Nine Common Misconceptions About Small Business Insurance

A major issue standing in the way of small businesses and the insurance that can keep it afloat in times of trouble are misconceptions about small business insurance in Alberta. Below we are going to look at the common misconceptions and put them into perspective by revealing the facts.

There are over one million small businesses in Canada with under 100 employees. A vital component to running a small business successfully is utilizing small business insurance to protect the business. However, with all the other tasks business owners have to do, wading through pages of insurance information shouldn’t be one of them.

9 Common Misconceptions About Small Business Insurance

1. Insurance Brokers Work for Specific Insurance Companies

Some business owners are afraid to work with a broker because they think they’re biased. This isn’t true. Insurance brokers are independent small business owners themselves and work with a number of carriers. They get paid no matter which carrier you buy your insurance from.

This isn’t to say that they only want a pay cheque either. Insurance brokers stay in business by providing excellent products and customer service to their clients. This is why they strive to work with as many insurance carriers as they can.

2. Using an Insurance Broker Adds Costs to the Premium

Insurance brokers work for business owners, not insurance companies. They offer their expertise, free of additional charges, to their clients. They uncover the needs of the business by asking important questions and then get quotes from multiple carriers, not just one.

3. Business Owners Should get the Cheapest/Most Expensive Insurance

Premiums are calculated (https://www.investopedia.com/ask/answers/09/calculating-premium.asp) based on the coverage, and exposure a business has. Thus buying the cheapest coverage isn’t always a good thing. On the flip side buying the most expensive insurance policy doesn’t mean you’ll be adequately covered either. The trick is finding middle ground – the best coverage (sometimes more than one insurance policy) at the best price for your business (not the cheapest).

4. Small Businesses Don’t Need Insurance

Small businesses deal with data breaches, get sued and incur damages in fires and floods. It’s not only large businesses who deal with these events.

5. There’s a One Size Fits All Small Business Insurance Policy

A small business (depending on what type) may need more than one policy. It might not be possible to buy one that covers everything. For example, a commercial business would purchase an equipment and property insurance policy, but may also need key person insurance.

6. Corporations Don’t Need Business Insurance

A limited liability company structure can limit a business owner’s personal liability, but it doesn’t eliminate all potential damages. A person or entity could sue the LLC and bankrupt it, thus the owner would have to start over.

7. Insurance Companies Don’t pay on Claims

This misconception stems mostly from TV shows and movies, not fact. An insurance policy is a contract and there are laws governing them. If an insurance company doesn’t pay out a claim there are legal remedies available to business owners.

When an insurance company doesn’t pay out a claim it’s because they’re disputing something. A policy details specific types of damages caused by specific events with detailed financial remedies. For everyone that makes the news there are thousands paid out by the same company without incident.

This is why you must understand what your policy covers and what your responsibilities are.

8. Home Based Businesses are Covered by House Insurance

House insurance doesn’t cover claims related to small business operations. It covers the cost of damage to the home’s structure and personal belongings. It doesn’t extend to business loss.

9. A Business Owners Personal Vehicle Insurance Provides Coverage for Business

When a small business uses a personal vehicle to do business, costs from claims occurring during business activities aren’t covered by a personal policy. In this situation a commercial auto insurance is necessary.

As you can see, there are many common misconceptions about small business insurance. However, because it’s so vital to a business’s success it’s best to be as informed as possible. If you want to know more about business insurance you can visit our website.

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