Purchasing and managing insurance policies can be a headache for any small business. Between understanding the risks involved with running your business, what level of coverage you require and trying to get quotes from companies, choosing insurance policies can eat up a lot of time and energy. Inaki Berenguer, CEO and co-founder of the digital insurance management platform CoverWallet, is hoping to streamline that process and make it easier. Berenguer shared some of his insights with Business News Daily on how entrepreneurs should navigate the stressful process of choosing and managing their insurance policies.
Business News Daily: What do small businesses need to understand about insurance management?
Inaki Berenguer: Insurance products are meant to protect businesses from the risks that come along with running a company. However, many companies don't see insurance that way. They see it as both a time suck and a cost.
It's important for businesses to understand that while obtaining insurance has been a historically painful process, insurance is there to protect the business, its employees and their assets. It should be mentioned that insurance is moving towards a more customer-friendly and digital experience, thanks to tech innovations, startups and investors that believe in a better way.
BND: When it comes to selecting insurance, what should entrepreneurs consider?
Berenguer: Entrepreneurs should think about a few things while selecting insurance.Understand your business and the risks that come along with it. Unfortunately, there's no such thing as a one-size-fits-all insurance policy. Different insurance types come along with running each and every type of company. For example, if you're planning on opening a bar, you'll need Liquor Liability Insurance, on top of a General Liability Insurance policy and more.
Other questions you'll also want to consider are:
- Do you have any nonowner employees? If so, depending on your state, there are some insurance types that are legally required.
- Do any of your partners require you to have insurance? A landlord, an investor or a distribution partner may contractually require some forms of insurance from your business.
- Are you planning to start your business in a locale that is at risk for a natural disaster?
- Will you or your employees use a vehicle for any business-related matters?
It's probably going to take longer than you think it will.Entrepreneurs and first-time business owners are always surprised by how "old school" the process is. Currently, the world of insurance still exists as a disjointed, offline experience, which means lengthy phone calls or in-person meetings with brokers and insurers are the industry standard.
At CoverWallet, we're actively working on changing this lengthy process, especially for the small businesses out there, by bringing insurance distribution, management and education online.
Get the right coverage, not necessarily the cheapest. Many businesses choose the lowest amount of coverage or forget about it altogether. There's always the chance that a business could get lucky, but the chances of something bad happening are much higher than that, and when it does, you'll be happy you had the right coverage in place.
BND: What is the most common problem small businesses encounter when it comes to insurance?
Berenguer: The most common problem small businesses encounter when it comes to insurance is the level of service they receive versus a larger business. It's harder for small businesses to understand their risks and get the right insurance, because the information isn't readily available online yet, and it can take up to a month for a company to get a quote. That means most businesses take the first quote they get because they can't wait months and months to get the protection they need.
This is especially difficult for first-time business owners who have never had to deal with insurance before. Between cutting through the insurance jargon online, waiting in long phone queues, and getting a quote, these new companies are looking at a lengthy and stressful process.
BND: How can entrepreneurs address or avoid those problems?
Berenguer: The first step in avoiding these problems is self-education. Understanding the process, what insurance types your business may need, and having a list of questions to ask will help to save time. Again, understanding your business specifically and the risks that come along with running that business is especially important when you're first starting out.
BND: What resources are available to help small businesses navigate the world of insurance?
Berenguer: Resources online are scarce. We used to think Google could solve all of our problems until we started looking into and researching insurance. The truth is, there's not a ton of streamlined information, but that's a huge goal of ours at CoverWallet.
We believe that insurance is important to the lifeblood of a business, and understanding its importance, instead of viewing it as just another thing to think about, is the way of the future.