clock June 7, 2016 comments No Comments flowchart Business InsuranceOur Blog tag Liability
small business owner reviewing common insurance myths

Insurance myths abound and many Rhode Island business owners accept them as truth.

Unfortunately, many are pure fiction and they can lead to costly mistakes that can jeopardize your business.

While no one wants to spend capital unnecessarily, ensuring that you have proper coverage in place can protect you from the unexpected. Let’s take a look at 6 business insurance myths that can put you, and your business, at unnecessary risk.

Myth #1: I work from home, so I don’t need insurance

Home-based businesses are a booming industry, and with good reason. You reduce overhead, work from the comfort of home, and you don’t have to commute. However, many business owners believe their homeowner’s insurance policy covers their business, but this isn’t usually the case.

Homeowner’s policies don’t normally cover damages to a home office. Even if you have some coverage under your homeowner’s policy, it may not apply if you’re out of the office on business. Businesses need insurance, even if they’re in a home. You can buy a BOP (Business Owner’s Policy) or a general liability policy that covers business property, such as computers, and possible injuries.

Myth #2: I work at a client’s location, so I’m covered under their insurance policy.

Just because you’re working at someone else’s location, it doesn’t mean you’re protected by their insurance. If your work damages their property, they could come after you for restitution. If you’re a contractor and you don’t have your own insurance coverage in place, you could be responsible.

You may think this applies only to tradespeople, but it also applies to other types of contractors, like accountants, computer programmers, or consultants. If your work disrupts business or damages equipment while under your control, you could pay.

Myth #3: I am just giving advice, so I don’t need insurance.

You need insurance to back you up, even when you’re hired as an advisor. If your advice causes a business hardship, they could sue you.

Most professionals carry errors and omissions insurance. It provides funds for lawyers, court fees, and paperwork associated with liability. Even if you feel you’ve done everything properly, your client may not agree. Then it’s off to court, and without insurance you’re left paying the bills.

Myth #4: I don’t drive a company vehicle, so I don’t need a commercial auto policy.

If you use your vehicle for business, your personal auto insurance policy may not cover you. You may need it if you use your vehicle for deliveries, you transport people, or if you let other employees drive it.

If your personal vehicle is a heavy-duty pickup, van or utility vehicle over a certain weight, or if it has ladder racks or permanent toolboxes, you may also need commercial auto insurance.

Myth #5: I have an umbrella policy, so I’m covered in any situation

Umbrella policies do not cover all risks. They have very specific limitations and exclusions. Exclusions vary widely by company and some might surprise you. They could include damages arising out of business or professional pursuits and the liability you assume when you sign a contract or agreement. Umbrella policies may also exclude damages to property you use.

Myth #6: My contract protects me

Contracts can include clauses that state the other party cannot sue you as long as you fulfill the contractual requirements. However, if you breach the contract you could be open to a lawsuit, because the contract is now void. A written contract is not guaranteed protection. Only proper liability insurance can do that.

If you want true peace of mind, give us a call. We’ll review your current coverage and make sure that it is tailored to your specific business needs.





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