Last month, we spent some time discussing the importance of having an experienced accountant on your business’s team of professional advisors. This month, we are going to talk about insurance advisors and why you need to have a trusted agent on your business’s dream team of professional advisors.
At the consumer level, insurance is almost impossible to avoid. If you want to legally own and drive a car, you have to have auto insurance. If you want to avoid paying the government large penalties, you have to have health insurance. The intent of these products is the same: to mitigate the downside of an unexpected and large loss or catastrophe. In the business environment, insurance works the same way. As a small business owner, you need to purchase insurance products that will offset the cost of unanticipated losses that may occur while operating your business.
In the business marketplace, insurance is often viewed as a commodity. Price is generally the deciding factor for the business consumer. Although the product of insurance may in fact be a commodity, insurance representatives and advisors should not be viewed in this manner. A solid insurance agent or broker is an invaluable asset for a small business owner. Great insurance agents take the time to learn and understand a business and the potential risks it faces at the macro-level. They see the big picture and can offer insurance products that mitigate business risks and protect the business and the business owner from hidden or unseen liabilities. When recruiting an insurance partner for your dream team of professional advisors, be sure to keep in mind the following:
(1) Industry Expertise – Unfortunately, your buddy from high school that wrote your AAA auto insurance policy may not be the right partner for your business insurance needs. He’s probably a great guy with a pretty good golf swing and he might even offer you a solid rate on the family minivan (or Buick, depending on your current stage of life). However, as a small business owner, you need someone that has experience insuring businesses and business owners in your specific industry or niche. They will better understand what you do, who you serve, and the risks you face. It’s probably fine to keep your family auto policy with your buddy from high school, but when it comes to your business and its insurance needs you need an advisor on your team that understands the unique risks of your business and offers insurance products to mitigate those risks.
(2) Wholistic Approach – Although you need insurance products tailored to your specific industry, there are a number of standard insurance products that business owners need as well. These include general liability, property coverage, auto liability, workers compensation, etc. Make sure that your advisor takes a wholistic approach to your insurance needs and offers you products that meet all of those needs. An advisor with experience in your industry is great, but you also need to ensure your advisor offers insurance products that provide coverage for the general operations of your business.
(3) Do Your Homework – Insurance is a complicated field and the products are not always clear and straightforward. A great agent will walk you through exactly what you are purchasing and help you understand how you are covered. However, if you have questions or something is unclear to you, then make sure you ask for clarification. When it comes to insurance you need to be a savvy consumer. Know and understand as best you can what you are purchasing so there are no surprises down the road if you need to make a claim.
If your business is located in the West Michigan area and you are looking for a solid insurance partner for your team of professional advisors, please give me a call. I can refer you to some excellent, local insurance advisors.