Business Owners – How Do You Get The Right Insurance Coverage?
You could be a startup and you want to know what the right insurance coverage is to buy.
You could be an established business that’s thinking about shopping for your insurance.
Or, you could be somewhere in between and just doing research on business insurance, not sure what to buy or how to judge whether you have the right insurance coverages.
If shopping for business insurance is on your mind, stick with me – I’m going to give you a few things to consider, in this video and post.
Okay, business insurance. It’s complex, it’s confusing and it can be costly.
Before I get into it, I want to let you know that if I don’t answer your questions, concerns, or issues in this video and post you can call me, or drop me an email with your questions.
I love helping business owners when it comes to insurance and risk issues, so please, I have an open door and welcome your inquiries, even if you’re not looking to change brokers at this time.
And I promise no hard-core selling or nonsense if you do reach out. Just some problem-solving.
So, something I can tell you from the start is that after 40 years in the insurance business I’ve learned that even the smartest decision-makers at businesses large and small don’t fully understand their business insurance.
These leaders don’t have a reliable method to audit what types of coverages they need or don’t need or whether their insurance protection is sufficient to hold up to serious claims should they occur.
And that’s understandable.
Business insurance is really complex and nuanced.
In fact, a lot of insurance brokers don’t really understand what they’re selling to business owners, and just hope they’re getting it right.
So it’s understandable that buyers don’t fully get it if sellers don’t.
Part of the problem, I believe is rooted in the way most businesses go out and procure business insurance.
It is called bidding out or shopping out their account.
Every few years after being hounded by several insurance brokers every year wanting a chance to quote the company’s insurance, business owners will occasionally permit two or three brokers to come in and give them quotes.
The decision-maker may even go online and try their hand at getting a quote from online providers and I can talk about that in another video.
But, I will say that do-it-yourself commercial insurance isn’t a great idea.
Now I want to stop here for a moment and ask you:
How valuable is your business to you?
What percentage of your net worth does your business represent?
If your business was destroyed or impaired today, how would it affect your family’s income flow now and in the future?
I ask those questions because for most business owners their firms represent a huge chunk of their net worth and pretty much all of their income flow.
Their business is their life.
And that’s the perspective I’m coming from when it comes to business insurance.
I want to make sure you, the business owner, understand the risks you face and give you the confidence and peace of mind that we’re doing our best job possible to protect you from those risks.
For us, this is a big responsibility.
Okay with that established, let’s go back to the bidding and shopping process.
If you’ve been through it before you know it’s not pleasant.
Brokers are jockeying for what insurance companies they can bring your account to for quotes.
There are lots of applications to complete.
There are often loss control inspections from multiple insurance companies.
And, it seems like a lot of work for you.
At the end of the process, you meet with the two or three brokers and go over the quotes they are recommending.
The proposals are all different in, details, limits, and recommendations all written in “insurance-eze” language which you don’t understand.
So, how do you make a decision on which proposal is the best?
In many cases, decisions are made based on price, because the business owner can’t decipher which proposal offers the best value.
And that can be a problem.
I’m not saying that the lowest price isn’t the best option, but what I am saying is that the decision-making process is flawed.
And, it’s flawed for two reasons.
The first is that the GOAL of the bidding process isn’t made clear from the beginning.
Your goal is or should be: Get me the best protection for my business so that I have peace of mind and get it at the most reasonable cost.
Because your business represents your life, your income, and your legacy proper protection is objective #1.
But, the competing brokers have a goal of just getting the lowest price in front of you because they believe that will win them the deal.
And let’s be honest, winning deals is what it’s all about.
Unfortunately, these two goals oppose each other. They are not congruent.
And, in search of the lowest price corners are cut, costly options may not be presented, and the worst part is that the proposal is based on what you already have.
Probably because you said: give me an apples-to-apples comparison to what I have.
Insurance agents aren’t starting with a blank sheet of paper when they work on your deal – they often are copying what you have and only repeating prior mistakes made by prior agents.
And here is the second flaw.
Lack of diligence.
There is a tremendous lack of due diligence when it comes to the bidding or shopping process in the insurance industry.
The starting point as I mentioned for most shopping exercises is your current policies, which I can tell you are outdated, have incorrect limits of protection, and lack key coverage parts and endorsements needed in today’s world.
So, it shouldn’t be a surprise that the quotes you get are going to be wrong as well!
The big question?
How do you fix these two flaws if you want the best and right insurance coverage protection at the lowest cost?
This may sound entirely self-serving but hear me out.
The answer is to change the dynamic. Rather than pitting three brokers against each other to go out and get you quotes, you interview brokers and select one to work with.
This is called a broker selection process. You select the broker who you believe is best to do three things:
- Perform a thorough review and analysis of your current insurance coverages and your needs, as well as your historical claim performance.
- Deliver a report on those findings with their strategy on how they would approach the marketplace if it was in your best interest for alternate pricing.
- And finally, what risk control strategies would this broker recommend helping you manage risk in your organization.
Creating a solid risk control strategy puts you in the driver’s seat on future insurance renewals and lowers your costs.
Risk control also helps improve productivity and long-term profitability.
Here’s the bottom line.
Most business owners and company decision-makers lack a reliable methodology to determine what’s the right insurance coverage they need and at what limits.
They’ve relied on long-term broker relationships and/or a bidding process to shop the market for ideas, which come up short on expertise, insight, and strategy.
To avoid this, YOU, the decision-maker needs to be in control.
You gain control by hiring the right broker to lead the process of discovery, strategy, and implementation.
You hire the right broker based on a strategic broker selection process.
Not by having several aggressive brokers fight it out in the market for the best price scenario.
Keep in mind bigger isn’t always better.
I have met many prospects who are dissatisfied with their big institutional brokers who have lost touch or failed to manage expectations.
Broker Selection is about problem-solving, value proposition, and effectiveness.
It also has a lot to do with likeability and trustworthiness.
You need to like the broker you will work with and feel that they are trustworthy.
Want to learn more about broker selection and why we may be someone you want to talk to?
Let’s jump on a conversation to see what I can help you with.