Top Deadly Commercial Insurance Mistakes

Many business owners, especially just starting out make some terrible decisions, or what we call deadly sins of business insurance.  By committing these actions, or sins, you are risking your business, your assets, and your good name.

The first deadly sin or mistake a business owner makes, “No one will ever sue my business.”

The irrational thinking behind this is the business has no assets, is newly established, or you fill in the blanks.  The fact is every business and everyone can be sued.  Once a judgment is rendered, a persistent attorney can file a judgment lien which doesn’t go away.  Assets can be frozen or seized and wages garnished.  In fact, lawsuits are on the rise.  Not having the proper insurance coverage to defend against a lawsuit is playing Russian roulette with your business’s future and maybe your families as well.

The second deadly sin is thinking because you set up your business as a corporation, you are all set.  Many business owners think they are 100 percent protected by the wall of incorporation.

Facts what they are, a corporation protects the officers and owners from actions or damages against the corporation.  However, that corporate shield can be pierced or even stripped and a business owner held liable personally.  A business and its owners are legally liable for any action that hurts others. Even if a company is incorporated, owners can be sued personally for their own actions in the company. They risk losing their personal assets and perhaps even their home if a liability lawsuit against them is successful. Without doing a case study, the smaller and newer the corporation, the more likely this could happen.

The third deadly sin committed by business owners regarding their insurance coverage is that nothing could ever happen to them.

Often, business owners mistakenly think their business will continue to provide for their family.  Most businesses don’t survive the death of a principle.  Often, the business is dissolved to pay off obligations.  This leaves the family and the employees of the business devastated.  Have an exit strategy and contingent plan in place and fund it through business insurance.

The fourth sin is thinking a home based business is covered under a homeowners’ policy.

As a rule, just the opposite is true.  In fact, a normal claim may be denied if a carrier finds it could be related to your home based business.

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