Small Business Insurance

Small Business Insurance

There are over 11 million small businesses with between 1-100 employees and if you are one of them you make up a large percentage of the total businesses in the United States. Now consider that most start out with an idea or someone else’s idea and you are very excited to get started, and you have so much to get done and one of the tasks is insurance, Ugh! What is your first thought? “I hate insurance”. Okay, second thought, what do I need? Who do you get it from? What is a fair price?

Let’s start with what do you need basics:

Workers’ Compensation

Needed when or if you have employees

Commercial Auto

Needed when you have a vehicle used in business outside of sales* calls,*vehicles need insurance regardless of business use but personal insurance usually excludes delivery of products, carrying passengers for a fee.

Liability Insurance

Needed when you conduct business, but not required unless it is being requested to secure a contract. An example if you are leasing a building the landlord may want you to carry liability for the space you occupy. If you manufacture a product, a store carrying your product may want you to carry product liability coverage if someone gets hurt using your product.

Property Insurance

Needed if you have business property, equipment, but not required unless it is being requested to secure a contract. An example – the bank you obtained a loan for some machinery, or building wants it to be insured for theft, fire, etc. A landlord requires you to cover the insurance for the building you are leasing.

Business Income Insurance

You should obtain this coverage to protect your income in the event of a covered loss. Not required usually by anyone. This coverage is usually included in a BOP for very little cost. If you have a brick and mortar business such as a restaurant – you should obtain this coverage. It could take years to get the clientele back to a new location if yours should burn down.

Professional Liability Insurance

Needed if you are in a professional industry – Doctor, Lawyer, Dentist, CPA, Veterinarian, etc. Liability insurance to protect professionals for loss or expense resulting from claims of mistakes, errors or omissions committed – or alleged to have been committed – by the insured in his or her professional activities.

Health Insurance

Nice to have as it can attract good employees and certainly good for the owner to have to prevent any unexpected cost associated with a major illness – but certainly not mandatory – yet.

These above are the starter list but there are other coverage’s that are more intricate, such as, umbrella coverage, earthquake, flood, directors & officers, employment practices,coverage within the policies for money, accounts receivables, tenant improvements, tool floaters. Some of these can get added into the main coverage’s the others you need to seek out and a good agent or consultant who can go through a check list of areas and help you decide if you need or what need. Insurance agents have a wealth of products to sell you and most agents are more than happy to sell you any and all of them, so again it pays to be knowledgeable.

Where do you get the insurance?

You all know you get it from an insurance agent, that’s simple, but how do you go about getting the best deal with an agent – that’s really the question isn’t it?

Pop in the words small business insurance in a Google search or anywhere else and up comes plenty of information to shift through. The number one thing to remember is, they are all paid for by insurance companies and agents wanting your business. The insurance companies and agents are paid more if you pay more for insurance. You need the agents, because you know YOU don’t know anything about insurance, but total trust is NOT in your best interest because of the way they are paid. Just because an ad says they are the leader for small business insurance does not make it the most competitive. For example, you can hardly turn on the television, radio or go to any website and not see an advertisement for Progressive or Geico, but does that mean they have the best rates for personal auto insurance? I can tell you, it does not. What it means is that they have a HUGE advertising budget and advertising works – for them, it does not necessarily work for you. So, be smart and use your common sense about insurance. Here are some tips.

The best place to get insurance is from the insurance companies and so you must start with a strategic list of insurance companies and seek them out for a quote, and agents represent those companies. Are you aware that in any given state there are approximately 20-35 mainstream insurance carriers for just the property/liability and workers’ compensation coverage? Has any one agent or even two agents ever given you 20 quotes? If you could see 20 quotes you would also see the vast disparity in pricing – it is really quite fun to watch how the same coverage can vary in price by so much – but the only time you will see it is if you see the entire market. No one agent represents all the markets, even if they tell you they do – they don’t, they never have, they never will. Call a Hartford agent and ask them if they represent Sentry Insurance (not Century) and vise verse, the answer will be no. This is not just the case with direct writers and independent agent carriers. Independent agent carriers rarely even if they represent a mass of carriers go to all of them, they have favorites and they have ones that pay them more commission.

What is a fair price?

If you can see at least ten quotes you can decide what a fair price is, it is the one that gives you the most coverage, with the best rated carrier, for the least amount of money, with an agent who you feel was knowledgeable and professional. If your premiums are high enough (over $10,000) you can also negotiate a better deal with one of the quotes you received.