Insurance Agency
 min read

Which Insurance Small Businesses Need and How Commercial Agencies can Support Them

Published on
January 18, 2024
Ray Huang
Head of Marketing

Ray is the Head of Marketing at Canopy Connect and has helped dozens of startups and growth companies over his 20-year career to develop strategies and implement tactics that yield high-impact results.

Every business needs a strong insurance policy, but small business insurance needs differ considerably from large businesses. Small businesses don’t always have the staff required to thoroughly explore their insurance options. This can cost them in the case of an unexpected event. And owners ‌know this, too. A new survey by NEXT Insurance found that 90% of small business ‌owners aren't confident they have the proper insurance coverage for their business

The best insurance agents know how to bridge the knowledge gap. They can keep their small business clients covered while guiding them through the ever-changing insurance landscape. With sound strategies and the right tools, insurance agencies can help their clients understand the risks and safeguards of their profession. That, in turn, improves customer satisfaction while reducing ‌overall cost.

The more small businesses understand about their insurance options, the better prepared they’ll be. Use these strategies to educate your small business customers and give them the coverage they need to protect their operations.

Insurance Commercial Agencies Should Recommend for Small Businesses 

Small businesses can’t get by with only one kind of insurance coverage. They need multiple policies covering different types of risk.

The basics include general liability insurance, health insurance, and workers’ compensation insurance. More specific kinds are commercial auto, property, and cyber liability insurance. The company’s physical location is also a factor since different laws and statutes apply depending on the state or locality.

Small business insurance needs are as unique as the businesses themselves. Good commercial agencies will know their client’s specific needs and adjust their plans to match. Here are six types of insurance policies that small business clients might need:

  • General Liability Insurance: covers possible lawsuits from outside the company.
  • Workers’ Compensation Insurance: covers employees who get hurt on the job.
  • Health Insurance: provides health insurance options for employees. 
  • Auto Insurance: covers any vehicle owned or operated by the company.
  • Property Insurance: covers property and as well as most assets associated with the company.
  • Cyber Insurance: covers the costs a business suffers from hacks, data breaches, as well as settlements paid to customers with compromised security. 

How to Understand Small Business Insurance Needs as a Commercial Agency 

The knowledge gap can be difficult when it comes to small businesses understanding their insurance needs. But bridging that gap can pay big for insurance agencies. Specifically, it builds customer trust, facilitates open lines of communication, and encourages repeat business. Agencies that help their small business clients understand risks and insurance also tend to incur fewer claims.

Unfortunately, business insurance isn’t something many small businesses have the resources to explore. Most are concerned with day-to-day operations or larger challenges within their field. Due to their limited time and attention, they're unable to fully consider the impact of their small business insurance requirements, leaving them vulnerable to potential risks. Inadequate coverage can cost a small business everything if the wrong claim comes along. But getting covered often requires the one thing most small businesses don’t have enough of—time.

That’s where commercial insurance agents can do their small business customers a service—by closing the knowledge gap as much as they can. It starts by knowing how the specific insurance market affects customers and the risks they might not know they’re running. From there, clear communication and education can make a huge difference. This also benefits insurance agencies by targeting a niche market other providers aren’t taking the time to understand or sell to.

A long-time customer who trusts their insurance carrier will be more open to information and more inclined to take necessary coverage they wouldn’t otherwise. Improved coverage keeps the customer more secure, and improved awareness decreases the chances of an accident or similar claim. Both parties benefit when insurance agencies take the initiative and educate their clients.

Strategies for Commercial Agencies to Communicate with Small Businesses

Once you understand the benefits of bridging the knowledge gap for your small business customers, the next question is what strategy to use. This is where your knowledge of individual customers becomes invaluable. Chances are, you know how to approach your clients to bridge the knowledge gap. The right tools can simplify that process.

Properly leveraging social media can create new potential customers, while online services can streamline filings and claims. In addition, data analysis pinpoints key pieces of information to better identify hazards and mitigate risk. All of that can help insurance agents bridge the knowledge gap for their customers.

While every small business has specific needs, a few general strategies can help you get started:

Offer Tailored Coverage Options

Effective small business insurance often depends on a positive customer experience. This goes back to traditional business strategies such as facilitating communication and fostering trust. An insurance agent who knows their clients’ needs can respond to them with tailored coverage options designed to address specific insurance requirements. Small business owners leave with the ideal coverage—paying for what they need and not a dollar over.

Provide Easy-to-Understand Policy Language

Nothing widens the knowledge gap more than technical jargon. A small business insurance client won't understand their policy's contents if it’s wordy or complex. Plain language is a better way to help clients comprehend their policy, as are visual tools and bullet-point summaries. The clearer the language, the quicker the customer understands what's at risk. 

Communicate Their Coverage Needs

Bridging the knowledge gap means educating small business owners on what and why they need it instead of simply telling them they need it. The right technology can be extremely beneficial in educating clients about their coverage needs. While it may seem obvious to insurance agents dealing with this information day in and day out—this is often the first time small business owners will hear about these topics. Additionally, explaining these topics on their terms or in their preferred channel (text, email, etc.) can be a thoughtful way to reach them on their own time. For instance, omnichannel communications—website, email, text chats, and other online media forms—can convey details quickly and effectively to interested clients.

How Commercial Agencies Can Overcome Small Business Insurance Challenges

Small businesses don’t tend to focus on insurance from day to day. But when a problem comes along, they want to know as much as possible, as quickly as possible. Insurance agents can—and should—help their small business clients navigate the landscape on a regular basis and when times are tough.

Start by anticipating what your client might need. Again, small business insurance needs differ from larger companies. So, come to your customers prepared with the policies and protections that address their specific requirements.

Reviewing policies once or twice a year and encouraging clients to communicate when they have a question or concern can have a big impact. For one, you’ll help clients stay updated on new developments. Plus, your clients will be more likely to contact you sooner rather than later in the event of trouble. They’ll also be better equipped to accurately assess a challenging situation on their own, cutting down on the time you’ll need to spend on the issue.

How to Meet Small Business Insurance Needs with Canopy Connect

Small business owners put everything they have into their companies. As their insurance agent, it’s your job to guarantee they have adequate coverage that meets their unique small business insurance needs. To better bridge the knowledge gap, turn to a trusted partner with services that benefit both you and your client.

It starts with understanding a small business client’s current insurance situation. With Canopy Connect, you can quickly collect verified commercial insurance information including policy information, insured asset information, loss runs, and declaration pages.

See how Canopy Connect helps commercial insurance agencies »