How to Buy Small Business Insurance
I’ve done several videos on what small business owners should look for in the insurance policies they buy, but I don’t think I’ve ever answered the question on how to buy small business insurance.
So how do you go about buying small business insurance?
There are three main channels in my mind of where you can go to purchase coverage.
The first is the big-name captive direct writers such as Allstate or State Farm – these companies do offer most small business insurance products but just realize that their product offering is limited just to the company they represent. This means limited options in coverages and pricing, so it may not be your best choice.
The second option is to buy your policy directly online from several firms we would call insurtech platforms, and direct writers. These are basically online portals where you enter your information and buy a policy. Several come to mind: biberk a division of Berkshire Hathaway, Nextinsurance, Embroker, Hiscox, Insureon, Progressive, and others.
The good news is that these are very simple, fast, and easy. The bad news is that they are simple, fast, and easy!
What I mean by that is in most cases there is very little human interaction in these platforms and a minimal amount of information is exchanged to get a quote.
Sometimes A.I. or artificial intelligence is used to help the process along but the downside to quick and easy is that it might not be right. And, once you grow, you may outgrow the usefulness of a platform like this.
I’ve reviewed policies from several of these firms and often find glaring errors and mistakes that limit coverage or are so incorrectly written that there is essentially no coverage there.
Basically, this is one step up from “do it yourself” business insurance I don’t recommend going this route. If you do, just be prepared that the policy you buy, may not be everything you thought you were getting.
The last option is to buy from an independent agent or broker. Usually, an independent agent will represent multiple insurance companies, so you get a choice and range of options when it comes to coverage and price. Sometimes you may be able to do most of your transactions online with minimal human interaction or you may need to visit your agent in their office, which still happens in many small rural communities.
What I’m saying is that you can choose an agent or broker that fits your needs and your way of doing business.
Now, not all independent agents and brokers are the same. So what should you be looking for is an agent or broker that focuses on business insurance, and has expertise in your industry. You can do a lot of vetting online when looking for a broker as well – read their content – do seem like they know what they’re talking about? Do they have positive reviews and testimonials? Do they demonstrate competence and interest in your business or industry?
For example, I would not be the right broker to speak to about farm insurance because I’m not in a rural or farm community and don’t have experience in farm insurance – but I do have experience and interest in a lot of other industries. I really think the internet gives you, the buyer, an advantage to do some research before you pick up the phone or drop an email to someone.
Another point I want to make is that insurance agents are not middlemen. Direct insurers like Geico want you to believe that if you cut out brokers, you’re cutting out middlemen and saving the commission that agents and brokers get paid.
That’s not entirely true. The truth is that someone has to get paid to sell a policy and service it, so it doesn’t matter if it’s the insurance company or an insurance agent – it’s still part of the transaction that needs to be accounted for unless you want to go entirely online and do it yourself.
Now does it make sense to have more than one broker quote your business insurance?
I don’t think so. If you find a broker you’re comfortable with, you feel like you can trust them and you have a good rapport, ask them flat out – will you quote more than one insurance company on my account? Can you give me comparisons, so I don’t need to do a lot of shopping? If you can get buy-in on that level, then it doesn’t make sense to go out to multiple brokers and get multiple quotes.
Here’s why – first there are a limited number of insurance companies writing commercial insurance so one broker can likely reach several of them. Communicating your information to multiple brokers is time-consuming and leaves an opportunity for someone missing something in the conversation which can lead to a gap in coverage. Third, if you get quotes from two or three brokers how are you going to compare them as to which is the best deal?
The lowest price isn’t always the best deal – insurance proposals can be confusing and if you don’t fully understand the proposal, how will you do a real comparison?
The bottom line is this. I recommend using an independent agent or broker for your small business insurance. Your business will likely become your largest asset so protecting it properly is critically important and that means starting off with a good relationship with an expert who will spend the time with you to figuring out your needs. Doing that online by answering 5 or 6 questions doesn’t make a lot of sense to me.
You need to trust who you’re working with that they’ve got your back, and most agents I know will have your back.
Have other questions on business insurance? Want to find out if we might be a good fit for you and your firm? Why not give me a call, or drop me an email. I’d love to chat with you and see how we can assist you with your business insurance needs. Click the button below to get started. Thanks!