Episode 11: Dorene Stockman on business insurance for independent professionals
Our guest today is Dorene Stockman, an insurance agent with the Owens Group, an independent agency.
Dorene helped me get my own insurance policy, and I thought she was very knowledgeable and a helpful advisor on that process, so I asked her to be on the show to share her advice for independent professionals on the types of coverage we need to consider getting.
In our conversation we discuss the types of coverage that are applicable to most independent professionals, namely:
- Business owners insurance – closely related to General Liability policy
- Umbrella policy
- Professional liability policy
- Privacy / cyber policy
We discuss policies that independent professionals should consider getting if you hire an employee or engage a subcontractor, including
- Workers comp
- Unemployment insurance
For those independent professionals that serve on the board of a non-profit or for-profit, we discuss directors & officers insurance.
Dorene also shares tips on how to select a broker, how often you should re-quote your policy, and how to work most effectively with a broker.
Dorene prepared a much more exhaustive list of policy types that are applicable to narrower groups of independent professionals – if you email me at email@example.com I’ll send you a copy
You can find Dorene’s firm at www.beechercarlson.com
Reach Dorene at: firstname.lastname@example.org
Will Bachman: Can you help me understand the different insurance representatives and the structure of the insurance industry?
Dorene Stockman: There’s the agent who’s down the street on your neighborhood corner. They’re usually only licensed to write business with one particular carrier, and that carrier might not be the best fit for your particular business, so you might be inhibiting yourself from getting the best program out there.
When you go to a licensed broker like me, I work for an independent agency. That allows me to go to multiple carriers. I can solicit quotations from multiple carriers and have them compete against each other to get the best price, program, terms, and conditions. We put it together in a proposal for the independent professional to review the options. We go through those, step-by-step, with the prospective client, and tell them the pros and cons of each of the offers.
What are the questions an independent contractor should expect to answer when they call for insurance questions?
My job is to assess and find the risks your business is going to face, and I want to make sure I’m recommending the appropriate insurance product. I’m going to need to know the name of the business, the state you’re domiciled in, who your clients are, what your revenues are, what your employee count is. I want to know the information, not just as it exists today but also to get a projection for where the business is going. I want to make sure I position you with a company that’s going to grow with you. Once you find a company you’re a good fit with, you nurture that relationship. You don’t want to requote your business year after year after year: insurance companies don’t like to see the same risk coming up every year on their books to get a new quote. We tell our clients that once they have a relationship, they should build on it.
When should someone start looking for insurance, and how long should they expect the process to take?
Start looking when you’re starting the business. Putting together the appropriate insurance program can take two to four weeks, depending upon the business and the types of insurance that you’re looking to secure. People who don’t have an insurance program, eventually you’re going to see a contract that’s going to ask for insurance coverage to be in place. Then you’re under the gun. The last thing you want to do is to try to get the insurance quickly. You might not get the right insurance and you might have to pay a little bit more for it.
What are the most common types of insurance an independent contractor might need?
The most common type of policy is a “business owner’s policy.” You can correlate a business owner’s policy to your own personal insurance that you have for your home. It covers your property and it covers your liability, but it’s also going to cover what’s owned by the business as opposed to by you personally. An independent professional who’s operating a business out of the home really needs to have a business owner’s policy. For property, I’m sure there’s a computer. I’m sure there’s office equipment. If there isn’t property, it can be written with just general liability, which is going to give coverage for most of the liabilities associated with the business: bodily injury, property damage, personal and advertising injury. Every business has those liabilities, and the general liability policy protects you for them.
Number two would have to be professional liability, which is going to give you coverage for anything that’s not covered in the general liability. It’s for claims that are alleging some type of financial loss. For your independent management consultant, it’s called “errors and omissions.” Some people call it “malpractice insurance.” The terms have different meanings, but people use them synonymously. There are some professional liability products tailored to certain professionals and there’s what’s called a “miscellaneous professional liability” that’s the bucket that all others are going to fall into.
Cyber-liability is a rapidly-emerging number three. It’s still changing, and every policy is different, so you really need a professional who can go through the different coverages and tell you what it is you’re buying. Cyber-hackers are becoming ever more prevalent in today’s society. We really need to protect ourselves.
Is there anything you recommend as businesses grow?
As your business grows and you add staff, you definitely need to consider workers’ compensation and unemployment insurance. There’s also another insurance product you might want to consider called employment practices liability which is coverage for any type of human resources-related situation, including wrongful termination, discrimination, failure to promote, all those things that happen behind closed doors in the HR department. That’s something I would strongly recommend.
Unemployment insurance is typically handled with the state directly. Your accountant would be the person to help you with that, or your payroll service provider or someone like that.
Disability is for non-work-related injuries or illnesses, while workers’ compensation is for injuries that occur on the job. It’s going to cover all of your medical expenses and lost wages. It’s the first line of defense for an injured employee: if your employee is injured and you don’t carry workers’ compensation coverage, you can have fines and penalties assessed against you or your company by the state. As for subcontractors, if you have somebody who you truly feel is an independent contractor but they come to your office four days a week and they’ve only been working for you for the last six months, even if at the end of the year they’re getting paid as a 1099 employee, the workers’ compensation board will say that they were an employee if they were injured in the course of their work for you. There is also the availability of an umbrella policy which is extra liability coverage. You could also get it for additional auto liability if you have any vehicles owned by your business.
What should we be considering when it comes to directors’ and officers’ insurance?
For people on the board of a non-profit, or who are sitting on the board of a company they’re working with, there are some pretty specific and tailored insurance products available. I’ll give a shout-out to the Personal Lines World. There are a great number of insurance carriers that do have an endorsement available on the homeowner’s product, where you can get coverage for your board service. You’re covering your fiduciary and legal duties to the company. If you sit on a board, make sure the company has Directors’ and Officers’, and don’t be afraid to ask for it. Share what they have with your insurance professional. They can give you guidance to make sure it’s appropriate and that your service on that board is covered.
Some independent professionals have insurance, but find clients require a higher liability coverage based on bigger vendors they’ve work with in the past. What do you recommend in that situation?
Be proactive and address the situation before you sign the contract. Share the insurance requirements with your broker and say, “This is the contract I’m looking to sign.” On many occasions all they have to do is ask. Sometimes the clients recognize that their contract is off-the-shelf and not geared towards a single, independent professional. I’ve seen clients take a different approach where they get the quote from me on the cost to meet the requirement and then go back to the client and say, “This is how much it’s going to cost me. Can we split the cost, can we reduce the limit, or talk about splitting the cost of it?”
What’s the best way for someone to find an insurance agent?
Go onto Bing. Go onto Google. If you’re looking for an independent broker agent who can access multiple carriers, then enter “Independent insurance professional”, “Independent insurance agent”, “Independent insurance broker”, “Agent”, or “broker.” Those terms are fairly synonymous. The credentials are the same. People don’t need to limit their search to their particular geographic area because, with today’s technology, as long as the individual that you’re working with is licensed in the state where you operate, you can do business around the world these days.
Find somebody you’re comfortable with and that you trust and have a conversation. Interview more than one person. Tell them right from the outset what you’re looking for and what your expectations are. Tell them about your business and where you expect it to be. Ask for their opinion: what kind of coverage do they think you need? Where do they think your exposure is? When you find somebody you like, work with that one broker. Try not to have three or four people working on your program at the same time because a lot of times the insurance companies like working with one broker.
How can folks find you and your firm online?
I’m online at owensgroup.com. We’re an independent insurance agency located in Englewood Cliffs, New Jersey. We also have offices in Manhattan. My bio is on the “Our Team” page under “Dorene Stockman.” If I’m not the right fit for your business, I’ll be honest with you and I will tell you that. My e-mail is email@example.com.