There are only two types of insurance in the world. Insurance to get your foot in the door and insurance that will actually protect your business. It’s a matter of "Business Access" versus "Balance Sheet Protection" and you get what you pay for.
1. Business Access
I often refer to this as the “currency of doing business”. It’s what you need just to have a seat at the table. It’s the mandatory worker’s compensation.
It’s the minimum contract requirements like:
$1M per occurrence General Liability
$2M Aggregate General Liability
$1M Hired & Non-Owned Auto Liability
Oftentimes, this is triggered for the first time when a new business signs a commercial lease. They simply need a door, an office, or an address to serve as HQ. There are hundreds of ways to buy this, online through sites like https://www.insureon.com/. . Through a local captive agent or independent agency. Some agencies are setup as a “bulk business model” where it’s very much transaction focused. They write dozens of policies per day, they have service centers, and instant quote capability online. While other brokers often focus on specific niches, take the time to sit down to understand your business, and teach you about the coverages available. This is where #2 comes into play.
2. Balance Sheet Protection
This is your property insurance, business income & extra expense, employment practices liability, directors & officer’s liability, crime insurance, cyber liability insurance, clinical trial product liability insurance, professional liability, technology errors & omissions liability, pollution liability, flood insurance, eathquake etc.
This is what you don’t want to buy online. These coverage are often triggered by contractual requirements with vendors, manufacturers, and clients, perhaps research collaboration agreements, or master service agreements. Some overages can be triggered by employee count or the state your operating in. For instance, The state of New York has mandatory Paid Family Leave Benefits and Short Term Disability coverage for companies with even one employee working in NY.
This is insurance is where an insurance professional that regularly works in your industry can provide immense value.
I’ve seen businesses where their insurance was written improperly. Usually because they purchased it online or went through a transactional agency. Two quick examples.
One time I had a life science client written as if they were a barbershop, when in reality they owned a commercial microbial soap product and had over 100 customer contracts with major grocery stores and health care organizations around the globe. If there was a claim, zero coverage would be available.
Another time I had a Technology consultant that built websites, social media campaigns, and apps have a $700,000 cyber breach claims, thinking they had coverage. When in reality, they only had "business access insurance".
In the end, it doesn’t matter which type of coverage you buy, but you need to know what your motivation is when purchasing the coverage. Do you need to protect assets from large financial losses, or are you just trying to get in the game?
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