insureon CEO Ted Devine and KFAB Morning Show talent Karla James discuss risk management for small business (along with Omaha tornadoes, lost keys and financial literacy). Hear the interview for yourself below!
Karla: Thank you for taking a few minutes with me. We're going to talk about small businesses and the amount of insurance coverage that they do need. I was a bit surprised that how many of them, or a majority of them, rather, are underinsured. I guess, first question after the shoot for you, is what kind of insurance do small businesses need?
Ted: Sure. So that's a great question, and thank you so much for having me on, cause the small business – the 40 million of them across the U.S. economy are the real heroes that are really the engine that drive all of our economics as a country. Making sure that we support them, and making sure they get the right insurance is really important. So there are three basic types that all companies need to think through. First is what's called a Business Owner's Policy, a BOP, which covers their property, primarily. So, if you're a contractor and you have tools or you're a firm that has computers – a BOP will cover that property, and a little bit of liability as well. Then if you're a consultant, or an accountant, or a web firm holding data, and you're giving advice, then you need to think through what's called Professional Liability – because if you give the wrong advice, or if you lose your client's data – you could get sued. We want to make sure that you're protected in that case. So, having some form of E & O, or Professional Liability cover, is really important. And then third is, a lot of small businesses, as they grow, add employees, which is terrific. We need to make sure that their most important assets, along with their customers, are covered. They need to make sure that they've got Workers' Comp, so that if anybody gets injured on the job, they're protected. Those are the three main types that we deal with every single day.
Karla: Also, under the liability, you know, the customers, your building itself – if something should fall and hit them or something, would give away and what not – That's one of the main things that I always think of, if I was to own a business, would be the brick and mortar part of it itself. (For more information about scenarios like this, see "Philadelphia Building Collapse Illustrates Multiple Liability Scenarios.")
Ted: So if they own a building or if they're on the job site and they damage somebody's property, the BOP will cover that, which is a great thing.
Karla: Perfect. O.k., I guess the next feeder question is what kind of contingency plan should a small business have in place?
Ted: Well, this is a huge problem and a great question. With all the weather and now, with online and cyber attacks and people hacking, having contingency plans for events, whether they're weather-driven or technology-driven, and having that thought through in advance is really important. Because once it happens, you're in the middle of the fight and you're trying to get everything solved. So, having that written down – and that should contain all the important numbers that you have to have. It should contain a reach out plan to all your customers. It should contain... we're usually the first call for most of our clients, cause they need help. Inside of that contingency plan, there's two types of insurance that we need to make sure that you've got. One is called Business Interruption Insurance, which covers the direct lost profits and the cost of getting your business operational. Let's say there's a storm in Omaha, and we need to get that business up and running as fast as possible after that event. You've lost three days of profit, and you need to repair computers and your site. The BI policy will cover that, which is awesome. And the second is, in this age of technology, a lot of folks are getting hit with people coming to their website, or trying to get their data. There's a great insurance product called Cyber Liability that a lot of our clients have that protects them in the case of that contingency. So, those are the two elements, Karla, as part of their contingency plan that we help them think through.
Karla: You know, I'm glad you brought that up because Omaha here, the entire state of Nebraska has a touchy weather climate. We can have the blizzards that shut down everything for days in the winter, and the tornadoes that rip through here in the summer, so, that's really important.
Ted: It is. And the great thing about that BI policy is that if you get the right one, it also covers, in case of – let's say you're running your business in Omaha and you've got a supplier that's forty miles away and they get hit by the blizzard, so you can't get the supplies you need to run your store, run your restaurant, or do your job. They'll actually cover you for that supplier being offline, so you can do what you need to do. So, it's a really, really good insurance policy.
Karla: Different insurance are obviously talking about construction and what not. There are differences, I guess, depending on what kind of business you have – let's say I would open up a boutique, or something like that. Much different from what somebody would need in an construction area.
Ted: It's the most important thing. Whether you deal with us at insureon. I think we're the nation's largest small commercial agency online. Regardless of who you deal with, it's really important that you make sure that that firm, that broker or agent, has expertise in your industry. So, how we do that at our firm – we have seven unique industry desks, and every single one of our clients talks to an expert and their industry. The folks who do contractors, construction and landscapers only talk to those folks. And people who do doctors and dentists and nurses talk to our allied health desk. And people that are opening up a boutique or running a restaurant talk to our hospitality desk. So, it's really important because there's all these little nuances like, I was on the phone with a janitor, which is awesome – I try to spend at least an hour of my day on the phone with clients. And for a janitor, it's really important to get a policy, a coverage called Lost Key Coverage. If you're cleaning a building and you lose the keys, they're going to make you, as the janitor, pay for rekeying the whole building. And that could be $10,000. So, if we can add a little Lost Key Coverage endorsement on that for $30 a year – you're protected. The only way you would know that is if you talk to our construction and janitorial and landscaping desk.
Karla: See, that would have never even entered my mind!
Ted: It's a great question because all these industries have those little nuances. For restaurants it's the whole gluten-free thing, it's a big deal. There's a couple things that we can help you do to make sure to make sure that if you're going to have that offering in our restaurant and hospitality desk that makes sure that you're protected.
Karla: Anything else that you would like to add? We could go on and on about this and come up with all these little questions.
Ted: You can tell we're pretty passionate about it. It's our life work and our clients are really important to us. The only other thing I'd say, Karla, is we've got a wonderful program, for all your listeners, called the small business heroes program and what that is our way to give back to our clients and the small business owners across the country. And what folks can do is, we give a gift away every week – usually for around $500 – and what happens is a small business, anyone in the country, can go online and apply for their wish and our first gift was to a cancer survivor who, she wanted a color printer so she could expand her business, and so we were able to get her that color printer for her design firm. She was obviously really happy about that and we were overjoyed by the excitement about that. And then the last gift we gave was to a nonprofit in Newark who teaches inner city kids about financial literacy like how to do a loan and how to open a checking account. She needed an iPad to make it more compelling to students and we were able to help her with that. So, have your listeners go to smallbusinessheroes.com, or insureon.com, and they can be part of that program. It has nothing to do with being a client of our firm. It's just something we do to help the small business heroes across the country.