If you own a small business one of your largest expenses is commercial insurance. In most states general liability and workers’ compensation are required by law. Other coverages are dependent upon the industry you operate in and the amount of risk your business is willing to take on. There are many aspects that go in to this decision and partnering with a trusted and experienced independent insurance agent can help you save immensely on commercial insurance. Taking some extra time to speak with this agent about all aspects of your business is important as well. Here are 10 questions you should ask any potential insurance agent.
What is your experience and do you have any credentials?
Experience and credentials can be used not only as a litmus test, but they can tell you a little about the experience and the knowledge of your broker. You should not discredit a young or inexperienced agent automatically. An agent with limited experience can make up for that with enthusiasm and energy. A more established agent might not be as hungry for your new business and as a result they may not give you the specialized attention you need. The main thing is to get to know your broker beyond the basic information on her card or website.
Do you personalize policies?
Depending upon your industry this can be extremely important. Many insurance carriers offer cookie cutter business owner packages and they do not deviate from those packages. This is good for some businesses because carriers have insight through their history of claims what policies each industry may or may not need. If you are a start-up or you have no employees this may not be necessary. For instance, if you are a photographer who works from home you may not have a need for workers compensation coverage. If you are in another industry where you do not own or operate any vehicles you do not need commercial auto. Some agencies and carriers are more flexible with you when it comes to adding or subtracting coverages. This is important to know before you purchase coverages you do not need.
Are there flexible payment options?
Pay as You Go Workers Comp Insurance Coverage is one option that can help businesses pay for their coverage monthly based on payroll instead of in one lump sum. Pay as You Go Workers’ Compensation benefits businesses by freeing up cash for more immediate business needs, by preventing over or under paying and by drastically lowering the likelihood of a mid-term audit by your insurance carrier. This is especially helpful for cash strapped or seasonal businesses.
How much does my policy cover?
What you are actually asking your agent is, “What are my policy limits?” A limit is the total amount your policy can pay out. For General Liability Policies there are two ways in which limits are paid: Aggregate limit is the most your policy will pay in a single year for all claims. Occurrence limit is the amount your policy can pay for any single claim. Which type of policy you want for your business really depends on the types of risks you face and how much risk you are willing to take on. Taking on more risk will help lower your premium, but will make you have to foot more of the bill when a claim does occur. This is why it is important to take some extra time to speak long and honestly with your agent about your business and what types of risks you are comfortable with.
Can I get more coverage?
An Umbrella Insurance Policy is the best way to supplement your General Liability Coverage. This policy will kick in when the limits of your other policies have been reached. You can purchase Umbrella coverage in increments of $1 million, and it’s often a cost-effective way to fulfill liability insurance requirements in client contracts. It is crucial to understand that an umbrella policy only kicks in for a covered loss. If you live somewhere with a common risk of natural disasters, like hurricanes or tornadoes, those disasters have to be covered separately. An umbrella policy will not kick if the claim is not covered by the initial policy.
Is it worth my time to implement an in-depth safety program?
The simple answer to this question is yes, it is always worth your time and effort to implement and effective safety program. Having a safety program in place will cut down on the number and severity of injuries to your workforce. The safety of your workforce should always be at the heart of your businesses mission. A healthy workforce is a happy and productive workforce. This program can also keep down what your business pays for workers compensation premium. The program does not have to be excessively time consuming. Including this in a weekly or monthly huddle can make a difference in the injury outcomes of your employees.
Do I really need Commercial Auto Insurance?
The answer to this question really depends on the operations of your business. If you own and operate cars as a part of your daily business than yes, you absolutely need commercial auto coverage. If you have employees who use their own cars for work or who drive rental cars from time to time you can cover them with a hired and non-owned auto policy. If you have employees who drive their own car as part of their job duties, their personal auto policies will cover the damages to their car, but not the liability to other cars if the accident is there fault. That liability falls on the business because the reason the car was at the location of the accident was because of an action of the business.
Do I really need Cyber Insurance?
Again this policy completely depends on the operations of your business. It is important to speak long and honestly with your insurance agent about all of the electronic devices any of your employees use. There may be risks hiding in places you might not realize. The great thing about a good insurance agent is that they not only interact with small businesses when they purchase insurance for their business, but they also speak with business owners when bad things happen. They can use those experiences to help you prepare for those times when bad things happen to your business. They should be able to prepare you for risks you do not even know you face.
Am I classified properly for workers’ compensation?
This is extremely important for your business cash flow. Especially, if you operate in an industry with several different areas of operation. If you do, you need to ensure the agent classifies your business properly. They are in the business of analyzing risk. If you do not tell them all of your risks, then it is in their best interest to assume your business is taking on more risk. If you do not give your agent enough information they may place your business in a riskier classification code. This can have an enormous impact on what you pay for general liability and workers compensation insurance. Taking just a few extra minutes to explain exactly what your business does and does not do, can save you immensely when it comes to premium.
How can I lower my premium?
If lowering your premium is a priority than tell that to your agent. Agents interacting with a lot of people who operate in a lot of different industries and who have a lot of different priorities. Some business owners just want their policy and they want it quickly so they can get back to running their business. To that business owner price may not be at the top of their priority list. Other business owners may want to insure their business to the absolute largest limits possible, while other business owners are comfortable taking on more risk. Where ever you are on this spectrum, tell that to your agent. Let them know what is important to you and they can better serve your needs.
Mitchell Sharp is a Marketing Associate for Workers Compensation Shop.com. Mitchell is a Missouri Boy and a Carolina Man. He has a deep passion for social media and content marketing. Mitchell would like to use his knowledge of these subjects to benefit small business owners.