Chapter 4: Insuring Your Engineering, Architecture, or Design Firm
Part 1: How Self-Employed Architects, Engineers, and Designers Can Find Small Business Insurance
We've covered the necessity of having adequate small business insurance to defend against property loss and liabilities inherent in your work. And now, you're ready to take the plunge. You're ready to run outside, arms outstretched, singing to the neighborhood, "Insure me, Universe!"
Well, if this is your first rodeo, you might be wondering where to start shopping for business insurance. Do you take your search to the Internet? Or is there anyone who can do all the legwork for you?
As it turns out, there are two ways for design consultants and contractors to acquire a business insurance plan:
- Find the coverage by yourself.
- Find the coverage with the help of an insurance agency.
We'll explore each route so you can decide which method is right for you.
Finding Small Business Insurance by Yourself
If you decide to find small business insurance on your own, know that you'll need to carve out a significant chunk of time. The road ahead is full of researching, emailing, and comparison-shopping.
Even though you may have bought personal insurance policies on your own, you'll soon find that most personal insurance providers do not sell commercial policies. That means your first step is to find the right insurance provider — one that is not only experienced in insuring design professionals, but also understands the needs of contractors and consultants.
Here are some considerations to keep in mind as you search:
- Research, research, research. When putting together a list of potential insurance providers, pay attention to each carrier's reputation. You'll need to check their rating to make sure the company is solvent (usually denoted with an "A" rating). You can use the A.M. Best's ratings search tool to help you decide which providers make the cut. You can also ask your design colleagues for their insurance provider recommendations. But remember, not all insurance companies provide coverage for solo practitioners.
- Query and compare. After you've made a list of solvent providers that insure small businesses, you'll need to contact each one to make sure it sells the type of policies you need. Not all companies sell the same types of policies, and plans can vary drastically from company to company. Good thing you've already assessed the risks of your business, because now you know which questions to ask. If it becomes clear that a provider isn't familiar with insuring design professionals or self-employed professionals, move on. You can't afford the risk of inadequate coverage.
- Collect insurance quotes. After you've vetted the insurance providers on your list, it's time to request insurance quotes. Realize that insurance rates can vary wildly from provider to provider. Being diligent at this stage is necessary to ensure that you don't spend more on insurance than necessary.
- Don't get swindled. If an extremely low quote seems too good to be true, it probably is. There are a lot of scammers out there posing as insurance companies, and they aren't accredited by professional institutions. Always make sure your insurance provider has the necessary level of accreditation and experience.
As we mentioned before, finding small business insurance on your own is time-consuming. And if you aren't fluent in insurance jargon, the research and evaluation process can be grueling.
Don't have the time to spare? Forgo the extra stress by getting some help.
An insurance provider's "A" rating means it is able to meet long-term financial obligations.
Finding Small Business Insurance with a Licensed Agent
Instead of completing the boring, labor-intensive legwork of finding insurance by yourself, you can use the expertise of a licensed insurance agent like those at insureon. Our agents specialize in finding coverage for the small and micro businesses in niche industries like yours. This route comes with several benefits:
- It saves you money. When you work with an insurance agency, you are working with an independent agent, as opposed to a captive agent. Independent agents sell policies from many different companies while captive agents represent only one insurance company. Because independent agents aren't tied to one company's policies, they can find you more competitive rates. Additionally, you don't pay your insurance agent. The insurance company pays agents when they sell you a policy, which incentivizes agents to offer you the best options.
- It saves you time. Agents find competitive quotes for a living. This means they can quickly sift through dozens of policies from multiple providers much faster than you could. Plus, insureon agents are trained by the industry, which means they are already familiar with the risks of your work and know which policies can protect you. Sometimes, insurance agencies provide online applications, which you can fill out at your own convenience. For example, insureon can send quotes via email within a day or two.
- It gives you options. Have you ever experienced drastic rate hikes when it comes time to renew your personal insurance policies? Has one of your policies ever been discontinued? This can happen with business insurance, too. If you buy your policies directly from the insurance company, you are left with few options should one of these situations arise. You either have to pay more, switch policies, or leave the company. When you work with an independent agent, they can find you a new, comparable policy without all the hassle.
- It offers a safety net. Many business owners don't realize that an independent agent acts as your legal representative to the insurance company that furnishes your policy. Because the agent is working on your behalf, you have some legal recourse if the agent makes a mistake and, say, sells you the wrong policy. You could ostensibly sue to recoup your losses. But if you choose your own policies, you're the only one responsible for the outcomes of your decisions. If you purchase the wrong policy, there's nothing you can do.
- It provides a human connection. When you work with insureon, you can ask your questions to a live agent during regular business hours. Forget about automated voice messages and punching numbers into your keypad. You can call up your very own insurance agent for direct answers to your questions. This is a huge benefit, as most people have trouble sifting through the complicated legal jargon of insurance policies. Let your insurance agent be your translator.
Remember that no matter which route you take, you'll want to have a clear idea of your business insurance needs before you search for policies. This means carefully assessing risk and keeping records. The more information about your company that you can provide to your insurance agent, the better your coverage options will be.
Independent insurance agents aren't tied to any one company. They can offer you policies from several providers so you get the best deal.
NEXT: Part 2: Keeping Insurance Rates Low with Risk Management