Forming your own business is a lot of work – more than what the average person clocks in a week. So, shouldn’t you protect your time and effort by insuring your company? Getting insurance is a smart bet and easy to set up with a simple call to our office. Don’t make one of these mistakes made by many small business owners, including those who self-operate.

  1. Relying on your homeowner’s policy for coverage.

Even if you run your business out of a home office, thinking you can rely on your homeowner’s policy can land you in a financial heap of trouble if something were to go wrong. Homeowner’s insurance does not cover any property, including structures and equipment, used for a business. If a visitor hurts themselves, even if they are over for personal reasons and not business ones, your homeowner’s insurance can deny your claim for coverage against those injuries. In order to be properly covered as a business owner, especially if you work out of your home, you need to have Business Personal Property Insurance, On/Off Premises Liability Insurance, General Liability Business Insurance and, depending on your line of work, Error and Omissions Liability Coverage.

  1. Paying too much or having the wrong coverage.

It’s easy to sign up for insurance online but mistakes in coverage levels and types of coverages can be made. You should speak directly with one of our Magruder agents to discuss your business and insurance needs. Our agents will find you the perfect match in coverage options and do all of the searching around for the best rates for you. There’s no need to pay more for insurance if you don’t have to – that’s money better spent elsewhere in your business. Not to mention, having the wrong type of coverage or not enough coverage can leave your business open to financial distress.

  1. Not having disability insurance.

Whether the business is just you or for an office full of employees, skipping disability insurance is a major mistake for the sake of cutting costs. Did you know that a disability can be more devastating to a family than a death? More homes are lost following a catastrophic injury resulting in a disability than any other reason. There are a few important aspects of disability insurance to remember that is specific to small business owners and entrepreneurs. Try to select coverage that will pay out if you are disabled and unable to work in your field rather than not able to work at all. Also look for policies that will pay until you are 65 or older so that you are covered for life long injuries. If your income is based primarily on commission rather than a flat rate, then make sure the policy you select provides coverage for that type of income. Although you or your employees may never need to use the coverage, having that peace of mind can make your company a better place to work.

  1. Not having life insurance.

This is especially important for business owners who are the sole employee. What would happen financially to your business or to your family if you were to pass away suddenly? Would your family be able to survive the financial loss of your income? Having life insurance provides some financial security to those you leave behind.

If you have employees that are essential to your business who would be difficult or impossible to replace then you should also purchase life insurance for key employees. This type of insurance will help keep your business afloat if you suddenly lose an employee that is essential to the daily function of your company.

  1. Not having loss-of-income coverage.

If your business is ever forced to shut down because of a natural disaster, that leaves you and your employees without income. In order to protect yourself and your company you should get loss of income or business interruption insurance, especially if your business is located in an area prone to natural disasters.

  1. Business listed as an LLC not having general liability insurance.

Too often people who form an LLC don’t think that they need to have general liability insurance for their business because their personal assets are already protected from being used to satisfy business obligations. Meaning, that the formation of a LLC protects your home from being taken if you are sued. However, if someone is injured at your business location and you are sued for the injuries sustained, you will have to pay for those injuries somehow. Or if while working, one of your employees damages a client’s property then you are on the hook for those damages. If liquidating your business assets is not enough, you may lose your business and all of your hard work to get it up and running will go down the drain. General liability insurance is one way to protect you and your business from a lawsuit.