The Three Things Every Business Owner Should Learn Before Buying Insurance

Buying the wrong plan can ruin a business. Not understanding how your coverage works can cost you everything. If you’re a founder, owner, or operator, you need to know more than just the price tag.

John Theodore Zabasky learned this the hard way. Years ago, he was falsely accused of workers’ comp fraud. The charges didn’t stick, but the lesson did. He realized how little most business owners know about how insurance really works. Now, he teaches others how to avoid the same traps.

Here are the three things every business owner needs to understand before signing that policy.

1. Know What You’re Really Covered For

What “Coverage” Really Means

Just because you have a policy doesn’t mean you’re protected. Most insurance plans include long exclusions, confusing language, and fine print that leaves you exposed when it matters most.

A common mistake is assuming you’re covered just because you pay the premium. You might think your policy includes cyber liability or employee theft—but if it’s not clearly listed, it’s probably not there.

Common Gaps in Coverage

• Workers’ comp may not cover independent contractors.
  
• General liability might exclude data breaches or lawsuits from employees.
  
• Property insurance may only protect buildings, not inventory or equipment.
  

According to a survey from Insureon, 40% of small business owners don’t have the right type of insurance for their risks. That’s a big problem.

What You Should Do

• Ask for a summary of what’s included AND what’s excluded.
  
• Get real examples. Don’t ask, “Am I covered?” Ask, “If my employee is injured at a client site, will this plan help pay their medical bills?”
  
• Read your policy like it’s a lease. Because it kind of is.
  

2. Understand How Claims Actually Work

Coverage Is Useless If You Can’t Access It

The biggest surprise for most new business owners isn’t the cost of insurance—it’s what happens when they try to file a claim.

Sometimes your claim gets ignored. Other times, it’s denied based on a clause you’ve never heard of. And worst of all, some carriers will try to push blame on you to avoid paying.

John Theodore Zabasky once found himself being investigated not for a claim he filed, but for something he didn’t even do. The insurance company tried to protect their own interests by treating him like the enemy. That taught him everything he needed to know about how messy the process can get.

How the Process Usually Works

• You file a claim.
  
• An adjuster is assigned to review it.
  
• They investigate, ask for documents, and sometimes interview employees.
  
• You wait—days, weeks, sometimes months.
  
• You get a decision. It might be partial. It might be denied.
  

What You Should Do

• Ask your broker how the claims process works before you buy.
  
• Talk to someone who has filed a claim with the same provider.
  
• Keep records—emails, invoices, contracts, incident reports. These will help you later.
  
• Build a relationship with a claims advocate or attorney if you can.
  

3. Learn What the Insurance Company Gets From You

It’s Not Just About Paying Premiums

When you sign a policy, you’re giving the insurance company access to information and leverage. They may audit your payroll, inspect your operations, or review your risk data. That’s fine—until it isn’t.

A lot of companies don’t realize that one small reporting error can lead to big consequences. A missed form. A misclassified employee. A gap in the safety log. All of these can be used to raise your rates or deny a claim.

Real Examples of What Can Go Wrong

• Misreporting payroll can trigger a mid-year audit that triples your premiums.
  
• Classifying a construction worker as “administrative” can be considered fraud.
  
• Reporting a minor injury incorrectly can put you on a high-risk list.
  

Insurance companies are in business to make money. That means minimizing payouts and maximizing risk assessments. If they see you as a liability, they will act accordingly.

What You Should Do

• Review your application and make sure all the info is accurate.
  
• Keep documentation up to date—employee status, locations, service types.
  
• Don’t assume your broker did everything right. Double-check.
  

Bonus Tip: Choose the Right Partner, Not Just the Right Policy

Every carrier is different. Some are helpful. Some are silent. Some are aggressive when claims are involved. And some just want to close deals and disappear.

Pick a broker who educates you—not just sells to you. Look for someone who knows your industry, your growth plans, and your pain points. Ask questions and trust your gut.

Zabasky says the best protection isn’t the policy—it’s knowing how to use it. That’s how he went from being wrongly accused to building a healthcare platform that now covers thousands of workers.

Final Thoughts

Insurance can save your business—or sink it. It’s not about picking the cheapest plan. It’s about knowing what’s in it, how it works, and what could go wrong.

Learn how your coverage actually works. Understand what the claims process looks like. Know what the insurer sees when they look at you. Ask better questions. Get better answers.

Insurance isn’t exciting, but it’s essential. And once you understand it, you’ll see it as a tool—not a trap.

Start smart, stay sharp, and don’t sign anything you don’t understand. Your business depends on it.