6 Business Insurance Mistakes Seattle Entrepreneurs Make

Protect What You've Built

Starting and growing a business in Seattle takes enormous effort. Don't let an insurance oversight undo it all. Here are the most common mistakes we see local business owners make, and one that is specific to the way insurance works in Washington.

Before the list, one fact that changes the whole conversation here: Washington is one of a small number of states where workers' compensation is not sold by private carriers at all. Coverage is purchased through the state, and a business either goes through the state fund or qualifies to self-insure. We do not place your workers' compensation. We help you get the rest of the program right around it, and we tell you how the state piece fits.

1. Relying Only on a BOP (Business Owner's Policy)

A Business Owner's Policy bundles general liability and property insurance, which is a great start, but it rarely covers everything. Most BOPs exclude professional liability, cyber liability, commercial auto, and employment practices liability. A consultant with a BOP who gets sued over advice rather than injury or property damage discovers, at the worst moment, that the policy was never built for that claim.

2. Underinsuring Business Property

Many owners insure equipment and inventory at purchase price rather than replacement cost, and the difference is the same mechanic as on a home. Replacement cost pays to replace at today's prices; actual cash value subtracts depreciation, so a five-year-old machine is reimbursed as a five-year-old machine. With supply chain volatility and inflation, that gap can be significant.

This section is also where business interruption belongs, and it is missing on most policies we review. The equipment is one loss. The months you cannot operate is a separate and often larger one, and a BOP's built-in income coverage is frequently capped well below what a shutdown actually costs. Read more about how commercial property coverage addresses it.

3. No Cyber Liability Coverage

Cyberattacks on small businesses are rising sharply, but most owners picture a hacker in a hoodie and the real claims are more mundane. A cyber policy responds to notification costs, forensic investigation, business interruption, ransomware, and the wire-fraud claim that starts with a convincing email asking accounting to change a payment account. None of that is covered by a standard policy.

4. Skipping Workers' Compensation

In Washington, workers' compensation is mandatory for almost all employers, and non-compliance carries significant fines and personal liability for workplace injuries. But the part most owners miss is that it isn't bought from us. It is bought through the state, as noted above.

Where owners most often get it wrong is the contractor and 1099 question. Whether someone is genuinely an independent contractor is not decided by what the invoice says, and misclassifying an employee as a contractor is one of the most expensive errors a Washington business can make.

5. Not Revisiting Coverage at Renewal

Your business evolves, and your insurance should too. The specific triggers that should prompt a call rather than an automatic renewal: a new hire, a new location, a vehicle, a new service line, a large contract with insurance requirements attached, or revenue up materially. Most owners do not know that a customer contract can require coverage they do not carry, and that the time to find out is before you sign, not at renewal.

6. Assuming the landlord's policy covers your space

If you lease commercial space in Seattle, your landlord insures the building and their own liability. Your tenant improvements, your equipment, your inventory and your liability are yours. Lease agreements also routinely require specific limits and require the landlord to be named as an additional insured, and the time to read that clause is before you sign rather than at renewal.

Our commercial team specializes in helping Seattle businesses of all sizes get properly covered. Reach out for a no-obligation coverage review.