Even with the know-how and drive that it takes to operate a thriving small business, it’s easy to fall for these everyday misconceptions about liability coverage. 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.
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, so make sure to check what, in fact, your policy has to say about your business. Consider what would happen if a colleague is injured on your property, or if you use your car for purposes related to your business — how does this affect your current car insurance policy rate? Your agent can help you understand the ramifications and examine the benefits of liability protection.
Myth 2: My business is too small for liability insurance.
Any enterprise, no matter its size, can be sued. For example, someone might claim your business caused them harm 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. 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 that you’ll ever face a claim, liability insurance is a wise investment that often doesn’t cost much. But if you were to face a claim without coverage, you could wind up incurring high costs. Consider the possible financial risk of an unforeseen problem.
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. 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.
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’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.
Just like an unforeseen medical emergency can happen at any time, so can an on-the-job accident or a claim against your small business. Liability coverage can go a long way toward giving you peace of mind and protecting you and your business from unexpected problems.
Customized Coverage for Your Business
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!