What is that increase?

Liar, Liar, Pants on Fire

January renewals are being seen and far uglier than one would think – 50%-400% increases for some. Why? Agents are being told it is due to losses, but here is California premium and loss ratio for workers compensation – average loss ratio for the last 10 years is only 66% – that means they are making money.

Or are business suppose to pay what the insurance carriers normally make in investments too?

Workers Comp CA Insurance carriers premium & loss ratio 2011

Like never before – you have got to look at your renewal early and be strategic or you will be stuck with whatever they serve up to you.

“The only person who likes change is a baby with a wet diaper!” Mark Twain

This is kind of like a wet diaper too! I am sorry to say the state of workers compensation in California is not good, quite frankly it’s bad, very, very bad.

IMPORTANT

If you do not have losses you could expect to see a 15%-35% increase, if you have losses you could expect to see 25%-55% increases and this is 2012. Brace yourself because rates for many carriers are being projected at another 10%-15% increase starting January 2013.

What can you do?

Be proactive, the worst thing you can do is wait and see. We hear this often that a prospective client wants to wait and see what their agent can bring to the table. But what if, they were not thorough? What if the renewal proposal is delivered with only a few days remaining and the renewal is awful?

Keep your losses under control, hire wisely, pre-screen, exit interviews, keep morale up – losses are being file post termination due to the poor economy, layoffs and low morale and the insurance carriers are not fighting these claims.

We can not emphasis enough, that being strategic with your insurance portfolio is the best way to minimize an increase.

While meeting with a client yesterday, we actually were laughing at how even though the clients business has grown since we have been working together, in locations, vehicles, sales, we have reduce the premium by 50% over the last ten years. The workers’ compensation has ebbed and flowed with the market, but their rate increase this year was only 2%, they had offers at well over 50% increase, but with strategic work they only saw a 2% increase.

Cheers! Here is hoping you don’t get stuck with a wet diaper!

You Have The Control Switch

The Simplest things can make a HUGE difference

This is part one of a multi- part series on small and simple things making an impact on your health insurance bottom line.

Have you ever noticed that looking at a big project seems insurmountable but if we break it down into steps it seems achievable?  It reminds me of many various quotes

Insanity is doing the same thing in the same way and expecting a different outcome – Chinese Proverb

 

A journey of a thousand miles begins with one small step

Chinese Proverb

 

Don’t judge each day by the harvest you reap, but by the seeds you plant – Robert Louis Stevenson

 

Cost reduction on insurance is effected by small steps that you can make now and begin today.  Business’ today have an opportunity present to them to create change.  Our nation is one of the most obese, we have high blood pressure, high cholesterol, have more cancer than most other countries and yet we pride ourselves at being a world changer, so let’s change our world.

We have some inherent problems but the more I dig through the battle of cost reduction I see that we do have more choices that can effect change but we are just not making them.  Let’s not wait for people to just  ”get it”, let’s create those changes.  We will address many areas that can make an impact and encourage you to give it some thought and then to take action on a few.

Did you know – employees that misuse the emergency room escalate the companies health insurance costs?  How simple is it to hold some informative meetings with your employees to assist them in making good choices that will both help them with their health needs and help minimize your costs.  A simple thought may be that the insurance carrier pays,  so that is why you have the insurance, but I encourage you to think again.  When your group policy renewal comes in and they claim that the overall group cost is high this can be the reason your agent can not negotiate a better rate.  What they don’t tell you is the details, many times it is a small area that life style changes could make a significant impact.  The emergency room is one of those areas, and who really likes visiting the emergency room anyways?  What are the stats on this misuse?  Over 44% seems to be a fair number based on various reports, we have read – see an article link below.

http://healthyliving.ocregister.com/2010/02/24/most-er-visits-avoidable-in-o-c/16797/

It takes a long time, if it is truly NOT an emergency compared to others waiting they will make you wait.  I have been in one myself and they take hours to assist some patients and the bill is astronomical.  A friend of mine used one just a few years ago, he was sick with the flu and felt even worse over the weekend, he decided to go to the emergency room, he received a $5,000 bill weeks later and he was no better for it.  The fact of the matter was there wasn’t anything they could do for him, he just had a bad flu.  He needed rest, fluids and a nurse to discuss his situation to see if it warranted any extreme measures such as an emergency room visit, and if he was not better by Monday he needed to get into see a doctor.  This same $5,000 bill could have been a $100-$250 doctor visit and additional tests could have been done for under $600.  Do you see how that can cost your company more?  If you have 100 employees and 15% of them use the emergency room once a year at  $5,000, that is a cost of $75,000 a year and this is the non-necessary expense cost, not the big cost that we want the health insurance used for.  Easily solvable.

Did you know – most people use the emergency room because they don’t know who to call or speak with about a medical situation or they have not designated a primary care physician that has a remote service for off  hours?  How simple is it to have your health agent in conjunction with your carrier set up meetings and have your employees be informed and ready for a health situation, and to help them choose a primary care physician that has a nurses service.  This small item is very achievable and can make a difference in the cost of your plan in the long run.  I personally called the nurses service  when my daughter was born at least three times, had I not been able to do that I too would have gone to the emergency room and incurred an inflated cost.  The cost was included in the plan design and all of the calls never resulted in an emergency room visit.

Small changes can start moving your results in the right direction.  We have many more ways to move your company in a forward direction to reduce cost, stay tuned.

Health Insurance Making You Ill?

I’ve taken the temperature of many businesses in the past year and have found that many are suffering from a very high fever.  The high cost of health insurance, is making them ill.  Ironically, it seems to be the CEO and CFO that are the most effected and of course the employees that end up  losing their jobs.   The benefits department is concerned about raising deductibles, changing doctors, the administrative workload of change to the current staff and having to deal with the fall out and certainly that is understandable.  However, isn’t it a bit short sided to be too concerned about the employees that still have a job, most have no plan to leave their job without a replacement job and there are plenty of individuals ready to fill any empty positions?  Keeping a business health financially should be the number one decision of every employee and employer, as it provides a long term employment opportunity that can weather difficult times and ultimately improved the well being of all employed.  With out financial solvency and profit most businesses will not and can not survive.

The remedy is not fast, it is a long term solution and it is based in transparency.  You do not have to receive a rate increase; contrary to what you have been experiencing the past few years and current trending predicts, the only thing missing is the right tools.  Tools are available to reduce the cost significantly right now and of course a long term solution is having healthy employees.

Yes, even tools your current benefits department and human resources has not discovered.  Most human resource managers have no idea what we do or how we do it, as hard as they try to guess.

Why is the human resource department unaware of how to keep these costs down?

They are experts in human resources they are not usually experts in the function and purchasing of insurance or the negotiation of contracts concerning insurance, even if they worked in the insurance industry before.  Just as I would fail, or even the CEO would possibly fail at the administration of payroll, procedures, COBRA laws administration, etc.  A human resource department may easily not know how to negotiate the best deal on health insurance.  It is not their fault, it isn’t anyone’s fault, it is just the way it is and has been this way for years.  The system is not transparent.

You can’t reduce cost if you don’t know what you should be shooting for.

If you want to win a marathon, you need to know the times that others are winning the race, you need to know how much to train, you need to know about nutrition for sustaining yourself, and you need to know ways to improve your speed.  You do not just show up on the day of the race at the starting line and run when the gun goes off; you will not win this way.

You need a good agent for your health insurance, (by the way, that’s not us, we are insurance negotiators not your agent) but that is not enough and furthermore most businesses judge their insurance agent by the fact that they answer their calls, or are nice to the employees or to them, or they receive a rate increase and the agent brought it down by 5%., or they provide their COBRA administration (they do that don’t they? If you answered no, you already have a poor agent).  Do you have any idea where your premiums should be?  If not, why not?  What is a good rate?  How do you obtain a good rate?  What are others paying?  If my agent isn’t offering a good rate, how do I obtain one?  What services should our agent provide for us? Are they offering us all the options available?

Eighty-percent of all our clients that we save the huge bucks believe they have a good agent, the opinion only changes when they see it in black and white that they did not receive as much as they thought, and paid much more than others.  The best thing about health insurance negotiations is the secret sauce we provide to our clients lasts years.  It is the same example of teaching a man to fish, it will feed him for years, but if we give you a fish to eat it only lasts a day.  We teach clients tools and they can continue to use them for years to come and many of our clients reduce their health insurance premiums between 5%-25% the first year.  Pretty significant savings especially considering many are only seeing rate increases.

 

Recent industry article  on health insurance

www.insurancejournal.com/news/national/2012/08/28/260916.htm

Top 5 Insurance Must Do’s for 2012

The insurance market definitely made a shift for January 2012.  In usual form the market was slow at producing quotes, releasing loss history and wrapping up the year but the end result were plenty of rate increases for workers’ compensation in California and group health insurance across the nation.  The news wire is posting rate increases for the property and liability segment too.  What this means for 2012 is that a smart methodology for managing this cost is in order.  Here is a short list for 2012, happy cost cutting!

1. Workers’ Compensation must be reviewed and marketed.  Do not wait until your renewal proposal is presented, do it 60-90 days in advance.   The carriers that did have the best rates have shifted and you may anticipate another shift in October.  Did you know that there are over 20+ different workers’ compensation carriers?  How many quotes have you seen?  Did you know that some agencies have exclusive programs with special filed rates?  Did you know that as consultants we have all the filed rates of every carrier and how many credits are available for each – does your agent share that with you?  Did you know that even if you are with a SIG or Captive you can still lower your rates?
2. Health insurance, shopping it does not get the results.  Health insurance is a different animal and you MUST do it strategically it is not about having four agents quoting on your account.  It is about power and clout and how to get it, they’re tools that once you know them you can always manage this process with great results.  What you shouldn’t do is take a rate increase – chances are it is not necessary.    It is also time to start getting your employees educated in managing their own health.  If you want lower costs and employees want less burden it starts with us all individually.   We have a country plagued with obesity, diabetes and cancer.  The US ranks us in the top 10 countries dying of cancer and over 60% can be prevented by lifestyle.  Take a tour of  http://www.who.int/en/ for some enlightening information about how we compare to other countries.  We do not smoke as much as other countries but we are dying of cancer – so what is the cause?  This is NOT a quick fix, but it has to start somewhere and since business are going to effected by low performing human capital due to illness, doctors visits and insurance cost we might as well start the movement.
3. Move it to improve it.  If you have a renewal date in December or January, move it, move it NOW.  This is the worst time to be renewing your insurance.   Year end, new insurance rate filings, holidays, vacation, family and 60% of everyone else has a renewal this time of year – if you are not the most AWESOME account, meaning no losses and paying tons of money for insurance you are not getting the most attention from the insurance carriers.  It’s easy to change the renewal date, just ask or demand it – DONE!  Pick the date that works for you and your business.
4. Employment Practice Insurance – Sorry but I think you may need it.  In the last five years I am seeing claims in this area all the time.  The most important source of exposure for California employers is the seemingly ubiquitous class action lawsuits for Labor Code violations.  Once they have been sued, however, employers are sorely disappointed when their carrier contends that the policy contains a blanket exclusion for all wage and hour claims.  The standard verbiage excludes coverage for any alleged violation of the federal “Fair Labor Standards Act . . . or any similar provision of federal, state or local statutory law or common law.”  Defense to retain an attorney may cost you a retainer of $50,000 whether you are in violation or not.  I see claims filed on this more often then the umbrella policy, which about 80% of all the business’ we evaluate have coverage for, so why not this?  This coverage is more readily used in tough economic times as employees find anyway to pay bills or have an employer pay for a wrongful act, whether true or not.  The attorneys are standing by to help them and you need to be protected.  Do not automatically assume you are covered for anything on these policies they are all different manuscript policies – so compare them all by coverage, price and deductible.  As always, weigh the cost and what you feel your risk is for this coverage.
5. Cyber Liability -”But…I only produce $30,000 of revenue on this part of my business”.  It would seem that it is quite a large subject and the more I read the more I learn you are exposed and it is the new hot crime.  Hackers hacking sites and obtaining confidential data.  My recommendation is to look into the coverage, weigh the cost and decide if you feel it is worth buying and review it every year as an option while comparing the actual claims statistics.  I found this PowerPoint produced by Deloitte that I found at least worth the read. Cyber Crime Report – Deloitte

Have a successful 2012!!

You’ve Been Denied!

Always a good opener, just brings a smile to your face doesn’t it? An emphatic NO comes to mind!

A proposed rate increase on workers compensation was denied by the commissioner, but it did not stop many of the carriers from increasing rates anyways. Are you shocked? Some of the most competitive carriers such as CompWest raised rates significantly, even others that said they were not taking a rate increase did, but other carriers have moved into the market and are playing aggressively.

Got Rate Increase?

However, some business that are seeing their experience modifications going up got denied quotes by many of the insurance carriers this January and fewer quotes mean fewer options. This is often the case in January as businesses can often see the worst rates and fewer options because January is the busiest time of the year for business insurance renewals, roughly 70% of all policies renew in January.

Unlike CPA’s and accountants, they would never take a vacation in April, almost all of the insurance companies allow employees to take holidays, and they have holiday parties where they shut down the office or have a skeleton crew during this time. If your account is not in good order with a low experience modification, few losses and larger premiums you are not the cream of the crop client for many of these busy insurance carriers and you get shifted to the bottom of the pile.

January renewals have always been a problem but there is an easy solution that many businesses are unaware of, change your renewal date! You can choose any renewal date you want. There are some consideration to take into account:

• Is your cash flow good during your alternative renewal date?

• Down payments for insurance can be 10%-25% to initiate coverage.

• Workers compensation experience modification should be positive, meaning below 1.00. Otherwise it will follow you for an extra few months until it catches up with your change of renewal.

• Is that a time of year that you and your staff can dedicate time to reviewing renewal information and quotes?  Think about the preceding 2-3 months as this is when the data is gathered and then presented within 1-3 weeks prior to the renewal date.

• Stay away from the 1st of the month on any quarter if you can – these are other busy times in the insurance industry, and usually for your business as well.

Other News -

Some businesses received a recalculation of their California experience modifier and for some it increased.   The bureau states that most businesses received a lower experience modifier – what is yours now? Also, you can now get your California modification worksheet online for Free from the bureau – anyone quoting your insurance will want or need this to offer compelling quotes
On your behalf.    WCIRB Report

If your experience modification is going up or is over 1.10 you need to get this fixed as soon as possible, when rates go up if you are a business that is experiencing many claims and a higher experience modification you will be the least desirable for the best rates if the market gets harder, you have to be aware of this now and see if there are actions you can take to correct the problem. I am reviewing an agency now that’s claim to fame is lowering the experience modification of businesses and we will see if they can make a difference with these two clients that can really use the help. We will keep you posted.

Are you over-paying for business insurance?  Try our Free Calculator

Insurance Consulting

A Strategic Plan to Lower Costs Health Insurance & Workers’ Comp

The market is shifting, the market is shifting. No the sky isn’t falling but what is occurring could shake your world a bit, if you’re not prepared.

Health Insurance Rates – are going up between 10%-30% for many group plans, cost for some are about $500 per employee per month.   Insanity!!

The good news: Creativity pays, HSA and high deductible group plans and self funding can carve out some deals but only if you have over 50 employees, self funding is more in the over 100 employee arena. Also, what you can’t change on this front you can on the package and workers’ compensation savings so it can at least off set this cost.

Workers’ Compensation – a rate increase was approved for January 2011 in California, but what we are seeing is that the cream of the crop most competitive players in the field took some hikes in their rates as early as October 2010. So, if you got a stellar deal last year, chances are they are packing a punch to you this year.  The State Fund issued a release they are taking a 5.2% rate increase, which doesn’t sounds so bad except that they are the least competitive carrier we have seen out there.  We consistently reduce clients premiums by 50% if they are with the State Fund.

The good news: Four new carriers have emerged into the California market place as they want a piece of this action, whether they will be buying up the business by offering compelling pricing will be seen shortly as we see the December and January figures released. Some carriers we work with have not taken a rate increase and are not planning one for January 2011.

Again, as we have stated before, the way to get the best rates are to strategically market your account. We do this by accessing every market with agents that have the best relationships and exclusive relationships with those carriers. Only 1-3 carriers will provide a “blow the roof off” price quote, and the goal is to find the proverbial needle in the hay stack. Insurance companies HATE what we do, they check out our website and read it page by page. The reason, we drive the cost down and there is not an agent, or other service that accomplishes this task, you can’t over-charge if you have competitive leverage.

Want to find out if you are over-paying for your workers’ compensation right now?  What is your clerical rate?

You should be paying no more than .38 per $100 of payroll in California

Now, if you are paying more than .38 for your clerical rate – what is the percentage amount that you are over-paying? Take that amount off your whole policy premium and that is how much you are over-paying.

A perfect science – this is not a perfect science, but it has been pretty darn accurate when we use it with our clients but there are a few rules.

1) Your experience modification should be less than 1.30

2) You should have at least $500k in payroll

3) You should be a somewhat desirable risk. What is a somewhat desirable risk, it is better to state what is not a desirable risk – bomb mfg, toxic waste disposal – think of really tough businesses.

Keep in mind many agents sell their client as a tough risk and they are not –this mentality keeps you locked into them and keeps you from searching out a better option, because they have told you no one wants you. If in doubt of your situation give us a call or email us and we will tell you straight up for free if you’re a candidate for savings.

Are you over-paying?  Try our free fast calculator to find out – Calculator

 

Andrea@ratecraft.com

RateCraft.com

888-632-9900

Why Do You Call Them?

I have recently been a little agitated at many things.  As I turn on the t.v., I get blasted with all the political slinging, ads that you know are not the truth and I wonder is anyone one believing all this stuff?  I don’t like most of the political arena and in many ways I am ignorant.  Yes, it’s true – it has been a slow turn for me as it was just not something I grew up with so it took awhile before I really cared.  Then, I dated someone who was the chief of staff for a senator and I saw so much waste of time and money in his work, it just made me sick.  I watch it in my own industry and so my trust is very low.  Here is my main agitation.   Do we not use any common sense when we ponder something?

My industry is one of those that today that I find myself a bit perplexed.  We contact businesses and try to give them an assessment of where they are in regards to the cost of their business insurance.  We have actual rates from our client base for the last 14 + years and they are real figures.

We tip our prospects onto what they should be paying for insurance based on how much property they have, sales volume, industry, workers comp best pricing, etc.  Now, do they call us and question us to how we arrived at those figures?  No.  What they do is they send this information to the agent who insures their account.  Now, I ask you, what do you think that agent is going to say?  Is it, “Yes, John we have been ripping you off for years?”  “Oops, sorry about that, we will fix it now”.  Or is it more likely they will say, “I don’t know how this person can say that without knowing your account” we do the best job we can at keeping your costs down.”

Quick Facts:

• 98% of our clients save money
• Our average savings is 35%, we have saved as high as 74%
• We don’t sell insurance – we don’t want to be your agent
• We only make money if we save you money – a one-time percentage of the savings

Why do you call the person that is possibly over-charging you?  If they lower it, are you really happy?  Did they serve you well?

This October we had one of our clients that we were working with and utilized our new calculator system – we predicted that they should be paying about $25,000 for their insurance.  Their current cost was $61,000.  The carrier they had was a good carrier and one that can be very competitive and yet, they were over-paying according to our data by over 50%.  The client sent me an email from his agent and it said, “We have sent the renewal application to several carriers to check the market place for your insurance coverage renewal, most have indicated they can not compete with the current carrier.”  I’ve got to tell you, I laughed when I saw it.  I see this all the time, every month.  Our client said, well good luck, and I know he didn’t believe we could come through, many of our clients don’t, it just sounds too good to be true and they keep hearing from their own agent that they can’t get a better deal and even other agents will tell them that same thing.  It MUST be true!

Our calculator works because it is a base line on what is available as the BEST rates, and then all we have to do is find one or two carriers that want the business willing to offer coverage at that best price available.  The agents are working in the wrong direction.  They are working on the premise of “what are you willing to buy at” so as long as you don’t know what you should pay, and no one else brings it to the table, then they have you!

For this particular account, the end result was we had two offerings one at $37,000 and one at $31,000.  The client had another agent bidding on it and he came in at $55,000 (with less coverage).  His own agent then miraculously dropped his premium to $38,000.  We did not get a quote at $25,000, but given the chance to work it again we could probably get it there in less than three years.  If your premium is high, it can take a couple of years to get it to it’s lowest level because the carriers will have to if they want it, but when it is already high, they know they don’t have to max credits to obtain the account.  We don’t have to know everything about your account to give you a pretty accurate prediction – just a few, simple basics.

Back to the original question, why do prospective clients call their agents to check us out?  What are you expecting to hear from them?   If we had taken this approach with the computer when it was introduced who would we have called, the person who sold us the typewriter?  “Hey, typewriter guy, this other bloke says he has this gizmo that will store all my data I type into it so I can use it again, save it, forward it, etc.”  “Do you think I should try it?  Typewriter guy, “hell no, our product is the state of the art gizmo”.  How many of us still have typewriters?

Who should you call?  Call some of our clients, most of them were all skeptical until we delivered.  All you need to do is ask.

The fact is, if your agent has done the best job available, then they shouldn’t fear us working on your account, since we couldn’t possible find anything better, right?  So why don’t they encourage it?  I think you know the answer.

California Workers’ Compensation Rates to Soar; 5 Tips to Prevent a Rate Increase

The State Compensation Insurance Fund the quasi-public San Francisco-based workers’ compensation insurer that has held the lion’s share of the state’s compensation market, said May of 2009 it filed for a 15 percent mid-year rate increase. BizJournal 2009

Up, up, up go the premiums again with a proposed rate increase on the table for January 2010 of 22.8%. BizJournal 2010

So what can you do?

As you evaluate your business insurance portfolio should you anticipate tacking on 22%? Not necessarily. Keep in mind a rate increase was proposed of 22% in July 2010 and although many carriers did take a rate increase many were just as aggressive to write business as before and aggressive competition drives pricing down. The difference is in who the players are – every time the market makes a shift in pricing, such as an increase or a decrease in pricing, or even a shift in the economy such as lay offs, the market responds and the markets change. New leaders emerge and prior competitive leaders settle in to the mid-row players. We have consistently even this month lowered our client’s workers’ compensation premium by over 25%, so how is that possible if rates went up by 22%? The beauty of the game is to be on top of the market and knowing where to go and how to canvas the market. That does not mean calling every broker in town to bid on your insurance. Nor does that mean jumping ship every time an insurance carrier gives a better price. Here is your best strategy for getting the best rates on workers’ compensation.

• Have a discussion with your agent about the market. If your agent starts preparing you for a rate increase then it may be time for a change in agents. Your agent should be aggressively trying to keep your rates low. If they are already starting to sell you a higher price before they start shopping for you – that says they are not planning on winning this battle.

• Ask your agent to pick his/her top five markets they will be sending your account to for bids. An agent will only pick who they think will be the best and who they have the best relationship with – all the others they may not even present a quote from – they are on the bottom tier because usually your agent doesn’t have a firm relationship with them.

• Don’t be fooled if your agent gives you a list of 30+ insurance carriers they represent – rarely does an agent ever go to all of them and rarely does your agent have a great relationship with all 30. They give you the laundry list to impress you and many a client has been fooled by this tactic.

• Who are all the players in the market? Do you know? Find out and make sure you have an agent representing them to provide a quote to your company. Competition is what drives prices down and the power of negotiation lies in those competitive quotes.

• Start early. You need to get your account out to market ideally 60-90 days in advance with complete and updated loss history for the last four years. Anything less than this and you may miss some markets that could be valuable.

 

Are you getting over-whelmed yet? Stop wasting your time and your employee’s time by shopping your insurance. Shocked at this statement? It is doubtful that you or your staff are experts in the insurance industry. This is a tedious process and each agent will want to do their dog and pony show of how great they are compared to your current agent. To access the entire market it can take you working with over 10 agents, and each agent will want about 2-3 hours of your time. Is that the kind of time you want to spend on this? Each agent will want the same information from you and you will need to provide it to be successful. Why not outsource this? Do you handle your own taxes or do you outsource it? You outsource it, why? Because you don’t have the time to learn all the new tax rules, because it is time consuming. Well, you don’t have the time to find out who all the players are or the strategies for getting the best deal for insurance either. Do you even understand all your coverage’s? Or are you easily baffled by an agent that tells you you’re not classified correctly? Do you rely on the agent expert? The problem relying on the agent expert exclusively is that they are paid a commission based on how much you pay – so the more you pay the more they make – are you starting to see the problem with this method? You need a good agent that is clear. To keep your insurance program tight though it might be effective to outsource the services to a company that has your same interest aligned. Food for thought – otherwise make sure you set aside the time to do the foot work it will take to market your account thoroughly.

Small Business Insurance

Small  Business Insurance

 

Where are the best rates?

 

There are over 11 million small businesses with between 1-100 employees and if you are one of them you make up a large percentage of the total businesses in the United States.  Now consider that most start out with an idea or someone else’s idea and you are very excited to get started, and you have so much to get done and one of the tasks is insurance, Ugh!  What is your first thought? “I hate insurance”.  Okay, second thought, what do I need?  Who do you get it from?  What is a fair price?

Let’s start with what do you need basics:

Workers’ Compensation

Needed when or if you have employees

Commercial Auto

Needed when you have a vehicle used in business outside of sales* calls

*vehicles need insurance regardless of business use but personal insurance

usually excludes delivery of products, carrying passengers for a fee.

Liability Insurance

Needed when you conduct business, but not required unless it is being

requested to secure a contract.  An example if you are leasing a building the landlord may want you to carry liability for the space you occupy.  If you manufacture a product, a store carrying your product  may want you to carry product liability coverage if someone gets hurt using your product.

Property Insurance

Needed if you have business property, equipment, but not required unless it is being requested to secure a contract.  An example – the bank you obtained a loan for some machinery, or building wants it to be insured for theft, fire, etc.  A landlord requires you to cover the insurance for the building you are leasing.

Business Income Insurance

You should obtain this coverage to protect your income in the event of a covered loss.  Not required usually by anyone.  This coverage is usually included in a BOP for very little cost.  If you have a brick and mortar business such as a restaurant – you should obtain this coverage.  It could take years to get the clientele back to a new location if yours should burn down.

Professional Liability Insurance

Needed if you are in a professional industry – Doctor, Lawyer, Dentist, CPA, Veterinarian, etc. Liability insurance to protect professionals for loss or expense resulting from claims of mistakes, errors or omissions committed – or alleged to have been committed – by the insured in his or her professional activities.

Health Insurance

Nice to have as it can attract good employees and certainly good for the owner to have to prevent any unexpected cost associated with a major illness – but certainly not mandatory – yet.

These above are the starter list but there are other coverage’s that are more intricate, such as employee health insurance, umbrella coverage, earthquake, flood, directors & officers, employment practices ,coverage within the policies for money, accounts receivables, tenant improvements, tool floaters.  Some of these can get added into the main coverage’s the others you need to seek out and a good agent or consultant can go through a check list of areas and help you decide if you need or what need.   Insurance has a wealth of products to sell you and most agents are more than happy to sell you any and all of them, so again it pays to be knowledgeable.

Where do you get the insurance?

You all know you get it from an insurance agent, that’s simple, but how do you go about getting the best deal with an agent – that’s really the question isn’t it?

Pop in the words small business insurance in a Google search or anywhere else and up comes plenty of information to shift through.  The number one thing to remember is, they are all paid for by insurance companies and agents wanting your business.  The insurance companies and agents are paid more if you pay more for insurance.  You need the agents, because you know YOU don’t know anything about insurance, but total trust is NOT in your best interest because of the way they are paid.  Just because an ad says they are the leader for small business insurance does not make it the most competitive.  For example, you can hardly turn on the television, radio or go to any website and not see an advertisement for Progressive or Geico, but does that mean they have the best rates for personal auto insurance?  I can tell you, it does not.  What it means is that they have a HUGE advertising budget and advertising works – for them, it does not necessarily work for you.  So, be smart and use your common sense about insurance.  Here are some tips.  You can find more tips in our new book  Secrets of Business Insurance

The best place to get insurance is from the insurance companies and so you must start with a strategic list of insurance companies and seek them out for a quote, and agents represent those companies.  Are you aware that in any given state there are approximately 20-35 mainstream insurance carriers for just the property/liability and workers’ compensation coverage?  Has any one agent or even two agents ever given you 20 quotes?  If you could see 20 quotes you would also see the vast disparity in pricing – it is really quite fun to watch how the same coverage can vary in price by so much – but the only time you will see it is if you see the entire market.  No one agent represents all the markets, even if they tell you they do – they don’t, they never have, they never will.  Call a Hartford agent and ask them if they represent Sentry Insurance (not Century) and vise versa, the answer will be no.  This is not just the case with direct writers and independent agent carriers.  Independent agent carriers rarely even if they represent a mass of carriers go to all of them, they have favorites and they have ones that pay them more commission.

What is a fair price?

If you can see at least ten quotes you can decide what a fair price is, it is the one that gives you the most coverage, with the best rated carrier, for the least amount of money, with an agent who you feel was knowledgeable and professional.  Our company is about to launch a calculator that you can log in a few bits of information and we can tell you instantly if your pricing is fair based on the best rates we have seen, but for the time being we do this manually on our site under “Where Do You Rank?” and it’s free, try it out.

For example – Commercial Auto Coverage with $1mil limits including Comp/Coll for a box truck -

• San Diego County – $800 per year, per unit
• Orange County – $1,100 per year, per unit
• Los Angeles County – $1,200 per year, per unit

If you are paying more than this – your paying too much and chances are your other insurance is too high as well.