Most startup and small-business owners have a lot at stake — particularly in the architecture, engineering, and design field. You often are a part of each operation, from project acquisition to project design, and so it makes sense that you would treat each business decision carefully and thoroughly.
Choosing a small business insurance plan can seem overwhelming, and there's a lot of misinformation out there. Part of this is because a lot of insurance agents aren't equipped to deal with the needs of startups and boutique firms — not to mention the specific insurance needs of architects, engineers, and design professionals.
It's a niche market, one that insureon was designed to fill. Insureon agents are not only well-versed in the needs of startups and small businesses, but in the particular risks associated with your field.
So read on to learn about some of the most common small-business insurance myths and what you need to know before purchasing a business insurance plan for your architecture, engineering, or design firm.
Myth #1: Two Agents Are Better Than One
1. Myth: Two Agents Are Better Than One
Many times startup and small-business owners believe that working with two agents to fulfill business insurance needs is better than getting all your coverage from one source. The idea is that the two agents will keep each other "competitive" and you'll benefit from the best rates as a result.
In reality, this setup often causes headaches, both for you and the agents. The more agents you have, the more opportunity there is for confusion about your coverage. This is because some coverage — like Hired and Non-Owned Auto Insurance — might reside under two different policies. In this example it's General Liability and Business Auto Insurance.
Lastly, if you are working with one agent, you may be able to bundle certain policies for a lower monthly premium — as is the cause with a Business Owner's Policy — or customize certain policies, like Cyber Liability, to weave seamlessly through your other coverage.
Myth #2: Your Employees Would Never Sue You
2. Myth: Your Employees Would Never Sue You
One of the benefits of working at a startup or boutique firm is that you and your employees work closely together, developing a kind of familial intimacy. This often lures business owners into a false sense of security, leading them to believe that their employees would never sue them. Unfortunately, this isn't something you can guarantee — not enough to risk your business's financial health on, anyway. Unexpected situations do arise — and injury on the job, for example — and with pricey medical bills mounting, employees can and do sue for reimbursement. For insured businesses, Workers' Compensation coverage would kick in at that point.
Myth #3: My Business Doesn't Net Enough to Be Sued.
3. Myth: My Business Doesn't Net Enough to Be Sued.
It's easy for many startup and small business owners to assume that their firms are relatively well-protected from lawsuits based on the fact that they are so low-profile. Lawsuits tend to follow the money — right? — so why would someone sue your boutique firm when they could go after a larger corporation for more money?
That's just not something you can safely guarantee. For one thing, wealth is relative. You might not think your business makes "enough" extra money to attract attention, but someone else might have a different perspective. For another, we'd all do well not to underestimate the abilities of a dogged litigation lawyer. They have squeezed blood from onions, and they won't stop until an entire debt is repaid.
If your business does not have the cash reserves to pay such a debt, then the courts have the right to repossess personal assets — both property and the funds from bank accounts.
Myth #4: Your Business Doesn't Net Enough to Require an Umbrella Policy.
4. Myth: Your Business Doesn't Net Enough to Require an Umbrella Policy.
The need for Umbrella Insurance is not directly correlated to how much money your business is bringing in. Umbrella Insurance protects your business in the event of catastrophic loss — loss that exceeds what your primary policies cover. Don't be fooled: This could happen to anyone.
Here is a familiar example: A devastating storm wreaks havoc on your business's property. If the damage caused by the storm exceeds your Property Insurance policy limits, you would be responsible for making up the difference, unless you had Umbrella Insurance.
And since most Umbrella policies come with inexpensive monthly premiums, it's not much of a stretch to suggest this is coverage worth looking into.
Myth #5: Someone Else's Plan Has You Covered.
5. Myth: Someone Else's Plan Has You Covered.
First of all, it's never a good idea to leave the fate of your company in someone else's hands — not when so much is at stake. This type of thinking usually comes in when you are drawing up contracts, wither it's a lease agreement or the project contract.
While the actual building itself might be insured by your landlord's Property Insurance plan, your property most certainly is not. If a fire starts and all of your computer equipment is toast, you won't be reimbursed by your landlord's insurance company. In most lease agreements, property liability is passed off to you — the lessee — which means you need to carry your own Property Insurance coverage.
Similarly, business owners often assume that they are protected from certain liabilities in their contract. But most corporate contracts — those between you and customers, 1099 contractors, employees, vendors, and others — will only transfer the liability from you to them in certain, usually extreme, cases of negligence. Or if you sell products to your clients, it's the manufacturer's responsibility if something goes wrong with them.
Likewise, if you sell products to your customers, you may believe that the liability rests with the manufacturer of the product. But if you in any way modify or re-package a product that you sell — or if you offer a different warranty — the liability transfers to you.
Myth #6: In The Event of Lawsuit, Closing Your Business Will Save You.
6. Myth: In The Event of Lawsuit, Closing Your Business Will Save You.
No it won't. The courts don't much mind if your business is currently operational or not. All they care about is whether you have paid your judgment or settlement yet. And remember: If your company doesn't have the means to pay, then you — the business owner — could be held personally accountable for the debt.