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Small business owners face a myriad of challenges every day.  We deal with governmental regulation, manage employees and try to control expenses. 

One of the main expenses for any business, big or small is the cost of insurance.  Understanding the intricacies of our (insurance) industry is difficult.  Policy forms are so complex, and working with the premiums inside a budget can be very trying. 

The goal is always to find the right coverage to adequately protect your business at a price you can afford.  But, so often, the budget dictates differently, and business owners end up with insufficient coverage, exposing their assets in the event of a lawsuit or uncovered claim. 

I would suggest a different strategy for purchasing insurance.  It involves a little “creativity,” but can provide you with the coverage you need at a price you can afford.

Take the time to make a list of events that can cause you grief, and note which ones are insurable.  You can use the internet or your trusted Agent for guidance.

The list begins with the obvious: Damage to your Property, Lawsuits from Automobile Accidents, Slip and Falls or Product Liability. 

But, we need to dig deeper.   Coverage gaps and the lack of proper forms can easily spell financial doom for small businesses. 

Consider Cyber Liability to protect your company against a breach of your Customers’ or Employees’ personal information; Crime Coverage including Employee Dishonesty and Computer Fraud; and Employment Practice Liability Coverage for allegations of Wrongful Termination, Discrimination or Harassment.

Finally, request Policy Enhancements on both the Property and General Liability forms and Umbrella coverage adequate to withstand a large Liability loss.

Now that we have everything you need to protect your business, how can you afford the premium?

The answer lies in deductibles. 

Certainly, if you do not have Employee Dishonesty or Cyber Coverage and you have a loss, you bear the full burden of the expense.  Right?

We call that Assumption of Loss…or, Self Insuring the Loss.

But, what if we Self Insure only a portion of the Loss.  Certainly a 5, 10 or even 25 thousand dollar deductible loss for a small business would hurt financially. 

But, it would not be nearly as devastating as a Liability award of $ 5M if you only have $ 1M in coverage  Or an Employee Dishonesty claim of $ 250K when you have no Crime Coverage.

Need I go on?

With insurance policies, as the deductibles go up the premiums go down.  The greater the “buffer” between a loss and the Insurance Company having to pay, the less they charge.  A simple concept and a HUGE area for negotiations with our industry.

So, write the specs…including all of the coverage necessary to protect your business, and shop with 3 or 4 highly rated carriers.  Make sure the limits are adequate (your local trial lawyer can assist here) and negotiate the premium using deductibles you feel you can afford.  Stay away from the small deductibles and have the carriers compete for your business.

Find an Agent and Company you trust, and use this strategy every 3 to 4 years to ensure the competitiveness of your program.   

You’ll have better coverage for the same premium you are paying now and sleep a whole lot better.