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Are You Making One of These Five Common Mistakes With Your Small Business Insurance?

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Are You Making One of These Five Common Mistakes With Your Small Business Insurance?

As a business owner, you have to make hundreds of decisions each year. How much should I charge for my product? When and who should I hire to help grow my operations? What kind of insurance coverage do I need to protect myself and my business? It can be exhilarating to be the one calling the shots, but it can also be stressful. You need to be an expert on everything from marketing and HR, to business strategy and risk management. Anyone who has been in your shoes before will tell you – you’re bound to make a few mistakes along the way.

Unfortunately, there isn’t much room for mistakes when it comes to your insurance coverage, since one lawsuit or disaster could put you out of business. Luckily, a little knowledge can go a long way to protecting your livelihood, so take the time to make sure you aren’t making one of these five common insurance mistakes with your small business.

Mistake #1: Thinking your home insurance covers your home-based business

Many entrepreneurs that operate a business out of their home believe that their home insurance covers them from any disaster that might befall their business. This is not the case.

Your insurance provider wants to know if you are running a business out of your home, and not telling them could void your policy if you ever need to make a claim. Your insurance provider will help you find the right coverage for your business, whether it’s an extension of your current policy, general liability insurance to cover you if an employee or client injures themselves on a visit to your home, or contents insurance to cover the cost of your business equipment.

Mistake #2: Thinking your personal car insurance protects your vehicle and its contents when it is being used for business

Just like your home insurance does not cover your home-based business, your personal car insurance does not cover your car if business inventory or merchandise is stolen from your vehicle. Again, if you haven’t advised your insurance provider that you’re using your vehicle for business purposes, you run the risk of voiding your policy.

Mistake #3: Thinking your business is too small for cyber liability insurance

Small businesses are often targets of cyber attacks, specifically because they aren’t large enough to have IT teams that can prepare for, identify and manage an attack. Without cyber liability coverage, the majority of small businesses that are victims of cyber attacks go out of business. You’ll especially want to make this type of coverage a priority if you operate an online store, as you’re dealing with sensitive customer information.

Mistake #4: Not planning for a business interruption

Although you might have an insurance policy that protects your premises and contents, you’re open to another significant financial risk: loss of earnings due to an interruption to your business.

For example, if your storefront is damaged in a fire, will your business be able to survive without revenue over a few months of closure? Or, will you have the funds available to rent a temporary space to bridge the gap while waiting for your store to be renovated in the wake of a disaster? Business interruption insurance covers the loss of income your business would experience in the aftermath of a disaster-related closure, and it could be the difference between weathering the storm of a temporary shut down and closing your doors for good.

Mistake #5: Not taking advantage of opportunities to save money on your business insurance

Many small business owners don’t have the insurance they need to properly protect their business for a number of reasons including not knowing what type of coverage they need, or being worried that it may be expensive.

In reality, without the necessary insurance, the price of a single lawsuit or disaster could be the end of your business. Make sure you’re getting the best price possible for your coverage by shopping around and getting multiple quotes, since different providers will offer different plans and prices for the same business.

If you’re making one or more of these common mistakes, make it your priority to invest in the right insurance coverage for your business. And while you’re looking for the right solution, talk to your current provider to make sure that you aren’t voiding any personal car or home insurance plans. It’s okay to make mistakes as you build and grow your business, and with the right insurance coverage, you’ll be able to recover from the missteps and disasters that come your way.

I am the founder of Startup Today. I am the main writer and have put in many hours of work into creating this blog. If you want to find out more about me then lets get in contact.

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