Vital coverage discussions for small-business clients
Many of small-business owners don’t exactly know what risk management entails or how to get started.
Most business owners know that effective risk management is key to adequately protecting their assets.
The problem is, many of them don’t exactly know what risk management entails or how to get started. That’s where we, as experts, can be invaluable resources for business owners. There’s a wide range of products that address many common (and abnormal) risk exposures, but do we do a good job of explaining these products and their benefits to clients?
Prior to embarking on my insurance career 15 years ago, I opened my own Italian restaurant, Florentina’s Pizza and Pasta. In the beginning, I knew almost nothing about evaluating and managing risk and depended entirely on my insurance agent, Cliff, to provide me proper counsel. So I know the benefit of having an agent who takes the time to get to know your business and reassures you that they’ve put together an appropriate slate of insurance policies to protect your business.
As the agent, you have to be prepared to walk your client through their business’ various exposures and the policies that make sense to protect it. Let’s start from the top and try to evaluate potential loss exposures without sinking too deep into insurance jargon, shall we?
Start with worker’s comp
If your client’s business requires employees, outline worker’s compensation insurance options and how those options can be customized on varying levels of risk. Be sure to discuss the various operations of the business and anticipated payroll when explaining policy options.
Move on to property
Next, let’s evaluate real and business personal property. This includes a business’ property, stock, any improvements made to the property, electronic data, processing equipment and other materials essential for your client to stay in business.
Start by explaining the financial strain of having to replace those items out of a personal savings or business account, in the event of a fire or flood. Develop a list of the key pieces of equipment and estimates for the client to help visualize the magnitude of a potential loss. This will help best inform policy decisions and give clients peace of mind in terms of knowing what they’re protecting.
Next, business interruption
Alongside property insurance is business interruption coverage, which can be a bit more challenging to explain to new business owners with no history to consider. Work with clients to fill out the business interruption worksheet using real numbers of their top-line sales, gross and net profit, and so on. This will help them more accurately determine the limits of coverage needed to protect the business.
End with liability coverage
Finally, general and excess liability coverage can also be difficult for clients to gauge. They’ll need clear guidance when considering all of the things that could happen as a result of operating their business for which they might be held liable. Although a daunting exercise, outlining potential liabilities will not only help clients understand how much coverage they’ll need, it also provides the opportunity to develop processes that can help minimize the risk of those occurrences.
Running a business is hard enough. Your clients are focused on serving customers, growing their business and protecting their livelihoods. As their agent, they’re placing a great deal of trust in you to help them achieve this. Keep this, and the aforementioned tips, in mind when communicating with clients to assure them that their business is your priority.
Michael D. Brown is vice president and property department manager at Golden Bear Insurance Company. He can be reached at michaelbrown93442@gmail.com.
The opinions expressed here are the writer’s own.
See also:
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