Key Commercial Capital would like to introduce a professional partner to our clients and those who we hope to assist in the future. All businesses should have adequate commercial insurance coverage. How does a small business owner know what is adequate?
Importance of SBA Loan Requirements for Insurance Policies
When an SBA loan is utilized for financing, the lender must require proof that several insurance policies are in place in order to set up the initial closing (especially for projects involving any type of construction). Other policies must be in place prior to final funding of the loan. How does a borrower know which policies to initiate when? How does a business owner know who to contact to get the process of initiating policies started? We aim to answer these and other questions in a series of articles all about commercial insurance.
Choosing the Right Commercial Insurance Broker: What to Look For
Not all commercial insurance brokers are the same. Over the years we have heard many stories from multiple clients about a lack of responsiveness or personalized service when trying to obtain the right commercial insurance. Even harder to find is a commercial insurance broker who stays involved with the customers when a claim must be made. Many brokers tell the clients to reach out directly to the insurance carrier for assistance. They tend to excuse themselves from being an advocate or a mediator between the client and the insurer.
For a very long time we tried to find a professional insurance broker to refer our clients to in order to meet the requirements of our SBA lender partners. In every scenario, it is in everyone’s best interest to have a good partner to get quotes out and policies written, so that loans can close. It should not take weeks or months to get these things done. Sometimes it does. It should not take multiple phone calls or emails to get a slight update in wording made to the Certificate of Insurance. When the lender and loan number need to be added to the policy and certificate it should not take a terrible amount of effort to get a response or someone who understands what is expected by the SBA lender. Unfortunately, in the past, we had no great resource to share with clients for attentive care with respect to commercial insurance.
When Jamie Robinson from AUDAX Insurance Brokerage contacted us about financing for her business, we got to know and respect her character and level of integrity. We were thrilled to consult with her and offer guidance throughout the entire loan underwriting and closing process. We spent a long time sharing stories and conversing about customer service excellence, professionalism and the simplicity of showing care for the needs of a client. We agreed that oftentimes these qualities are lacking in corporate America. A good level of after-sales-service is something we both felt is rare to find in any industry. We made a vow to do all we could to work together to be different and better.
AUDAX Insurance Group is an Insurance brokerage. They can access all the same insurance carriers/companies for policies as most businesses might be familiar with (The Hartford, Hiscox, Nationwide, Century Surety and many others). Jamie has been kind enough to provide an explanation about several of the different policies. We look forward to getting more insights from her over the next several months.
Comprehensive Breakdown of Business Insurance Policies
A Business Owner’s Policy is the Liability package that includes baseline coverages of Business Interruption, Business Personal Property, and General Liability. There are other types of coverages that are typically included in this package at no extra cost that provide protection for tenants leasing office or work spaces, and various other exposures depending on the Insurance Company providing the coverage. Business Personal Property is any equipment or office furniture or inventory the company owns. If a company sells vendor products, there is coverage for that inventory that would be included in this package.
General Liability can be stand-alone coverage for companies that don’t own a lot of property or office furniture or equipment and is recommended as a baseline coverage for any type of industry. Most baseline General Liability policies should offer $1mm per occurrence and $2mm aggregate per term in coverage. Liability refers to third party, so this would be for a physical injury to a third party in or at the business, it also covers exposures like Advertising Injury and Products Completed.
Builder’s Risk Insurance is coverage specifically for spaces or structures that are being built and is temporary insurance typically provided in 6 months increments. This is to cover any space or structure while it is under construction and should cover things like General Liability, can cover materials, etc. This is a separate policy from a Business Owner’s Policy or stand-alone General Liability.
Professional Liability is insurance that’s mostly required for any type of business that is consulting or giving advice. This liability covers exposure to a client suing said company for giving bad advice that they may claim has affected their business or staff. Professional Liability is really only important for specific industries unlike General Liability which should be included for any type of industry.
Worker’s Compensation covers any employees who may get hurt on the job. It is important to understand how W2 employees versus 1099 contractors may be covered for these policies. The agent should be asking specific questions to understand the staff structure of the business to best advise if Worker’s Comp should be part of the insurance. Additionally, every state has requirements about when Worker’s Comp is required to be implemented and in some states it’s all companies regardless of industry, some states are industry specific, and some states are specific to the number of employees in the company.
Partnering with AUDAX Insurance Group: Key Commercial Capital’s Recommendation
We are happy to recommend AUDAX Insurance Group to all of our clients. Jamie will be providing more information and articles in the next several months. Feel free to contact us with any questions you might have.