Having adequate insurance coverage is crucial when managing a business, but there is a lot of false information out there, especially when it comes to general liability insurance.
Regardless of your level of experience in the world of business, it’s easy to fall for common insurance myths that result in leaving your business dangerously underinsured.
To get ahead of these false narratives, we’ve put together a list of five of the top myths surrounding general liability insurance that could be hurting your company. ]
Myth #1: General Liability Insurance Covers Employees
While many people think that workplace injuries and illnesses are covered by general liability insurance, the truth is, they are not.
TRUTH: If you have employees, you must obtain workers’ compensation insurance, which is mandated by law in most states. The purpose of general liability is to shield you from third-party claims, such as a consumer slipping in your store, not from employee injuries sustained on the job.
Insider Advice: Many business owners choose to bundle their workers’ compensation and general liability policies together to maximize savings!
Myth #2: I Don’t Need It Because My Clients Sign Waivers
While contracts and waivers can lessen liability, they do not replace insurance altogether.
TRUTH: A written waiver can help in court, but it doesn’t prevent someone from suing you. Even if you aren’t at fault, legal defense fees can cost thousands of dollars—this is where general liability insurance comes in to protect you.
Myth #3: I’m on a Budget, and It’s Just Too Expensive
Many business owners overestimate the expense of general liability insurance. In actuality, it’s shockingly affordable—far less expensive than dealing with an unexpected lawsuit out of pocket.
TRUTH: Small business owners often spend $30-60 per month for general liability insurance, depending on industry, size, and location. That’s about the cost of one dinner out per month. Investing in a general liability policy could save you hundreds, if not thousands, of dollars in legal fees and financial damages down the road.
Myth #4: My Business Won’t Get Sued, We’re Too Small
No company is too little to be faced with legal risks. In fact, small companies are frequently more vulnerable. They might not have the finances to defend themselves or a legal team, which could make them prime candidates for money-hungry claims.
TRUTH: Whether you have a physical storefront, interact with customers face-to-face, or even just advertise your services online you could be held liable for costly claims. Mishaps, miscommunications, or unhappy clients could all result in costly lawsuits. Additionally, it takes a lot of time, effort, and money to defend yourself in court, even if you aren’t found at fault.
Myth #5: Homeowners Insurance Fully Covers Home-Based Businesses
The purpose of homeowners and renters insurance is to safeguard your personal belongings, not your company. It’s highly unlikely that your personal homeowners or renters coverage will cover a business-related situation.
TRUTH: Your business requires its own separate protection, whether you’re shipping goods from your garage, hosting clients at a home office, or keeping inventory in a spare room. Typically, homeowners’ insurance doesn’t cover a customer hurting themself during a home visit or a destructive event destroying company property.
Insider Tip: To cover your businesses property against unforeseen circumstances, you’ll need to invest in a commercial property insurance policy. Having both commercial property and general liability coverage ensures that your business is covered from a variety of angles.
Final Thoughts
When it comes to running a business, there are a lot of myths that go around that could expose your company. Especially when it comes to a coverage type as essential as general liability insurance, it’s crucial to understand what it does, how it works, and its main purposes.
When the time comes to find business insurance, you don’t have to do it alone! EZ.Insure and our licensed agents are here to help you compare plans, get customized quotes, and make fully-educated decisions. And beyond general liability, EZ has access to all of the essential business and group health coverage types your team needs to stay covered from all angles.
To get a free quote and learn more about your options, simply enter your zip code, or give us a call at (855)-694-0047.
