Expert Advice
A Risk Management Guide for Marketing and Management Consultants

Chapter 3: Tips for Finding Small Business Insurance
Part 1: Finding Small Business Insurance on Your Own

Some small-business owners can find effective insurance coverage on their own, but they must be willing to put in the time and energy to complete the task properly. Below, we discuss the steps you should take when choosing the solo route.

Evaluating Your Risks

Though we've already delved into the common risks marketing and management consultants face, leave no stone unturned. Consider your work environment, where your business is located, and the people you work with. Contemplate all worst-case scenarios — the ones that could financially devastate your business. These are the instances where you need your insurance policies to shine.

Then, you'll want to seek out insurance providers that specialize in providing insurance to professionals like you. Not all providers have experience in all markets. You'll want to make a list of providers that can prove they can find insurance for:

  • Small-business owners.
  • Sole proprietors or independent contractors.
  • Marketing or management consultants.

Consulting Your State Insurance Department

As you're scoping out possible insurance providers, you want to ensure you're selecting from trusted companies. One way to determine if the company is trustworthy is to see if it is licensed and covered by your state's guaranty fund.

Why? If such a company defaults, your claims can still be paid. You can contact your state insurance department for this information. Not sure where to look? Check out the National Association of Insurance Commissioners' resource "Map of NAIC States & Jurisdictions New browser window icon.."

Checking Insurance Company Ratings

In addition to checking for proper licensing, you'll also want to find the insurance ratings for the companies you're considering. If the provider carries an "A" rating, then you can trust the offer. A-rated carriers are known for their industry-tailored products, reliable terms, and quick payouts. To begin checking insurance companies' ratings, visit the A.M. Best website New browser window icon..

Requesting Rates & Comparing Coverage Offerings

Once you've identified top-rated insurance carriers, it's time to request quotes. Be sure to ask several different companies for estimates so you can compare the premiums. Though premium prices are important, they should not be the only factor you consider when selecting an insurance policy.

You'll also want to consider each policy's…

  • Limits.
  • Covered claims.
  • Exclusions.

Remember: the limits must be high enough to cover a disastrous liability suit or extensive property damage. You'll want to ensure the claims you are most concerned about are explicitly covered by your plan. Also, be sure to read the fine print so you don't accidentally take on a policy with serious coverage gaps or too many extras that you don't need.

Considering the Deductible

The last phase of choosing a policy is to consider the deductible. The deductible is the amount you pay out of pocket before you can receive benefits. Generally, higher deductibles are paired with lower premiums, and vice versa.

Though it may be tempting to take on a high deductible, consider the financial situation you'll be in if you ever need to use your policy. Can you spare the cost of the deductible at a moment's notice without hurting your own finances?

If not, the deductible is too high. When selecting your policy, never choose a deductible that's more than you can comfortably spare without risking your own financial wellbeing.

As you can see, this process is far from quick and easy. And as an independent consultant or sole proprietor, you likely don't have the time to spare for all this extra work. If that's the case, you may be better suited working with an insurance agent. Let's take a look at what this process entails.

Never choose a deductible that is higher than you can afford to spare at a moment's notice.

Next: Part 2: Finding Small Business Insurance with a Trusted Insurance Agent

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