Small business owners face risks from insurance oversights

New business owners frequently encounter significant financial risks due to common insurance oversights. Research conducted by ERGO NEXT involving 501 small business owners highlights that approximately 57% of new owners fail to secure insurance because they believe it is not a legal requirement. However, even if not mandated by law, insurance is often required by lenders, landlords, and clients to secure contracts.

Key risks include the misconception that a landlord’s policy covers a tenant’s assets. While a landlord’s insurance protects the building’s structure, it typically does not cover a tenant’s inventory, specialized machinery, or internal fittings. Additionally, many owners focus on physical asset replacement while neglecting business interruption coverage. Experts suggest that prioritizing coverage for ongoing operational costs—such as rent, payroll, and subscriptions during downtime—is critical for maintaining cash flow during unexpected disruptions.