There is little real knowledge around business insurance, and a lot of folklore. Below are the six misconceptions I run into most often – each paired with the reality. Not so I can sell more insurance, but so the decision can rest on facts.
- Myths pull in two directions: some create unwarranted peace of mind, others put people off needlessly.
- The most expensive myths come to light at claim time – which is why it's worth sorting them out in peacetime.
- This list has a companion: the myth-busting collection, in a short, shareable format.
“Business interruption insurance will make up for the lost revenue”
The most common and most expensive misunderstanding. Business interruption cover does not replace lost profit, as many hope – it typically pays for the fixed costs that keep running during a standstill (such as overheads) and a limited wage burden, and only comes into play following a property claim. It's valuable cover where it's warranted – but it's not a miracle cure. The full picture: machinery breakdown and business interruption.
“A small company doesn't need insurance”
The opposite is true: the smaller the company, the less able it is to absorb a large loss on its own. For a one-person business, the company's risk is the family's risk. The question isn't whether you need it, but what the minimal set is that answers the real risks – that's what the sole trader's minimal portfolio article covers.
“The cheaper quote does the same thing”
Sometimes it does – and that's exactly why you should run a competitive comparison. But a significant premium difference is typically driven by a difference in cover: a narrower limit, a higher deductible, more exclusions. Premium alone is not information; premium paired with cover is. Details: the trap of a cheap premium.
“The insurer rejects everything anyway”
Day-to-day practice shows something else: well-documented, covered routine claims typically get paid out without issue. Behind rejections there is typically an identifiable reason – uncovered risk, an exclusion, an unreported change, incomplete documentation. Most of these are preventable: common reasons for claim rejection. And where the dispute is legitimate, the broker helps the client, where possible: stalled and disputed claims.
“My home insurance covers my home office too”
Home insurance protects the household's property – equipment used for business purposes typically falls outside it, or is only covered to a limited extent. A company laptop on the kitchen table can easily end up in no man's land between two policies. On the boundary line: home office and company equipment.
“We took it out once, so it's been fine ever since”
Insurance is not a tin on a shelf, it's a system that needs upkeep. The company grows, moves, takes on a new line of business – and the policies stay as they were. An unreported change backfires at claim time, and gaps and overlaps build up in a portfolio that never gets reviewed. The remedy isn't complicated: an annual review routine and a renewal table.
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