Protect Your Business: Avoid These 5 Common Insurance Mistakes

Running a business comes with risks, but having the right insurance in place can mean the difference between recovering from a setback or facing financial disaster. While most business owners understand the importance of insurance, many unknowingly leave gaps in their coverage—gaps that could lead to significant losses when the unexpected happens.

At AB Phillips, we specialise in helping businesses identify and close insurance blind spots, ensuring they are truly protected. Here are some of the most common insurance mistakes businesses make and how to avoid them.

1. Underinsuring Your Business

Many businesses take out insurance based on estimated replacement values rather than actual costs, leaving them underinsured. Whether it’s property, equipment, or stock, failing to accurately assess your assets can mean insufficient payouts in the event of a claim.

How to avoid this mistake

  • Conduct regular valuations of your business assets.

  • Work with an experienced insurance broker to ensure your policy limits reflect real-world replacement costs.

2. Assuming You’re Covered for Business Interruptions

Property damage might be covered under standard business insurance, but what happens if your operations are forced to stop due to a fire, flood, or even supply chain disruptions? Business Interruption Insurance protects your revenue stream by covering loss of income and operating costs while you recover.

How to avoid this mistake

  • Ensure your policy includes Business Interruption Insurance to cover ongoing expenses during downtime.

  • Consider additional cover for supply chain disruptions if your business relies on external suppliers.

3. Overlooking Cyber Liability Risks

Cyberattacks are no longer just a big-business problem. Small to medium-sized businesses are just as vulnerable, especially if they store sensitive client data. A cyber breach could lead to financial loss, legal claims, and reputational damage.

How to avoid this mistake

  • Take out a Cyber Liability Insurance policy to protect against hacking, data breaches, and financial fraud.

  • Implement strong cybersecurity practices, including employee training and multi-factor authentication.

4. Relying Only on Professional Indemnity Insurance

Many businesses believe Professional Indemnity Insurance is enough to protect them. However, this only covers claims related to professional advice or negligence, not issues like management liability, fraud, or employment disputes.

For example, if a business faces a wrongful dismissal claim or a shareholder dispute, they could be financially exposed without Management Liability Insurance.

How to avoid this mistake

  • Consider Management Liability Insurance to cover risks like employment disputes, fraud, or regulatory investigations.

  • Regularly review your business risks to ensure your coverage remains adequate.

5. Not Reviewing Your Insurance Regularly

Businesses evolve—new locations, increased revenue, expanded services—yet many owners fail to update their insurance accordingly. This can leave significant coverage gaps, meaning your insurance may no longer align with your current operations.

How to avoid this mistake

  • Schedule annual insurance reviews with a broker to adjust coverage as your business grows.

  • Inform your insurer of any major changes to operations, staffing, or revenue.

Ensure You’re Really Covered with AB Phillips

Insurance isn’t just about ticking a box—it’s about ensuring your business is really covered when it matters most. At AB Phillips, we help businesses identify coverage gaps, tailor policies, and minimise risk exposure.

Contact AB Phillips today to discuss how we can safeguard your business from overlooked risks.

Eliza Whyte