Owning and running a business comes with risks, and one of the biggest is believing insurance myths. Whether you think small businesses don’t need insurance, that cyberattacks only happen to big companies, or any other misconception, you may be leaving your business vulnerable to financial setbacks, lawsuits, and more.
Below, we clear up the top ten business insurance myths we hear most often in 2025.
1. “Small businesses don’t need insurance.”
Some owners think insurance is only for large corporations with dozens of employees. The reality is that small businesses are often the ones most at risk. Without the resources to absorb losses, even a single claim or lawsuit could shutter a small business completely.
2. “General liability insurance covers everything.”
General liability is a key part of protection, but it’s limited. It won’t cover situations like data breaches, professional mistakes, or employee injuries. For those risks, you’ll need additional policies tailored to your business.
3. “Home-based businesses are covered by homeowners insurance.”
There are more business owners working from home than ever before, and many believe their homeowners insurance can do double duty. In most cases, it can’t. Business property, liability claims, and even client injuries that happen in your home are rarely covered.
If you’re a business owner working from a home office, you’ll need to purchase business insurance just as you would if you commuted to a company location or operated out of a storefront.
4. “Workers’ compensation isn’t necessary for just a few employees.”
Not true. Even if you only employ a handful of people, most states legally require workers’ compensation coverage. It pays for medical care, rehabilitation, and lost wages if someone is injured on the job. Without it, you could face stiff penalties in addition to paying out of pocket for expenses.
5. “Cyber insurance is only for big tech companies.”
Here’s the truth: Hackers often target small businesses because they assume defenses are weaker. Unfortunately for smaller sized businesses, a single phishing email or ransomware attack could shut down operations entirely. That’s why cyber liability insurance is a must-have for businesses of all sizes.
6. “Business interruption insurance is optional.”
What would you do if your office flooded, or a fire forced you to close temporarily? Without business interruption coverage, you could be left paying bills with no income. This policy helps replace lost revenue and cover expenses until you can reopen.
7. “If employees use their own cars, I don’t need commercial auto insurance.”
If an employee makes a delivery, visits a client, or runs errands for your business in their personal vehicle, your company can still be held liable in an accident. Consider adding commercial auto coverage if employees drive for business purposes.
8. “Once I buy a policy, I don’t need to review it.”
As your business grows and changes, so do your insurance needs. An annual review with a trusted advisor helps identify gaps in coverage so you always have the protection you need to operate and expand confidently.
9. “The cheapest policy is good enough.”
It’s tempting to pick the lowest premium, but the cheapest option usually carries significant exclusions or very high deductibles. Saving a little upfront may leave you paying far more out of pocket when you can least afford it. Instead, look for coverage that strikes a balance - affordable yet comprehensive enough to protect your business and employees.
10. “Insurance is just a formality.”
Insurance is often required, but it’s much more than documentation for lenders, regulators, or landlords. In reality, it’s one of the most important investments you can make for your business’s stability and long-term success.
Protecting Your Business in 2025
The risks businesses face today, from cybercrime to supply chain disruptions, make insurance more important than ever. Believing myths can create costly blind spots, but staying informed helps you avoid them.
At Roehr Insurance, we specialize in building customized insurance strategies for businesses of all sizes. If you’re ready to review your coverage and close potential gaps, we’re here to help.
