Shopping for Small Business Insurance the Right Way
Shopping for business insurance, contrary to popular belief, doesn’t have to be painful or even stressful. In fact, some would dare call the process therapeutic. Determining your needs for risk protection is a great time for you, as a business owner, to meditate on your most pressing needs and to find out which elements of your business are the most susceptible to risk. The term “shopping” really fits when talking about small business owners’ insurance options; America’s robust field of insurance options can sometimes feel like being given near-infinite options for one problem. Anxiety, however, can set in deep when business owners think they may have missed out on a better deal or a more inclusive package. While there is no wholly wrong way to shop for business insurance, there are several tips and tricks business owners can use to make sure they are getting both the best deal and the best coverage for their dollar … as well as getting to know your business better along the way!
Know Thy Business
Before even researching what kind of coverage you may need, you need to understand what needs to be covered in the first place. Does your business have inherent occupational hazards? If so, be sure those are top-of-mind when shopping for insurance. Beyond the potential hazards inside your business, think outside the office: what natural disasters or outside accidents could happen in the area you do business? This is another essential question that should drive all insurance discussions to follow. Consider making an actual list of your most pressing liabilities and keeping the list handy during all insurance-related talks.
Separately, begin to think “worst case scenario” about lawsuits that could be brought against your business. Considering your industry, customers, location and means of doing business makes this more than a one-day job and may require some amount of legal counsel. But knowing these risks is essential. Several types of business insurance can help insulate businesses from debilitating legal fees but only if those businesses take out the proper policies ahead of time.
Quotes & Questions
Once you know what types of insurance likely suit your business best, the next step is finding the right provider. No matter how much a first or second meeting may wow you, it is almost never wise to choose a provider before collecting several quotes from similar competitors. No two insurance carriers are identical, and packages can vary in their fine print as well as bold claims. An industry standard is to compare three quotes from providers before settling on a best pick but there is no reason to stop at three; the more insurance providers you can find that suit your needs, the better off you’ll be and the more confident you will feel in your final decision.
From your several quotes and meetings, learn to think beyond the dollar price of a package and determine its value to your specific business. Companies with lower premiums obviously appear attractive outright but the reason those premiums are lower are likely quite unattractive. Be certain – and ask directly if – that the providers you are recognized as “admitted insurance companies.” This means that the carrier is approved by all valid and relevant departments of insurance; this is an assurance that the carrier cannot and will not deviate from the rates you have agreed upon. If an admitted insurance company cannot meet its financial responsibilities, in nearly all cases, relevant state or federal departments of insurance will step in to pay your claims.
Bite the Bullet, Work with a Broker
It’s not a charming thought that on top of paying for insurance you need to pay for someone to help you choose which policy to pay for. Brokers and insurance professionals, however, are likely to save you money over time much bigger than upfront brokerage fees. Especially if you are shopping for business insurance for a new business or it is your first time determining your needs, brokers likely have the expertise necessary to connect your needs with a proper policy.
Picking a broker, however, likely requires just as much forethought as picking the right insurance policy. While you don’t necessarily have to weigh as many quotes as when selecting your provider, it is essential to check brokers’ online reviews and beyond so you have a good hold over their reputation. When searching for a broker that fits your needs, be certain to do your due diligence. Here are a few ways to get you started:
Seek Out Genuine Referrals: While online reviews may tell some of a broker’s story, true word of mouth is still the most full way to understand the way they work and the candid thoughts of their clients. While it may sound over-the-top to have a sit-down chat with a broker’s former or current client, remember that proper fitting business insurance has the potential to revive a business while ill-fitting policies only make bad situations worse.
Seek Out Specialists: While insurance generalists are unlikely to lead you astray, it’s likely that a well-placed specialist may get you even closer to your goals. Try to find a broker with experience in your industry or the policies you are likely to hold. Specialists by nature, however, tend to take less clients and demand higher fees so decide ahead of time if refined expertise is worth it for your business.
Background Checks: Consider researching your potential broker on the National Association of Insurance Commissioners consumer website This is a means to check if your potential broker has received any official complaints or enforcements while working on behalf of a client.
Since a broker is representing you and your interests, it’s best that they align with you as closely as possible. Unlike insurance agents, brokers do not generally work for commissions. So once you pay an upfront or split brokerage fee. To further ensure that your interests are the same as your broker’s, see if they are willing to let you be billed directly via the insurance carrier rather than through that broker; this once again will ensure that your broker is not financially incentivized by the contents of your insurance package.
The nature of all types of insurance is the push and pull of premiums and deductibles. Your premium is the upfront monthly, or sometimes annual cost to maintain your policy while your deductible is the amount of money you must pay in before your policy begins to cover whatever relevant cost you would like it to. Speak closely with your staff, broker, and all relevant parties when deciding the premiums that will work for your business. It is essential that small businesses find a balance where insurance both protects them and is not a financial burden; that burden can spin both ways: imagine picking an insurance package with a low premium but high deductible for a seemingly unlikely to occur policy like cybersecurity insurance. In the unfortunate event that your business suffers a cyberattack, your high deductible may just make paying your low premium worthless in the first place, as the out-of-pocket cost of repair and replacement could very possibly not reach the deductible where your carrier begins to pay into your claim.
Make detailed, and indeed pessimistic, plans of the most expensive and least expensive types of damages that could lead to claims in your business. Once you’ve calculated which types of risk cost what amount of money, you are much closer to picking the rightly priced premium.
Reevaluate Needs Annually
It’s more than natural to want to wring your hands after signing the dotted line and call it a day on your insurance policy. Getting the policy is work enough but unfortunately, insurance, like your business, must be regularly evaluated. The best businesses reevaluate their insurance packages, premiums, and deductibles at least annually in line with most insurance contract lengths. While it may be tempting to maintain current coverage, even the most innocuous change in your business may make reevaluating your insurance a worthy endeavor. For example, do you have new commercial vehicles that may qualify you for a new package or form of commercial car insurance? The only way to know is to reevaluate your insurance package with your broker or directly with your carrier. Just as well, America’s insurance market is known for its bounciness before being known for its stagnation, so there are likely new competitors to weigh against your current carrier.
The Best Insurance is the Diligently Selected Insurance
There is a reason shopping for small business insurance can feel like weighing thousands of options for one solution: every business has its own separate needs. While one small business may need a certain type of coverage, there is another that doesn’t. Finding the right coverage, however, is easier than ever in the Internet age where comparing companies, brokers, and policy needs can take an hour as opposed to taking several days. Take advantage of the time modern technology allows us and get granular with your business needs. Afterall, The best-insulated businesses are the most likely to weather the storm.