common business insurance mistakes

1. Not shopping around

Let’s be honest with each other - we tend to see business insurance as a necessary evil. We pay our premiums, hoping to never have a claim; but if we do, we just want it to be taken care of. I'm so glad we could be open about this.

Since it’s not exactly a pleasurable experience, the last thing you want to do is shop around, set multiple meetings and phone calls, and chew up time you could spend running your business. But, this is often the biggest mistake small businesses make when it comes to their insurance.

More honesty now - not all insurance is created equal and the pricing differences between policies and carriers can vary greatly. There are a lot of factors that determine the price a business insurance carrier offers a policy for even though it may be for the same coverage. If you don’t shop around to compare policy prices from multiple insurance carriers, you’re likely to miss out on significant savings for your business.

2. Comparing rates instead of quotes

Even if you don’t make the previous mistake, many businesses make the innocent mistake of comparing rates and not quotes. This is an easy slip up since many insurance companies trumpet proudly about how they’ll compare rates with their competitors for you. It sounds altruistic, but it’s not exactly as useful as it seems because rates don’t take into all of the factors that make the final insurance policy price customized to your business. Think of rates kind of like baseline estimates. Quotes, on the other hand, are the actual price you can purchase a policy for. Saving business owners from making this common mistake is very important to us. That’s why we make sure to help you compare only actual quotes that you can buy on the spot. Don’t get caught in the trap of comparing rates.

3. Tolerating inefficiencies

How long should it take to get an insurance policy? This is a heavily loaded question because it really depends on what kind of business you are and any complications that may arise. We can tell you that businesses that shop for their insurance through Talage can typically find and buy a policy in less than 10 minutes. Unfortunately, it's not that fast everywhere or for everyone.

If you are in the construction industry, for example, it's probably going to take a little longer because it’s an industry with greater risk associated with it, and insurance carriers usually like to take a closer look at your business before setting the policy price. However, it should still be a smooth process and there should be minimal back-and-forth. If it's taking more than a day or two, something may be wrong, or you’ve been pushed aside. And unless you are paying 100s of thousands of dollars in insurance, if it’s taking anybody a week or more to get you multiple quotes for any industry, that’s far too long.

4. Settling for indifference

Does your insurance agent really care about your business? The cold hard truth is that most small businesses are small accounts for an insurance agent. It doesn’t mean your agent is a heartless, money-hungry jerk. They’re probably very nice and professional. The reality is that a small account (and thereby a very little commission) means that it isn’t a high priority or worth the economics of spending a lot of time on (managing or obtaining quotes). A lot of times, insurance agents will utilize a small business unit within the office, or your account will be dealt with as quickly as possible so they can get back to work on larger accounts.

Again, it’s not their fault, it's just economics. If you’re going to feel confident about the quote you’re getting, you need to work with somebody that is willing to put in the time to get you multiple quotes even though you’re a small policy. Or you can always take the shopping and quote comparison into your own hands.

5. Trusting "Cousin Eddie"

We’ve all got a family member who works in insurance. We’re all for supporting your own, but make sure your cousin, neighbor, buddy from city league basketball, or your sorority sister know what they’re doing (don't just presume they do). There is too much is at stake for you, your business, and your budget. Make sure you are working with a licensed agent who understands your business needs and can provide you with multiple quotes from A-rated insurance carriers.

6. Not understanding the policy

Do you have an insurance license? What about a degree in risk management? Of course not, nobody does; well, ok, some people do. The point I’m trying to make is that if you aren’t an expert, then it helps to at least get acquainted with insurance. It’s a significant line item for most small businesses, so it’s worth your effort to educate yourself and understand the impact insurance can have on your business. Today’s business owners are more educated and more savvy than ever. You know your business inside and out, you read, you research and keep up with trends. Don’t let insurance be the blind spot in the vision for your business. You can always check out our small business blog for articles to help you better understand business insurance.

7. Being set up for an audited additional premium

This one is specific to Workers’ Compensation policies, but it can be devastating if handled improperly. Workers’ Comp policies are written based on forward-looking payroll and as a result, the premium you were quoted at the beginning of the policy period is technically an estimate that is subject to audit at the end of the policy period. This means, much like your taxes, if you pay too much over the course of a year, the insurance company will send you a refund, but look out if you don’t pay enough! You’re going to owe them and it won’t be spread out in monthly payments like the rest of the premium you just paid. It’s really important to get that payroll estimate close and if you have unexpected shifts in your estimated payroll during the year, let your agent or insurance company know right away so adjustments can be made to prevent a nasty audit.

8. Waiting until the last minute

This one may not be a disaster, but it will likely add to your stress as a business owner. You may be able to buy a policy in minutes and have it take effect the next day (like you can with Talage!). However, if something comes up that delays the process you could find yourself without coverage. Not only could this expose you to costly losses, you may also find yourself in breach of contract, or worse, in violation of state law. We think you should start looking at your insurance about 30-45 before it’s scheduled to renew. You can often shop up to 90 days in advance if you are really an overachiever, but then you may run into issues likes new rates that haven't been filed yet. A month or so out will give you enough time to get multiple quotes and make a decision.

9. Letting the renewal just ride

Generally, small business insurance policies are written on an annual basis and as such, they renew every 12 months. Most insurance companies will automatically renew your policy with little to no interaction from you and usually insurance agents are all too happy to let it ride. Less work means higher margins, but it could also may mean higher premiums for you. A lot of times it may be a great option to stay where you are, but how do you know if you don’t look around? Don’t be afraid to check your policy against changing market conditions. All insurance companies have their own pricing and own financial motivations, so differences in pricing can be significant year over year.