When you own and operate your own business—regardless of size—it can be extremely challenging to figure out the exact amount and type of insurance coverage you need. This is especially true in light of all of the common misconceptions and misinformation that many business owners are bombarded with when it comes to insurance. So how can you muddle through all of the false claims, so to speak, and gain a true understanding of the type of coverage your business needs? Working alongside a Farmers Insurance agent in Mansfield, Texas is a great place to start.
To help you separate fact from fiction about business insurance in Mansfield, Texas, here’s a list of the eight most common misconceptions facing the industry today.
Myth # 1: You Don’t Need Business Insurance for Your Home-Based Business
Working from home is a luxury that more and more people can afford with the advent of the Internet. But that doesn’t mean that your home office and its contents are necessarily covered by your personal home insurance. Actually, the opposite is true. While the physical structure of your home or apartment building is certainly covered under your home insurance or your landlord’s commercial insurance, anything pertaining to your business requires additional coverage. If you work from home, conduct meetings from your home office, or store inventory and office supplies in your home, you need to notify your insurance company so they can adjust your policy accordingly.
Myth #2: General Liability Covers All Potential Risks
Since every single business model is different, that means they all have a unique set of business insurance needs. Insurance mandates may vary from state to state and sometimes even between different counties, but the fact of the matter is that you need to understand all of the risks your business is liable for and could incur. General liability insurance covers a vast variety of incidents and risks, but once you take a gander at the limits and exclusions section of your policy, you might be surprised to find out that there are, well, certain limits and exclusions that aren’t covered under your contract. As always, it’s important to do your homework thoroughly and make sure you understand the needs of your business to find the right insurance policy.
Myth #3: Commercial Vehicles Are Automatically Covered
Never under any circumstances should you make this assumption because it could lead you to a lot of trouble in the event that you get into an accident during business hours. Always read the fine print in your business insurance policy and ensure that all commercial vehicles are properly registered and accounted for in the contract, especially if you have hired drivers to operate them.
Even if you occasionally use your personal vehicle for commercial purposes, you should still make sure that it’s covered under your business insurance policy.
Myth #4: Workers’ Compensation Insurance Is Unnecessary if You Don’t Have Employees
There’s nothing wrong with running a one-person operation and doing everything yourself as long as you stay organized and focused. Many entrepreneurs manage to singlehandedly get their businesses off the ground and build successful brands with limited resources. Where there’s a will, there’s a way.
The state of Texas doesn’t require business owners to purchase workers’ compensation coverage, but that doesn’t mean you shouldn’t protect yourself. In fact, going bare (without coverage) could leave you vulnerable to potential claims and lawsuits, especially if you outsource some of your services and contractual employees become injured on the job. You could even be held personally accountable if products are damaged, cause injury to clients due to faulty mechanisms, or if shipments aren’t fulfilled.
Myth #5: Small Businesses Don’t Need or Benefit from Business Insurance
If anything, small businesses are probably actually the most vulnerable to loss of assets if a claim is ever filed against them because they usually have limited financial resources. Also, failing to protect your small business could exponentially hinder its growth and diminish its credibility in the long run. For those reasons alone, you should at the very least consider purchasing Commercial General Liability coverage, Professional Liability coverage, Product Liability coverage, or all three if applicable. Even a minimal small business insurance policy in Mansfield, Texas can save you a lot of headaches in the future.
Myth #6: You Get Comprehensive Business Insurance by Default
If only that’s the way things worked, but unfortunately, that’s not how it is at all. General Liability insurance is just that—general. It’s an umbrella coverage that may cover most of your general business needs based on certain factors (i.e. geographic location, climate, crime rates, etc.), but not all of the specific ones will be included. This is where it’s really important that you do your homework and communicate to your insurance agent exactly what your expectations are.
Myth # 7: Contracts Can Always Protect You from Legal Action
Even the most legally binding contracts aren’t infallible and that means that if you fail to uphold your contractual obligations to a client or employee, then they could take legal action against you. Professional Liability insurance can help you recover some of your losses and even mitigate risk when a particular client is dissatisfied with your products or services.
Myth #8: Your Lost Income Isn’t Covered by Your Insurance if a Claim Is Filed Against You
According to the Texas Department of Insurance, there are four types of business interruption insurance:
- Business income coverage
- Civil authority coverage
- Extra expense coverage
- Contingent business interruption coverage
As long as your insurance policy contains clauses that pertain to either some or all of these types of coverage, you should be entitled to them. Most policies cover losses caused by natural disasters with the exception of floods (which must be purchased separately in Texas). Other loss coverages include theft, vandalism, fire, civil commotion, as well as damaged caused by vehicles or aircrafts.
Earthquakes, pandemics, terrorist acts, weather-related evacuations, and power outages are also excluded from business interruption coverage unless purchased separately.
If you have any questions or need clarification regarding the stipulations of your business insurance in Mansfield, Texas, feel free to contact Farmers Insurance – Crystal Schuder Agency. We’re more than happy to answer all of your questions and work with you to find the right business insurance coverage that addresses all of your needs. Contact us today!
Picture Credit: iStock.com/natasaadzic