5 Myths About Small Business Liability Insurance

It takes extraordinary knowledge and drive to operate a thriving small business. But it’s still easy to fall for misconceptions about business liability insurance. Even the savviest business owner may have questions about their general liability insurance coverage or may find themselves wondering what business liability insurance covers. Don’t fall prey to myths: Learn the facts about the importance of liability protection for small businesses, so you can protect yourself against avoidable losses and lawsuits — and unnecessary costs.

Myth 1: I Operate Out of My Home, So I’m Covered by My Homeowners Policy

A 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.

So, make sure to check what, in fact, your policy covers in your business, and whether general liability insurance coverage is needed. Consider what would happen if a colleague were injured on your property, for instance, and how you can protect yourself and them. Don’t forget: if you use your car for purposes related to your business, this might also affect your current car insurance policy rate. Your insurance company can help you understand the needs of your business and examine the benefits of liability protection.

Myth 2: My Small Business Doesn’t Need General Liability Insurance

It doesn’t matter how small your business is: Any enterprise, no matter its size, can be sued. For example, someone might claim your business caused harm to them as the result of a defective product. Liability insurance, however, can cover damages for which you are found liable, plus attorney’s fees and any other legal expenses that you may incur. For example, if a customer slips and gets hurt, your policy may contribute toward the medical bills and legal claims on your business. You don’t want to do business unprotected.

Myth 3: Skipping Business Liability Insurance Is an Easy Way to Cut Costs

Even if it’s unlikely that you’ll ever face a claim, keep in mind that general liability insurance coverage is a wise investment and can often be affordable. However, if you were to face a claim without coverage, you could wind up incurring high costs. The small payment to protect yourself against the potential of a much greater one down the line is worth the peace of mind, especially when it involves risks like bodily injury or property damage.  Be sure to consider the possible financial risks of unforeseen issues.

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 commercial general liability insurance policies cover more than physical injury on your company’s property. For instance, business liability protection can cover claims of false or misleading advertising, such as libel or copyright infringement. They can also protect you against liability if, for example, you operate out of a rental property that is damaged by fire. Again: the security is worth the cost.

Myth 5: I’m Covered, So I Won’t Have to Pay Anything if I Am Sued

Insurance will protect you, but it can’t mitigate every possible cost. Much like other insurance policies, your liability coverage will include a maximum that would be paid against a claim. So, if your small business were sued for $300,000 for bodily injury or property damage associated with an incident that happened on your business’s 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.

Yet, just as an unforeseen medical emergency can happen at any time, so can an on-the-job accident. Or a claim could arise against your small business without warning. Liability coverage can go a long way toward giving you peace of mind, protecting you and your business from unexpected problems and mitigating costs should they occur.

Customized Coverage for Your Business

Small business insurance from Farm Bureau can help protect your business 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!