You’re busy. Chances are, your business is more fragile than you realize. Every day, small successful businesses are shut down by unforeseen losses. Even worse, business owners can find themselves hanging personally for these events. Every business is different – and so the risks are different. Take a moment to consider what kinds of events could sink you. What kinds of lawsuits might be brought against you or your business? How many months of operating expenses do you have in reserve for some kind of emergency? What would you do if major theft occurred … or a key employee were killed. If you’re like most business owners, you are just one disaster away from losing it all.
Don’t play Russian roulette with your livelihood. Businesses that survive long-term aren’t run by people that just “hope” everything works out. They take an active role in identifying potential threats and take smart action in developing and maintaining a protection program. Stay in business long enough, and a disaster is likely to hit. Are you prepared for this?
Avoid making these 7 mistakes and you’re on your way to ensuring proper protection . . . and you’ll be saving a lot of money along the way!!
1. Consulting with “Order-takers.” 97% of agents are order-takers. They fill orders – and collect a check/commission for it. There advice is always: Buy my stuff! There are some obvious tell-tell signs that you are working with an order-taker:
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◦ You Quickly Hear, “My Company is the Best!” Most agents are paid by one company to say this . . . and then take your-order. Order-takers have a hard time separating their “recommendations” from their obligations to a company.
◦ Poor service after sale. Order-takers are poor at providing ongoing service. This can mean your protection plan no longer covers you in important areas.
◦ No Big Picture Discussion. You’re left wondering if you have a good insurance plan as a whole. Order-takers talk “trees” and never “forest.”
◦ No Talk of What Isn’t Covered. Everyone has gaps in coverage because no policy, or group of policies, can protect you from everything. Do you know what your policies don’t cover? Order-takers gloss over this.
◦ Agent just Copies and Pastes. The guy trying to earn your business just “quotes” prices against what you already have. There are no recommendations for improvement.
◦ You find yourself asking, “Why didn’t my insurance guy tell me about this?!!” This is the worst! Usually it’s too late by the time this question is asked.
Solution: Instead, put an ADVISOR to work for you. There are those that can really help you make good decisions. They’re proactive, really understanding and serving your interests. They’re experts in the details but can stand back and manage the whole forest with you. They don’t work for a company … they work for you.
2. Going with a “Captive Agent.” Most of the agents you run across are “captive,” meaning they have an obligation to just promote the products of one company.
Solution: Instead, find an “independent agent” that has access to dozens of the highest rated companies. This brings a number of advantages to you:
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◦ Better advice. Agent can truly advise with your interests in mind.
◦ Flexibility. As your circumstance change, you can change companies and products without changing agents.
◦ Comprehensive Plan. One agent can bring together the best products from a variety of companies to handle all aspects of your insurance plan. This saves you the hassle of having a handful of different agents across town – and greatly reduces the chances of “I didn’t know you wanted me to handle that” gaps in coverage.
◦ Savings. Access to companies that don’t have massive advertising costs to cover.
◦ More Choices. Access to more types of products and programs.
3. No Comprehensive Plan. You buy a policy here and another there . . . but no solid advisor has ever done a comprehensive risk analysis for you. You’re left with spotty protection, gaps in coverage, unnecessary costs for things you really don’t need, and worst of all . . . you are left to be your own advisor; an unnecessary and risky burden.
Solution: Find an independent agent that proves he/she can really act as a trusted advisor in a comprehensive way; someone that can see the forest from the trees.
4. Price Only. It’s a common mistake to look at insurance as a commodity – where it’s all the same and price is the only variable to consider. There are companies that cater to these folks by advertising that they can just name their price. The idea is that they can give next to nothing in coverage — and give a big discount for it. If you only look at price, you open yourself up to making a lot of poor decisions because you are blind to all the other factors you should be considering when determining the best VALUE.
Don’t pay a dime for bad coverage. Instead, get the best deal you can on a protection plan that is appropriate. There is truth in the old cliché: The cheapest is the most expensive.
Solution: With the guidance of your advisor, consider some of the following:
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◦ What are your greatest risks?
◦ What IS covered?
◦ What is NOT covered? (Exclusions)
◦ Are limits of coverage appropriate?
◦ What risks can you live with? Not all insurance is worth buying. Don’t let order-takers sell you protection you just don’t really need.
◦ Ongoing services and value added propositions from company. For example, does your Employment Practices Liability policy come with a free HR hotline?
◦ Ongoing services and value added propositions from agency and agent.
◦ Billing practices. What’s it REALLY going to cost?!
◦ Am I working with an order-taker or an advisor?
◦ Is this agent/agency free to place me with the appropriate combination of companies/insurance plans?
◦ Does their service seem to be above par?
◦ Consumer rating information of company. Watch dog companies like AM Best can help you know the truth about companies. Consider their handling of claims and financial stability.
5. Thinking like a teen. This doesn’t usually happen in mid-size to large organizations. They’ve had time to mature and learn some hard realities that some small business owners just haven’t been forced to learn – yet. But like teens at home, we think we know better . . . and that nothing bad will ever happen. We roll our eyes at the idea that we should take precautions. Too many small business owners do not take protecting their businesses seriously . . . and it costs some their entire businesses.
Bad things do happen . . . and ensuring you have a proper protection plan is something you should never entirely delegate.
Solution: As the owner, along with your advisor, understand the risks you face and take smart action with your team of professionals (company, agency, agent, advisor, risk manager) in creating and maintaining a proper protection package.
Being Fooled by Savvy Marketing. I’ll admit we use some of these to help folks give us a call for the first time, but we’re open about what they are and why they work. Let me share a few “secret” tricks of the industry to be aware of:
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◦ Discounts: They exist . . . but lots of them don’t necessarily mean the best deal.
◦ Special Associations: They play on your need to belong and your likely assumption that they MUST be the best if they specifically work with your type of business.
◦ We’re the cheapest! Companies ALWAYS say they are the best deal . . . verify!
◦ We’re really big and on TV – we must be good. Hundreds of companies use different advertising/marketing models. Often, those that advertise most on TV are the most expensive. Most of the largest – highest rated – companies go through independent agencies because it has proven to be more cost effective.
◦ We have cute Mascots that will make you like us. Large companies are great at providing products but often struggle to connect with people and serve them at the human level. Mascots are a way to help you feel connected to them. Don’t buy into it. Buy a pet instead and work with real human beings that can give you “real” service.
◦ Heart warming slogans. They might make you like and remember them . . . but slogans won’t pay your claims, answer the phone, or be there when you need them. It’s just another way to appeal to your emotions.
◦ We are the biggest independent in town! How does that benefit you? This plays on our human tendency to trust things that lots of other people apparently trust. The reality is that the biggest independent agency often has just been around the longest. Be wary of them. I’d suggest a mid-sized agency. One that is large enough to represent some of the best companies but small enough to give you lots of personal attention. The agency earning business away from the big dogs can only succeed by better serving you.
◦ Special Programs for your type of business: I use this one … like many other savvy marketers. It’s true. There are special programs. But they aren’t always the best. This is related to the “associations” trick.
◦ 2,000 years of combined experience. This is a credibility ploy. Who cares if it’s 2,000 years of order-taking? What matters to you is to find 1 key advisor/agent that has enough knowledge/experience to properly advise you – and the desire/ability to properly serve you in an ongoing basis. It’s something worth looking at – but don’t assume the more years in the business the better.
Solution: Understand some of the common tactics. Don’t take an advertisers message as necessarily true and keep your focus on the things that really matter.
6. No annual reviews. Next to failing to put together a solid protection plan at a truly competitive price, this is the biggest mistake most small business owners make. Almost every day I hear, “I haven’t heard from my agent in years . . . I don’t really know what my policies cover.” You wouldn’t just “hope” an employee is showing up to work and performing his duties.
Solution: Don’t just “hope” everything is ok. Once a year (at least), take the time to sit down and review your protection plan with your advisor. All successful mid-sized to large companies do this – and they tend to have a lot more resources to sustain a major loss. It is especially important for small business owners.
For a great article on how to select the right protection advisor for you and your business, please email me at ben@PageInsuranceLive.com.
