Insurance Myths That Cost Small Businesses Big
- Marketing Manager
- 3 days ago
- 4 min read
Running a small business in Australia already comes with enough challenges — managing cash flow, keeping up with ATO obligations, staying competitive, looking after customers — so the last thing any entrepreneur needs is to be caught off-guard by an avoidable insurance mistake.
But many business owners still rely on outdated assumptions or “she’ll be right” thinking when it comes to protecting their business. The truth? A single uninsured risk can cost thousands, disrupt operations, or even shut a business down completely.
Today, we’re busting the most common business-insurance myths that quietly cost small businesses big — and how to protect yourself the smart, simple way.
Myth #1: “I’m a small business — I’m too small for insurance.”
Many freelancers, sole traders, and micro-businesses assume insurance is only for bigger companies. Not true.
Even the smallest businesses face risks:
A client tripping over your equipment
A mistake in your work causing financial loss
A customer damaging your property
An unexpected weather event destroying stock
A cyberattack compromising client data
Without insurance, you wear 100% of the cost — and claims can easily reach tens of thousands.
Reality: Small businesses often face higher risk because:
Cash reserves are lower
One incident can severely disrupt operations
Owners personally absorb financial damage
Even a basic level of protection such as Public Liability or Professional Indemnity can be the difference between a minor setback and a permanent shutdown.
Myth #2: “My work is low-risk, so I don’t need coverage.”
Many service-based businesses — designers, consultants, virtual assistants, IT professionals, bookkeepers — often think, “Nothing dangerous happens in my job.”
But risk isn’t always physical.
A simple mistake can lead to a costly claim:
A financial miscalculation
Incorrect advice
Missed deadlines
Breach of contract
Lost client data
Cyber incidents
Professional Indemnity Insurance exists for exactly this reason.
Reality: If clients rely on your skill, advice, or work — you are exposed to risk.
Myth #3: “My home & contents insurance covers my business equipment.”
This is one of the most expensive myths Australian business owners learn the hard way.
Most home insurance policies:
Do NOT cover business assets, equipment, or tools
Do NOT cover business liability
May void your policy if you operate a business from home without declaring it
If you run any part of your business from home, you may still need:
Portable tools/equipment cover
Public liability (if clients visit your home)
Cyber protection
Professional indemnity
Reality: Home insurance protects your home — not your business.
Myth #4: “Insurance is too expensive — I’ll get it later.”
Delaying insurance feels like saving money… until something goes wrong.
The cost of not having insurance can be far higher:
Public liability claims can exceed $20,000–$50,000
Professional indemnity claims can exceed six figures
Replacing stolen business equipment can cost thousands
Cyber breaches cost Australian small businesses an average of $46,000
Reality: Insurance premiums are cheaper than unexpected crises — and often tax-deductible.
Plus, online platforms like BizCover make comparing policies quick, transparent, and affordable.
Myth #5: “All insurance policies are basically the same.”
Nope. Not even close.
Policies differ in:
What they cover
What they exclude
Claim limits
Industry requirements
Contractual obligations
For example:
Some public liability policies don’t cover products once sold
Some professional indemnity policies exclude subcontractors
Some portable equipment policies only cover theft from locked premises
Always review:
Coverage limits
Exclusions
Excess amounts
Whether subcontractors are included
Whether your industry has special requirements
BizCover simplifies this by letting you compare policies side-by-side without jargon.
Myth #6: “I’ll only insure once my business grows.”
Many businesses fall into this trap:
“Once I get more clients, then I’ll insure.”
But here’s the catch: Your risk starts the moment you start operating.
As soon as you:
Send your first invoice
Give your first piece of advice
Sell your first product
Visit your first client
Advertise your business publicly
… you are legally exposed.
Reality: Insurance isn’t for big businesses — it’s for businesses that want to stay in business.
Myth #7: “I don’t need cyber insurance — I’m not a big company.”
Small businesses are actually the #1 target for cybercriminals.
Why?
They often lack cybersecurity systems
They store sensitive customer information
They are easier to breach
They rely heavily on digital systems but lack backup plans
Cyber incidents can lead to:
Loss of customer data
Business downtime
Ransomware payments
Legal liability
Compliance fines
Reality: Cyber protection is no longer optional — it’s essential for any business that stores data or uses online systems.
So, What Should You Do Next?
Here’s a simple checklist to protect your business:
Identify your exposures
(physical, financial, digital, and operational risks)
Compare insurance options
BizCover is a great place to start — fast, easy, and designed for small businesses. 👉 Insert BizCover affiliate link
Keep your policies updated
Business structure changing? Adding staff? Launching new services? Update your coverage accordingly.
Seek professional guidance
As your business grows, investing in proper risk protection becomes even more important.
Final Thoughts
Insurance doesn't have to be confusing, overwhelming, or expensive. But ignoring it? That can be costly.
By understanding the biggest myths — and avoiding them — you’re already taking smarter steps than most business owners. Protecting your business is protecting your future income, reputation, and peace of mind.
If you'd like us to walk you through your insurance options or help you review what coverage you might need, we’re here to help.
Just reply “Review my insurance” and we’ll guide you.
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