7 most common Business Insurance mistakes

Published July 10, 2019
Risk Ahead blue road sign-1
 

Director of Business Development

A comprehensive, customized insurance program is vital to the success and security of any business, and therefore should designed with the utmost care and consideration.

Frankly, I'm amazed by some of the policies I review. There are many good insurers out there, but there are too many careless and under-informed ones, too, as I'm frequently reminded when I analyze a prospective client's existing coverage.

Some Business Insurance mistakes result from an insured's reluctance to purchase coverage, while others result from an insurer's error or omission, but all mistakes leave a business at risk of a potentially devastating loss.

The list of common mistakes is long — as this FitSmallBusiness.com compilation of examples from attorneys, insurance professionals and business executives attests — and my colleagues at Sylvia Group and I go to great lengths to avoid them whenever we review or write coverage. It's a never-ending challenge, but providing clients with the cost-effective coverage that fully protects their business is what makes the job of a good insurance adviser rewarding.

Here are the seven most common Business Insurance mistakes I discover when reviewing prospective clients' policies:

1. Lack of Mod analysis to reduce Workers' Comp premium

You know how expensive Workers' Compensation Insurance is, and I don't need to tell you what an obstacle that can be to growing your business. But did you know that you can greatly lower Workers' Comp costs by taking steps to lower your Experience Modification Rate, better known as your "Mod?"

The first step is Mod analysis, a service Sylvia Group performs for Business Insurance clients as part of SPS — the Sylvia Protection System. Mod analysis enables you to see the causes of a high Mod and determine solutions. It also can detect whether an underwriter made a costly mistake in calculating your Mod, and it can determine whether you're eligible for the Massachusetts Qualified Loss Management Program (QLMP) after being subjected to the Assigned Risk Pool.

2. A priority on price over value

Many businesses view insurance as a necessary evil rather than as valuable protection. Those who do are prone to go bargain-hunting for cheap insurance, which more likely than not will fail them when it comes time to submit a claim that ultimately turns out to be uncovered under the so-called bargain policy.

This is where the role of an independent insurance agent may be most critical. An independent agent can market your business to multiple insurance companies, making sure you get the right coverage at a competitive price —  the greatest value for your insurance dollar.

Acadia Insurance — one of many companies Sylvia Group works with to provide customized, cost-effective insurance coverage — recently shared this insightful, concise blog post from a New Hampshire agency: 10 Reasons to Choose an Independent Insurance Agent.

3. No protection under an umbrella

Maybe it's the formal name: Excess Liability Insurance. "Excess" is, by definition, "an amount of something that is more than necessary." But think about what Excess Liability Insurance — also known as Umbrella Liability Insurance — does: It provides coverage beyond the limits of the underlying commercial auto, product liability and premises liability coverage in the event of a severe loss. 

4. Lack of Employment Practices Liability Insurance

Hard to believe in the #MeToo era, but many businesses neglect to protect themselves from the risk of a lawsuit by a current, former or prospective employee. Sexual harassment, discrimination, wrongful termination — all are common claims in Employment Practices Liability (EPL) suits, and whether the employer is guilty of the alleged offense or not, defending such a suit can come with enormous costs.

5. Failure to include Business Interruption in cyber coverage

Business interruption is a potentially lethal consequence of a cyber breach — especially to an organization that does much of its business online or during one or two peak seasons — yet many Cyber Insurance policies exclude business interruption coverage unless the insured requests it and pays additional premium. Almost every business should have cyber coverage, and every Cyber Insurance policy should cover business interruption.

6. Absence of Key Person Life Insurance for partners and key employees

What would happen if a business partner or an employee whose role is essential to the business' operations died suddenly or suffered a debilitating injury? A life insurance policy with the business as the beneficiary can save a small or midsized business in the event of a partner or key employee's death, and many policies also provide coverage for chronic and debilitating illness or injury.

7. No tax-advantaged Executive Bonus plan

Under Section 162 of the federal tax code, employers can provide executives with supplemental benefits through the purchase of Life and/or Disability Income Insurance using tax-deductible dollars. Section 162 Executive Bonus plans benefit both employers and employees, and yet many businesses fail to take advantage of the plan.

All of these coverages cost money, naturally, but the costs of being under-insured can be far greater. Paying for insurance and then finding out your policy doesn't cover a loss is beyond frustrating. For a business, it can be fatal.

Recognize that insurance is an investment in protecting your future, and avoid these all-too-common Business Insurance mistakes.


About Mike Isbister and Sylvia Group

Mike Isbister_retouchedThroughout his 30-year career in sales and service, Mike Isbister has achieved success by combining analytics and action, recognizing that having meaningful data is important — but only if you know what to do with it. The analytics-plus-action approach works not only for Mike and his team but also for Sylvia Group clients. Through the SPS process of compiling and breaking down data, they’re better able to analyze needs and exposures, review claims to determine risk-management solutions, and design comprehensive, cost-effective insurance programs.

CONTACT MIKE ISBISTER

A repeat winner as "Best Insurance Agency" in the SouthCoast Media Best of the Best Awards program, Sylvia Group helps businesses and individuals protect their future by designing insurancebenefits and financial planning programs. We’re a locally owned agency known for our commitment to our clients and our community, as well for our industry expertise. Founded in New Bedford, MA, in 1950, headquartered in neighboring Dartmouth, and serving businesses and individuals throughout Massachusetts, Rhode Island and beyond, Sylvia Group is certified as a Woman Owned Business Enterprise with the Massachusetts Supplier Diversity Office and has the distinction of being the first six-time recipient of the Five Star designation awarded by the Massachusetts Association of Insurance Agents (MAIA) for all-around agency excellence. 

Upcoming Events

HOSTED EVENT
WEBINAR:

Risk Management Solutions for Businesses and HR Professionals
Thursday, Dec. 5
10:30-11:30 a.m.
Sylvia Group
500 Faunce Corner Road
Building 100, Suite 120
Dartmouth, MA 02747
More Information »


Sylvia Newsletter

Subscribe to our newsletter for news and updates about policies, enrollment changes and new laws that affect you.

Testimonials

  • “I come in contact with many insurance brokers in the course of my practice – even more so with the advent of the Affordable Care Act requirements. Some are ill-prepared or still in denial. Others call me from the car on the way to a client meeting asking for a summary of the ACA in ten minutes. On the flip side of this coin is the Sylvia Group agency. Their clients are very fortunate to have a broker who is knowledgeable about employee benefit matters. The fact that Sylvia Group invited me, an ERISA lawyer, to conduct a live client seminar on the new ACA employer information reporting requirements indicates to me that they are engaged in the process and they care about their clients.”

    – RICHARD A. SZCZEBAK, Esq., RAS Law, P.C.

  • “By giving, advocating and volunteering, Sylvia Group has proven they are dedicated to our community. Whether they are volunteering at one of our Day of Caring events or working with us to provide affordable health insurance and benefits to our employees, Sylvia Group does whatever they can do to make a difference for United Way of Greater New Bedford. The team at Sylvia Group is a trusted group of dedicated professionals, and we thoroughly enjoy working with them.”

    – MICHELLE N. HANTMAN, President and CEO, United Way of Greater New Bedford

  • “When I needed assistance with my business insurance program, Jill White immediately responded – and, even more important, she listened. She understood the challenges I had with my former agent, and she and the Sylvia Group team designed a program specific to my restaurant’s needs. I’m confident that with Jill’s expertise and personal attention, Fay’s is in good hands. That gives me the peace of mind to focus on what my family and I do best: serve delicious food and provide great customer service while running a successful business.”

    – EVELYN BETTENCOURT, Owner, Fay's Restaurant and Knotty Pine Fine New England Catering

  • “Sylvia Group is very resonsive to our ever-changing needs. Jill White provided us with wonderful support when we moved our child-care program location. She ensured that our coverage was seamless and that it met all of our program, licensing and funding needs. Sylvia Group always assists us immediately when we have questions and/or requests. We knw we are in good hands and that they have the best interest of our YWCA participants in mind. It's a pleasure to work with the staff of Sylvia Group; they are truly customer-focused.”

    – GAIL FORTES, Executive Director, YWCA Southeastern Massachusetts

  • “Thanks to John Beauregard and the professionals at Sylvia Group, our MassMEDIC membership has paid immediate dividends. Through the BIO Business Solutions® program, Primo Medical received a significant premium reduction on our Professional Liability policy. In addition, utilizing Chubb as our insurance provider and Sylvia Group as our broker, we’re confident that we have business partners who truly understand our insurance needs, provide outstanding loss control services and continue to work with us to lower our total cost of risk.”

    – CHRISTOPHER LAPLANTE, Chief Financial Officer, Primo Medical Group

  • "Getting the right insurance to guard against risks is absolutely critical for nonprofits, as well as other businesses; dealing with a costly claim could force a nonprofit to shut down permanently. Going with the Sylvia Group, we made the right decision and have never looked back. They have gotten to know our mix of services, evaluated our insurance needs and designed an insurance program around our specific insurance coverage needs — allowing us, on a tight budget, to purchase the right amount and type of insurance at the best value. Sylvia Group staff have built strong, personalized helping relationships with our staff. I can sleep at night knowing they make sure that our insurance policies are adequate to cover our risk exposures. I have recommended, without hesitation, the Sylvia Group to my colleagues working in both the nonprofit and for-profit arenas."

    - MARIA A. ROSARIO, Executive Director, NorthStar Learning Centers, Inc.

  • “Sylvia Group is an attentive, professional and knowledgeable insurance agency. They are familiar with the ever-changing rules and regulations when it comes to independent, nonprofit schools., and John Beauregard always goes above and beyond for Friends Academy. Whether it is something small, like registering a new school vehicle, or something bigger, like filing a claim after our greenhouse was destroyed by a hurricane, he treats every question and every claim with utmost importance. Sylvia Group is invested in our program as well; John sponsors and participates in our yearly golf tournament. Sylvia Group is an exceptional insurance company that I would recommend to all my cohorts.”

    – KATHERINE FURTADO, Chief Financial Officer, Friends Academy

  • “The Sylvia Group team provides a multitude of services in all aspects of employee benefits. The team's dedication to their clientele is apparent through their willingness to provide trainings in your office, at their business and through valuable webinar resources. They are readily available to answer questions and help with any issues that may arise. CMHS, Inc. appreciates the relationship that we have enjoyed with the Sylvia Group throughout the years.”

    – JOHN WINTERHALTER, President, Comprehensive Mental Health Systems, Inc.

  • “I want to thank you for this incredible resource, ThinkHR. We will be accessing it frequently and appreciate Sylvia Group making this available to Advanced Eye Centers.”

    - PAUL C. ABRANTES, Executive Director, Advanced Eye Centers

  • “I love your staff. In the first three or four weeks after we moved over to Sylvia Group for our insurance, I have had more communication and attention from them than I had in the seven or eight years we were with our former agency! You have a great team.”

    – PAT CASSAN, Ocean Explorium

  • “I just wanted to take the time to recognize what a remarkable job Danielle Andre is doing. I cannot thank her enough for her time, her kindness and her willingness to make sure I’m comfortable with all the necessary changes that occurred from an insurance standpoint. As a whole, every Sylvia Group staff member has been friendly and knowledgeable, but Danielle has certainly gone above and beyond for me.”

    – SHANNON S., Personal Insurance client

  • “I so appreciate Julie Jennings' help with Medicare planning. It is a relief to be able to consult with a knowledgeable professional on insurance issues. I have no idea how people do this without such help.”

    – CHRIS BLACK, Personal Insurance client

  • “Working with Sylvia Group over recent years has taken our insurance issues from 'groans and moans' to 'no problem.' Rose Lopes, our Account Manager, is one of the most responsive people I have ever worked with. She responds immediately to questions or special requests. It is such a pleasure to work with Rose, who does whatever it takes to find a solution to our needs. We are very pleased… She always has our interests in mind.”

    – LYNNE FOLEY, Director of Human Resources, Five Star Companies, Inc.

  • "Sylvia Group is by far the best insurance agency I have ever dealt with, both personally and in my business. They provide customer support that is not found in other agencies. For example, they take a personal interest in their clients, calls are always taken or returned immediately, and during reviews suggestions are made to offer the most cost effective and comprehensive coverage. When claims occur, they have always been there to facilitate the process. It has truly been a pleasure to have them represent me in my insurance needs."

    - WILLIAM N. WHELAN, Chairman, Whelan Associates LLC