Even with the know-how and drive to operate a small business, it’s easy to fall for these everyday misconceptions about liability coverage. Learn the facts about liability insurance for small businesses so you can protect yourself against losses, lawsuits and avoidable costs.

Myth 1: I operate out of my home, so I’m covered by my homeowners policy.

Not so fast. Your typical homeowners policy will protect damage to your home, but it may not cover everything related to your home-based business. In fact, many homeowners policies specifically exclude business liabilities. Consider what would happen if a colleague is injured on your property, or if you use your car for purposes related to your business. Your agent can help protect you from these kinds of risks.

Myth 2: My business is too small for liability insurance.

Any enterprise, no matter its size, can be sued. Someone might claim your business caused them harm as the result of a defective product, for example. Liability insurance can cover damages for which you are found liable, plus attorney’s fees and other legal expenses. It can also contribute toward the medical bills of anyone injured by your business.

Myth 3: I need to cut costs somewhere, and liability insurance premiums are an easy place to start.

Even if it’s unlikely you’ll face a claim, liability insurance is a wise investment that often does not cost much. But if you were to face a claim without coverage, you could wind up incurring high costs.

Myth 4: A work-related injury is unlikely for my business, so I don’t need it.

Liability coverage varies based on business type. For example, a building contractor may need more coverage than a graphic artist. But these policies cover more than physical injury on your company’s property. They can cover claims of false or misleading advertising, such as libel or copyright infringement. They can also protect you against liability if you operate out of a rental property that is damaged by fire, for example.

Myth 5: I’m covered, so I won’t have to pay anything if I am sued.

Much like other insurance policies, your liability coverage will include a maximum that would be paid against a claim. So if your small business was sued for $300,000 for medical costs associated with an injury that happened on your business’ property, plus $150,000 for pain and suffering, but your coverage was limited to $300,000, you could be responsible for paying the difference of $150,000.

SOURCES: Insurance Information Institute, Small Business Administration

Small business insurance from Farm Bureau can help protect your company from the uncertainties that can be devastating to your business. Your agent will spend time customizing your coverage around your specific business operation and more. Connect with an agent today!