Business Insurance Buying Guide

Buying business insurance can be a daunting task. It’s easy to see the types of policies we have and what we pay for them. But when we look closer, insurance policies are long and complicated legal contracts. We’ve put together this Business Insurance Buying Guide so that you don’t have to go in blind.

This article is the first in a multi-part series examining the steps businesses have when evaluating and buying insurance. By knowing your options and what a typical process looks like, you’ll know what to expect and can make the most of your time.

Your Options for Buying Business Insurance

When it comes to buying business insurance, the first real decision to come to is how do you want to buy? There are a lot of options out there, including:

Shopping online
Here’s where you’ll likely be able to get a quote quickest, but you’ll do the heavy lifting in terms of deciding what kind of coverage to get and what limits to purchase. The benefits of this approach are that you’ll save time; however, there is a greater chance that you’ll have a gap in coverage or a costly exclusion.
Compare offers from multiple brokers
This is a similar approach to shopping online, but with a more personalized approach. You’ll end up repeating yourself a few times over, but you’ll get multiple options and in the short-term, you’ll probably save some money. Know before hand that it’s hard to compare multiple offers from multiple brokers. Trying to compare the differences in coverage can be incredibly complicated because there is no such thing as apples to apples comparisons for insurance.

multiple kinds of apples — Did you know there are more than 2,500 different kinds of apples in the United States alone?

Interview multiple brokers and decide to work with one
This approach is a little bit different because you’re first deciding who to work with before deciding on price. Where this makes sense is when you’re prioritizing having the right coverage and when you value working with a trusted advisor instead of a vendor. The downside here is that it usually takes a little more of an investment in time, but when you find the right broker to work with, you usually reap the benefits of that relationship in the future.

Starting with the End in Mind

How do you decide which insurance buying option is right for your business? My recommendation is to start with the end in mind.

In the book The Seven Habits of Highly Effective People, Stephen Covey talks about the principal of starting with the end in mind. This is something I’ve found immensely helpful in thinking through how I want to do something, or what I want to accomplish.

So think about the end – imagine that you’re at the end of buying insurance for your business. What’s important to you?

Do you feel the peace of mind that comes with knowing your business is protected?
Did you reduce your insurance premium expense?
How confident are you that your business is financially protected from things like accidents, fires, & lawsuits?
How confident are you that if an accident, fire, or lawsuit happens, you’ll be able to continue operating your business?
Were you able to get it done without talking to a single person?
How much time did you invest?
Does your insurance broker understand your business?
Do you have a good understanding of the types of risk you have exposure to?

Challenging Your Assumptions

I’ve been working in insurance for more than 15 years. Because I’ve been doing this for so long, it’s hard for me to think in the same way as many people do about insurance.

Because of this, one thing I try to do on occasion is remember what I thought about insurance before I got my start. The phrase that comes to mind for me is necessary evil. Paying insurance premiums never felt like something I’d ever want to do, but something that had to be done.

Not everybody thinks that way, but I don’t blame you if you do. Insurance exists for when things go wrong – and sometimes in the worst ways imaginable. But insurance also exists – specifically when it comes to your business – to enable growth. Without the ability to protect yourself from risk, would a business ever grow big? Would wealth on the scale that we see it today even exist?

One other thing that comes to mind when I think about how business owners view insurance – a drain on resources. Why would I want to pay insurance premiums instead of reinvesting in my business?

What if you could do both?

I’d like to challenge you a little here if I can – Outside of the insurance coverage itself, what value do you get from your insurance policies? In other words, If you never have a claim, what did you get from your insurance premiums?

In most cases, the answer is nothing.

However, what if instead of getting nothing back, you paid the same amount of money and were provided with support in helping you achieve your business goals?

Maybe one of your goals is to keep your employees safe from injury. What if your insurance broker could help you put a safety manual in place and help you set up a safety committee? Or coordinate loss control services from your insurance carrier? Or connect you with a professional who specializes in your industry?

Get Started Here

A Biased Opinion

If you look back to the top of this article, I outlined three options for starting your insurance buying process. They were:

Shopping online
Compare offers from multiple brokers
Interview multiple brokers and decide to work with one

Arguably, you could use a mix of these options, but the time it would take to do that makes it a bit unrealistic.

As an insurance broker, it probably won’t come as a surprise that I recommend the third option – working with only one insurance broker. Granted, this approach isn’t for everyone, but here’s why I recommend it:

Most insurance brokers have all the same markets anyway

Here’s a phrase common among insurance agents: “we have all the best markets.” Of course you do…so does everyone else. This does not make an agent different – it makes them an insurance agent. If an agent has all the worst markets, would they still be in business?

Finding the right agent first saves you time and helps establish a relationship with a business advisor. If you need multiple proposals, any independent agent can provide you with multiple options to review, with the notable exception that all the proposals will be with largely the same coverage options. You don’t have to wade through vastly different proposals in an effort to compare them.

There are insurance brokers who specialize in a few specific verticals

Many insurance agents work on everything that comes in the door, but the insurance needs of your business may be greatly different than those of a business in a completely different industry. There is likely always a place for generalists, but there’s also a reason specialists often earn more.

If your broker specializes in working with your industry, would they be able to provide insights into what other businesses (such as your competitors) are doing? Are your competitors getting this competitive advantage that you’re not?

Who’s on your Trusted Advisor Team?

Look to your most valuable relationships. Who are your best advisors? Most often, business owners rely on Attorneys, Accountants, and Financial Advisors to help them manage their business and personal finances. But how often is an insurance broker included in that category?

An insurance and risk advisor on your Trusted Advisor Team can be a real benefit to you and your business. Your insurance broker can be the glue that brings your other advisors together for common purpose – helping you achieve your goals.