Running a business comes with risk, some expected, others not. That’s why commercial insurance is so important. But while having coverage is essential, the way it’s structured can make or break you when a claim hits. Many business owners unknowingly fall into common insurance traps that could cost them thousands.
Here are five commercial insurance pitfalls to avoid:
1. Assuming “Basic Coverage” Is Enough
Many businesses buy a general liability policy and assume they’re covered. But general liability doesn’t include everything. It won’t cover your property, employees, cyber incidents, or professional mistakes. Every business has unique exposures don’t settle for one-size-fits-all.
Avoid it: Work with an agent who takes time to understand your operation and can recommend specific policies for your industry.
2. Underinsuring Your Property or Assets
It’s tempting to reduce coverage amounts to save money. But underinsuring your building, equipment, or inventory can backfire. If your property is damaged or destroyed, you may not receive enough from your insurer to rebuild or replace everything.
Avoid it: Review your coverage limits annually to make sure they reflect current replacement costs not just the depreciated value.
3. Ignoring Cyber and Data Risks
Data breaches and ransomware attacks are no longer just a big-business problem. Small and mid-sized companies are increasingly targeted. If your business stores customer data or relies on computers to operate, you need cyber coverage.
Avoid it: Ask your insurance advisor if a cyber liability policy makes sense for your risk profile. It’s often surprisingly affordable.
4. Failing to Update Coverage as You Grow
Businesses evolve. Maybe you’ve added new products, hired more employees, opened a second location, or bought new equipment. If you haven’t updated your policy, your current coverage may not reflect your real risk.
Avoid it: Schedule a policy review at least once a year or after any major business change.
5. Choosing Price Over Protection
We get it insurance isn’t a fun expense. But the cheapest policy often comes with the biggest gaps. It might have high deductibles, strict exclusions, or low coverage limits.
Avoid it: Think long-term. The right policy protects your business, your livelihood, and your reputation. Choose coverage that fits your needs, not just your budget.
Commercial insurance isn’t just a formality, it’s your safety net. Avoiding these five pitfalls can make a huge difference when something unexpected happens. The best way to protect your business is by partnering with a knowledgeable insurance professional who understands the risks you face and helps you plan for them.
Need a second look at your coverage? We specialize in helping business owners identify gaps and protect what they’ve built. Let’s talk.