How to pick an insurance carrier for your small business

You have a ton of responsibility as a small business owner, but there’s one thing that often gets lost in the shuffle when you’re starting out that needs to be ironed out: insurance. In fact, according to a recent study, 75% of businesses are under-insured while a whopping 40% have no insurance at all. While it might not be the first thing on your list, it definitely is one of the most important. It’s also one place you’re going to need some guidance.

Why? Because with all the options for carriers, types of insurance, and rates, you’re going to want to have an experienced hand to help you guide your way through it. 

Have a chat with your insurance agent

This might sound like a no-brainer, but you’d be surprised at how many folks put it off. As you begin business planning, it’s worth checking in with your insurance agent to have a little conversation about the types of insurance you’ll need. Don’t worry, you don’t need to know this before you go in: that’s their job. 

Here’s what you’ll go over in the meeting, which is basically just a way to learn about you, your business and some other key details that will help them identify the coverage you need and which carriers will provide the best coverage for your situation. They’ll ask you questions like how long you’ve been in business, if it’s the first time you’ve owned this type of business before, and what your general business experience is. Projected annual sales, number of employees, location questions etc.

What are the types of insurance your small business needs?

The types of insurance your small business needs will depend upon your assets and the type of business you run. If you have a physical location, you’ll need commercial property insurance to cover your build-out and your inventory. You may need workers comp depending on if you have employees or not. Another big one we see: commercial auto. That means if you have any sort of delivery or service vehicles, you’ll need to have those vehicles insured. Even if you don’t own the building, you may need to have property insurance – if you pay for a build out on a long term lease, you’ll want to ensure that it’s protected in the event of a fire or loss. And finally, adequately and appropriately insuring your inventory is a big deal. 

How do insurance companies decide their rates?

Every carrier and insurance company has a different appetite for the type of business they like - say if you’re starting an auto repair shop, there are four or five companies that right away will come to your insurance agent’s mind. Sometimes those calls aren’t as straightforward though, like if it’s a restaurant they may need to know if you sell liquor or not. They may need to know if you have gaming or gambling there. The size of your business will also matter: say a small ice cream shop vs a bigger late night eatery. 

That’s why the interview process is so important. With it, your agent will help you figure out the nuts and bolts of your business. 

When should I start looking for small business insurance?

The quick answer is as soon as possible. Here’s the thing: any good agent will be able to work with you on your timetable, whether that’s a few weeks, months, or even days. That said, more time means more options. If you’re trying to find the best rate and shop around, you will want to give yourself and your agent as much time and information as possible to make sure that you get the right coverage and a great rate. 

What else will my insurance agent do?

The team at Kaizen Risk Management will help you figure out the exact types of insurance that your business needs. Beyond the interview process, we may ask to physically see your location, or do a deep dive into some parts of your business. That’s why it’s so important to make sure that you trust your insurance agent. You’ll be opening up the most intimate parts of your business to them.

That said, once you’ve found the right match, it’s a crucial relationship to develop. These folks will act as a guide for you, showing you the right coverage and preventing you from having needless cost (which might happen if you just go it alone and try to figure it out online). Do you have small business insurance? Do you need to know more? Let's talk. We’re excited to hear about your business and see how we can help.