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Guide to Navigating Business Insurance & Broker Relationships

founders relationships risks Jul 28, 2023

If you're a leader in a fast-growing start-up, you know that one of your crucial roles involves the proper management of risk. And, of course, insurance plays a key part in that.

From cyber insurance to professional indemnity, the types of coverage needed by a business can be quite diverse.

But one common thread is this: Ensuring appropriate coverage isn't just about checking off boxes—it's about understanding the unique dynamics and needs of your business.

Here's where your insurance broker comes into play.

A good broker is more than just a salesperson, they're a trusted advisor who can guide you through the complexities of insurance policies and help align your coverage with your strategic goals.

This is one key 3rd party relationship that is worth investing some time in and worth asking around for recommendations or finding the right broker to suit you and your business.

So let's delve deeper into the crucial partnership between a Founder / CFO / Finance Director and an insurance broker.

Aligning Insurance Policies with Shareholder Requirements

Let's be honest, insurance documents can often resemble a foreign language. But understanding them is paramount, especially when it comes to meeting shareholder requirements.

Shareholders, particularly in high-growth startups, require assurance that their investments are protected.

A common insurance requirement within a Shareholder agreement, particularly early stage is Keyperson insurance.  The amount is often also stipulated.

Therefore, it's not only about ensuring the business meets minimum legal insurance requirements but also about making sure your coverage satisfies shareholder's expectations.

A detailed review of all policies can help identify any potential gaps and mitigate risks before they become major issues.

Developing a Strong Relationship with Your Insurance Broker

In the quest for appropriate insurance coverage, your broker is your greatest ally. A good broker will take the time to understand your business, identifying its specific risks and needs.

But this relationship is a two-way street. It's important that you, to maintain open communication, providing the broker with up-to-date information about changes in the business that could affect your coverage.

Make sure that any material pivots or changes to your business is communicated not only to Investors and bankers but also to your insurance broker. 

It's worthwhile having a mid-year catch up to go through business and commercial performance, not just at year end when all of the policies are due for renewal.

Ensuring appropriate insurance coverage is a complex but vital task. By maintaining a strong relationship with your insurance broker and regularly reviewing policies to align with shareholder requirements, you can confidently steer your start-up through the often complicated world of business insurance.


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