By Christine Graf
Because the insurance industry is constantly changing, insurance agents suggest that business owners meet with their agents on an annual basis in order to review their policies.
Jennifer Longtin, owner and president of Lighthouse Insurance Agency in Ballston Lake, said this is the only way for agents to ensure that their clients have the coverage they need. She has operated her business for 17 years and has been in the insurance business for more than 30.
“It’s not always about just adding more expense. It’s really about providing the right protection for whatever their needs are,” said Longtin. “Insurance should always change as the times change and as the business changes. And honestly, I don’t know any business that stays in business for years and years and doesn’t change.”
DeWitt Jenks said changes that can impact insurance coverage can be as simple as an increase or decrease in inventory levels. Jenks has been in the insurance business for 10 years and is the owner of Jenks Family Insurance Agency in Saratoga.
Both Jenks and Longtin advise their business customers to have cyber liability and data breach insurance. This insurance covers costs associated with data security breaches as well as liabilities that can result from the use of social media.
A small amount of cyber liability and data breach insurance—typically $10,000—is included in most business general liability policies. Longtin recommends adding additional coverage and increasing this amount to $50,000.
“If you did have a data breach—it depends on how much data is in there and how many clients were affected—$10,000 is not a lot. There’ are lot of legal things that you have to do,” said Longtin.
For example, she said business owners have to hire forensic engineers to determine how a breach occurred. They must also hire lawyers and notify all their customers about the breach. Some businesses even must pay for their customers to receive credit monitoring subscriptions.
“We have seen this shut down businesses,” said Longtin. “Completely shut them down.”
For example, a colleague told her about a pizzeria owner in Albany who had to shut down his business after a data breach exposed the credit card numbers of his customers. He incurred tens of thousands of dollars in costs and could no longer afford to keep his business open.
“Coverage of $10,000 doesn’t do much,” said Jenks. “We try to get people up to about $25,000 because by the time you have gotten a lawyer involved, you’ve probably spent about $10,000.”
He said the additional coverage is inexpensive and costs less than $40 a year for most of his clients. He refers to it as “inexpensive peace of mind.”
Longtin and Jenks also make sure business clients have adequate Employment Practices Liability Insurance (EPLI). EPLI covers liabilities related to claims of sexual harassment, wrongful termination, discrimination, and other illegal employment practices.
“If you are accused of something or get lawsuit papers, you want your insurance company to defend you. During that defense process, it can be financially devastating if you had to pay that all out of pocket. So, it’s not always about being negligent or being wrong, it’s about going through the defense process as well,” said Longtin.
Jenks also advises business owners to make sure they aren’t overpaying for their workers’ compensation insurance. For many business owners–Jenks included–worker’s compensation premiums are one of their largest expenses.
He said many new business owners think they have no choice but to get their workers comp insurance through the New York State Insurance Fund (NYSIF) during their first year in business. This is because some insurance companies do not offer workers’ comp policies to new businesses.
“I was with them the first year I got into business. I was paying twice as much. It was brutal. It’s not right,” he said. “I’ve got companies that don’t care if it’s your first year of business. People don’t do their homework and check into it. They stay with NYSIF for years and they could be paying less. It’s the same coverage and sometimes a little bit better.”
In addition to not being aware that they are overpaying for workers’ compensation, Jenks said many business owners are unaware that they do not have adequate coverage for the contents of their building—things like office furniture and computers. He said it is very common for people to be underinsured in this area in both their homes and businesses.
“You need to make sure that for the contents of your home and building that you have proper coverage,” he said.
Because both Jenks and Longtin are independent agents, they can shop around to find their customers the best deals. Both owners said they have high standards when it comes to vetting the insurance companies they work with. They also advise business owners to avoid purchasing their insurance online. Both noted that purchasing insurance online is especially appealing to the younger generation of consumers.
“It is often very bare bones and may be missing a lot of coverage,” said Jenks. “They could just give you liability, and that’s not what you want. Buying online, sometimes you get what you pay for. I want to make sure my customers are adequately covered.”
According to Longtin, working with an online company has other disadvantages. “The industry is losing the connection of the relationship faster than I have ever seen. With the loss of the quality of the relationship, it really does lend to our clients to potentially suffer financially. Not all policies are created equal.”
“You aren’t buying insurance,” she said. “You are buying protection. Sometimes it is a really hard concept when you are just seeing dollars and cents. You are always going to have clients that say, ‘I just want the cheapest price.’ But our goal is always to give them the best coverage at the lowest possible premium.”