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8 Common Mistakes to Avoid When Buying Business Insurance

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Running a business can seem like a minefield full of potential missteps and mistakes. It’s easy to overspend in some areas and neglect important obligations. If you own or run a business, purchasing the right kind of insurance is a necessity. However, there are many policies available, and it can be difficult to know exactly what you need. Unfortunately, many business owners rush into a decision about business insurance and end up facing problems in the future. Here are 8 common mistakes business owners make when buying business insurance and how to avoid them.

1. Choosing the Cheapest Policy

Saving money is a great priority to have when running a business, but choosing a cheap insurance policy can cost you more in the long run. Purchasing a policy based primarily on cheap monthly premiums could mean that you don’t have the coverage you need in the event you need to file a claim.


Seeking a local independent insurance agent can really pay off when comparing business insurance policies. An independent agent can gather multiple quotes and offer expert advice on local requirements. Thus, discuss your unique business with your independent insurance agent and ask for a list of policies best suited to your needs.

2. Not Taking Time to Read the Policy

Every insurance policy contains important information about coverage limits, deductibles, and reimbursement policies. Thus, the policy is likely an expansive document that takes a significant amount of time to read thoroughly. Skimming a document could lead to nasty surprises when you’re ready to file a claim.

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Take the time to read the entire policy before you purchase the policy. This way, you can clarify any questions you have with your insurance agent. If you have a clear understanding of excluded losses, you can purchase additional policies to complement your existing business insurance policy.

3. Failing to Insure Potential Income Losses

Most people recognize a disaster as a situation in which your physical possessions are at risk. However, if your business sustains damages, you’re likely to lose income due to downtime. When a business is closed for repairs, the income loss can be significant, and getting back on your feet without coverage may be difficult or impossible.


Ask your insurance agent about the value of adding business income coverage to your policy. This coverage provides reimbursement for income lost while your company is closed due to covered damage. Additional expenses like rent and electricity may also be covered.

4. Staying With the Same Insurer Too Long

Dependability in an insurance agent is a great quality to have, but many people stay with the same insurance company simply because it’s the one they’ve always had. If your insurance company is changing in ways you don’t like or failing to meet your growing needs, you need to change.


Assess whether your current insurance agency is meeting your personal and business needs by answering a few simple questions.

  • Are premiums rising while quality declines?
  • Are your services outdated?
  • Does your insurance company seem uninterested in your industry or particular business?

If you answered yes to these questions, you should consider shopping around for a company that can better meet your needs. At LoPriore, our motto is insurance that fits your lifestyle. We offer both commercial and personal insurance policies to suit unique individuals instead of pushing expensive policies.

5. Buying a Policy that Fails to Meet the Needs of Your Customers and Vendors

Every business is unique, and settling on a generic policy could mean you don’t have the coverage your clients expect. Business insurance is about more than the amount of coverage you have. Your policy specifically describes the events covered for you and your clients. Too little coverage or lacking the right coverage could mean your clients seek help elsewhere.


Before you purchase a policy, talk to your agent about the services you provide and the customers and related vendors who depend on you. Your independent insurance agent can offer advice regarding the business insurance policies that best meet your needs.

6. Failure to Adjust Your Insurance as Your Business Grows

Insurance protects your business. This means your policy isn’t something you should purchase and never revisit again. Your growing business likely holds more value than it did five years ago or even last year, and your insurance should reflect the changes.


Keep your insurance agent updated on the changes happening within your business, and be prepared to change your policy as necessary. For example, hiring new employees, purchasing new vehicles, and expanding your space are all reasons to consider changing your coverage.

7. Forgetting Workers’ Compensation

workers' compensation up for discussion for business insurance.

All employers operating in Massachusetts are required to carry Workers’ Compensation Insurance for their employees. Your employees are a valuable part of your institution, and their safety is an important part of your success. You also can obtain coverage for contractors and leased workers. Without Workers’ Compensation, you could face serious charges if your employees get injured on the job.


Talk to your independent insurance agent about a Workers’ Compensation policy that adequately protects both you and your employees. Thus, purchasing the correct Workers’ Compensation Policy protects your workers against financial loss and helps you avoid costly non-compliance fines.

8. Skipping General Liability

Many small business owners think they aren’t in the position to require general liability, and this assumption is a big mistake. Forming an LLC protects your personal assets but isn’t a safeguard against all liability dangers. You may still face the following liabilities as an LLC.

  • You may be responsible for medical costs if someone is injured at your business.
  • One of your employers damages a customer’s property, and you may be responsible for the costs of repair or replacement as the owner of the business.
  • Someone files a lawsuit against you, and legal fees can be a threat to your business.


Talk to your insurance agent about what your current policy covers. Selecting a Businessowner’s Policy can provide you with the option of packaging property insurance and general liability for complete coverage.

Top 10 Questions People Ask When Shopping for New Business Insurance

What types of business insurance are required in Massachusetts?

Massachusetts state laws only require minimal commercial insurance, including worker’s compensation and auto coverage for any vehicles owned by the business. However, your particular industry or certain activities you participate in during business might require additional policies. For instance, a law office or medical facility needs errors and omissions insurance. A bar requires liquor liability coverage. A retail shop that uses personal vehicles for delivery will need commercial auto insurance.

Do I need worker’s compensation for part-time employees?

Yes. Massachusetts requires you to have worker’s compensation insurance even if you only have one employee working on a regular basis. This includes part-time employees, family members, minors, and immigrant employees who work at least 16 hours per week. This requirement does not include independent contractors.

Do I need a commercial auto insurance policy if I use my personal vehicle for my business?

Maybe. If you drive your vehicle to work, your personal insurance provides the coverage you need. However, you need commercial coverage if you use your personal vehicle throughout the day for business purposes (like to deliver goods or complete business-related tasks).

How can I determine the amount of liability coverage I need for my business?

Liability is designed to cover the costs of damage to property or injury to individuals during an accident. If you don’t have the coverage to pay for these damages when an accident occurs at your business or related to your employees, services, or products, you will have to pay the difference out of pocket. Talk to your independent insurance agent about the potential risks involved in your industry and purchase coverage that won’t leave gaps.

Should I get business insurance from the same provider as my personal insurance?

It depends. Getting a business policy from an independent insurance agent, you already work with, and trust is ideal. However, if your current insurer isn’t experienced with commercial insurance, can’t adequately answer your questions, or seems disinterested in your business, you should seek commercial coverage elsewhere.

Can I get all the types of commercial insurance I need rolled into one policy?

Most likely. A business owner’s policy is a policy designed to protect small businesses from potential risks. It combines several coverage types to provide property coverage, liability coverage and eliminate gaps that separate policies could leave. A commercial package policy provides similar coverage for medium to large businesses.

Will my business insurance provide income if a covered event closes my business?

While you can get this type of coverage, it’s not automatically included in every business insurance policy. Ask your insurance agent if business interruption coverage is included in your policy. If it’s not, ask if you can add it as a rider.

What can I do to avoid gaps in my business insurance?

Commercial umbrella insurance is a policy that provides extended coverage when your primary commercial coverage limits are exhausted. Umbrella insurance is like secondary insurance for your commercial liability coverage, commercial property coverage, or other limits within your business insurance policy that fail to cover the damages caused by an accident.

How can I get insurance coverage for property damage when I work on the property of my customers?

Contractor’s general liability coverage covers the costs of bodily injury, property damage, and advertising claims damage made against your business. While contractor’s liability insurance isn’t required by law in Massachusetts, your customers may require you to have it before working on their property.

Am I required to have business insurance if I own a business?

While Massachusetts doesn’t require you to have a business owner’s policy, there are reasons you might be required to have it. For instance, if you rent your business space, your landlord may require you to have adequate coverage to protect the building or continue to pay rent if the business is closed due to a covered event.


Business insurance isn’t simply something that would be nice to have in the event of an emergency. It’s a necessity for every responsible business. An independent insurance agent can help you find the right package of policies to protect your unique business. Instead of hoping you’ll be covered in the event of an emergency, rest easy knowing you have the coverage you need to continue the successful growth of your business.

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