that the policy will be comprehensive enough for their business. However, general liability insurance only protects companies from risks that threaten the existence of your company.
Think of general liability as a foundational level of protection that covers for risks that you could pose to a third-party. The "general" here is referring to your liability, not all possible risks
3. Online businesses do not need property insurance
"Property" is not the same as "real estate". In fact, property is any physical product that you possess and other tangible objects that you utilize for work - supplies, equipment, raw materials and vehicles! In other words, "property" can be thought of as "possessions".
Moreover, we should focus on not just the monetary value of property, but also its replacement value, and how important it is to your business.
For instance, a handyman gets his vehicle stolen. Even if the vehicle may not be expensive for the business to buy again, the time and effort spent to replace this vehicle may add up to a lot!
4. Small businesses do not have to concern themselves with cyber attacks
It may come as a surprise, but hackers actually tend to target small businesses more. These hackers have come to realize that smaller businesses do not spend much on cybersecurity measures, making them much easier to hack. Thus, it is also important to invest in a good cybersecurity plan.
5. You can get reduce your premiums by declaring lower profits
Revenue is one of the many aspects that insurance providers consider to decide the cost of business insurance premiums. However, this should not be a reason for companies to underdeclare their profits.
This is actually a form of insurance fraud, and it is actually the reason why premiums have been on the rise lately.
6. My company doesn't need insurance because it is so small
Risk can manifest in many different ways. Risk can come in the form of fires that destroy your goods, a lawsuit by a customer and theft of a company car. These are problems that rarely cross business-owners' minds. However, these instances actually happen in real life, and businesses have incurred significant losses because of them. Every business, big or small, should consider business insurance to protect themselves from these risks.
7. My home-based business is sufficiently covered under home insurance
Insurance companies see your business and your home as two separate entities. Admittedly, home and business insurance can sometimes overlap when it comes to the risks that they provide coverage for. However, the premiums are derived from very distinct calculations. Homes are a lot less susceptible to risks compared to companies, and so the two insurance types are crafted very differently from one another.
If you were to file your business claim under your home insurance policy, there is no guarantee that you will be sufficiently covered for your losses, or even covered at all! It is crucial that home-based businesses are protected under a separate business policy.
8. My commercial vehicle is adequately covered for under personal vehicle insurance
Your personal vehicle insurance will only be able to cover for your lunch break or your commute, for example. However, when it comes to accidents that occur during work. A commercial vehicle insurance policy will cover for your commute to work and work deliveries.
Although there are a few exceptions to this, it is generally safer for businesses to invest in commercial vehicle insurance, and not depend only on personal vehicle insurance.
9. Professional liability insurance is only for big companies
Although many small firms find lawsuits very unlikely, they actually do happen. It takes a few minor mistakes to trigger a customer to file a lawsuit against you, and this lawsuit could cost you thousands of dollars. Even if you go out of your way to prevent these accidents from happening, there will always be a chance that you will not be sued. Moreover, these lawsuits are expensive, even if you win them!
10. Insurance is not needed for your workers, unless they work in a warehouse.
This is untrue. In fact, the Singapore government even makes it compulsory for businesses to protect their employees under the Work Injury Compensation Act (WICA). Moreover, it is still possible that serious injuries can happen even in office environments. It is therefore crucial for businesses to invest in insurance to protect their workers.
Conclusion
It is crucial that businesses protect themselves adequately through business insurance. After all, you wouldn't want all your hard work to go down the drain with an unforeseen circumstance that forces you to incur expenses. Contact me here if you are interested in finding our more about business insurance.
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