by Jennifer Beale
Professionals tend to become immersed in their fields, and forget that their customers don’t know what they know or see things how they see them. I grew up in an insurance family, and tend to forget that insurance isn’t top of mind for everyone, and can get put off or entirely slip the minds of property and small business owners.
After twenty years in the industry, I continue to see the following themes when it comes to small business owners and insurance:
- Not knowing what they need. A small business inheritably faces a number of exposures, many of which are insurable. It’s hard enough to identify all of those exposures, much less determine how to reduce risk and how/whether to insure them. Don’t get me wrong – a single policy covering all of your business exposures would be amazing – but it doesn’t work that way. You probably need at least two, and maybe as many as thirteen (Property, General Liability, Business Auto, Workers’ Comp, Professional Liability, Employment Practices Liability, Cyber Liability, Directors & Officers, Earthquake, Flood, Commercial Umbrella, Crime, Inland Marine), policies to cover all of your property and liability exposures!
- Not asking questions or reading the policy. Just like your business is NOT the same as every other business: Every policy is NOT the same. Every insurance company is NOT the same. Every agent and agency is NOT the same. Make sure your agent understands your business and is providing coverage that fits.
- Being too busy. Taking the time to meet with a reliable agent to review how your business works can help identify exposures and gaps in coverage. Many entrepreneurs spend a lot of time writing a business plan, finding a location, obtaining financing and marketing when they launch a business, but forget to seek advice and budget for insuring the business. It’s not a pleasant experience to identify these at the time of a loss.
- Not willing to invest financially in a solid insurance portfolio. It takes dollars to insure your business, but the cost typically isn’t as much as you anticipate, and is a fraction of your potential losses. A good agent can shop the market to find the best value for your particular needs and budget.
- Not advising their agent when they have material changes in ownership, revenues, staff, operations, locations etc. If it’s a customer- or Facebook-worthy announcement (“Now offering”, “Newly renovated”, “New location”), there’s a good chance it’s something your insurance agent needs to know.
- Not having a succession plan in place (or having one, without the proper tools in place). What does this have to do with insurance? Buy-sell arrangements typically contain clauses requiring partner(s) to buy out a deceased partner’s interest in the company. Life insurance is a good way to fund such a buy-out.
- Renewing policies as-is, year after year, without updating them to match the current needs of the business. See #1-6. Your business changes over time, so chances are you’re under- or over-insured if you haven’t had periodic coverage reviews to take your current operations, revenues, employees, payroll, property, etc. into account.
- “I’m not big enough”. Whether an insurance agent or company told you this or you are telling yourself, this is not true. Sometimes coverage for start-ups can be hard to place, but it can be done. Natural disasters, accidents, and lawsuits strike businesses of all sizes. There’s no magic number or time or size to buy insurance.
- “I don’t need it yet”. Please, please, please do not wait until you need insurance to purchase it. It will be expensive and difficult to find coverage after you have health issues, your property needs repairs, you’ve been in an accident or you’ve been involved in a lawsuit.
- Thinking that if something isn’t required by law, landlord, client or licensing bureau you don’t need it. You run your business. It is up to you to consider your liabilities as a business owner and decide whether to limit those exposures by purchasing insurance.
One of my favorite things to do is meet with a new business owner to learn about their business and help them understand the world of insurance. We try to make the process as painless as possible. Yes, there’s paperwork and appointments involved; yes, there are decisions that will need to be made; and, yes, there will be premiums to pay. We’re up for the challenge if you are! Call us when you’re ready to tackle your next coverage review.