Business Insurance Myths & Misconceptions
Many small business owners ask us, “Do I need business insurance?” The answer is always the same: YES! Every company—no matter how cozy—is exposed to risks. Below, we dismantle ten of the most common misconceptions so you can pick the right coverage for your business.
Business Insurance Myths & Misconceptions
Myth #1: “I’m a Mom-and-Pop—Too Small to Worry About Insurance”
Busted...Size doesn’t equal invincibility. Even a one-person operation faces liability if someone slips on your doorstep or your equipment takes a dive. According to the U.S. Small Business Administration, nearly 25% of businesses close after a liability lawsuit without adequate coverage (SBA.gov). Fact.
Myth #2: “Business Insurance Costs an Arm and a Leg”
Busted...Sure, premiums aren’t free—but they’re a fraction of potential losses. For example, the average small-business general liability policy runs between $500–$1,500 per year, yet a single slip-and-fall claim can top $20,000 in legal fees alone (NAIC.org). Fact. Investing in insurance is like buying a financial safety net—worth every penny.
Myth #3: “My Homeowners’ Policy Has My Back Since I Work From Home"
Busted...Your homeowner’s policy might cover a stray coffee spill on personal gear, but it usually caps business equipment at a few hundred dollars—and excludes liability altogether. If your Insta-worthy inventory burns in a kitchen fire, you’re on your own. Consider a BOP (Business Owners Policy) specifically designed for home-based enterprises (III.org). Fact.
Myth #4: “General Liability Covers All My Mishaps”
Busted...General liability is a workhorse for third-party bodily injury or property damage—but it won’t pay for your own damaged gear, cyber breaches, or professional snafus. Think of it as basic cable; everything else (E&O, cyber, property) is a premium channel.
Opinion: Don’t be that business that “saved” on insurance, only to discover they’re channel-surfing through uncovered claims.
Myth #5: “My Personal Auto Policy Covers All My Business Drives”
Busted...Great for your grocery runs, not so much when you’re hauling materials or chauffeuring clients. Most personal auto policies explicitly exclude “business use” scenarios. If a brick dislodges and smashes your windshield mid-delivery, you could be paying out of pocket—plus legal fees if someone’s injured. Fact: Commercial auto insurance is a must if you’re on the road for work (SBA.gov).
Myth #6: “Errors & Omissions Is Just for Lawyers and Doctors”
Busted...If you offer advice—or technical plans—you’re a target. A single miscalculation in architect plans or a missed deadline can trigger lawsuits for “faulty professional advice.” E&O (a.k.a. professional liability) keeps you from spending decades in litigation. Fact.
Myth #7: “I Don’t Need Workers’ Comp—I Have No Employees…Yet”
Busted...Spoiler: you’ll eventually hire someone, or subcontract labor. Plus, in New York, Nevada, and Utah, you’re on the hook even if you’re a one-person show (NAIC.org). Workers’ comp protects you and your team from medical costs and wage loss—and typically waives the employee’s right to sue. Fact.
Myth #8: “Hackers Only Go for the Big Fish”
Busted...Small businesses are low-hanging fruit because they often skimp on cybersecurity. The Verizon 2024 Data Breach Investigations Report shows 43% of breaches hit businesses with fewer than 1,000 employees(Verizon.com). Cyber liability insurance helps you cover notification costs, credit monitoring, and—even yes—the ransom if you can’t retrieve your files. Fact.
Myth #9: “My Client’s Homeowner Policy Will Cover Job-Site Damage”
Busted..If you accidentally flood a client’s basement or knock over a priceless heirloom, their insurer may come after you for restitution. Without your own property coverage, you’ll foot the repair bill.
Opinion: Don’t be the contractor who thought “they’ll handle it” when you should’ve been covered.
Myth #10: “My Umbrella Policy Will Fill in All the Gaps”
Busted..Umbrella policies only extend limits on existing coverages—they don’t magically include E&O or cyber if you didn’t already buy those. You must know exactly which underlying policies it rides shotgun with.
Fact: Always review your policy declarations with your agent.
Still Scratching Your Head?
Let’s turn those myths into things of the past. At GMAC Works, our experts will customize an insurance package based on your size, whether you work from home or a high rise on Main Street. We tailor it to exactly what type of coverage you need, make sure we fill any current gaps in your current policy, and most importantly, keep you and your business protected, no matter what life throws your way. That way, the only thing you have to worry about is growing your business—nothing else. Ready to chat?
