Sure, I’m willing to agree that purchasing an insurance policy can be a frustrating process. I can imagine business owners struggling to find the right policies and cover. I know the feeling that you would rather be focusing on increasing the sales numbers of your business.
And, obviously, you’re not alone.
An Accenture and Fjord research survey of small business owners found that the majority of them could not feel a connection with the insurers. They found the entire process to be time-consuming and confusing. The cookie-cutter approach of large insurers made it difficult for the business owners to choose an insurance policy with the confidence that this was right for them specifically.
There’s no doubt that it would be frustrating to deal with insurers who are more interested in pitching their insurance products to you rather than understand your pain points and offer solutions.
That said, obviously, it’s crucial for you to be well-equipped to make the right decisions. So, how should you proceed? What should you focus on?
Here are five factors you and your agent must zero in on to decide the right insurance solution set for your business.
Five decisions that your agent should help you make
#1 – What kind of insurance policies are available?
Largely, there are four types of insurance covers available to small businesses – property insurance, liability insurance, business vehicle insurance, and workers’ compensation insurance. Property insurance provides compensation if your property is damaged, while liability insurance can be claimed when you are found liable to pay for damages caused to people or the environment by your product or business. You can claim business vehicle insurance if you use a vehicle for your business and if it is involved in an accident during the course of performing business activities. Worker’s compensation insurance is paid for the medical care or lost wages of an employee who is injured at the workplace. But not all businesses are the same. Your needs are unique. You may not need all the four insurance policies. Or you may need some additional forms or extended limits of coverage. For example, if you don’t own a business vehicle, you don’t have to buy a business vehicle insurance. So, consult your agent to choose the right insurance coverage for your business.
#2 – What specific insurance should I choose?
Every industry is different and has its own potential risks. Ensure that your agency understands your business well so that they can guide you in the right direction. Ask your agent which insurance policy will best suit your business, check if it offers you benefits worth the premium you pay and make sure that it covers all the risks associated with your business. Check with your peers in the industry to get clarity, so you don’t burn your fingers by buying a wrong policy. For instance, you may need to get an umbrella policy, over and above the traditional forms of cover because your own considered assessment of some specific risk may be more than what any single policy covers you for.
#3 – How much should my insurance cover be?
Small businesses are all about the cash flow. You’re willing to spend when needed, but carefully. Your cover drives the premium so you must ensure that you are not over-insured or under-insured. Don’t pay too much premium or assume too much risk. Determine the required cover by looking at a mix of factors including your industry, your size, the location, materials used, and other risks attached to your business. Discuss with your agent to ensure that you buy the insurance for the right amount.
#4 – Should I buy a packaged policy?
Insurers and agents may try to sell you a packaged policy. A packaged policy combines many policies into a package and sells it as one bundle. Packaged policies are cost-effective and will save you from the headache of buying multiple insurances separately. Some are even industry-specific, catering to the unique business challenges of that industry. However, you might not require all the policies included in the policy. It’s about what’s right for you. Check with your agent if it is really a viable option for you and then make the call.
#5 – How can I lower the premium and set an appropriate deductible for my business?
Consult your agent to know how you can achieve the right mix of premium and deductible. Many agents will suggest picking a policy with a high deductible to lower the premium. As you may know, a deductible is an amount you forego when you raise a claim. The insurer covers the rest of the claim amount up to the policy limit. By agreeing to a high deductible to reduce the premium amount, you might end up risking more than what you can afford. Hence, be prudent and ask your agent to define the appropriate deductible for your business. If an emergency comes around, you don’t want to be compensated for a sum far less than you had assumed your policy covered you for.
Obviously, there are a bunch of other criteria to bake into your decision but starting with these five crucial factors should make your decision-making more structured.
In closing, I can’t reiterate one point enough. Make sure your agency makes the effort to listen to you and understand your business reality. Without that, no way they can help you make the right decisions.
On a personal note, I know how important it is to safeguard a business! We run a small business too. I appreciate your fear and anxiety about protecting your livelihood from potential risks. That’s our agency is willing to walk that extra mile to understand your business to offer customized solutions for your business needs. Your business must be well-equipped to handle all the unforeseen circumstances that you could face in the future.