How Business Insurance Fuels the Growth of Small Businesses with Mary from Gild Insurance

Speaker 1: 0:10

Welcome to the Funded Podcast, where we dive into the details of how businesses really start, grow and operate. We'll hear from experts that can guide us to smart business decisions in finance, marketing, managing people and everything in between. I'm your host, stephanie, the CEO of Funded, where we're on a mission to redefine how businesses understand and access capital. Today I'm chatting with Mary, the founder of Guild Insurance, on everything we need to know as small businesses about insurance, which is such an interesting topic to me. So to dive in, mary, welcome. And first, it's like business insurance just feels so overwhelming to me. I have a hard enough time with my own personal health insurance. It's like where do we even start? How do we even think about business insurance?

Speaker 2: 0:56

Yeah, I appreciate that. That is very true. Business insurance is a different animal than what we would look like from a consumer perspective. For business owners, business insurance really needs to be viewed as a tool. Business insurance is what lets you launch your business, it lets you grow, it lets you reach the next level. It's not merely about trying to ensure for devastating claims or worst case scenarios, though it does protect against everyday risks of your business, but it really is the secret tool that people don't really think about because we approach it from a consumer perspective rather than a business owner perspective. So let me give you some real world examples. So you want to open up a business, you want to have a brick and mortar location. You're going to walk up. You're going to ask for that lease. The landlord is going to say, okay, show me your business insurance. And most of our customers, most of our clients, don't even realize until they're sitting at the table that that's going to be a requirement. It comes up out of the blue on them, and so they rush around at the last second to try and find something that's ready so they don't have to push their closing, they can still get into their space on time, and so that they find what's fast, which isn't necessarily what they need or what's best for them, and so it's an unexpected scenario that most business owners don't realize that that's coming at them.

Speaker 1: 2:26

Yeah, that's so interesting and I've been in that position. I remember it so clearly and one of the things I remember, thinking that you could probably answer, is like when they say, please provide your business insurance or send it, it's like what are they looking for? And to me it was like well, what? Because that's always so overwhelming about business insurance is there's actually a lot of different kinds. So like what are the basics, what are all the different things that could happen there? Sure, yeah.

Speaker 2: 2:56

I totally understand and if you look at it from that perspective especially for using landlord as the example, the document they send you of meet these terms right, so you can lease my space, yes, your interests are going to align to a point. But he's looking at insurance from his risks, from his business of leasing that space. He's not looking at it from the business's individuals perspective. He's not coming to you and saying, okay, coffee shop, this is what you need. It's his perspective. So what we like to do is advise our clients that the document your landlord gives you, for example, is a nice starting point. Right, that's the minimum that you need to have. It may be all that you need to have, it might align really well, but you need to take that next step and actually take a look at the document and think about well, how does this apply to my business? So what we typically advise for business insurance because it is very broad when we talk about small businesses and businesses in general, the risks are very diverse. Your starting point is a general liability. If that protects you, it's your foundational policy. It's like you're building block, right, it's where you start and that provides coverages for risks for others others injuries, others property while they're in your space or they're being you know. So that's to protect your clients, the customers that come in. It's everybody else essentially is how we like to generally look at that policy An example of that. this is the like someone slips and falls in your parking lot on ice part yeah exactly Like I've just mopped the floor and I have the signs out, but somebody slipped anyway. Right, it's that that everyday operational type of policy. It's your everyday risks. But then if you want to look at it from a little broader perspective, right, we go to the next step, which is okay. I'm protecting others while they're in my space. What about the things that I own, like my property? What if there's damage to the things that I own, like my inventory, my equipment? So you want to move that into more property coverages, and that addresses moving from the claims of others to the claims on your things. And so you look at that property insurance as that second step. And that's really where our business owners, no matter what the industry that's really where they start at is okay, general liability at a minimum. And then do I need to add property right away or should I wait a little bit? So that's the kind of your A or B decision right at the very onset. But then you need to take into other factors. There are some insurance coverages that are required by law, such as workers comp in certain states. If you get above one employee or you move beyond just employing the members of an LLC, you should be considering workers compensation, and that's really the advice that we give. You may not be required by law in the state that you operate in until a certain trigger point of certain number of employees. However, as soon as you have more than one right, you hire that first employee. You need to start thinking about protecting those employees on premises during work, and you may, in fact, be required by law to have that insurance. And so those are like the first steps, right general liability, property, and then workers compensation, and then you've got in terms of that next first level of insurance types. You have professional liability, and that triggers for a lot of our industries and businesses that are providing advice as their job, right, if they are advising, that's one of their skills, then professional liability insurance is really something that they should have out of the gate, right? If you are a consultant, if you are even and this is one of my favorites even if you're a hairdresser, right, they never think about professional liability insurance. And if we think about providing services or advice on the style of a bride or a style on a photo shoot, and it doesn't go well, like they are not pleased with the outcomes, you know, and there's a lot of emotion there. It provides a really nice layer of protection for the advice that they've given, and so that's where we start. Those are the steps that really should be that first level of analysis when you first start your business, or you've gone through your first year and you're reevaluating right, you're in that fourth quarter, going okay, what do I need to start my year off right next year?

Speaker 1: 7:38

That's our launching part Interesting, okay, cool. And I'm thinking like, legally, I've had different kinds of businesses where I've had to have insurance, have not. And so one of the questions I always hear is like, do I have to have insurance? And so I get workers comp? That could be a state regulated thing because you're employees, but talk to me a little bit about that. Like, do I have to have insurance?

Speaker 2: 8:03

So if we're talking about is it legally required, then you're going to have to have it for, like we talked about workers compensation, in some professions, professional liability will be required by law to receive licensure.

Speaker 1: 8:16

Is that like legal or CPAs? Is that?

Speaker 2: 8:20

Dad even gets down to your cosmetology license right. So in certain states like Pennsylvania, you have to have you know or professional liability insurance in order to be licensed. Why is that? It's because of the risks associated with their industry.

Speaker 1: 8:35

I know, I know, I know, but like, why can a state require someone to have it? Even like everything has risks? Like, tell me more, this is interesting.

Speaker 2: 8:46

Okay, well, insurance is a state regulated financial services product right, so it's not regulated at the federal level, it's regulated at the state level, and so, because of that, each state is going to have their own parameters on how they deem appropriate business interactions and operations should be, and so, to come from that regulatory viewpoint of they've identified in certain categories, we want to ensure that we're protecting the consumers, we want to protect the citizens, and so we're going to require that we have workers compensation to protect employees and that we have professional liability tied to licensure to ensure that those students that are coming out of education have received the right education. And part of that to verify with the state when they apply for licensure is I was able to secure insurance. I've really gone through this training and I've applied for this professional liability insurance.

Speaker 1: 9:48

Also, where my mind goes as a small business owner is like if I don't have insurance and the state's requiring it, does the state have some sort of financial obligation Because I don't have anything you guys like? Well, this date doesn't really care, it's not like something's going to fall back on them, it's more of just a oh no, this is definitely falls into the realm of consumer protection.

Speaker 2: 10:10

Okay, right, this is the state's looking to protect the citizens that go into these businesses, the citizens that receive the services, the citizens that receive the advice. Cool.

Speaker 1: 10:21

And when they're thinking consumer, they're not just thinking the customers I might have as a business, they're also thinking about me as the business owner and protecting me. Yes Cool, that's super helpful. I've never really understood that, so that makes sense. So back to like is business insurance required? So it sounds like there are some things in which they are workers comp. Get it sometimes tied to licenses, like massage therapists, cosmetologists professions like that Say I'm let's go. I like to use this example a lot because I used to have a marketing company. I'm a marketing agency, I don't have a license, so I don't actually need professional liability coverage.

Speaker 2: 11:04

Right, oh, I mean, this is you're getting into risk assumption, right, yeah, totally. This is where are you comfortable playing? Yes, are you comfortable with covering yourself if something goes wrong? Right, if you don't have a mandated trigger, and those triggers can be very broad. We've already talked about legal requirements. They can be triggers of. They're required from your bank. If you want to have a business loan, they are required from as a lot of us are encountering Amazon sellers you hit a certain amount of revenue. They want insurance. Oh, that's interesting. Yeah, if you want to sell in wholesale platforms, online, they are requiring insurance. If you want to launch your product from your table and you're selling online, and now you want to go into target, now you want to expand into a sporting goods store, they're going to have insurance requirements for you to be a vendor to sell on their shelves. So, though you might not be legally required to have that insurance, right, you might be required, based on that contractual agreement, of going into business with someone else. And all of my contractors know right, you're going on to a job site. They're all going to ask. Your general contractor is going to ask show me your shirt, you need business insurance. And so there's these natural triggers of doing business right. You can't get that lease right. It's a day-to-day operational piece and so, yes, your digital marketer who's working from home may not need a lot of insurance, right? But from that risk profile, from that thought process of I'm going to design this for my client, is this actually my design? Did I just run into some copyright or trademark issues? Did I just defame someone because I tried to do a very sarcastic ad and, ooh, it didn't land? Well, right. So there's different risks associated and you might not think about it of, well, I don't have brick and mortar, so I don't really have risks. But the services that you provide could trigger the need for business insurance, even if it's not mandated, right, we should still be thinking about. Is that the right decision for my business? I've started my business. This is my livelihood. Where is my line of? Okay, I've been operating for three days. I'm okay with not having insurance. Okay, I've long-winded my first five clients. Should I reevaluate that? Am I really comfortable assuming the risk and paying out of pocket for any contractual or claim issue that may arise between me and my client? Because if you don't have insurance to step in as your protector and your shield. Those costs are coming at you directly, right, there's no one protecting you, there's no shield there. So you have to really look at that from a pocket book and expense perspective. Can I cover this myself, or is it time to get a partner and someone to come help me with that? Sure, that makes sense.

Speaker 1: 13:58

And then another trigger I've seen is you talked about getting into big retailers, but sometimes back to the service industry. Getting that bigger customer might then, in the contract process, ask if you have insurance oh, absolutely. But you just hit on a really big topic that I think we all think about as business owners is costs. So wherever I'd love to start with, that is just like how should business owners think about costs? I think it's actually a big reason why people don't explore it. Let's like dive into just the cost of insurance.

Speaker 2: 14:31

Yeah, unfortunately it is varied. We can talk about this a little bit in general about the types of insurance and what it should cost, but essentially what the general concept is is that as you add protections, right, the price is going to go up. That's just the way that it works. You're getting more, so you're paying more, right. So if we're looking at this very generally kind of entry level risks, you know one location, very few employees, you know maybe don't own a lot of property or have a lot of inventory, things like that. You know a general liability policy should be typically around $500, right, and your business owner's property might be around $800.

Speaker 1: 15:15

And when you see that you're talking annually right, Annually right, and that is.

Speaker 2: 15:20

And again, let's like put a great big, huge asterisk on that. It is utterly dependent on where you are right. My coffee shops in Miami have totally different price structures than my coffee shops in Dayton Ohio, right, Totally different risks. They're not coastal. There's no flooding, right, there's. That will play a part, especially if we're talking about property, and that increases the prices. And then, typically, professional liability we see anywhere I've started points of around $800 to above, depending on the risks associated with the industry, like what advice, what services are being provided. But I think really, if we want to talk about it very generally, if we're looking at those entry level policies, you're really going to be about somewhere between $500 and $1,000, depending on how many products you're selecting. Are you adding professional liability? Are you adding property, Things of that nature? But from the out the gate budgetary purposes of I should put a number here. What should I be anticipating? That would be the range I would put.

Speaker 1: 16:27

Okay, that's helpful, super helpful, and I think hopefully people listening to this are surprised by it being somewhat lower than they might think. Again, emphasizing that we're talking about annual costs, not monthly costs, right. And so another thing that I think just like a crazy part of insurance is that I'm a small business owner. I have business insurance. Something happened and I'm immediately terrified to file a claim, so I pay out of pocket anyways, because then I'm like, oh, my insurance is going to go up. Is that true? Like, talk to me about this, because I think this is like an annoying thing to me about the insurance world. Is this idea and you know, like all things in small business ownership, we relate it back to our personal lives where we're like I'm going to pay for my windshield out of pocket that cracked, because I would rather do that than my insurance go up, and it's like what is happening here. Tell me more about this, yeah exactly.

Speaker 2: 17:27

Well, I think in business insurance, life is a little different. Very rarely will you get that cracky windshield that's like ah, 10 bucks. There's like a quick glass filler that's right here at the car wash. He'll hit me as I drive through, no worries. Not quite the case of business insurance. I think there it's more of a rarity that you run into a scenario where it would be cost effective to just pay out of pocket. Okay, right, from the business insurance perspective, your and that's really why I think it's so very important of where you take your business, your insurance carrier really should be your partner in this. Right, you're going to call them when you have a claim. It's very different. Right, there are very rarely fender benders in business insurance, right? Okay, so you want to have that carrier that matches your business, right, and I think that's really where guild excels and where independent agents excel of. Okay, you look at the broad market of. Okay, we know those insurance carriers, we know all the different types of policies that they have, the exclusions and the coverages, and we know that this carrier really likes coffee shops. It's priced well, the policies written well. They'll be really great and understand when you have a claim we have this is my favorite example when I speak with my boutique studio or yoga studio owners is you don't want there to be a claim and you call your carrier and you're having this conversation and they're so confused because they don't understand why the yoga was hot. Why is yoga hot? I don't understand.

Speaker 1: 19:01

Do you mean it was hot in there?

Speaker 2: 19:03

Yeah, Is that why we're having a claim? It was hot, I don't right. You want them to understand and know your business, and so that's important because they are their insurance carrier on the business, insurance side is going to be your first line of defense, right? They are going to be who you call and say, okay, something went wrong, help me. And so having that good match at the beginning is really important.

Speaker 1: 19:25

Got it. Okay. That's such a good point too. Okay, and then same with costs. I'm like testing all my assumptions because, like we all are, is like I only know my personal insurance to relate it to. Like yesterday I wasn't a business owner, today I bring my personal experience Right With business insurance. I'm assuming auto renews every year or renews in some way as business owners. Is it going to go up every year? Like I'm thinking about health insurance, like how should we think about ongoing costs? If I don't make a claim, will it go down? What are we seeing, right?

Speaker 2: 20:01

So typically you're. If we're looking at business insurance and you have a nice fit in the first place, right, like we've put in the effort as a business looking for an insurance partner and an insurance provider, your insurance really shouldn't be going up dramatically unless there's something dramatic going on in the world like we're seeing right now. So right now is a very interesting time for insurance, kind of across the board, because of the just environmental factors and climate factors that have been going on right now. We've been seeing a lot of weather claims and a lot of property damage. It's just been for business owners and, personally, for just citizens. It's been a really rough year with environmental disasters, but those are like the once in a lifetime kind of scenarios that really shouldn't be what we plan our world around, right when we're talking about our business insurance, right? Really, if it was kind of the day-to-day normal of what's going on, if you haven't had a claim and nothing dramatic has been going on in your area in term of weather, there really shouldn't be much of a change to your policy year to year, right? If everything is kind of going along as normal, then there really shouldn't be anything different. And so what we see is big increases because there's been major catastrophes that a carrier in general across the board has had to deal with things of that nature, or you've had many claims. Those things do trigger increases but truly, if you've spent the time to align with carriers that understand the business space and understand your industry, it shouldn't be shocking, it shouldn't be the norm that you have a $300 general liability policy and then next year it's now an $800 general liability policy. If that's the case, there's something larger going on.

Speaker 1: 22:03

Okay, cool, good to know. That's awesome to hear. So you mentioned changes and stuff and it sparks a question for me is how often, as a small business owner, should I be reviewing my policy, not just like my coverage, but my provider? You said something so interesting. As a follow-on, you said it might increase because that particular carrier had something. So if you didn't have something that your carrier did, can you switch?

Speaker 2: 22:30

carriers, Sure. So I think that is a benefit of having an independent insurance agent. That takes the pressure off of you. A dedicated insurance agent should be contacting you. They should be in touch. Whether it's you have an email relationship, you're getting newsletters, you're part of their process. In general, if we're just talking about how it works in general across the board, whether you've used an independent agent or you've gone with an insurance carrier, they'll reach out, typically about three months before your policy renews, to ask some questions what has changed? Have you had any changes in your business structure? Are you offering new services? Have you hired employees? Are you opening another location? What's just a touchpoint? What's going on? I think most of us probably get that email and ignore it and they're just like, okay, auto-renew, right, we're just going to handle it. But I think from the business owner perspective, that's a lost opportunity. How my team handles it is that we are really trying to build though we are digitally based more of a communal structure online of we want to be following our clients online. We want them to be following us. We want to be able to see what's going on in your businesses. We want to supportively listen to. Oh hey, they have a post saying that they're hiring. That's awesome. Jane's hiring more people Fantastic. Make a note, because Jane's hiring more people. If she does actually hire, that expands her risk. We need to talk to her about workers' compensation. We need to talk to her about what else is changing the business, and so we will do that as well, and it's called the process of servicing process. We want to reach out annually and see how everybody's doing. If not but it really should be if either your agent or your carrier should be reaching out, and if they don't, it really should be on the client. It's part of your business. You should be looking at business insurance, like you would do an annual review of anything else operational in your business. This is your tool. Is it ready and how do we need to amend it to make sure that you're?

Speaker 1: 24:40

ready, going forward, interesting, okay. So the big takeaway is just standard in the insurance industry is an annual review of your coverage. What you need changes all of that A lot of times. If you have a good partner, they're going to proactively do that. When you get that email, do something with it. Don't auto renew. Check into it. That makes a lot of sense. That's super helpful. And last, like I really want to hear about guild insurance. So you're the founder of guild insurance. You guys specifically do small business insurance, so I just love to hear more about your company and what you're doing and who is a good fit to partner with you.

Speaker 2: 25:15

Sure. So we like to say that we are a digital, independent insurance agency rather than saying that we're an insure tech, because what we're building is just a digital model of an insurance agent. We truly want to be that specialist. We want to be one of your advisors. We just happen to have fantastic technology and it's a great tool for us to help small business owners, because we understand that small business owners don't work nine to five. They want to be able to handle some things on their own, and for that we have a fantastic AI based chat bot that they can go through and quote, buy and pay on their own. We also have digital channels where they can reach out and have a consultation with a specialist, have a discussion with an agent. So we are really trying to take your brick and mortar agent and have a specialty in business insurance, because it is so very different than the other insurance products on the market. I don't necessarily want you going to the person that sold you your renters insurance to get your business insurance right. They just might not see enough business insurance clients, and so we want to provide that level of care and that level of specialty to small businesses and really what our focus is essentially the smallest of small right. We love local businesses. We love businesses that are starting up. We want to be able to take you as you start and you grow till you get to be too large, and then we can hand you over to those amazing large brokers because you've grown your business so much. But we want to be able to be there for you with the latest technology in a very savvy and sophisticated manner. But don't lose the personal touch, because, though I really do enjoy technology it's fantastic. It makes my life easier as a business owner I can handle this at 3am Fantastic. You still need people, and what we've found in our industry is time has gone by and we've started to digitize and we've created these digital channels. We've lost that personal connection to the insurance agent, which is so important. They want to be able to still have those advisors and I think it's getting harder and harder for smaller businesses or businesses just starting up to find those partners that can stand with them on day one and then can stand with them five years from now, after they've launched and grown and they've done a VC fund or they've done a business loan or they've opened up multiple locations or in their multiple states. Now right, we want to be able to be a true agent with the latest tools.

Speaker 1: 27:56

Awesome, so cool. Well, we will have a link to Guild Insurance in our show notes if you are looking for business insurance. But, mary, thank you so much for being here and for all of you listening. Thank you so much for listening to the funded podcast. I hope that you found this episode informative and helpful on your business journey. Don't forget to subscribe to the show and to our social media channels for other great content. And if you're looking for funding to grow your business insurance other partners that is what we do at funded, so visit our site, getfundedcom, and we are here to educate and help you understand business finance and all the things that come along with business ownership. We will see you all next week.