The pandemic has brought on many things, and for some moms, that means a new business venture. Sure it’s an exciting time, but dealing with the nitty-gritty of what a new business entails can be overwhelming, and not every business plan is one-size-fits-all. But whether you’re a baker, a lawyer, or a photographer, there’s one thing in common that every new business owner needs—small business insurance. Just like auto insurance to protect your car or home insurance to protect your house, small business insurance will have your back in case of any accidents or unforeseen circumstances. If you don’t know where to start (and maybe you’re feeling a bit in over your head), we talked with Chris Flanz, a partner at Parker Agency. Scroll down for his advice for all NJMOMpreneurs starting out.
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The pros of going local
“The first thing to think about is who you’re going to work with to source and place your insurance coverage,” says Flanz. Consider going with a local agent specializing in commercial insurance, where you’re likely to get more personalized service and regular check-ins, with equally (if not more) qualified agents than you’d find at a larger direct insurance company. “Local insurance agencies work with the business owner and get to know them,” says Flanz. And because of that, they understand your business better and evaluate different companies to guide you toward the best fit and price. What’s more, direct insurance companies sell only their product, and it may be a generalized cookie-cutter approach that doesn’t always address your specific business needs. However, a local agency has a bank of insurance carriers with multiple products to choose from, and you’re more likely to find a policy that specifically caters to your business.
They’ll also be on hand to answer your questions when you need answers right away. The agent cultivates a relationship with each insurance company, and often, decisions are made at a local level and not through a service rep at a direct company. That personalized touch continues each year when your agent checks in with you to ensure your business is appropriately protected and helps manage your insurance costs. If you go with a direct insurance company, most likely, those check-ins are more on you to keep up with, which can often lead to coverage and pricing gaps. As a small business owner, you have so many aspects of your business to manage. This should be one that is managed by a proactive, trusted professional similar to your CPA or your legal team.
Do your research
Once you settle on an agent, the next step is to talk about your needs, and knowing the basics of what types of coverage you want can give you a better read on what your agent will be looking for to put together your program.
“General liability covers a business for any property damage or bodily injury that they might become liable for,” says Flanz. It will help defend the owner in court cases by providing a legal team and paying legal fees and settlements. “General liability is technically not required in the state of New Jersey,” Flanz says. “But it would be very unwise for a company not to have it.” Without it, you’re at a greater risk of losing your company to a lawsuit. If you plan to hire people to help, you’ll need workers’ compensation if an employee gets injured. The policy will pay for their medical bills and loss of income during that time. “Worker’s compensation is required in New Jersey if you have employees or if you are a corporation,” says Flanz.
Flanz specifies one popular type of business insurance package that some small businesses can get called a Business Owners Policy, or BOP. BOP insurance typically includes two main insurance types—property insurance and liability insurance. Property insurance covers things like the building, your inventory, and your equipment. “Covering property is an essential part of insurance policies,” notes Flanz. Business income coverage or business interruption insurance should be included in this, “it protects your business if you can’t operate due to a covered loss,” says Flanz. For example, suppose your business has a fire and operations are suspended. In that case, the insurance will pay for your income loss, ongoing expenses, payroll costs, and often the cost to move to a new location as soon as possible. General Liability insurance covers your business if it becomes legally liable to pay for bodily injury or property damage to a third party, including attorney fees, court expenses, and settlements or damages.
Make sure you see the bigger picture
It’s important when building the policy that you think long term, not short term, says Flanz. Look at the bigger picture—whether it’s expanding the business to include more employees or adding another product that will need additional insurance coverage. Keep the communication open because you can always add (or take away) coverage before you act. It will help your agent meet your insurance needs every step of the way and give you peace of mind, which is exactly what every new business owner needs to succeed.
Are you an NJMOMpreneur? We’d love to know about your insurance experience—share it with us in the comments below.