Your Insurance Agent is Your Partner, Choose them Wisely
Most people don’t think of their insurance agent often and you won’t find to many that consider them to be their business partner. Insurance can be a complex topic and if you don’t think so, just read your 200-page insurance policy and get back to me. It is full of what’s covered, the limit of coverage, the retention or deductible amounts and of course what is not covered, the exclusions. Most policies have a multitude of exclusions that most people don’t give much thought or attention to. With the current Covid 19 health crisis affecting most business today “exclusions” are a hot topic and even a legal matter, specifically surrounding business interruption coverage, which is a typical coverage included in most business property coverages. The substantial number of commercial property policies also include a standard exclusion; “Exclusion of Loss Due to Virus or Bacteria”. Exclusions are actually considered endorsements that modify the terms and coverage of your insurance policy. My point here is not to get go deep into the weeds on this specific issue, but to make my case that insurance can be complicated. I find that most people have not even thumbed through their policy document, let alone read it. If by some chance they have read their policy documents, the specific insurance terminology can be equally perplexing.
I tell my prospective clients, if you choose me to be your insurance agent, I consider myself to be your business partner in charge of your insurance needs, I just don’t take up any office space. It is really important to have a very open and honest relationship with your insurance agent, like you have with any business partner. I find that some clients find it hard to have this kind of relationship with their agent. Your agent is not a mind reader, that is why they ask so many questions (or they should be asking). Every business has specific risks and threats, which are often different and unique to their business. If we don’t understand what the threats and risks are to your specific business and situation then we can’t be sure we are doing everything we can to make sure we are protecting you. I find, the more I know about your business and situation, not only can I help to better protect you, most times, I can find you the best coverage options at lower rates. If I am shooting in the dark and hoping to cover your needs, I may be getting coverages you may not need, which can cost more. The other situation business owners can find themselves when their agent does not fully understand their business, something critical many not be covered and thus, claims could be rejected, causing them to have to pay for the full amount of the loss not covered, out of pocket.
Many clients don’t fully understand how insurance works or to be more specific, how their rates are determined. For example, the thing I run into the most often is in regard to General Liability (GL) insurance. GL insurance is typically rated or priced based on the gross sales of the business, the higher the sales the higher potential risks and therefore the higher the cost. Many businesses, especially start up businesses don’t really know what their gross will be, so they are asked to project their gross sales for the 12 months of their policy period. The amount they pay is generally called a deposit premium, because it is based on projected sales, and therefore a deposit, not to be considered the full cost. At the end of each policy year the insurance carrier conducts an audit to confirm the actual gross sales. If you had projected $100,000.00, and the actual gross sales was $150,000.00, you are billed the cost difference for $50,000.00 in gross sales. These are called audit premiums and are due upon receipt from the insurance carrier. If you had paid $1,000.00 as a deposit premium, you would actually own an additional $500.00 in audit premium. This can be a real shock to a business that does not understand this aspect of how insurance works. Additionally, circumstances often change during a year, which can have an effect on your insurance coverage as well.
The bottom line; if you and your insurance agent see their role to be a business partner for your insurance needs, they can and will do a better job for you all the way around, getting the right coverage at the best cost. I know how hard my clients work and the sacrifice they make building their business. So, protecting what has been worked so hard for is paramount!