Don't Gamble with your Small Business

June 08, 2012

In a recent article in Entrepreneur titled 3 Insurance Gambles That Put Your Business at Risk, Catherine Clifford talks about three of the most common mistakes to avoid when it comes to insuring your small business. The first point Catherine makes is you can’t look at insurance as one-size-fits-all. This statement couldn’t be more true. A photographer and a real estate agent, for example, operate in different industries and face different types of risks. It wouldn’t be safe to assume that the same insurance for the photographer would work for the real estate agent. Each of them would want to look for a specialized policy to cover their specific needs. A photographer, for example, would want to make sure he was covered if a memory card failed and his client’s wedding photos were lost. Secondly, don’t assume you’re covered by another policy. If you’re running your small business from home, you might think your homeowner’s policy will cover you, but that isn’t always the case. If you don’t declare that you run a home business to your insurer, certain coverages in your homeowners’ policy may be unavailable following a loss such as business equipment damage.

Finally, don’t think you’re invincible. While many business owners would consider general liability insurance or professional liability insurance, it’s the lesser known business interruption insurance (also known as business income insurance) that is often  overlooked. If your office building were to catch fire and you were forced to temporarily close your doors while the building was being repaired, it would be the immediate loss of income that you would quickly notice. What if it took three months to repair the building, how long could you survive without money coming in? A tailored insurance policy from Hiscox starts at just $22.50 a month. That’s a price lower than some people’s monthly Starbucks bill! I’ll be the first to admit, insurance isn’t the most exhilarating subject, but it’s a necessary cost of doing business and something you don’t want to be wishing you had once you need it. Are you making any of these three common mistakes with your business?