8 Reasons Why Insurance is Crucial for Small Business

There are many reasons why a business needs to carry insurance coverage. In its most simple form, insurance protects a business from financial loss due to an unfortunate emergency, accident, or unforeseen event. Now there are many different types of insurance a business may need. Some businesses may need multiple types of coverage, some businesses may be able to get by with a bare bones package of coverages. Partnering with an independent insurance agent is one of the best ways to determine what types of coverage you need and what types of limits are best for your business.

Insurance is Required for a Loan

Banks require a business to carry insurance in order to qualify for a loan. If you think about it lenders want proof of insurance before you buy or build a new facility in order to safe guard all assets. To get access to cash for your business you will need to have certain types of insurance coverage. Without insurance, a business will be forced to fund its own expansion with cash on hand.

Some Forms of Insurance are Required by Law

In most states, Workers Compensation and General Liability Insurance is required by law for most business in most states. Each state has their own rules and regulations that offer some exclusions for some types of coverage. It is important to check with the proper state governing body within the state you operate in to make sure your business is properly insured.

Insurance Protects Against lawsuits

Today’s business environment is a very litigious society. If you stay in business long enough, more than likely your business will be sued in some form or fashion. When a business faces a lawsuit, even if your business wins the suit it can amount to an enormous sum in legal fees. Insurance coverage can reimburse your business for these costs.

Insurance Can Protect Your Employees

A business depends upon their employees to make the business work.  Building a healthy workplace culture is crucial to success no matter what industry a business operates in. Insurance can add to the trust a business has with its employees.

Your business depends heavily on the knowledge of one person

If you operate a business that depends upon the talents of one or a few key employees, it is necessary to carry Keyman Insurance. Keyman Insurance is a policy designed to cover the life of a key employee for a monetary value so in the event of an untimely death of such key employee, the loss to the business will be recouped through monetary assistance.

Most Contracts Require Insurance

When it comes to contracts, insurance is required by both parties in order for the contract to be valid. Some examples of scenarios where insurance is required include:

  • A business rents a facility instead of owning the building outright.
  • A business borrows money to finance buildings or equipment.
  • A business enters into a contract where the client specifies that insurance coverage in the event the deal does not go as planned.

A Business Cannot Predict The Future

No matter how much experience a professional has there are unknown occurrences that no one can predict. Regardless of whether the occurrences are a natural disaster, injured employees, lawsuits, or damaged equipment; it is impossible to predict when one of these claims will occur. Insurance coverage can protect your business in the event of an act of god.

Insurance Grants Peace of Mind

Business owners and leaders face an enormous amount of pressure. Insurance allows those leaders the ability to ease some of that pressure because they can rest assured that an insurance policy will help the business become whole again in the event of a serious occurrence.
 

5 Questions to Ask Your Insurance Agent

And 5 Tips to Make Sure the Insurance Buying Process is Smooth

What Liability Do I Face That I May Not Realize?

Insurance Agents interact with businesses of all types and sizes on a daily basis. They work with business owners when they are starting a business, when they are up for renewal, and when they have to file a claim. These experiences expose your agent to many different ways a business might have to use their insurance policy. This experience allows your agent to understand risks that a business owner may not even realize they face. If you value your business than ask your insurance agent about those risks you may not foresee.

How Should I Communicate With You?

Ask your agent what their preferred method of communication is. If you need to get ahold of them in a hurry, ask how to best accomplish this. They may have a key employee who is the person to talk to when you cannot get ahold of them directly. It is helpful to know who those people are and what the process is to get ahold of the agent effectively.  It is equally important to ask them what the process is throughout the year for you to communicate with each other (when you need to file a claim, when you are up for renewal, when you buy new equipment, etc.).

How Can We Establish Expectations?

Most business owners are very busy people and time is of ultimate value. The same can be said for your insurance agent. An insurance agent has to balance the needs of many customers. If you know at the beginning of your business relationship what expectations are, the more likely you are to avoid difficult situations in the future. This should go for what their responsibilities are, what your responsibilities are, when you should talk to each other, and what the process is at the end of your term. These are just a few areas that should be established up front to prevent problems down the road.

How Do I Report a Claim?

Knowing what the process is to file and process a claim is not something you want to be figuring out when your business is dealing with a loss. Do not be upset when your agent tells you that the carrier process the claims. Processing the claim is the job of the carrier. It is important to contact your agent throughout the claims process. They can help when an unfortunate event occurs like your agent is not living up to their responsibilities.

What additional Information can help you?

Your insurance agent can only act upon the information you give them. No one knows your business, inside and out, as well as you do. Communicate as much about your business as you can to your insurance agent as well as what you value out of your relationship with an insurance agent. this additional information can help the insurance agent determine what exactly are the risks that your business faces and it will help them come up with multiple packages to suit the needs of your individual business.

5 Tips for a Smooth Renewal

Honesty is Always the Best Policy

When it comes to protecting your business, honesty is always the best policy. Once you find an insurance agent that you trust (and you should not be partnering with an agent you do not fully trust) it is important to tell them as much about your business as is necessary. Do not ever conceal or lie about anything within your operations. At best it can cause a major headache for you when a claim is filed and in many cases it can cause a claim to not be covered. Having a long and honest conversation each year with your insurance agent is always the best way to properly protect your business.

Tell the agent what you can and cannot afford

You do not have to give the agent a number, but if you cannot afford an all inclusive package you need to tell them. It is equally wise to ask your agent what liability you are left exposed to by not purchasing a particular policy. Most carriers have Business Owner’s Packages designed specifically for each industry. These packages can usually be changed to meet the specific needs of your business. If you are cash strapped and cannot afford all the policies recommended, it is important to tell them this fact. This is also true if you have the ability to pay and you want to get as much coverage as possible. No matter where your business stands and what you value, it is always best to keep your agent in on these priorities.

Express to the Agent How Much Risk You are Comfortable With

In some business scenarios, you do not have to overdo it when it comes to insurance. This is especially true for startups or seasonal businesses. Now it is never a good idea to go under-insured, but not every business needs to take on every insurance coverage offered. Cyber liability is one coverage that may or may not be necessary for your business. It takes an in-depth conversation with your agent to determine whether you actually need cyber insurance or any other coverage. In addition to going without coverage, you can also save money by choosing a higher deductible.

Remember the Agent is Feeling You Out Too

Remember, the agent is feeling you out too.  If you give the wrong impression of how you run your business, the agent may determine the risk is not worth the commission. This can make it difficult to find an agent who will partner with you. This can be especially difficult when you are looking for comprehensive coverage or you are looking for the lowest California Workers Compensation Rates. Always remember the agent may also be feeling out if your priorities are in line with the type of customer they want to partner with. Insurance is a business of maximizing risk. Insurance agents and carriers want to partner with businesses who rarely file a claim. If you have a negative claims history, you do not have any documentation of safety programs and you only want to discuss what the cheapest policies are; the agent may determine you are the type of business that is likely to file claims at a high frequency or claims that may be severe. If you put off this vibe during your interactions with the insurance agent, they may simply determine your business is not worth the perceived risk.

Periodically Reevaluate Your Risks

As businesses grow so do the risk they face. If you have finished a year in which you have taken on additional staff, bought additional equipment, or taken on a new property; it may be time to reassess the risks your business faces. This is why it is important to find an insurance professional with whom you can have a comfortable relationship. When you establish a strong relationship with your insurance agent, this relationship allows you to feel comfortable telling your insurance agent about all the aspects of your business that may present additional risks to your business. This is not something you need to do on a weekly or monthly basis, but it is something you should do when you are up for your yearly renewal.

Why should someone choose an independent agent?

4 Reasons why you are better off choosing an Independent Agent.

Choosing which businesses to partner with are important decisions for any business owner, no matter what industry they operate in. Finding another business to provide the products and services you depend on is essential to your success.  No decision is more important who you decide to purchase insurance from. There are many ways a business owner can go about this process, but one of the most effective for many businesses is to partner with an independent agent. Here are 4 reasons why you should choose and independent insurance agency the next time you are looking for insurance coverage.

An Independent Agent Works for You

When you partner with a captive agent (an agent who works for only one carrier) they have a partnership with that carrier and that carrier only.  They work for you the business owner, but they also are equally looking out for the best interests of the carrier as well. An independent agency, who partners with multiple carriers, has more of an incentive to keep you the business owner satisfied in order to continue to win your business in the future.

An Independent Agent gives you choice

When you partner with an independent agent you will have the choice of which insurance carrier you would like to partner with. Most independent agencies partner with between 10 and 40 insurance carriers. This gives them the ability to shop your policy around and make the carriers compete for your business. An insurance agent who is a partner with only one or a few carriers, is not able to obtain quotes from as many carriers. In most cases, this causes them to not be able to get as thorough coverage and it may not be at the best rate. When an independent agent partners with many agents they learn the ins and outs of each carrier. They know which carrier is better at the claims process, which carrier is more likely to give additional credits and discounts, which carriers like for you to have a safety program in place. They can advise you on which carrier might be a better match for you based upon what you value. The best match for you may not always be the carrier who offers the best price. They can help guide you through that process with the most thorough and unbiased information.

An independent agent is a partner with an insured, who has their best interst at heart.

An Independent Agent can be your advocate

An independent insurance agent can give you unbiased advice about the coverage’s you are looking to secure. They can give you advice about all the companies you are considering. They can tell you which companies are the best during the claims process, which companies more than likely offer the cheapest rate, why you might want to pay additional premium for the services of a particular carrier.

An independent agent can also be your advocate when you have a problem regarding your insurance policy. These problems can arise when you have a billing question, you buy new property or equipment mid-term, when you need a certificate of insurance for another business you are partnering with or even when you have a claim. This is especially important in the event you have a claim, and all business at some point have to file a claim. If your carrier is not living up to their obligations your agent can hold them accountable on your behalf.

An Independent Agent can save you time and money

Depending upon what you value in the insurance quoting process, an independent agent can help you save both time and money. For some business owners their time is precious and the most important aspect of the insurance buying process is to have the process over with as fast as possible. If this is the case, you can express this to your agent and they can search the policies for you after a 5 or 10 minute conversation. They can get you a quote from as many as ten carriers with minimal time. Partnering with a captive agent means you have to call each carrier individually.

For many business owners, their time is better spent running their business than it is trying to save additional money on premium. Some businesses may have a premium amount that is so small it may not be worth their time to spend an additional few hours to find a 5 % savings on a $500 policy. In the end this would only save them $25. On the other end of the spectrum, a large business with a $75,000 policy may block out as much time as a half a day or even multiple days to find the best insurance policy for their business. In this instance a 5% savings would add up to $3,750, which is a months worth of salary for one of their employees, it could be a $500 bonus for 7.5 employees, or it could be a winter vacation to Florida for the owner of the company. No matter what you as a business owner value, an independent agent can save you time and money by having them do the searching for you all at one stop.