5 Insurance Mistakes New Business Owners Make

By McAdams Insurance Agency · August 2026 · 3 min read

Starting a business means a hundred decisions at once, and insurance often gets rushed or skipped. Here are the mistakes we see most often — and how to avoid them.

1. Assuming a personal policy covers business use

Using a personal vehicle, homeowners policy, or personal umbrella for business activity is one of the most common (and costly) assumptions. Most personal policies exclude business use entirely.

2. Underinsuring to save on premium

Choosing the cheapest coverage available can leave a business exposed to a loss far larger than the money saved on premium. It's worth pricing coverage that actually matches your real risk, not just the minimum available.

3. Not reading exclusions until a claim happens

Every policy has exclusions — situations it doesn't cover. Finding out what's excluded during a claim is the worst possible time. A good agent will walk you through exclusions upfront.

4. Forgetting to update coverage as the business grows

Coverage that fit a business with 2 employees and $50,000 in equipment doesn't fit the same business a year later with 10 employees and new equipment. Insurance should be revisited as the business changes, not set once and forgotten.

5. Not working with an agent who shops multiple carriers

Going direct to a single insurer means you only see that one company's pricing and appetite for your type of business. An independent agent can compare multiple carriers to find the best combination of price and coverage.