14 Disastrous Mistakes New Business Owners Make

NEWPORT BEACH, Calif. - June 20, 2024 - PRLog -- While many types of business insurance are optional, others, like workers compensation, are required by law for businesses that have more than one employee. So, if you started a business and have one employee, that person needs workers compensation coverage. Commercial auto is not required by law but if you use a vehicle for work purposes and have an accident, an insurer may not cover the losses with your personal insurance policy.

Understanding the policy or policies before you buy is most important and so is implementing risk-prevention strategies to help you mitigate future risk.

Let's explore the most common commercial insurance mistakes business owners make and see how to avoid them.

1. Not Buying Insurance Coverage

What if a fire burns down your office, shop or inventory? How about a terrible storm that wreaks havoc on your business? Many new entrepreneurs focus on getting their business going and neglect the potential risks that could derail their efforts.

The first step to preventing financial disaster is to learn about specific risks your type of organization faces.

Next, learn about the different types of insurance products designed to protect against common losses. There are 15 common types of business insurance, so see which ones fit your type of business and which don't.

• General liability insurance protects against claims of bodily injury or property damage.
• Commercial property insurance covers damage to your business property due to fire, theft, or other perils.
• Workers' compensation insurance, also known as "workers comp," is required by law, as coverage for employees' work-related injuries or illnesses. If you have 1 or more employees, it's essential coverage to have to stay in compliance with federal laws.
• Business interruption insurance will keep payroll going if the business must shut down due to a covered peril.
• Business owners policy (BOP) combines coverages that include property insurance, general liability coverage and business insurance coverage at a discounted bundle.
• Commercial auto is necessary for any vehicles used for work purposes, including open houses and regular trips to Home Depot. A personal policy may not cover you if you're in an accident.
• Cyber security insurance is important for many industries that rely on technology. The cost of a data breach or ransomware attack is expensive and so is restoring privacy and data exposure.
• Directors and officers liability coverage pays for expenses if key high-level executives are found liable for wrongdoing that requires legal services.
• Product liability coverage pays for legal fees if a customer claims that a product you sold or manufactured led to an injury or to property damage.
• Optional coverages include commercial umbrella insurance, which extends liability limits, and life insurance, as a legacy to continue operations upon your passing.

2. Choosing the Wrong Type of Insurance

For the full article, visit https://smartfinancial.com/commercial-insurance-mistakes