If a Small Business Owner is doing their Due Diligence here are 10 Insurance Questions they should be asking
What are all of my Businesses Risks?
It is tremendously important to know what risks your business faces and what risks your business does not face. No one knows your business better than you, but no one knows risk better then your insurance agent. Once you find an insurance agency you trust, it is crucial to speak long and honestly with your agent about all aspects of your business. Having a second set of eyes analyzing the risks you face may bring about aspects of your business a business owner has never thought about.
Are all my risks covered?
Once you have determined exactly what risks your business faces, it is important to determine how to protect against those risks properly. Having an open relationship with your insurance agent is important to address this part of your risk management and insurance plan. It is important to communicate to your agent what amount of risk you are comfortable with. From the agents perspective, they are in the business of managing risk. It is in their best interest to always assume more risk and protect fully. If you are comfortable with more risk then the average business, it is important to let the agent know. It is equally important to not base your decision solely on price. It is probably a good idea to not let price be the most important factor in your decision. This is because margins are extremely tight in the insurance industry. If a product is discounted compared to all competitors, it usually is because the product is inferior. Going with an inferior insurance policy can cause a lot of headaches when you are faced with a claim, and all businesses have claims eventually.
Do I have any Gaps in Coverage?
A gap in coverage is a place where a business has two policies that have exclusion related to the coverage. A claim occurs where both policies have an exclusion for the specifics of this claim. The best way to avoid a gap in coverage is to bundle all policies with one carrier and to talk about gaps in coverage with your agent as you shop for coverage.
Are there other ways a Small Business Owner can pay?
Most carriers offer multiple ways for commercial insurance. The most common form of alternative payment option is Pay as You Go Workers Compensation. Pay as You Go allows businesses to pay premium in real time based upon the actual payroll numbers from the previous month. A traditional workers comp policy is based upon an average of the payroll numbers for the business over the past 2-3 years. A traditional workers comp policy also requires a business to pay anywhere from 25 to 33 percent of the entire premium up front just to get coverage in place. A Pay as You Go Policy allows a business to get coverage in place for as little as a few hundred dollars for most small and medium sized businesses. This frees up cash for more immediate business needs. Additionally, a Pay as You Go Policy eliminates the likelihood of a surprise during the end of term audit. An audit takes place for all businesses at the end of each term. The audit determines finally payroll amounts and determines if all employees are classified properly. The audit may result in a credit to your account because of over payment or it can result in additional premium being owed.
Can a Small Business Owner Experience a Data Breach?
Data breaches are now a problem for all business, big and small. In the past, cyber attacks were only a problem for big businesses. Most small business owners assumed they did not have enough records for cyber criminals to bother to come after their internal systems. Large corporations are catching on to the need for cyber security. As big business becomes more cyber savy, hackers are forced to look to small businesses for access to peoples sensitive financial information. Two of the largest data breaches in history, Target and Home Depot, started by a small business first being hacked. In both of these data breaches, there was a small business that was a partner of the bigger business who had employees that had access to the bigger businesses computer systems. This is becoming a much more common way for cyber criminals to approach gaining access to large amounts of financial records.
Additional Questions to Consider:
- Do I need to implement a Safety Program?
- Does Ergonomics around the Office Matter?
- Are there any discounts available?
- Can I Adjust the Limits of some policies?
- Are my employees classified properly?
- Who and what is insured?