5 Insurance Mistakes New Business Owners Make

Starting a business is exciting, but many new entrepreneurs overlook insurance until it's too late. Here are the five most common mistakes and how to avoid them.

Mistake #1: Having No Coverage At All

The most common mistake is simply not having any coverage at all. Many new business owners assume they're too small to need insurance or that nothing bad will happen. One lawsuit or accident can wipe out everything you've built. Don't wait for disaster to strike.

Mistake #2: Choosing the Cheapest Policy

Choosing the cheapest policy without understanding what's covered is another costly error. A bare-bones policy might save you $20 per month, but it could leave you exposed when you need protection most. Always read what's included and excluded in your coverage. Pay attention to coverage limits, deductibles, and exclusions that might affect your specific business activities.

Mistake #3: Underestimating Coverage Limits

Underestimating coverage limits puts your personal assets at risk. If you carry $500,000 in coverage but face a $750,000 lawsuit, you're personally responsible for the difference. Many new business owners choose minimum limits to save money, not realizing that higher limits often cost only slightly more. The difference between $500K and $1M coverage might be just a few dollars per month.

Mistake #4: Not Updating Coverage

Failing to update coverage as your business grows is a mistake that catches many owners off guard. The policy you bought as a solo freelancer won't adequately cover a business with employees, equipment, and a physical location. Review your insurance annually and update it whenever you hire employees, sign a lease, buy equipment, or significantly increase revenue.

Mistake #5: Missing Certificate Opportunities

Not getting certificates of insurance when needed can cost you contracts and opportunities. Many clients require proof of insurance before hiring you. SmartInsured provides instant COIs so you're never caught without documentation. Our licensed agents help ensure you have the right coverage from day one—so you can focus on growing your business.