What You Need To Know About Insurance And Your Small Business

There are many considerations when starting a new business. Decisions you make today can affect your business for years to come, and it’s important ensure you have all the necessary information to help your business thrive. Today we are joined by Shawn Cooper, an insurance broker with advice about why entrepreneurs, start-ups, and small business need to think about insurance.

Hi Shawn! Thank you for talking with us today. Can you tell us a little bit about yourself?

I come from an insurance family with over 35 years of insurance experience. When I started out about 5 years ago, I had a choice of either working for a specific insurance company or being a broker and working for 25+ insurance companies. I chose the latter because I am client first focussed and would not recommend something to a client that I would not purchase myself.

Being a broker gives me that choice when it comes to providing insurance coverage because no two risks are the same and no two risks should be treated the same. When I am not helping families and business owners with their insurance needs, I enjoy spending time with family and friends either playing or watching sports or finding a new restaurant to try.

Can you tell us a little bit about why entrepreneurs, startups, and small businesses need to think about insurance?

Proper insurance coverage is one of the most important first steps for entrepreneurs, startups and small businesses when starting out on their dream.

When you first start a new business you will probably make more mistakes than later in your career. If you make a error and are liable for damages to other persons or property you could end up paying for large financial damages. If you do not have proper insurance coverage in place, this could ruin your business dream at the start of your practise. Having the proper insurance coverage in place would alleviate the financial burden. Insurance premiums may be higher when starting a new business, but once you start to gain experience and the longer you have a claims free insurance history, the better the chance of premiums being reduced.

What are some good questions to ask to insurance brokers before you make a decision about personal or business insurance?

Some questions that need to be asked when searching for the best insurance coverage for yourself are:

“Are there other coverage options?” – Asking this will open up conversation about other insurance companies and provide a comparison of coverages and premiums between different insurers.

“What discounts do I qualify for, can I qualify for others?” –  This will open up conversation about ways to reduce premiums. Also, it will give you an idea of future options for yourself. For example: purchasing winter tires or a property alarm system will be extra protection for yourself, family, or business and reduce premiums on your insurance.

“What do I do if I need to make a claim?” – Very important question to ask upfront because having a plan before the time of a loss is the best way to be prepared. Some brokers may have a checklist to provide you of what to do at the time of a loss so you can document all important details an insurance adjuster will need to complete a claim.  

How often do you have to pay insurance premiums? Is there a good way to structure it if you're a small company or young business?

Depending on which insurance company you are insured with, there may be different premium payment options: from annual payment, to bi annual payment, or a monthly payment method.

The cheapest way to pay your insurance premiums would be one time annual payment. Most insurance policies are based on insurance coverage for one year and if you pay your premium on a payment plan either bi annually or monthly, most companies will include a finance fee, which could be up to 5.5% of the annual premium. Not paying that finance fee could be substantial savings for a small company.

In your mind, what's a big mistake that small businesses make when structuring their insurance?

A big mistake I see small businesses make when setting up their insurance coverage is not updating the broker whenever they have a substantial change to their business model.

From hiring new staff, to taking on an influx of new clients, or even buying new equipment for your business. If your insurance provider is not notified of any substantial changes, you could be under insured at the time of an incident because the insurance company would not know about changes to your business without your notification. All updates and alterations to your business should be discussed with your insurance broker so proper insurance coverage is always updated accordingly.

Thanks for your insights Shawn! This is very important information for those with small businesses.

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