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Insurance Company Business Plan

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Acme Insurance

Executive summary executive summary is a brief introduction to your business plan. it describes your business, the problem that it solves, your target market, and financial highlights.">.

By focusing on its strengths, its present client base, and new value priced products in the next year, Acme Insurance plans to increase gross sales by 10% and profit by 15%.

Our Keys to Success and critical factors for the next year are, in order of importance:

• Identify “Target Markets.”
• Institute our Property inspection program.
• Begin our “Insurance Partners” program.
• Develop a profitable property program.
• Provide small businesses with an affordable basic business package.

Acme Insurance Incorporated has been profitable, but recently we have had  declining market share  and this must be addressed. Therefore our goals are:

• To re-establish Acme Insurance Inc. as the market leader in quality and value-priced insurance products in Smalltown District.
• Establish good working relationships with our present insurance markets by meeting with their decision makers and plotting a mutual plan for success. Get commitments for support and products that we can market in our trading area starting April 1st of Year 1.
• Investigate new markets that meet our marketing criteria by a) committing to small rural brokerage; b) providing products suitable to our economic and social climate; and c) plans for the upload and download of insurance policies.
• Provide sales incentives to staff to meet sales goals of 10%.
• Complete inspection of all Pilot homeowners within one month before renewal date.
• Formulate plans to acquire another brokerage

Acme Insurance Inc. is dedicated to providing insurance products that provide quality protection with value pricing. We wish to establish a successful partnership with our clients, our staff members, and our insurance companies, that respect the interests and goals of each party.

Success will be measured by our clients choosing us because of their belief in our ability to meet or exceed their expectations of price, service, and expertise.

In order to implement our strategic goals, we will focus on developing the following tools.

• Knowledgeable, friendly staff that can empathize with our consumers needs and circumstances, especially in handling a loss.
• Policies that meet or exceed the expectations of our clients, and that are affordable, available, and understandable.
• Policies and endorsements delivered on time with minimal errors.
• A commitment to an annual insurance review for all of our clients. A phone call is more than any direct mass marketer offers. We believe personal contact and service is the cornerstone of our success.

Acme Insurance primarily markets and services Personal Lines Insurance. Its customers are mostly rural, lower income families or long time resident senior citizens who demand value priced insurance premiums in keeping with their lower and fixed incomes.

We also provide insurance to small business, mostly family-run seasonal operations primarily focused on the tourist trade.

Acme Insurance is a privately incorporated company in the Smalltown district and is licensed to transact both Life and General Insurance. The shares are held equally by John Smith and Peter Smith.

Our Insurance and Real Estate brokerage operates from two central locations. Our modern attractive office in Smalltown, at 178 Small Street, is located in a small plaza which is owned by the principals of our brokerage. It comprises 2,000 square feet.

In Nexttown, we operate from an 800 square foot, one-story brick veneer building overlooking Lake Small, which again is owned by the principals of our firm. The office is strategically located across from the Post Office.

We have stressed to our insureds the importance of good communication between the broker and client to insure proper coverage is in place. We have noticed as our clients become better informed about insurance that there has been a tremendous increase in clients wishing in-depth discussions about their policy coverage and how they can get the most value for their insurance dollar.

Our company’s strength lies in the quality and depth of our products and staff. Our offices, unlike our competition, are open six days a week. Because of our larger staff, we are able to service our clients even when a client’s broker is busy or out of the office on inspections.

Our staff has specialists in commercial insurance that can properly service and underwrite local business. We also have some quality commercial markets unavailable to our competition.

Our Real Estate division, which is a separate company, helps with market value and replacement cost analysis when required.

The past few years have seen tremendous upheaval in the insurance industry. The number of players has decreased in both the broker and company communities. The recession has curtailed insureds from properly maintaining their homes and automobiles, and insurance fraud has become a major issue for the entire insurance industry.

Brokers are concerned that in spite of commission reductions, quotas, contract cancellations, and refusal to write new auto business by some markets, they now may find themselves in competition with some of the traditional broker distribution companies that are setting up direct marketing facilities and branches. The banks now have announced they will open stand alone insurance offices to retail insurance.

In spite of the above, we believe that the independent broker will survive. We are more automated than most service industries. We are close to the customer, regardless of some insurance companies’ attempts to sever the traditional broker-client relationship. Our clients, in most cases, still do not care or know which company we place them with. They trust our judgement in selecting the proper coverage and company to place them in.

Upload/download capabilities are in many brokers offices, including our own. This will cut costs, improve efficiency and accuracy, and help us meet the competition from banks and direct writers. Companies that truly value and trust the broker distribution system will align themselves with professional brokers and grant more underwriting authority similar to Lloyds.

Among the substitutes that are our main competition we have Local independent brokers, Agents (such as Co-operators), Mass Markets, Mass merchandise programs heavily advertised over the radio such as “Gray Power”, and Group Plans.

We have depended in the past on a small advertisement in our local newspaper, listings in the Yellow Pages, and word of mouth. However with the changes in the market today, we must begin to investigate alternate ways to put our name in front of the public. We have set out several criteria for our marketing campaign that include”

• All advertising has to emphasize our differentiation point rather than price.
• We must sell the company, not the product. In spite of some companies’ efforts to minimize the importance of the broker, our clients still identify with the broker, not the insurance company.
• We must improve and increase our contacts with our clients.
• Make contacts and support senior citizen groups and cottage associations.

Based on these changes in our goals, outlook, and company culture, we anticipate that we will be able to increase revenues substantially by year 3 of the plan and increase net profit handsomely. The company does not anticipate any cash flow problems.

1.1 Mission

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1.2 Objectives

• Investigating new markets that meet our marketing criteria by a) committing to small rural brokerage; b) providing products suitable to our economic and social climate; and c) plans for the upload and download of insurance policies.
• Formulate plans to acquire another brokerage.

1.3 Keys to Success

We believe the keys to success in a small town insurance business are:

Company Summary company overview ) is an overview of the most important points about your company—your history, management team, location, mission statement and legal structure.">

2.1 company ownership, 2.2 company history.

Acme Insurance was founded as a sole proprietorship in 1938 and was owned and operated by the founder Stan Smith. He originally ran the operation from his home, but moved to the business section of Smalltown when he outgrew his home based operation.

In 1972, the company constructed a new office building in the main business section and over the course of the last 15 years has purchased four other brokerages, one of which led to the establishment of our branch office in Nexttown.

In 1988, a new company was formed “Acme Insurance Inc.” which bought the insurance business from “Acme Insurance Limited.” All shares in the new company are owned by John S. Smith and Peter Smith.

Today, the fourth generation of Smiths, Stephen and Jason Smith, are working in the firm. We are also gratified to report that our founder, Stan Smith, is still in our office every day, and although still licensed, he is only active in a “goodwill ambassador” capacity.

2.3 Company Locations and Facilities

Our Smalltown operation enjoys its own private parking lot for our clients and our staff. A second story was recently added to our office which will allow ample room for expansion. It is presently used for training, staff meetings, and conferences.

Acme Insurance is committed to providing professional sales and service for its insurance customers. We have established what we consider to be an excellent reputation in our area, and are the largest multi-line insurance broker in our trading area.

3.1 Service Description

Acme Insurance provides home, automobile, and business insurance in Smalltown District. We take pride in knowing that for over 50 years we have helped our clients to find the best coverage at the right price that suits their needs and expectations. In the event of a claim, our clients know that we are there to provide help and counsel to ensure a fast, speedy claim settlement.

Like other independent brokers, we issue binders and new policies, endorsements and process renewals.

We also provide insurance services to non-clients, such as lawyers and mortgagees, to ensure our mutual clients have proper coverage and binding notes in place for the purchase of homes, businesses, and automobiles.

3.2 Competitive Comparison

Since we are brokers, (not agents such as Co-operators), we have access to a range of standard and specialty markets.

3.3 Sales Literature

We have recently produced a pamphlet titled “Insurance Partners” which stresses that a successful insurance partnership between the client, the broker, and the company is based upon a new concept.

Not only do the broker and the company take responsibility for proper protection and indemnity in the event of loss, but in the 1990’s, the client must also take his share of responsibility to insure the safety of his property by keeping it well maintained and using qualified professionals to update or change the heating, electrical, and plumbing systems in his home. We stress that multiple claims or claims arising out of poor maintenance may adversely affect his insurance.

In addition to the above, our brokerage uses a number of boilerplate letters on our computer system that are sent along with various types of policies explaining unique features or limitations in the contracts to avoid possible Errors and Omissions claims. They also encourage our clients to contact us about reviewing their coverage and promote other products and services we provide.

3.4 Fulfillment

We call upon the ample resources of our insurance markets to help with any unusual situations which occur and may present a problem finding proper coverage for our client.

When we required trained inspectors for evaluating the safety of our insured’s solid fuel heating devices and installations, we sent one of our own producers for training and who now has W.E.T.T. certification.

We are proud that Acme Insurance Inc. has never had an errors and omissions loss, but to protect our clients against that possibility, we have in place Errors and Omissions Insurance through our Insurance Brokers Association in the amount of $1,000,000 (Employer’s Reinsurance).

3.5 Technology

We have been fully computerized since 1982 and both offices and some of our producer’s homes are connected to our main computer server located in Smalltown.

As of February 1996, we have entered into an agreement with our present computer vendor, Teleglobe, to update our computer system to a Pentium server, and to Release 74, which allows upload/download capability with our companies, as well as email.

We have elected to stay with the Teleglobe Tabs system since our staff is familiar with the program. It has exhibited excellent, reliable telecommunications ability. The high speed ISDN lines required for MS Windows-based communication between our branch office as well as our home offices are not available in our trading area, so at present we will not migrate to the new MS Windows-based products available from Teleglobe or Agency Manager.

3.6 Future Services

Although Stan Smith started out as a life insurance agent, the “life” part of our business represents only 1% of our sales. We are looking to strengthen this part of our operation in the future. Due to the complexity and number of life and disability products, we are presently using an outside service: Atlantic-Smith Insurance out of North Town, although two of our general insurance producers have life agent licenses.

We are in the process of setting up a substandard property market. We feel that there is a need for this service and that it can be profitable if strictly underwritten with proper controls in place.

Market Analysis Summary how to do a market analysis for your business plan.">

Recent demographic studies in our area reveal a total year-round population of approximately 13,000, which rises in the summer to approximately 25,000. We have a relatively high number of seniors and many younger, newly-formed families dependent on government assistance living mostly in a rural, unserviced, thinly populated area. This makes it costly to service our clients. Long distance phone bills represent our second largest expense (our two offices each have their own toll free phone numbers) and the cost of visiting our insureds to do home inspections is time consuming due to the large area we service.

We are targeting seniors which have proven to be a profitable, stable market for our brokerage in spite of our present difficult economy.

We are fortunate that we have not yet had the intrusion to a large degree of mass merchandising programs like “Silver Power.” Smaller brokers have made inroads into our traditional rural business, with low cost farm markets that sell home and auto insurance. We understand that some of these markets are in a poor financial position and may cease to be a factor in the future.

4.1 Market Segmentation

Our market consists of senior citizens, lower-income young families (many of who are on social assistance) and the small, family-run business (many of which are seasonal and based on the tourist trade). There are a few industrial risks and those that are located here are branches of larger industries which obtain their insurance through large brokers in Bigtown.

Our target market is the seniors, family business, and middle income earners in our area. Statistics show that over 42% of our permanent population is above 45 years of age. The average family income is approximately $27,000 and the unemployment rate 9%.

We are cautious about encouraging business from lower income prospects since they tend to have wood heat, homes in poor repair, and many attempt to install and repair their own plumbing, wiring, and heating systems.

Another market of concern is out-of-area clients who may have been payment or claim problems to local brokers and attempt to find a distant broker to provide coverage instead of making the necessary adjustments in their own lifestyle to prevent claims.

Clients who have moved repeatedly can be difficult to obtain proper underwriting information and past claims experience on, and we feel our staff is to be commended for their ability to properly assess if a client should be placed to our standard markets or would be better served by a specialty company.

4.2 Service Business Analysis

The past few years have seen tremendous upheaval in the insurance industry. The number of players has decreased in both the broker and company communities. The automobile product has, in the mind of the public, become unaffordable, unavailable, and impossible to understand. The recession has curtailed insureds from properly maintaining their homes and automobiles, and to exacerbate the situation, many clients have turned to wood heat and started doing their own repairs and maintenance which may have increased the number and severity of claims. Insurance fraud has become a major issue for the entire insurance industry.

Our traditional close relationship with our companies has been strained. Brokers are concerned that in spite of commission reductions, quotas, contract cancellations, and refusal to write new auto business by some markets, they now may find themselves in competition with some of the traditional broker distribution companies that are setting up direct marketing facilities and branches. The banks, even though thwarted by the federal government in its last budget to retail insurance from their premises, will continue pressure on the government and now have announced they will open stand alone insurance offices to retail insurance.

The new federal government is close to adopting a new automobile contract that hopefully will make it affordable, understandable, and available to our clients. A profitable automobile product will entice the companies to aggressively seek new sales and more brokers will see companies offering contracts.

4.2.1 Main Competitors

Local independent brokers Cal Roberts, Patrick C. Johnson, Rob Champlain

• Strengths – alternate markets, especially small farm mutuals, that still continue to give low prices, still continue to write wood stoves, and allow discounts and underwriting terms such as table 1 rates on homeowners within 8 km of fire hall protection.
• Weakness – most are smaller, one-man operations that do not have the backup or finances to aggressively impact the marketplace.
• Strengths – Large advertising budget and competitively priced products. Their commercial is difficult to compete against in some cases because they seem to not have the same restrictions on underwriting as our markets. Also they have large capacity to write certain risks.
• Weakness- one small operation that does not have the same hours as our offices. Staff, because of salary, do not appear to be very knowledgeable or aggressive.

Mass Markets

• Strengths – large advertising budget and very competitive prices.
• Weakness – not local and largely unknown to our clients at the present time.

Our own Companies

• Strengths – already known to our clients; will be competitively priced.
• Weakness – an unknown quantity to our insureds. Also, if their people skills are similar to what they now exhibit, they will have great difficulty empathizing with the client and selling the client what he needs, not what they think he needs.

Mass merchandise programs heavily advertised over the radio such as “Gray Power”

• Strengths – price.
• Weakness – a still untried, unknown quantity.

Group Plans – teachers, public employees

• Strength – group pricing.
• Weakness – very little obviously, since we insure very few of the professions.

4.2.2 Competition and Buying Patterns

The main volume of income for our brokerage is generated by automobile premiums because they are relatively higher priced to insure than property, and because automobile insurance is mandatory in the region.

As stated previously, our success is dependent on our staff and our companies convincing our clients and prospective clients that price, although important, is not the only criteria for the purchase of insurance. Our advertising stresses that we have two offices, open six days a week with after-hours support and we have been an active, concerned, community involved, local business since 1938.

Still, price is very important and we must work with our markets to ensure that our insurance products are available and affordable to a large part of the market. It is the broker’s job to ensure the client understands what he is buying, and if circumstances dictate a lower-priced product, we must make our insured aware of the trade-off in coverage versus price.

4.2.3 Business Participants

• Cal Roberts Insurance
• Markets – Royal, Dominion of Canada
• Patrick C. Johnson
• Markets – General Accident, Canadian Surety
• Rob Champlain
• Markets – Farmer’s Mutual, National Frontier
• Co-Operators
• Silver Power
• Markets – Trafalger
• Con-struct Direct

4.2.4 Distributing a Service

Our trading area is rural. Premiums are relatively low and therefore not subject to large brokerages or specialty direct writers mounting aggressive advertising campaigns to bring in business. There are few group plans providing insurance coverage with the exception of our teachers. Smalltown has two independent brokers and a Co-Operators agent, Nexttown has two independent brokers, and Southtown has one. We have just started to see some move by locals to “Silver Power” and other specialty retailers who advertise on radio and television. The banks are still a future unknown.

Strategy and Implementation Summary

• Emphasize service and ongoing support . We must avoid selling only one policy at the lowest price for each customer and concentration account selling which greatly enhances client retention.
• Build an Insurance Partnership . The customer does not want to shop every year for a new broker. Concentrate on building a long term relationship with our customers and make the client and our staff appreciate the value of a long-term relationship.
• Focus on target markets . We must focus on personal and business customers that we identify and select to insure, instead of allowing potential customers to choose us, which could result in our brokerage attracting problem clients from other brokers.

5.2 Marketing Strategy

• Emphasize service and support.
• Build a partnership business based on account selling.
• Focus on senior, claims-free personal lines business and the profitable, well-run, small family business.
• Target small, non-franchise business that does not have access to group insurance plans.
• Investigate acquiring other brokerages in our area.

5.2.1 Promotion Strategy

We have depended in the past on a small advertisement in our local newspaper, listings in the Yellow Pages, and word of mouth. We must begin to investigate alternate ways to put our name in front of the public.

• All advertising has to emphasize our differentiation point rather than price. We will be developing a “Now what do I do?” message to emphasize the need for dealing with Acme’s insurance professionals so that in the event a loss occurs, you know you have the proper protection.
• We must improve and increase our contacts with our clients. All clients should be contacted before renewal to ensure covers are current and adequate. Also, new insurance should be solicited. We are investigating the production of a company newsletter or use of the I.B.A.O. newsletter which is distributed on a bi-annual basis.
• We have put our email address in our newspaper advertising, but we must be careful about attracting clients from out of the area who may be difficult to service and properly inspect.
• Make contacts and support senior citizen groups and cottage associations. Identify sports and hobby groups that involve seniors and cottagers.

5.2.2 Distribution Strategy

• Select Seniors We will give special attention to this market in our advertising. We will make a concerted effort to support and sponsor seniors programs in our area. We will seek out Cottage associations and offer support and advice to attract new senior clients who are recently retired or about to in the near future.
• Insurance Partners We will include inserts in renewal, endorsements, and correspondence stressing the importance of the insured taking an active interest and responsibility for trying to control the severity and number of claims. Our staff should take every opportunity, when discussing insurance with a client, to emphasize the consequences of multiple claims.
• Business Partners Again we should encourage insureds to take responsibility for controlling claims in partnership with their broker by installing alarm systems and continuing to maintain and upgrade their property. We should stress the benefit that good loss ratios help to control rates and ensure markets that want to write their business.

5.2.3 Positioning Statement

Our target market is Smalltown District. The ideal client is claims-free aged between 45 – 75 who owns his own home and car and is debt free. Has exhibited stable family patterns and is known and respected in the community.

A similar profile should be used for commercial prospects with emphasis placed on the well-run, profitable business that has exhibited good claims experience.

5.2.4 Pricing Strategy

Our customers are especially sensitive to value. We must ensure that our price and service are perceived to be good value to our client.

Our markets must offer several payment options to our clients that are convenient to the client, not just to the company. Example – payment on insured’s preferred day of month, not on the company’s, and accepting payment by credit or debit card. Many insureds are on a fixed income and receive their income on a set day of each month or a paycheck on a particular day.

We encourage our companies to “Target Market.” Many of our companies are now focusing on what they have perceived to be profitable niche markets, where they can offer a competitive product with little, if any, competition.

We are seeing our commercial markets now moving toward basic coverage and limiting the “bells and whistles,” all-risk products available to only those clients who have modern, well-managed, profitable, low-risk operations. This should help stabilize pricing and, even more important, ensure that there is an insurance market available for most risks. Continued insistence by the industry on better protection, i.e. fire and burglar alarms, upgrading of buildings, etc., have started to lower loss ratios.

Many of the larger insurance markets have increased minimum premiums to $1,000 for any commercial package policy. Our Lloyds market should be able to accommodate these customers with a minimum premium of approximately $600.

5.3 Sales Strategy

We want to emphasize the benefit of dealing with professionals who live and work in our client’s area. We know their needs and their problems and we have a local reputation to protect, unlike an out-of-town market. If the out-of-town broker fails to provide proper cover or advice, they lose one client. We could stand to lose many if the public perceives a professional failure on our part.

Competitive prices for our identified target markets. Discounts of up to 25% for claims-free seniors who renew their home insurance with us.

Careful inspection and the judicious use of deductibles and warranties for insureds using wood stoves should help alleviate company concerns about solid fuel heating devices. Competitive pricing is not an important factor to attract business because competition is very limited for primary wood heat houses in our area. This may provide a chance to pick up all of the insured’s business because, in many instances, they contact us after being told by their previous broker that, in spite of their claims-free status, the broker doesn’t want their house insurance.

Business partners provide us the opportunity to sell lower-priced, basic insurance coverage to our client. Many clients have expressed interest in retaining part or all of the insurance risk, especially for burglary. They feel that if they have installed central alarms and bars, they can take the chance of self insurance.

5.3.1 Sales Programs

We are investigating sales incentives for our producers. They must encourage profitable new business and have a retention component. Presently, our producers receive $10 for every new policy written in our office, with the exception of recreational vehicles.

5.3.2 Sales Forecast

The following table and related charts show our present sales forecast. We are projecting sales to grow at a moderate but steady pace for the coming year and to continue into 1997.

5.4 Strategic Alliances

Some of our present companies have surveyed us to investigate co-operative advertising but we have not committed to any programs at present.

5.5 Service and Support

Acme Insurance is really a group of small brokerages housed under one name and location. Our producers are each responsible for a book of business. They sell, service, handle claims and are responsible for their accounts receivable. We have found over the years that our clients prefer to deal with one broker who is aware of their particular needs.

5.6 Milestones

We have listed our plan milestones in the table below.

5.7 Service and Support

Management summary management summary will include information about who's on your team and why they're the right people for the job, as well as your future hiring plans.">.

Acme Insurance is slow to hire new people and loyal to those whom we have hired. We hire only when there is a vacancy or growth dictates more staff. Most of our people have been in our organization over 15 years, which allows our clients and our companies to form long lasting business relationships with their broker.

6.1 Organizational Structure

Our brokerage is divided by client instead of service. Each broker is responsible not only to renew and service a client’s insurance, they also are responsible for collection and claims. We feel a client wants to deal with his or her broker, especially in a claim situation, instead of an unknown “specialist” whom they feel does not represent their interests.

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Insurance Agency Business Plan Template

Written by Dave Lavinsky

Over the past 20+ years, we have helped over 3,000 entrepreneurs and business owners create business plans to start and grow their insurance agencies. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through an insurance agency business plan template step-by-step so you can create your plan today.

Download our Ultimate Insurance Business Plan Template here >

What is an Insurance Agency Business Plan?

A business plan provides a snapshot of your insurance agency as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategy for reaching them. It also includes market research to support your plans.

Why You Need a Business Plan for an Insurance Agency

If you’re looking to start an insurance agency or grow your existing insurance agency you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your insurance agency in order to improve your chances of success. Your insurance agency business plan is a living document that should be updated annually as your agency grows and changes.

Source of Funding for Insurance Agencies

With regards to funding, the main sources of funding for an insurance agency are personal savings, credit cards, bank loans, and angel investors. With regards to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to confirm that your financials are reasonable. But they will want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate the business.

The second most common form of funding for an insurance agency is angel investors. Angel investors are wealthy individuals who will write you a check. They will either take equity in return for their funding, or, like a bank, they will give you a loan. Venture capitalists will not fund an insurance agency unless it is based on a unique, scalable technology.

Finish Your Business Plan Today!

Your insurance agency business plan should include 10 sections as follows:

Executive Summary

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of insurance agency business you are operating and the status; for example, are you a startup, do you have an insurance agency that you would like to grow, or are you operating multiple insurance agency locations already.

Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the insurance agency industry. Discuss the type of insurance agency you are operating. Detail your direct competitors. Give an overview of your target customers. Provide a snapshot of your marketing plan. Identify the key members of your team. And offer an overview of your financial plan.

Company Analysis

In your company analysis, you will detail the type of insurance agency you are operating.

For example, you might operate one of the following types:

• Direct Writer / Captive : this type of insurance agency only sells one insurance company’s products – like Allstate or State Farm
• Independent Insurance Agent : this type of insurance agency is privately-owned, and sells policies with may different insurance companies

In addition to explaining the type of insurance agency you operate, the Company Analysis section of your business plan needs to provide background on the business.

Include answers to question such as:

• When and why did you start the business?
• What milestones have you achieved to date? Milestones could include sales goals you’ve reached, new location openings, etc.
• Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry analysis, you need to provide an overview of the insurance business.

While this may seem unnecessary, it serves multiple purposes.

First, researching the insurance industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your strategy particularly if your research identifies market trends. For example, if there was a trend towards weather-related policy purchases, it would be helpful to ensure your plans call for flood insurance options.

The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section of your insurance company business plan:

• How big is the insurance agency business (in dollars)?
• Is the market declining or increasing?
• Who are the key competitors in the market?
• Who are the key insurance carriers in the market?
• What trends are affecting the industry?
• What is the industry’s growth forecast over the next 5 – 10 years?
• What is the relevant market size? That is, how big is the potential market for your insurance agency. You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Customer Analysis

The customer analysis section of your insurance agency business plan must detail the customers you serve and/or expect to serve.

The following are examples of customer segments: individuals, households, businesses, etc.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of insurance agency you operate. Clearly baby boomers would want different pricing and product options, and would respond to different marketing promotions than recent college graduates.

Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, include a discussion of the ages, genders, locations and income levels of the customers you seek to serve. Because most insurance agencies primarily serve customers living in their same geographic region, such demographic information is easy to find on government websites.

Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your customers.

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Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other insurance agencies.

Indirect competitors are other options that customers have to purchase from you that aren’t direct competitors. This includes self pay and public (Medicare, Medicaid in the case of health insurance) insurance or directly working with an insurance carrier. You need to mention such competition to show you understand that not everyone who purchases insurance does so through an insurance agency.

With regards to direct competition, you want to detail the other insurance agencies with which you compete. Most likely, your direct competitors will be insurance agencies located in your geographic region.

For each such competitor, provide an overview of their businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:

• What types of customers do they serve?
• What products do they offer?
• What is their pricing (premium, low, etc.)?
• What are they good at?
• What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

• Will you provide superior insurance agency products/services?
• Will you provide insurance agency products that your competitors don’t offer?
• Will you make it easier or faster for customers to acquire your products?
• Will you provide better customer service?
• Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For an insurance agency business plan, your marketing plan should include the following:

Product : in the product section you should reiterate the type of insurance agency that you documented in your Company Analysis. Then, detail the specific products/services you will be offering. For example, in addition to P&C insurance, will you also offer life insurance?

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting the menu items you offer and their prices.

Place : Place refers to the location of your insurance agency. Document your location and mention how the location will impact your success. For example, is your insurance agency located next to the Department of Motor Vehicles, or a heavily populated office building, etc. Discuss how your location might provide a steady stream of customers.

Promotions : the final part of your insurance agency marketing plan is the promotions section. Here you will document how you will drive customers to your location(s). The following are some promotional methods you might consider:

• Making your insurance agency’s front store extra appealing to attract passing customers
• Advertising in local papers and magazines
• Reaching out to local bloggers and websites
• Partnerships with local organizations (e.g., auto dealerships or car rental stores)
• Local radio advertising
• Banner ads at local venues

Operations Plan

While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your insurance agency such as serving customers, procuring relationships with insurance carriers, negotiating with repair shops, etc.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to acquire your 500th customer, or when you hope to reach $X in sales. It could also be when you expect to hire your Xth employee or launch a new location.

Management Team

To demonstrate your insurance agency’s ability to succeed as a business, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.

Ideally you and/or your team members have direct experience in the insurance agency business. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act like mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in insurance agencies and/or successfully running small businesses.

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet and cash flow statements.

Income Statement : an income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your costs to show whether you turned a profit or not.

In developing your income statement, you need to devise assumptions. For example, will you acquire 20 new customers per month or 50? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.

Balance Sheets : While balance sheets include much information, to simplify them to the key items you need to know about, balance sheets show your assets and liabilities. For instance, if you spend $100,000 on building out your insurance agency location and/or website, that will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $100.000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement : Your cash flow statement will help determine how much money you need to start or grow your business, and make sure you never run out of money.

In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing an insurance agency:

• Location build-out including design fees, construction, etc.
• Marketing expenses
• Website development
• Payroll or salaries paid to staff
• Business insurance
• Taxes and permits
• Legal expenses

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your store design blueprint or location lease.

Insurance Business Plan Summary

Putting together a business plan for your insurance agency is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will really understand the insurance agency business, your competition and your customers. You will have developed a marketing plan and will really understand what it takes to launch and grow a successful insurance agency.

Download Our Insurance Business Plan PDF

You can download our insurance business plan PDF here . This is a business plan template you can use in PDF format.

Insurance Business Plan FAQs

What is the easiest way to complete my insurance business plan.

Growthink's Ultimate Insurance Business Plan Template allows you to quickly and easily complete your Insurance Business Plan.

Where Can I Download an Insurance Business Plan PDF?

You can download our insurance business plan PDF template here . This is a business plan template you can use in PDF format.

Don’t you wish there was a faster, easier way to finish your Insurance business plan?

OR, Let Us Develop Your Plan For You

Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.   Click here to learn about Growthink’s business plan writing services .

Other Helpful Business Plan Articles & Templates

Short-Term Liability Insurance

Short-term liability insurance gives small business owners and independent contractors the flexibility and affordability they need.

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Do you need short-term liability insurance?

Types of short-term liability insurance, coverage when you need it, and not a minute more.

Nearly every business needs some form of liability protection, but not every business needs ongoing coverage. Short-term liability insurance may be the best solution for companies that don’t need annual coverage. As the name suggests, short-term liability insurance provides coverage only when your business needs it.

Short-term liability coverage can be purchased for a specific time frame, as opposed to an annual insurance policy that’s “always on.” With Thimble, you can buy short-term policies by the job, month, or year.

The benefit of short-term business insurance is quite simple: don’t pay when you’re not working and keep more money in your pocket. Short-term liability insurance gives small business owners and independent contractors flexibility and affordability.

Short-term liability insurance is most appropriate for business owners whose work is episodic. Following are a few scenarios where short-term liability insurance may be appropriate.

You work in a seasonal industry — For instance, if you moonlight as a hiking guide in the summer, you certainly want to ensure that you’re not exposed to third-party bodily injury liability every time you take a group out. Short-term liability insurance can cover you just for the season, rather than you having to pay for an entire year.

You work on projects that have a limited duration – For example, if you have a part-time handyman business, you might work on a project-to-project basis, meaning it’s best for you if you only have to pay for insurance while you have a project.

You’re bidding on a project that requires proof of insurance – If you’re a general contractor bidding on a project, you may need to show a Certificate of Insurance (COI) to prove that you’re covered and for how long. A COI for short-term liability insurance shows that you have coverage, and you can maintain it just for the duration of the project.

You provide professional advice to clients – Say you’re starting your own career coaching business. Your job involves advising your clients, guiding them towards professional growth. You can purchase short-term liability insurance just for your coaching sessions until you build your business into a full-time gig.

There are two main types of business liability insurance , general liability insurance and professional liability insurance. Almost every business needs one or both types of coverage. Fortunately, both are available as short-term liability insurance policies.

Here’s what each type of insurance covers:

• General liability coverage : Provides coverage for claims of non-employee, third-party property damage, or bodily injury. If you run a cleaning business and someone slips on a wet floor and sues you to cover the cost of their medical expenses, general liability insurance may cover the costs.
• Professional liability insurance : Also known as errors and omissions (E&O) insurance, professional liability insurance protects against claims of negligence or inadequate work resulting in a client’s financial loss. Say you’re a computer programmer. Your client’s network crashes, leading the client to blame your software for the lost business. Professional liability insurance will investigate the claim, defend you in court, and pay the settlement if you’re held liable.

Both general liability insurance and professional liability insurance will provide for your legal defense and the settlement of claims if your business gets sued.

Pro tip: Liability insurance does not cover your employees or contractors who work with you. Instead, you must add subcontractors as Additional Insureds to your policy, and you’ll need workers’ compensation to cover your staff.

Short-term liability insurance may be the most affordable way for many businesses to make sure they have coverage only when it’s needed and not a minute more. And where can you get short-term liability insurance? At Thimble, of course.

Thimble specializes in making insurance simple, scalable, and flexible. You might call it our mission. We know that you need to move fast to get ahead in business. So we offer quick-thinking insurance that puts you in control as you grow.

Click “Get a Quote” or download our app to get short-term liability insurance in 60 seconds. Purchase, modify or pause coverage when you need to. Thimble puts you in the driver’s seat.

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Get a quote from Thimble in less than 60 seconds and get your Certificate of Insurance instantly.

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What is Short-Term Health Insurance?

Short-term health insurance may provide you with temporary medical coverage in certain situations. Many of the features of these temporary health insurance plans differ greatly from traditional health plans.

What is short-term health insurance?

Short-term health insurance is a type of health plan that can provide you with temporary medical coverage when you are between health plans, outside enrollment periods, and need some coverage in case of an emergency. However, to get the most out of a short term health plan, you need to understand how they work, what they cost, and what they cover.

What does short-term health insurance cover?

Short-term health insurance coverage varies greatly depending on the plan and the insurance company you buy from. These types of plans are not required to comply with Affordable Care Act (ACA) guidelines. ACA plans are required to provide certain levels of coverage—called minimum essential coverage . Short-term health plans are not required to meet the same standards.

Short-term medical insurance typically provides some level of coverage for preventive care, doctor visits, urgent care, and emergency care. There may also be coverage for prescriptions . Some plans also offer cost savings for seeing in-network providers. Make sure to read the “exclusions and limitations” information before buying any plan. This will tell you what’s covered and not covered by a certain plan.

How much does short-term health insurance cost?

If you’re considering temporary health insurance, typical upfront costs include:

• Premium: This is the monthly fee you pay for having coverage. The premium will vary depending on the level of coverage you choose, including deductible and coinsurance, as well as the types of services covered.
• Deductible: The deductibles on short-term health plans can be significantly higher than other more traditional health plans. You pay out of pocket for services until you meet your deductible. Then your plan starts sharing costs.
• Coinsurance: This is the percentage of costs you share with your plan after you meet your deductible. It’s often shown as a percentage. Most short-term plans have a deductible and coinsurance.
• Copay: This is a fee you may have to pay when you visit a doctor; usually payable at the time of the visit. Some short-term plans require you to pay a copay for certain doctor visits.
• Other out-of-pocket costs: If there are health care services not covered by your short-term plan, you could end up paying all costs. For example, some short-term plans may not cover or may limit your coverage for maternity care, mental health or substance use services, vision care, or dental care—these are costs you’d have to pay yourself for any services you receive.

Other costs may apply depending on what type of coverage you buy. Read all plan information carefully before choosing so you are informed on what your plan may actually cost you.

What are the pros and cons to short-term health insurance?

If you’re considering whether a short-term health insurance plan is right for you, here are some pros and cons:

• Designed to fill short-term gaps in coverage should you need it
• You can cancel coverage whenever you’d like without penalties
• You can typically choose a plan that covers you up to a year, if needed
• Many different plan designs are available, depending on insurance carrier
• Significantly higher deductibles than traditional health plans with other possible unforeseen costs
• No coverage for pre-existing conditions and limited coverage for most services
• A medical questionnaire may be required to be approved for coverage
• Coverage is not mandated or standard, so plans vary greatly in covered services and costs with very little government oversight

Short-term health plans are not a good fit for everyone. For comprehensive coverage and benefits, make sure you enroll in a traditional health plan. This is either a plan offered through your employer or one you buy on your own through an individual insurance company or the Health Insurance Marketplace .

Short-term health plans vs. ACA health plans

Short-term plans were created to help fill temporary gaps in coverage that can occur in certain situations. These types of plans are typically not good substitutes for traditional health plans. They do not have to adhere to ACA standards. They provide limited benefits with generally much higher costs.

ACA health plans, on the other hand, must provide certain types of coverage as mandated by the government. They must offer coverage for essential health benefits like maternity and preventive care at 100%, mental health and substance use benefits, and more. Before you decide to purchase a short-term health plan, make sure you fully understand what types of care and services are covered and not covered. Read the exclusions and limitations information carefully.

Do short-term health insurance plans cover pre-existing conditions?

Short-term health plans are not a part of the Affordable Care Act (ACA), so they do not need to comply with those standards. That means pre-existing conditions are not covered in a short-term or temporary health plan. You can be denied coverage for a medical issue you’ve previously been treated for.

Is short-term health insurance a good idea?

Short-term health insurance may not be ideal for the long term. But there are some situations in which you may need temporary coverage and a short-term health plan may provide it:

• You missed open enrollment for a traditional health plan
• You lost or left your job
• You turned 26 and just transitioned off your parents’ health plan

Is a short-term health plan a good idea for you? As a first step, try to anticipate your upcoming health needs. Would costs for care be lower with a short-term plan than without? Explore plans available to you. Duration, types of benefits, and even costs can vary widely between insurance companies that offer these plans. Plans may also vary depending on the state you live in due to state regulations.

How do you buy a short-term health insurance plan?

Short-term health plans are sold through private insurance companies. Not all companies offer this type of plan (e.g., Cigna Healthcare SM does not offer these plans). These plans are not available through the Health Insurance Marketplace and do not conform to Affordable Care Act (ACA) guidelines. To buy a short term medical plan, you can search for a private insurance company that offers them. Make sure to read all details before you buy or enroll. These plans can vary greatly in cost and coverage.

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Individual and family medical and dental insurance plans are insured by Cigna Health and Life Insurance Company (CHLIC), Cigna HealthCare of Arizona, Inc., Cigna HealthCare of Illinois, Inc., Cigna HealthCare of Georgia, Inc., Cigna HealthCare of North Carolina, Inc., Cigna HealthCare of South Carolina, Inc., and Cigna HealthCare of Texas, Inc. Group health insurance and health benefit plans are insured or administered by CHLIC, Connecticut General Life Insurance Company (CGLIC), or their affiliates (see a listing of the legal entities that insure or administer group HMO, dental HMO, and other products or services in your state). Accidental Injury, Critical Illness, and Hospital Care plans or insurance policies are distributed exclusively by or through operating subsidiaries of The Cigna Group Corporation, are administered by Cigna Health and Life Insurance Company, and are insured by either (i) Cigna Health and Life Insurance Company (Bloomfield, CT). The Cigna Healthcare name, logo, and other Cigna Healthcare marks are owned by The Cigna Group Intellectual Property, Inc.

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Short term health insurance

1</sup>">find short term limited duration health plans to help bridge gaps in coverage 1.

With coverage options lasting from 1 month to nearly 3 years, 2 short term plans, underwritten by Golden Rule Insurance Company, can provide a temporary solution that helps you get the benefits you want, for the time you need. 3

View short term plans by state

Questions? Call  1-866-487-9299

Choose a short term health insurance plan

Shop for a short term health insurance plan that’s available for the time you need.

Short Term Medical plans

Lasting 1 month up to nearly 12 months 3

TriTerm Medical plans

Lasting nearly 3 years 2

Is short term insurance for me?

Short term insurance may be the right choice for you if you’re:

Waiting for open enrollment to apply for an Affordable Care Act (ACA) plan

Not experiencing a situation that’s a  qualifying life event  and you don’t qualify for a Special Enrollment Period (SEP) to apply for an ACA plan

Waiting for ACA coverage to start

Looking for coverage to bridge you to Medicare

Turning 26 and are coming off your parent's insurance

Between jobs or waiting for benefits to begin at your new job

Healthy and under 65

For these situations and many others, short term health insurance, also called temporary health insurance or term health insurance, might be right for you. It can fill that gap in coverage until you can choose a longer term solution.

Why choose short term plans from UnitedHealthcare?

Quick coverage.

Get coverage as soon as the day after your application.

Flexible coverage periods

Pick your length of coverage, 1 to nearly 12 months in some states. 3 Drop coverage with no penalty if a more permanent health insurance option comes along.

Savings your way

Pick your deductible amount from several options.

Large provider network

Access an extensive network of health care professionals, with 1.7 million physicians and other health care professionals and approximately 6,400 hospitals and other facilities. 4

See how short term plans can give you more flexibility

Thinking about choosing a short term plan? In dynamic times of change, Short Term Medical plans, 1 may give you the added flexibility you need. With these plans you can:

Find coverage that’s available fast, as soon as the day after application 

Pick your deductible amount from several options

Pick your length of coverage, 1 to nearly 12 months in some states 3

Drop coverage with no penalty

Apply for another short term health insurance plan when the first one finishes, if needed 5

Apply for another short term health insurance plan when the first one finishes, if needed 3

What are Short Term Medical Plans?

Video transcript

A somewhat emotional piano tune plays. A blue ribbon flows across the screen and morphs into the UnitedHealthcare logo, and the words “Golden Rule Insurance Co.” appear under it. Under that, the words “Short Term Medical Plans” appears. A bright young woman’s voice comes in.

Voiceover: What do you do when you’re in a time of transition and need health coverage quick?

An airplane with a banner floating behind it appears. The banner reads: “Need health coverage quick?”

Voiceover: Maybe you’ve decided to turn your side hustle into your full-time gig.

An animated “open” sign swings back and forth.

Voiceover: Or you’re coming off your parents' insurance for the first time.

An animated calendar graphic with a coffee mug and a plant appears.

Voiceover: UnitedHealthcare branded Short Term Medical plans are designed for situations like yours,

An animated graphic of a hand holding a UnitedHealthcare insurance card appears next to the words “Designed for situations like yours”

Voiceover: and can provide flexible, budget-friendly coverage that lasts as long as you need,

A piggy bank graphic appears above the words: “flexible, budget-friendly coverage”

Voiceover: from one month to just under a year in some states.

A calendar graphic appears between the words “One month” and “One year”. The music becomes more upbeat and orchestral.

Voiceover: Apply for coverage starting as soon as tomorrow for things like doctor visits, ER visits, hospital stays, labs and even prescriptions with many plans.

Graphics that correspond to each covered item appear as they’re listed.

Voiceover: Plus, get access to the UnitedHealthcare nationwide network of doctors and hospitals

An animated network graphic appears with various health care icons of different sizes connected with lines.

Voiceover: that makes health care available at lower costs.

An animated piggy bank graphic appears with a coin dropped into it.

Voiceover: Short Term Medical plans do not cover preexisting conditions, so keep that in mind when you apply.

A heart graphic appears above the words “Preexisting conditions are not covered”.

Voiceover: Give the uncertain period in your life more certainty with a UnitedHealthcare branded Short Term Medical plan.

The animated airplane graphic appears again, this time towing a banner that reads “Find a Short Term Medical Plan”

Voiceover: Questions? Go to U-H-One.com or call your local health insurance broker.

A final title screen appears with the words “UnitedHealthcare” and “Golden Rule Insurance Co.” next to the UnitedHealthcare logo in the upper left corner. The words “Questions? Go to UHOne.com or call your local health insurance broker” appear in the middle of the screen, to the left of two colorful text bubble graphics. The following words are in fine print at the bottom of the screen: “Underwritten by Golden Rule Insurance Company, a UnitedHealthcare Company. This policy has exclusions, limitation, reduction of benefits, terms under which the policy may be continued in force or discontinued. For costs and complete details of the coverage, call or write your insurance agent or the company. Short term health insurance plans do not meet all federal requirements to qualify as “Minimum Essential Coverage” for health insurance under the Affordable Care Act (“ACA”). Short term health insurance is medically underwritten and does not cover preexisting conditions. Product availability varies by state. 48283-G-0322”

Short term plans that stand the test of time

Golden Rule Insurance Company, which underwrites UnitedHealthcare branded short term medical insurance, has been offering short term insurance plans for over 35 years

Frequently asked questions

Read on to learn more details about short term plans and how they work.

How long can I get coverage with short term plans?

Term lengths vary by state, but in some states you can apply for up to nearly 12 months of coverage for short term plans. If you need coverage for longer than that, TriTerm Medical plans can provide coverage for up to 3 years. 2

What do short term plans cover?

Short term coverage will vary, depending on the plan you choose. Check your plan details to learn about coverage for common care and services like these:

How quickly can coverage start?

Many, but not all, short term health insurance plans can take effect the day after your application is received. You may also choose a later effective date based on your individual needs.

Can I get a short term plan as temporary insurance between jobs?

Yes. Short term medical insurance can be a temporary solution to help fill gaps in coverage, including when you’re:

• Between jobs
• Waiting for other coverage to begin
• Waiting to be eligible for Medicare coverage
• Without health insurance, outside of Open Enrollment

For these situations and more where you are stuck in a coverage gap, you may decide that finding the best short term health insurance plan you can is the right solution for you. 1

How are short term insurance plans different from ACA plans?

With short term health insurance, it’s important to keep in mind you’re not buying an ACA health plan. Here are a couple of ways short term plans differ from ACA plans.

So, it’s true that you may save money by choosing short term health insurance. Just be sure you know what you are buying, and that it’s a good choice for you. For the right situation, short term insurance plans can provide fast, flexible, temporary health insurance coverage that fits your needs.

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The Best Short-Term Health Insurance Companies in 2024

Considering short-term health insurance? These plans are not created equal. We analyzed more than 3,000 data points to help you find the best option. Best overall company for short-term health insurance: UnitedHealthcare. Runner-up: National General Accident & Health

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Updated: December 28, 2023

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• Best for At-Risk Individuals
• Best for Students & the Unemployed
• Best Short-Term Travel Coverage
• Best for Generic Prescriptions
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• How to Choose a Plan
• Is Short-Term Coverage for You?
• Methodology

About Deb Gordon

Deb Gordon is the co-founder and CEO of Umbra Health Advocacy, and author of The Health Care Consumer’s Manifesto (Praeger 2020), a book about shopping for health care based on consumer research she conducted as a senior fellow in the Harvard Kennedy School’s Mossavar-Rahmani Center for Business and Government between 2017 and 2019. Her research and writing have been published in JAMA Network Open, the Harvard Business Review blog, USA Today, RealClear Politics, TheHill, and Managed Care Magazine.

Deb previously held executive roles in health insurance and health care technology services. Deb is an Aspen Institute Health Innovators Fellow and an Eisenhower Fellow, for which she traveled to Australia, New Zealand and Singapore to explore the role of consumers in high-performing health systems. She was a 2011 Boston Business Journal 40-under-40 honoree, and a volunteer in MIT’s Delta V start-up accelerator, the Fierce Healthcare Innovation Awards and in various mentorship programs.

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What Is Short-Term Health Insurance?

• How Short-Term Health Insurance Works

Short-Term Health Insurance vs. Health Insurance

Availability and cost, policy length and renewability.

• Pros and Cons
• How to Choose

Frequently Asked Questions (FAQs)

The bottom line.

• Health Insurance
• Definitions N - Z

kate_sept2004 / Getty Images

Short-term health insurance is meant to cover your medical bills for a short time, often during a gap in other insurance coverage. However, short-term health insurance does not provide as much coverage as a traditional health insurance plan. Insurers can also charge more and even deny applicants who have pre-existing medical conditions. The duration of these plans has been limited by federal rule-making. 

Key Takeaways

• People buy short-term insurance to cover gaps between traditional health insurance coverage.
• In March 2024, the Biden administration instituted a rule limiting short-term health insurance to four months at most if purchased on or after Sept. 1, 2024. 
• Short-term insurance is overseen by a mix of federal and state laws, so rules vary widely by state. 
• Short-term health insurance policies provide much more limited coverage than traditional health insurance. The Biden administration rule requires insurers to more clearly disclose limits on the first page of any insurance documentation.
• Applicants can be denied for pre-existing conditions.

How Short-Term Health Insurance Works 

Short-term health insurance may also be known as limited-duration health insurance or short-term, limited-duration insurance (STLDI). If your state allows these policies, for now, you can enroll in short-term insurance for a duration of up to 12 months, which can be extended to a maximum of 36 months through renewals.

All policies that begin on Sept. 1, 2024 or later may only last for three months, with a possible one-month extension. 

Short-term health insurance plans aren’t defined as “individual health insurance coverage” under the Public Health Service Act. As a result, short-term plans work differently than traditional health insurance coverage. Insurers have more flexibility in how they design the plans. You also don’t benefit from ACA’s federal consumer protections .

Many short-term insurance plan providers offer significant consumer choices regarding coverage and costs. For example, you may be able to choose your own: 

• Deductible : This is per person per term, such as $2,500 or $12,000
• Term coinsurance maximum : The most you pay for covered services after you meet the deductible  
• Maximum coverage : The most the plan pays for covered services during the term per person
• Copay or coinsurance : Your share of the cost for each service
• Prescription drug cost : Your share of prescription drug coverage, if available

Changing these variables will change your monthly premium. You may be able to add supplemental benefits, including virtual health care services, vision, dental, and other benefits. 

Federal regulations for short-term health insurance primarily only cover how long the plan can last and whether you can renew the plan. Some states have additional rules for short-term insurance benefits, while others don’t. 

In contrast, traditional health insurance is highly regulated by federal and state law. Here are some significant ways short-term health insurance differs from traditional insurance. 

You can buy an Affordable Care Act (ACA) plan on the ACA Health Insurance Marketplace or your state exchange. Buying on one of these websites may allow you to qualify for cost-sharing reductions that lower the cost of your healthcare. Plans can only use your age, area, and smoking status to determine your monthly cost.

In contrast, you must buy a short-term health insurance plan directly from the insurer or a licensed insurance agent. It isn’t available on the ACA Marketplace, and you won’t qualify for federal aid or reductions. Short-term plan premiums aren’t limited to being based only on age, area, and smoking status—the insurer can base your premiums on any number of aspects, including your health. 

ACA plans typically last one calendar year and are renewable even if you develop health issues. 

As previously mentioned, a short-term plan’s term can last only up to four months in total, for plans beginning on or after Sept. 1, 2024.  Before the new rule takes effect, some plans can be renewed for up to three years in some states. 

Deductibles and coinsurance out-of-pocket maximums typically apply to a single policy term, not for the whole year or multiple years. If you renew, you’ll pay the deductible and coinsurance again. 

Maximum Out-of-Pocket Expenses

Traditional health plans typically feature an out-of-pocket maximum or cap on the most you would pay out-of-pocket for health services. For example, the most you’d pay out of pocket on a Marketplace plan is $9,450 for an individual and $18,900 for a family in 2024. Once you hit the maximum, the plan continues to pay for covered care. There’s no limit on how much the traditional health plan will pay for your treatment. 

In contrast, short-term health plans have a lifetime maximum the insurer will pay, often between $250,000 and $2 million. This is the total your plan will pay for covered costs. So, if you have a $1 million plan maximum, once your medical bills total $1 million, the plan won’t pay anything else toward your care. 

Pre-existing Conditions

Short-term health insurance providers can deny you coverage if you have a pre-existing condition , charge you more because you’ve had a condition, or refuse to pay for specific procedures if the insurer determines you have a pre-existing condition. 

In contrast, according to federal law, health insurance cannot deny you coverage or charge you more based on your health history or current health. 

Standard Procedure Coverage

Many types of care coverage required in an ACA or group health insurance plan may not be included or available in your short-term health insurance plan. 

These include the ACA 10 Essential Health Benefits and other standard benefits such as: 

• Outpatient care
• Maternity and newborn care
• Preventive services and wellness
• Prescription drug coverage
• Lab services
• Immunizations

Limits on Treatment of Common Conditions

Whether or not you have a pre-existing condition, an insurer may deny coverage for specific conditions for a period of time, such as the first six months, or for the entire contract. According to a 2020 staff report from the U.S. House of Representatives, these common conditions include: 

• Kidney disease
• Skin disease
• Allergy treatment or diagnosis
• HIV and AIDS
• Organ transplants
• Eye surgery
• Sleep disorders  

The Congressional report found that many short-term plans have waiting periods for covered treatment, even for serious conditions such as cancer or a medical emergency. 

Coverage Limits

Even if treatment is covered, plans may impose maximum coverage limits for treatment. For example, some plans limit:

• Doctor visits: How often you can visit the doctor or a dollar maximum, such as $500 per policy period. 
• Daily hospital stays: Dollar limits may range from $500 to $10,000. 
• Emergency room coverage: Caps on treatment reimbursements could be as low as $250 
• Surgery: Limits may be placed on the number of surgical procedures that are covered or on the dollar amount covered 

Due to these limits, you could be billed by the facility or provider for the remaining amount, which could quickly spiral into medical debt. 

Advantages and Disadvantages of Short-Term Health Insurance 

Affordable premiums

Can start next day if necessary 

Can cover a short gap 

Potentially more provider options

Potentially higher costs 

Limited coverage for services and treatments

Coverage denial or higher rates based on pre-existing conditions

Confusing documentation

Pros Explained

• Affordable premiums: Short-term plans offer limited coverage, so their monthly premium costs may be much lower than an ACA plan, particularly if you’re young and healthy. 
• Can start the next day if necessary: While some ACA or employer health plans may not start until the first day of the next month, you can enroll in a short-term plan that starts the next day.
• Can cover a short gap: If you’re stuck without insurance for a brief period, a short-term plan can offer some temporary relief while you wait for another health insurance plan to kick in. It may be better than going without any coverage altogether.
• Potentially more provider options : Many short-term plans don’t use provider networks, so you may be able to see any doctor you wish. However, remember that the plan likely will not pay the full amount of your visit. 

Cons Explained

• Potentially higher costs: If you have high medical bills while on a short-term plan, you could pay more out of pocket due to exclusions, deductibles, and lifetime or treatment limits. Someone choosing a short-term limited duration plan is taking on “additional risk and may spend substantially more for treatment of a condition newly diagnosed while enrolled in an STLD policy compared to an ACA compliant policy,” according to a February 2020 report from Milliman.
• Limited coverage for services, and treatments: As noted earlier, many short-term plans place dollar, frequency, or other limits such as exclusions on expected health services and treatments.
• Coverage denial or higher rates based on pre-existing conditions : If you have a pre-existing condition, the short-term plan provider may deny you coverage, charge you a higher premium, or exclude your condition from any future treatment.  
• Confusing documentation: Shopping for a short-term health insurance plan can be very confusing, with plenty of exclusions and fine print. Short-term health insurance plans do not follow set standards like ACA plans. 

New Biden-Harris administration rules require insurers to describe service types and cost limits in “easy to understand” language.

History of Short-Term Health Insurance

Regulations and controversy around short-term health insurance have bounced around over the past 20 years or so. 

In June 1997, federal regulations restricted short-term health insurance contracts to a maximum of 12 months of coverage. Then, in January 2017, the Obama administration shortened that maximum duration to up to three months of coverage. 

But in October 2018, the Trump administration’s Department of Health and Human Services increased the short-term maximum duration to up to 12 months. In addition, a short-term plan can be renewed for up to 36 months.

Since the Trump administration’s changes, many states have set limits on plans based on plan design, plan contract length, and options to renew. 

The result has been a state-by-state difference in how short-term plans work. In Alabama, a short-term plan can’t last more than 12 months and is renewable for up to 36 months. But in Colorado, a short-term plan can’t last more than six months and cannot be renewed.

In March 2023, the Biden-Harris administration , calling short-term insurance “junk insurance,” instituted the new nationwide rule limiting plan duration to four months max and requiring clearer disclosure of limits.

Choosing a Short-Term Health Insurance Plan

When comparing short-term plans, make sure you understand the following: 

• Definition and coverage of pre-existing conditions
• Does the short-term plan use a provider network, and if so, how much of a doctor’s visit is covered?
• What deductible do you have to meet before the plan pays, and do you have enough savings to pay that in full if necessary? 
• What’s the maximum amount the plan pays per term or lifetime?
• Does the plan cover expensive emergency room visits, hospital stays, surgery, or prescription drugs? If so, what are the limitations?
• Does the plan cover preventive care, and if so, what type?
• Are there exclusions in the policy and is it possible you might need those services?

In most cases, you’ll want to closely read the policy documentation—which may be many pages long. Get help from a consumer advocate or licensed insurance agent to ask more challenging questions.

When comparing pricing, ensure you compare apples-to-apples by looking at plans with the same deductible and maximum benefit amount (such as a $2,500 deductible and $1 million benefit) and overall coverage (such as similar preventive services coverage). 

What is Short-Term Health Insurance Used For?

Short-term health insurance can be used for various health reasons, which depend on what kind of coverage the plan offers. For example, many plans cover emergency care and hospitalization, but only some cover prescriptions or routine preventive care visits. Few plans offer pregnancy coverage. If you’re pregnant and need coverage, consider Medicaid or an ACA plan. 

Is Short-Term Coverage a Good Idea?

Short-term coverage may be helpful in limited situations. For example, if you’re between plans, don’t qualify for a special enrollment period, and know you’ll have traditional health insurance coverage soon, it may be worthwhile. However, read the policy closely to understand what may not be covered. If you’re financially stressed, a Bronze or Catastrophic ACA health plan may offer better coverage at a comparative price—if you qualify for an enrollment period . 

How Do I Qualify for Short-Term Health Insurance?

Almost anyone can qualify for short-term health insurance, regardless of income, immigration status, or employment status. However, you may have a more challenging time finding coverage if you have a pre-existing condition or are over age 65 and eligible for Medicare .  In addition, you need to live in a state where short-term health insurance is available. In some states, short-term plans don’t meet the state’s requirements for health insurance plans. These states include California, Minnesota, New Jersey, New York, Vermont, and Washington State. 

Sometimes, a short-term health insurance plan may make sense as a temporary solution. However, you’ll need to seriously investigate any plan’s benefits and drawbacks before enrolling—you may not be buying the coverage you think you’re getting. Research your options; don’t just go with the cheapest plan out of haste or confusion. Get help, if necessary, from a licensed health insurance agent referred by friends or family. 

KFF. “ ACA Open Enrollment: For Consumers Considering Short-Term Policies .”

Healthcare.gov. “ Out-of-Pocket Maximum .”

U.S. House of Representatives Committee on Energy and Commerce. “ Shortchanged .” Pages 59-60.

Milliman. “ The Impact of Short-Term Limited-Duration Policy Expansion on Patients and the ACA Individual Market .” Page 2.

GAO. “ Private Health Insurance .”

Oregon Division of Financial Regulation. “ 11 Questions To Ask Before Buying Short-Term Health Insurance .”

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• Best General Liability Insurance for Small Business

As a small business owner, it’s important to have the right types of insurance to protect your company from potential risks. General liability insurance is one of the most essential policies, which covers your business against third-party claims of bodily injury, property damage, and advertising injury, other than auto or aviation accidents and employee injuries.

When shopping for a general liability insurance provider, there are a few things to consider, like coverage options, cost, and customer service. To help you find the best general liability insurance for small businesses, we rated and reviewed some of the top insurers.

Table of Contents

The Hartford  »

Over 200 years in business

Wide variety of coverage options

Online claim reporting

24/7 customer service

Below-average customer satisfaction rating

Not available in all states

The Hartford offers the best general liability insurance for small businesses overall. The company has been in business for more than 200 years, and it currently insures more than 1.5 million small business owners across the U.S.

General liability insurance from The Hartford covers your business against third-party claims of bodily injury, property damage, advertising injury, and other risks. The company serves dozens of different professions, including architects, interior designers, lawyers, schools, hair salon owners, biotech companies, and others.

The Hartford has an excellent selection of coverage options. In addition to general liability insurance, you can get workers’ compensation, commercial auto insurance, home-based business insurance, inland marine insurance, management liability insurance, surety bonds, and other policies you might need.

You can get quotes online, and The Hartford has an online claim reporting system. If you need help filing a claim or have questions about your coverage, you can reach a customer service agent 24/7.

You can purchase general liability insurance from The Hartford in most states. However, the company doesn’t sell insurance in Alaska or Hawaii.

Read more in our The Hartford review .

General liability policies start at $17 per month

Purchase coverage in minutes

Short-term coverage available

Unlimited COIs

Fewer coverage options than some other insurers

No commercial auto insurance

Thimble doesn’t underwrite its own insurance policies

Thimble has some of the most affordable general liability insurance for small businesses. According to Thimble’s website, its general liability insurance policies start at just $17 per month. However, most small business owners pay an average of around $42 per month for general liability insurance.

One of the most unique features of Thimble is the flexibility of coverage. You can purchase insurance for a year, month, or even a day, depending on your business’s needs. It’s easy to get a quote online and purchase coverage within minutes. Plus, you can modify your policy, pause it, or cancel your coverage at any time.

Once you have general liability insurance, you can access your certificate of insurance (COI) instantly and share it with as many clients as you need, at no extra cost.

Thimble offers a good selection of coverage options, but not as many as some competitors. Depending on your state, you can get business equipment protection insurance, workers’ compensation insurance, product liability insurance, cyber insurance, hired and non-owned auto insurance, and a few others.

Nationwide  »

Highest J.D. Power rating for overall customer satisfaction

Offers employee benefits packages

Covers a variety of industries and professions

Multiple endorsements available for general liability insurance

Some policies are not underwritten by Nationwide

Might need to contact an agent to purchase a policy

Nationwide stands out for its superior customer satisfaction. In J.D. Power’s 2023 U.S. Small Commercial Insurance Study , Nationwide ranked first place for overall customer satisfaction out of 13 insurers. Nationwide’s score is 883 out of 1,000, which is much higher than the study average of 847.

Nationwide offers excellent general liability insurance coverage for small business owners in a variety of industries. Some of the covered professions include florists, dry cleaners, gift shops, retail stores, auto shops, contractors, wholesalers, restaurants, and HVAC businesses.

Several endorsements can be added to a Nationwide general liability insurance policy, such as hired and non-owned auto insurance, fire legal liability insurance, directors and officers liability insurance, products and completed operations liability insurance, and umbrella liability insurance.

Another benefit of Nationwide is that it offers employee benefits packages. If you want to provide supplemental health insurance, life insurance, or other benefits to your employees, Nationwide has options for you.

Some of Nationwide’s business insurance policies are underwritten by partner companies. However, Nationwide only works with reputable underwriters, like Hiscox and Liberty Mutual , which have strong financial stability ratings.

Learn more in our Nationwide review .

Basic general liability policies provide more coverage than what other insurers offer

Sells short-term liability insurance through Thimble

Offers online quotes

Fewer endorsements than some other insurance companies

Doesn’t sell coverage in Alaska

Small business owners who want general liability insurance with the most comprehensive coverage should consider Hiscox. A standard general liability policy from Hiscox provides more coverage than what other insurers offer, such as supplement payments when you’re facing a claim and worldwide insurance coverage for certain incidents.

If you own a consulting or technology services business, a general liability insurance policy from Hiscox includes all the basic coverages plus $25,000 in electronic data liability coverage.

Another benefit of Hiscox’s general liability insurance is that coverage is automatically extended to your employees. If you have part-time workers, temporary workers, or volunteers, their actions are covered under your basic general liability insurance policy.

In terms of endorsements, Hiscox offers the most common options, like professional liability, cyber security, workers’ compensation, and commercial auto insurance. Hiscox also sells short-term liability insurance underwritten by Thimble if you only need coverage for a certain period of time.

Hiscox has been in business since 1901 and has more than 500,000 small business customers. You can purchase small business insurance from Hiscox in every state except Alaska.

Read more in our Hiscox review .

Insures many different industries, including self-employed business owners

Most claims are decided within 48 hours

Easy to file claims online

Offers live chat during business hours

Operates entirely online

Fewer specialty coverage options than some competitors

Next Insurance is a great option for small business owners who are self-employed. Whether you’re a solopreneur or have a team of 10, you can get the coverage you need. And, you can customize your policy with endorsements for the most tailored protection.

Next sells general liability insurance to more than 1,300 businesses, including freelance writers, Amazon sellers, therapists, fitness instructors, actors, event planners, motivational speakers, pressure washing services, and hundreds of others.

Besides general liability insurance, Next offers several other types of business insurance, like commercial auto insurance, professional liability insurance, business owner’s policies, cyber insurance, umbrella insurance, liquor liability insurance, contractor license bonds, and tools and equipment coverage.

Next operates entirely online and through its mobile app, but you can chat with a live agent if you need assistance. It’s easy to file a new claim or check the status of an existing claim online or in the app. Next strives to resolve all insurance claims within 48 hours, so you can expect to be reimbursed for losses promptly.

What Is General Liability Insurance and How Does It Work?

General liability insurance covers small businesses against third-party claims of bodily injury, property damage, and advertising injuries like libel and slander, other than auto or aviation accidents and employee injuries. Specifically, it will cover your financial responsibilities, such as medical expenses to another person, and your legal fees and court costs.

If your business is accused of a third-party liability claim, you can report it to your insurance company. After the insurance company investigates the claim, they will determine an appropriate settlement. The insurer will cover the settlement, as well as your legal fees, minus any deductibles.

Here’s an example of how general liability insurance works: Imagine you own a beauty salon and a customer slips on a wet floor. They get hurt and need medical attention. If they claimed that your business was responsible for their injury, your insurance company would cover a settlement with the customer and pay for your legal defense.

How Much Does General Liability Insurance Cost?

To keep your general liability insurance in force, you must pay a monthly or annual premium. According to The Hartford, the average premium for general liability insurance is $1,057 per year or $88 per month.

However, premiums are personalized for every business based on a variety of different factors, such as:

• Business size
• Years in business
• Coverage limits
• Insurance claim history

To get the most accurate cost for your business, you’ll need to get a quote directly from the company you’d like to use.

Features To Consider When Buying General Liability Insurance

Every general liability insurance policy is slightly different. When purchasing general liability coverage, there are a few important things to consider:

General liability insurance policies have a coverage limit, which is the maximum amount of money the insurer will pay for claims. Most general liability policies have a per-occurrence limit and an aggregate limit.

The per-occurrence limit is the most the insurer will payout for all claims resulting from one incident. The aggregate limit is the maximum amount the insurer will pay for all claims filed during the policy period (usually one year).

When shopping for general liability insurance, make sure to choose a policy that provides sufficient coverage limits for your business’s needs and unique risks. For example, if you own a construction company, you may need higher coverage limits than a self-employed social media manager.

Also, keep in mind that policies with higher coverage limits will have higher premiums.

One of the most important factors to consider when shopping for general liability insurance is the premium. The cost of general liability insurance depends on many different factors and is personalized for every small business.

Before you choose a general liability insurance policy, it’s a good idea to get customized rate quotes from several different insurance companies. Comparing quotes from multiple insurers will help you find the most affordable policy for your business and your coverage needs.

Most insurance companies allow you to pay your general liability insurance premium on an annual or monthly basis. You must continue to pay your premium on time in order to keep your policy in force. If you fall behind on your payments or stop making your payments altogether, the insurer can cancel your coverage.

Every insurance company has a different process for handling claims. While many insurance providers allow business owners to file claims online, some companies require you to file claims by contacting an agent.

If you prefer to manage your policy and claims without the help of an agent, consider choosing an insurance company that has an online and/or mobile claim reporting process. We found that Next and Thimble have some of the best online claim handling.

One of the best resources to consult when choosing a general liability insurance company is J.D. Power’s 2023 U.S. Small Commercial Insurance Study . Claim satisfaction is one of the criteria used to generate the study rankings, and it can give you a good idea of which companies excel at claims handling.

When evaluating general liability insurance companies, check each company’s financial stability rating. You can find an insurance company’s financial strength score from independent agencies like AM Best and Fitch.

Choose an insurance provider that has a strong financial stability rating, which means it has an excellent ability to meet policyholder obligations and pay claims. If a company has a poor financial strength score, it could indicate issues with settling claims or even a risk of bankruptcy.

How To Choose the Best General Liability Insurance

Follow these steps to choose the best general liability insurance for your small business:

• Review coverage options: Find out what coverage options the insurance company provides. You can check to see what endorsements can be added to a general liability insurance policy and what other insurance products are sold. For example, if you want to offer benefits to your employees, see if the insurer offers group insurance policies.
• Check for exclusions: Every general liability insurance policy has some exclusions and limitations. Read the fine print before you purchase a policy and make sure you won’t be affected by any excluded losses.
• Get customized quotes: Get rate quotes from a few different insurance companies before you purchase coverage. Aim to compare quotes from at least three insurance providers to see which one can offer you the best deal.
• Read customer reviews: It can be helpful to read customer reviews to see what current and past policyholders think about the company. This is a good way to identify consistent complaints, especially around customer service or claim handling.

Alternatives to General Liability Insurance for Small Businesses

There are no direct alternatives to a general liability insurance policy. However, some small business owners can benefit from a business owner’s policy (BOP). A BOP is a bundle that includes general liability insurance and commercial property insurance. BOPs are usually cheaper than purchasing these two policies separately.

The Bottom Line

Overall, The Hartford has the best general liability insurance for small businesses. The company has more than 200 years of experience selling insurance and it currently serves over a million small business owners. The Hartford offers a variety of coverage options and it has 24/7 customer service.

While The Hartford stands out as the best provider overall, the right general liability insurance company for your business may be different. Before you purchase a policy, it’s a good idea to review several insurance companies to find the best one for your business’s coverage needs and budget.

How We Chose the Best General Liability Insurance Companies

To choose the best general liability insurance for small businesses, we started by reviewing 10 different insurance companies that offer this type of coverage. Then, we assessed each one based on important factors, like coverage options, financial strength, customer satisfaction, claim processing, coverage limits, and availability. We also paid attention to the types of business insurance that each company sells, and prioritized insurers that offer other products that can be beneficial to small business owners.

Another thing we considered was the industries and professions that each insurance company serves. Most companies we reviewed sell general liability insurance to a wide variety of business types, but some offer a bigger variety than others. For instance, some insurers automatically cover home-based businesses, while others require an add-on if you run a business out of your home.

WHY SHOULD YOU TRUST US?

Our insurance contributors and editors have years of experience researching and reviewing insurance companies. Elizabeth Rivelli, the author of this guide, has been covering insurance and reviewing insurance providers for about five years. Her specific areas of expertise include commercial insurance, car insurance, health insurance, and life insurance. As a small business owner herself, Elizabeth understands the importance of having the right insurance protection, even if you’re in a low-risk industry.

General Liability Insurance FAQ

A general liability insurance policy typically covers third-party claims of bodily injury, property damage, and advertising injury, other than auto or aviation accidents and employee injuries. If your business is accused of one of the claims, your general liability insurance policy will cover a settlement or judgment with the other party, as well as your legal defense and court costs.

Most small businesses can benefit from general liability insurance. This type of insurance covers many of the most common risks that all small business owners can face. While general liability insurance is not legally required, it may be required by some of your clients. It might also be required by landlords if you want to lease a commercial office space.

Most general liability insurance policies have a per-occurrence limit and an aggregate limit. You can find your policy’s coverage limits by reviewing your insurance binder or policy statements. Depending on your insurance company, you might be able to access these documents online, or you may need to request a copy from your insurance agent.

The process of filing a general liability insurance claim differs based on the insurance company. In most cases, you will need to report the claim to your insurer using an online form or by calling an agent directly.

You must complete the claim paperwork and submit documentation for the claim, such as communication with the person suing your business or photos of property damage. Once the claim has been investigated and approved, the adjuster will determine a settlement and reimburse you for legal expenses.

About Our Team

Elizabeth rivelli.

Contributor

Stephen Yao , Ph.D.

Insurance Reviewer

U.S. News 360 Reviews takes an unbiased approach to our recommendations. When you use our links to buy products, we may earn a commission but that in no way affects our editorial independence.

I'm a financial planner with 7 tips for taking parental leave as an entrepreneur

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• As a financial planner, I know stepping away from your small business can be a big challenge.
• Make sure everyone who needs to know about your parental leave is informed well in advance.
• Consider short-term disability insurance and look at the options offered by your health insurance.

As a financial planner, my clients have all sorts of concerns as small business owners, from whether they need a business credit card to how to start their business.

Becoming a parent is undeniably one of life's greatest joys. But for small business owners, the thought of stepping away from their business to welcome a new addition is both exciting and intimidating.

There are many questions and concerns swirling in the minds of business owners: How do I ensure my business continues to thrive in my absence? What about my clients? Will they understand?

Navigating parental leave as an entrepreneur demands careful planning and consideration. Let's explore some practical tips to ease the transition and make this journey smoother for both you and your business.

1. Notify your clients well in advance

The key to a successful parental leave as a small-business owner is ensuring that your clients' needs are met in your absence. By providing ample notice, you afford your clients the opportunity to adjust and make necessary arrangements.

Once your leave begins, set up an out-of-office email response with detailed instructions regarding the duration of your absence and how clients can seek assistance in case of emergencies. Depending on the nature and scale of your business, this may entail automating certain processes, delegating tasks to trusted team members, or temporarily pausing certain services.

Many clients will not only understand but also applaud your decision to prioritize family by taking parental leave.

2. Plan how you will cover living expenses during your leave

One of the greatest concerns for small business owners considering extended time off is the fear of financial instability during their absence. To alleviate this worry, careful planning is key.

Establishing a robust business emergency fund is essential in this preparation. This fund serves as a supplement to any state or insurance benefits available. Ideally, it should include not just typical business expenses but also anticipated parental leave costs. Consider maintaining a reserve equivalent to at least three to six months' worth of business expenses. Parking these funds in a FDIC-insured high-yield savings account provides easy access while optimizing returns.

However, it is important to keep your personal and business emergency funds separate. Maintaining separate reserves helps to avoid dipping into personal finances for business-related needs.

3. Consider short-term disability coverage

Short-term disability insurance can be a valuable resource for small business owners preparing for parental leave. This type of coverage provides partial income replacement, typically ranging from 40% to 70%, for a defined period of up to a year.

Short-term disability policies vary in their coverage, with some covering complications during pregnancy or specific delivery scenarios. It's important to carefully review your policy to understand its specific terms and benefits.

When evaluating short-term disability insurance, consider several key factors:

• Coverage period
• Benefit amount
• Waiting period

4. Stay on top of legal obligations and expenses

Even during the anticipation of parental leave, it is essential for small business owners to fulfill their legal obligations. Certain legal tasks come with deadlines that cannot be postponed, requiring proactive planning to ensure continuity in your absence.

Consider delegating responsibilities to trusted team members or setting aside dedicated time to address these tasks before your parental leave begins. Some key legal obligations to prioritize include:

• Renewing your business structure (such as an LLC)
• Renewing your business licenses
• Renewing your professional licenses and certifications
• Making quarterly estimated tax payments

5. Check your health insurance for possible benefits

As you prepare for parental leave, it's important to review your health insurance coverage to ensure it meets the needs of your growing family. Selecting a health insurance policy that provides comprehensive coverage can alleviate financial stress and ensure access to necessary medical care throughout pregnancy and beyond.

When evaluating health insurance options, consider the following factors:

• Deductibles and out-of-pocket expenses
• Coverage for prenatal, childbirth, and postpartum care
• Coverage for your baby's medical expenses

6. Look into state-provided parental or family leave options

It's important to explore state-specific parental or family leave options as you plan for your time away from work. While these benefits vary by location, they can provide valuable support during the transition to parenthood.

Check whether your state offers any form of parental leave and familiarize yourself with the eligibility criteria and application process.

Consider seeking guidance from a legal or benefits expert to ensure you fully understand your rights and obligations under state-provided parental leave programs.

7. Don't hesitate to hire help if needed

Planning for parental leave as a small-business owner can be overwhelming and time-consuming. In such moments, it's important to recognize that seeking outside assistance can alleviate stress and ensure a smoother transition.

Consider assembling a team of qualified professionals, such as attorneys, accountants, or financial advisors, to help navigate this significant life event.

Remember, taking this time off is not just beneficial for your business; it is essential for your well-being and the bond you will create with your family.

If you enjoyed this story, be sure to follow Business Insider on Microsoft Start.

Politics latest: Keir Starmer accused of 'rank hypocrisy' by Rishi Sunak after setting out what he'll do to tackle small boat crossings

Labour leader Sir Keir Starmer lays out his party's plans to try and tackle small boat crossings if it wins power. Listen to the latest episode of the Electoral Dysfunction podcast as you scroll.

Friday 10 May 2024 18:30, UK

• Starmer says small boat crossings 'one of the greatest challenges we face'
• Explained: What's in Labour's plan to try and tackle problem
• Darren McCaffrey: Will Labour's plan cut it with voters?
• Starmer says no flights to Rwanda will take off under Labour
• Sunak accuses Starmer of 'rank hypocrisy'
• Electoral Dysfunction:  Jess Phillips says Elphicke defection like 'being punched in gut'
• UK exits recession | Economy 'returning to full health'
• Faultlines:   Can British farming survive?
• Live reporting by Tim Baker

Across the UK, anger is brewing amongst some farmers.  

Protests have already been held in London, Dover and Cardiff, with more planned - mirroring similar tensions seen across Europe in the last six months.     

They say they’re annoyed about cheap foreign imports and changes to subsidies forcing them to give up land in favour of environmental schemes.    

But what does this mean for the food on our table - and does British produce risk becoming a luxury product for the wealthy only?    

On the Sky News Daily , Niall Paterson is joined by West of England and Wales correspondent Dan Whitehead to find out why farmers are so concerned, and speaks to Liz Webster, the founder of Save British Farming, about why she believes eating British isn't just good for our farmers - it's good for the nation's health, too.   

In response to our report, Farming Minister Mark Spencer, said: "We firmly back our farmers. British farming is at the heart of British trade, and we put agriculture at the forefront of any deals we negotiate, prioritising new export opportunities, protecting UK food standards and removing market access barriers. 

"We've maintained the £2.4bn annual farming budget and recently set out the biggest ever package of grants which supports farmers to produce food profitably and sustainably."

The Welsh government said: "A successful future for Welsh farming should combine the best of our traditional farming alongside cutting-edge innovation and diversification. 

"It will produce the very best of Welsh food to the highest standards, while safeguarding our precious environment and addressing the urgent call of the climate and nature emergencies."

👉  Listen above then tap here to follow the Sky News Daily wherever you get your podcasts   👈

Following the defection of the Dover and Deal MP Natalie Elphicke to Labour, Beth, Ruth and Jess discuss the surprise move and whether it could have been handled differently by Sir Keir Starmer.

They also talk about Beth's interview with the former immigration minister Robert Jenrick and his warnings about Reform UK.

Plus, how significant was the defeat of former Conservative mayor of the West Midlands Andy Street? Beth and Jess were both there to tell the story.

And they answer a question on Labour and the Muslim vote, and what the party can do to restore confidence and trust.

Email Beth, Jess, and Ruth at [email protected] , post on X to @BethRigby, or send a WhatsApp voice note on 07934 200 444.     

👉 Listen above then tap here to follow Electoral Dysfunction wherever you get your podcasts 👈

In January 2023, Rishi Sunak made five promises.

Since then, he and his ministers have rarely missed an opportunity to list them. In case you haven't heard, he promised to:

• Halve inflation • Grow the economy • Reduce debt • Cut NHS waiting lists and times • Stop the boats

See below how he is doing on these goals:

The Sky News live poll tracker - collated and updated by our Data and Forensics team - aggregates various surveys to indicate how voters feel about the different political parties.

With the local elections complete, Labour is still sitting comfortably ahead, with the Tories trailing behind.

See the latest update below - and you can read more about the methodology behind the tracker  here .

Speaking to Sky political editor  Beth Rigby , Sir Keir Starmer has defended his decision to allow Tory MP Natalie Elphicke into Labour.

Ms Elphicke was on the right of the Conservative spectrum, and previously defended her sex-offender ex-husband, comments which she apologised for this week following her defection.

Addressing Tory voters, Sir Keir says he wants Labour to be a "place where they who have ambitions about their families, their communities, their country, can join and be part of what we are trying to build for their country".

Asked by Beth if he was ruthless, Sir Keir said: "Yes, I'm ruthless in trying to ensure we have a Labour government that can change this country for the better.

"Not ruthless for my own ambition, not ruthlessness particularly for the Labour Party - I'm ruthless for the country. 

"The only way we'll bring about a change in this country is if we're ruthless about winning that general election and putting in place a government of public service, that’ll be a major change.

"Politics, I believe, should be about public service, that's what I've been about all my life."

More now from political editor Beth Rigby's interview with Labour leader Sir Keir Starmer.

She reminded him that he previously ruled out doing a deal with the SNP - but has not done so for the Liberal Democrats.

Sir Keir again ruled out a coalition with the SNP - adding that he is aiming for a "majority Labour government".

He says Labour needs "to keep working hard, keep disciplined and getting our message across, which is something fundamental to me".

Pushed on his lack of ruling out a possible agreement with the Lib Dems, Sir Keir says: "I'm going for a majority.

"That's the answer I gave you a year ago. It's the same answer I'm giving you now."

Sir Keir Starmer was earlier today pushed on whether Rwanda deportation flights will take off if he was prime minister - although it was not clear if he would cancel flights which had already been organised.

Sky News understood that previously booked deportation flights to Rwanda would still go ahead if Sir Keir entered Number 10. 

But the Labour leader has now gone further.

Speaking to political editor Beth Rigby , Sir Keir has ruled out any flights taking off.

"There will be no flights scheduled or taking off after general election if Labour wins that general election," he says.

He says: "Every flight that takes off carries with it a cheque to the Rwanda government. 

"So I want to scrap the scheme - so that means the flights won't be going."

Sir Keir says he would rather spend the money on his own measures to counter small boats.

"No flights, no Rwanda scheme. It's a gimmick," he says.

By Alix Culbertson , political reporter

Scotland's new first minister has told Sky News that the controversial gender recognition reforms "cannot be implemented."

John Swinney,  who became first minister this week , has faced questions over his stance on gender recognition after MSPs voted in 2022 to pass a bill to make it simpler for people to change their gender without having to obtain a medical diagnosis.

The UK government blocked the bill from being made into law and the Supreme Court rejected a request by the Scottish government for a judicial review.

Asked if he would be fighting to push the bill through, Mr Swinney told Sky News: "The reality of the situation we face is that the Supreme Court has said that we can't legislate in that area. We can't take forward that legislation."

The UK economy is no longer in recession, according to official figures.

Gross domestic product (GDP) grew by a better-than-expected 0.6% between January and March, the Office for National Statistics (ONS) said.

Economists had predicted the figure would be 0.4%.

Prime Minister Rishi Sunak said it showed the economy had "turned a corner".

He told Sky News's Ed Conway: "I am pleased that while there's more work to do, today's figures show that the economy now has real momentum, and I'm confident that with time, people will start to feel the benefits of that.

"We've had multiple months now where wages are rising, energy bills have fallen, mortgage rates are down and taxes are being cut... I'm pleased with the progress that we're making."

Mr Sunak added: "I am confident the economy is getting healthier every week."

You can read more here:

Rishi Sunak has criticised Sir Keir Starmer's position on Rwanda as "rank hypocrisy".

Speaking to broadcasters, the prime minister says the Labour leader has announced things the government is "already doing".

He gives the example of "punching through the backlog, having more law enforcement officers do more, that's all happening already".

"We've announced all of that more than a year ago," the prime minister adds.

"The question for Keir Starmer if he cares so much about that, why did he vote against the new laws that we passed to give our law enforcement officers new powers? 

"They've now used those to arrest almost 8,000 people connected with illegal migration, sentenced them to hundreds of years in prison.

"And if it was up to him, all those people would be out on our streets, so I think it's rank hypocrisy property of his position."

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