Should you buy business insurance for your agency?

In this episode, Chip and Gini talk about insurance. Right up there with legal and accounting when it comes to favorite topics for agency owners.

As painful as it may be to talk about, insurance is something that we all need to understand and consider.

Balancing the risks with the costs isn’t always easy, but Chip and Gini offer up some perspective for you to consider.

The following is a computer-generated transcript. Please listen to the audio to confirm accuracy.

Chip Griffin 

Hello, and welcome to the Agency Leadership Podcast. I’m Chip Griffin,

Gini Dietrich 

and I’m Gini Dietrich,

Chip Griffin 

and today we’re going to ensure that you have a good time.

Gini Dietrich 

And I think you use that incorrectly.

Chip Griffin 

I absolutely use correctly and, and just before we get any notes and someone like Judy points out, my grammar is wrong. I know, I did it for fun, because

Gini Dietrich 

I liked I liked it, you went to the opening as fast as you could, so that I couldn’t make fun of you. That was

Chip Griffin 

I knew I was gonna get it on the backend. I had full confidence because I have full confidence in your ability to master the English language and know that ensure and ensure are different things.

Gini Dietrich 

Ensure.

Chip Griffin 

Yeah, and then if you you know capitalize the E, then you’ve got a brand name. And

Gini Dietrich 

that’s true, right?

Chip Griffin 

Yes, but no, we’re going to talk about something super exciting. I mean, this, this may be right up there with when we’ve talked about lawyers and accountants, we’re going to talk about insurance today. Yay. For you not off, I’m going to encourage you to listen, because there’s a lot of things you may not be thinking about that you should be.

Gini Dietrich 

Yes. So in the Spin Sucks community, we got the question. As an agency owner, should I have professional liability? And I said, Yes. The end? Like Thanks for your help.

Chip Griffin 

And of course, the answer is yes. There are some asterisks to this, because you should have it, you’ll probably never use it. You may need to have it to get some clients. Yes. If you ever tried to use it, you’ll probably be denied. But you should still have it.

Gini Dietrich 

You should have it. Yes. Just like not very expensive. It is not No, it’s not very expensive.

Chip Griffin 

It makes life easier when you do have that big client that comes along and they require insurance to work for them. A lot of these requirements are stupid. They’re nonsensical. But guess what? For like 80 bucks a month or less? In some cases, you can cover all your bases.

Gini Dietrich 

Yeah, I mean, you can think about professional you can think about our errors and omissions. There’s a lot that you can you can do in that package, business liability, all of that, to make sure that you’re covered because I prefer I prefer to have insurance just in case. I don’t want to test Murphy in his loss. So it cost me 80 bucks a month. I think it’s actually I don’t remember exactly. I think we pay probably 15 $100 a year for everything. So

Chip Griffin 

I mean, it depends on where you are what coverages Yeah, and all that kind of thing. So, but the there are some important things to consider, because there’s the basic liability insurance. But as you say, there are other things that you can get as part of that package or additional things that you might want to get. So it’s always good to work with an insurance broker who can explain to you what is out there, they help look at your business and figure out what are your exposures that you’re not thinking about? So for example, once you have employees, everybody thinks, Oh, well, I need, you know, health insurance. Sure. Okay. Great. That’s, we all know that. We’re not going to get into health insurance discussion, particularly since I just did my renewal today, and I’m just angry at the health insurance industry. But But there are other things, I mean, some things you can think about from a benefits perspective. So a lot of agencies offer, you know, at least a modest life insurance benefit or a disability benefit, or those kinds of things. There are some novel things that that are now being offered in some places like FMLA, leave insurance, you know, that they can help replace some income when someone is out on FMLA. So there are things to look at, they’re things to consider. But there are other things that you may not even be thinking about. And I was talking with an agency owner recently, who does a lot of influence marketing, and so has now started accumulating product samples and things that they’re shipping out to these influencers. So now they have, effectively a warehouse operation.

Gini Dietrich 

Yep, yep.

Chip Griffin 

So now you do have some things that are that are much more of immediate concern. What if they’re As a fire, what if there’s a theft, you don’t want to be out having to write a check to your client to cover, you know, that loss. You know, if you own your own building, there are certainly coverages that you’re going to want to protect the structure. But also if someone gets hurt inside the structure, yep, yep. So there, there are a lot of these little things that you may not be thinking about. And particularly as more agencies are getting creative in the services that they’re offering, you may have exposure that you didn’t realize, and in some of those cases, you might actually be able to file a claim. So your general liability ones and errors and omissions, those are, you know, fairly difficult to capitalize on it. But there are others that are much easier. And, you know, much more prudent imprudent not have I should say,

Gini Dietrich 

yeah, the influencer marketing examples, a really good one, because I have a friend who, whose client is doing a bunch of influencer marketing, and it’s about, they’re probably going to spend about $3 million in fees, and they want to run it all through the agency, they’re gonna pay up front and do all those things. But at the same time, first of all, I would not want that responsibility, because I’m not the bank. But there are some issues that she and I talked through a couple of days ago, in terms of what that looks like, from just keeping her her business covered. in case something happens in case somebody doesn’t get paid, or they one of the influencers comes back and says and Sue’s for whatever reason, now the agencies liable for it, because they’re the ones that were paying them and the contracts between them and the agency and not them in the client. So there is a lot to think about. And I think your your point about having a broker helps. I will also say that, and maybe some of you went through this last year as well. But when you’re given when you get an SBA loan, you have to prove insurance. And so it’s, you know, it’s far easier to be able to call the broker and say, Hey, this is what I’ve been asked for, this is what I need, can you send it over and they take care of it, they create the certificate, they put your name on it, like they do everything that’s required, either by the client, or the government, whatever it happens to be, and they get it over to you in a timely manner. So I highly, highly, highly recommended a broker, it may cost a little bit more money, because you’re paying a percentage to them. But it’s, it’s worth it from a time perspective.

Chip Griffin 

Yeah, well, in a lot of cases, it depends. And different states can be different here. But in a lot of cases, the insurance company actually pays the broker. So you don’t you’re paying for it. It’s very, it’s a little bit less transparent, I suppose. But they’re, you know, but it’s still worthwhile, because they understand. And I think what you said there is really important that the headache, right, you just, it takes away the headache of having to deal with it. So over the course of all the businesses I’ve had, I’ve always worked with insurance brokers for both health insurance and business insurance. Because then when I had a client ask for something, or an employee asked for something I just said, Go talk to so and so. Yeah. Yeah. For the email, and I just get it off my plate. I don’t have to figure out. Okay, how do I create a certificate of insurance to provide to this client? You know, how do I answer this employee’s question about a benefit? I don’t need to worry about it. I don’t have sorted out, yes, someone who will do it for me, and in my experience has actually been very positive with these brokers. Absolutely. That they just take the just take care of it.

Gini Dietrich 

Yeah. And when you have a prospect who says, well, we’re going to require that you have X amount in in coverage, and it needs to be this and this and this, it’s really easy just to forward that email to your broker and say, do we have this how do we make this work like and they just take care of it? It’s, it’s fantastic. And when it’s time to renew, you get an email from them that says it’s time to renew your your renewals up in two months, they give you plenty of time, here’s what you need to be thinking about, here are the questions we need answered. If you’re ready to go, let’s do it. They’ll make some recommendations. Like we have a health insurance plan that I got, when I started the my business and Blue Cross Blue Cross Blue Shield no longer offers it. So they grandfathered us in. And it’s a really good plan. So every it renews every November. So every August, my broker sends an email and they’re like, Don’t screw this up. Because if you’re even a day late, they can take you out of the grandfather clause. So I always paid in advance. I always paid by September for the following year. But they take care of all that stuff. Like I wouldn’t have known that I wouldn’t have known that they no longer offer it and they’ve grandfathered me in and there’s all these things I have to all these boxes, I have to check in order to keep it keep the grandfather clause. I wouldn’t have known that. And so keeping me abreast of all that information has been incredibly helpful.

Chip Griffin 

Yeah, no, it’s it is it is really helpful to take away all that paperwork burden, because insurance companies love to send you these detailed applications for renewals and all that kind of stuff. And, you know, it, we got it to the point in most of my businesses where the broker would just say, Okay, here’s a list of the data that I need, and then they took care of that, you know, we still had to review it before we would sign the application at the end. This is not for health and health insurance, you generally don’t need to do that. But for liability policies and things like that, you know, you’re generally going to want to look at it, make sure it was captured correctly. If you’re if you’re doing, you know, work for clients that are in e commerce and things like that, you may want to think about a cyber liability policy. Yep, those can get really expensive. So that would be an exception to the Hey, it’s, you know, it’s cheap insurance. It’s not cybersecurity, particularly if you’re dealing with any kind of credit card type information or anything like that can be much more burdensome, much more expensive, but you should at least look into it. So you can make a an intelligent decision about whether you want to assume the risk of not being insured versus, you know, having it as a line of defense.

Gini Dietrich 

Yeah, and the other thing I will say is, especially as the idea of not going back to the office, anytime soon, keeps getting pushed further and further out, you know, you have employees who are working from home, and they have your technology, they have your computers, they have your phones, they have the things that belong to the business, and that stuff needs to be ensured to. And that was actually, that was not something that I had considered. When we went virtual. In 2011. It just didn’t. And we had somebody whose house was broken into and our stuff was stolen. And that was a pain in the neck. So I called the broker and said, so this happened, and they’re like, yeah, that was stupid on your part. And I’m like, I know that.

Chip Griffin 

Know that? Well, yeah. And so So typically, you’re going to need to provide your insurance company with the addresses of all of these remote workers, it’s going to need to be kept up to date in order to make sure that you have coverage. So these are, these are some things you may have to work into your process to make sure that you’re getting the benefit of the insurance, that you’re paying for it. In most cases, they don’t actually charge you more for each individual employee. In some cases, they may, again, depends on the policy, but in general, all you really have to worry about is just making sure that it’s listed. So that you’ve got that coverage there in the event that you know, fire theft. Employee doesn’t return it whatever.

Gini Dietrich 

Right? Yeah, there were two states, I want to say that we had to file the insurance separately in those states. But I think that’s it.

Chip Griffin 

Right? But again, that’s where the broker comes in handy, because they know what the rules are, they can help you navigate it. And the key thing, anytime you’re working with, whether it’s a lawyer, accountant, insurance broker, is just to be open with them about your business. And you have to have someone that you feel like you can trust enough to share what what your business is actually doing, what your concerns are about what might happen. And frankly, you need to let them know about the warts, right? Yeah, you need to let them know. You know, okay, so I’ve got people in there, you know, they’re cutting open boxes all day long. And they, they like using this razor just straight up on its own, it doesn’t even have a handle. Right? I want to think about those things and share it so that you can make sure that you’re getting the right coverage. And or they tell you well, if you if you fix that, and you put processes or policies in place to prevent that, then it will bring down your cost. It’s like going back to cyber liability. If you have certain policies and practices in place, it will generally reduce your premiums sort of like you know, on home insurance, where you if you’ve got smoke detectors, you get a discount if you’ve got a burglar alarm. Yeah, the discount? Yep. It’s the same thing with business insurance in many cases, where if you’re, they will tell you what you need to do in order to either get the coverage or get a better rate.

Gini Dietrich 

Yeah, I don’t see any reason. I mean, with with the few exceptions, like the cyber insurance, I don’t see any reason that you wouldn’t have it. It’s kind of like renter’s insurance, renter’s insurance is so cheap. When you’re 20, in your 20s, and you have an you’re renting an apartment, and you’re like, Oh, I have to buy insurance too. But it’s like, three pennies. I don’t know. It’s like, it’s so cheap, that there’s no reason for you not to happen. And then the same thing here. There’s no reason for you not to have it, it protects you. It gives you peace of mind. If something happens. You call your broker, they take care of it. Done.

Chip Griffin 

Yep. And the other insurance that I would I mentioned that I think agencies probably should be thinking about is employment practices insurance? Yes. Because it’s an area where there is I don’t have any data on it. But I can say anecdotally various more employee litigation or threats of litigation these days than when I first started my businesses 20 years ago. And so having a policy like that in place, can help protect you. It’s not a substitute for getting proper HR and legal advice. Sure, when you’re doing things like you know, terminations or hiring or anything like that, but it certainly can be a good benefit to have in your back pocket in the event that A relationship with an employee or a prospective employee goes south. That’s a really, really, really good point.

Gini Dietrich 

Yeah. Because you never know. And some people are litigious just to be litigious.

Chip Griffin 

Yeah. And unfortunately, you can’t tell that during the interview.

Gini Dietrich 

No, you can.

Chip Griffin 

So no, you can you want to look through these things. And and it, you know, I would never encourage an agency to spend a huge percentage of their budget on insurance. It because it is it is difficult to get claims on on things. And it is a difficult process to go through. But you should absolutely get as much coverage as you can reasonably afford, so that you do have the protections in place. If something happens, that falls within the boundaries of those policies.

Gini Dietrich 

Yeah, it’s just like I said, it’s peace of mind it allows you to sleep at night is one less thing you have to worry about.

Chip Griffin 

And it makes it easier when when you’re asked by a client, a prospect an employee, do you have this? Yep,

Gini Dietrich 

yep. Yep. And that gives them confidence that you’re running a quote unquote, real business.

Chip Griffin 

Right? which you are even if you don’t think you are. Once you have a business, it’s a real business. Anyway, I think we will. We will leave it there because people don’t want to spend too much time on insurance.

Gini Dietrich 

No, I don’t either. If I’m a broker,

Chip Griffin 

yeah. I mean, you had suggested that we could just have an episode where we just said yes. Yes. And then, and we’re done. But that’s it. I said, he took about 16 minutes to give you a more detailed answer. Hopefully, it’s been helpful. Hopefully you have some ideas as to the kind of coverage that you might get or how to go about talking to a broker to get that information. So with that, I’m Chip Griffin,

Gini Dietrich 

and I’m Gini Dietrich,

Chip Griffin

and it depends

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