Owning a Small to Medium-sized Enterprise (SME) can be exciting, but it also comes with various challenges. One of the things you can do to take care of these challenges is to avail yourself of SME business insurance. However, some business owners tend to believe in various myths related to business insurance. So, before saying no you should first understand what SME business insurance (or business insurance in general) means, and its importance.
In some cases, although business owners know the importance of SME business insurance, they hesitate to avail due to various myths. This article will discuss the most common myths about SME business insurance.
1. SMEs Don’t Need Insurance
No matter the size of a business, it may still encounter challenges that may significantly affect the brand, such as closure of the business and financial strain. Besides, SME businesses tend to have more impact than well-established ones.
Meanwhile, having business insurance can be your financial safety net in case you experience a problem. For instance, if you’re a food-related business like a coffee shop, and a customer slips, you’ll need to cover their medical expenses out of pocket if you don’t have insurance.
2. General Liability Insurance Covers Everything
Some SME business owners tend to believe that general liability insurance is enough to protect their business. While it covers a wider aspect, including property damage, bodily injury, and product liability, you might still need some additional coverage depending on your industry.
So when thinking of general liability insurance, don’t get too excited about the word general. Besides, depending on the premium, you might just receive a portion of financial assistance per coverage. In some cases, you may end up spending more on paying the premium than when you pay things out of pocket.
3. Home-Based Businesses Don’t Need Separate Insurance
Owning a business even if you’re at home, still requires having business insurance. As you know, personal insurance coverage, including homeowner policies doesn’t cover business-related losses. So, if your computer or other equipment gets damaged, you can’t still file for claims. In addition, even if you conduct most of your tasks at home, you need to meet some clients outside, you should take care of the injuries and accidents in case the client gets hurt. So, no matter where you conduct your business, you still need to get a specific one for it.
4. SMEs Can’t Afford Insurance
Since SME businesses don’t make as much money as well-established ones, many owners think that availing of business insurance is too expensive. Instead, they just allot a budget for emergencies.
Unfortunately, it usually doesn’t work that way. Of course, there are certain issues or emergencies that you can pay out of pocket that won’t significantly affect your financial flow. But if you encounter some damages that require higher costs, you might lose everything you’ve worked hard for dealing with just a single incident. On the other hand, with SME business insurance, you just need to file for claim, and it may cover most of the money you need.
5. Only Businesses in High-Risk Industries Need Insurance
SME business owners rarely think about the risks surrounding their company. In addition, since they’re low-risk, availing of business insurance isn’t a priority compared to other business-related matters. So if you think only businesses with high risks need insurance, it’s another myth you should stay away from.
Even if your business doesn’t face many risks, you still need to avail of business insurance. The difference is that you just need to avail one with less coverage than those businesses with high risks.
7. Once You Buy Insurance, You’re Good for Life
Insurance isn’t a one-time deal. Even if you own an SME business, you still need to review and update your insurance coverage. For instance, if you gain more employees, you need to adjust the coverage and premiums, so that the new high are still protected. At the same time, if there are coverages you no longer need, removing them can help you use your resources for more important matters.
7. Filing a Claim Will Automatically Increase Premiums
Some business owners hesitate to file claims because they think that filing for one will automatically increase premiums. However, this isn’t always the case. Usually, often filing for claims and repetitive issues result in higher premiums. But if it’s your first time, and the issue isn’t that bad, there’s a chance that your premiums won’t increase.
8. Cyber Liability Insurance Is Only for Tech Companies
Nowadays, most businesses use digital and online transactions. So, even if you don’t own a tech company, you still need cyber liability insurance to protect the information of your clients and company.
Of course, you also need to get an antivirus and firewall to improve the security of your online data, but having cyber liability insurance is a must.
Final Thoughts
Deciding on whether you should get SME business insurance or not requires a lot of time. In addition, you also need to consider various factors. However, when looking for information, stay vigilant when it comes to myths and misinformation.
Don’t hesitate to let us know what you think about these myths by leaving a comment below!
