Startups don't need everything right away - there are different points at which brands should consider various insurance policies
In August of 2023, Amelia Risk's CRO & Co-Founder, Danielle Holyoake, was featured on the Startup CPG Podcast to discuss how fundraising & inventory should impact how brands think about insurance.
What followed was nearly 60 minutes of discussion with host Jessi Freitag, covering the following:
- Why D&O insurance comes up during fundraising and why it’s often a requirement of investors
- When to start thinking about D&O insurance and what it covers
- Why stock throughput insurance is important and surprising areas where your inventory may be unprotected
- How inventory is covered from an insurance perspective during freight transit, at 3PL warehouses, and why you might need insurance to protect it
- Examples of insurance claim and inventory loss scenarios when insurance can and cannot help, including spoilage, and temperature control issues
- How to find the right insurance broker and why choosing a broker before shopping for policies is important
Listen to the full show here, or read the transcription below:
Jessi - Hi Danielle, welcome to the show today. How are you?
Danielle - Hi, I'm doing well thank you. Thanks for having me.
Jessi - Yeah, it's so good to have you back on the show. The last episode that we did together, people really enjoyed and found a lot of value in, so I'm glad to have you back to continue our conversation and we got to meet in person earlier this year, which was really fun. So just really great to have you here and I'm wondering if to start us off, you could just tell us a little bit about yourself and a little bit about Amelia Risk.
Danielle - Yeah, absolutely. Thanks for having me again. I am CRO and co-founder of Amelia Risk Insurance Brokers. We started Amelia in late 2019 and our focus is primarily on insurance for consumer packaged goods (CPG) brands. They've worked at both boutique and international brokerages and what I've found is that large brokers aren't very interested in paying a whole lot of attention to the needs of startups. There's a lot of touch points and quite frankly the revenue isn't super high at first as I'm sure that comes as no surprise. I also noticed that there was, what was available to startups is a lot of one size fits all products that are designed to be highly transactional and provide little to no consultation to the founders. So with Amelia, we are here to bridge that gap and provide really good broker services and insurance expertise to startups who need it the most. I've worked with startups and emerging companies for my entire career and I really enjoy it. We use better technology so that we can improve the client's experience and ours. So allowing us to streamline various processes that we can provide true risk management advice and consultation that our clients need. Our goal is not to automate the client's experience. It is to automate a lot of the backend stuff that we have to do so that we can be with our clients and talk to them and be of service. I work with a lot of brands within the CPG community, many from this community which I just love and most of my clients find themselves in more difficult or high risk categories from an insurance perspective. Just you know like baby food, skincare, dietary supplements and this is just due to the fact that folks are really out there innovating and iterating on traditional types of product, making them more functional and quite frankly more interesting.
Jessi - Yeah, yeah that's great and I think that you know I can definitely attest to Danielle's expertise and the Amelia risk team because I think we must have connected around 2020, 2021 something like that. We met through the startup CPG slack and actually you know worked together on an insurance project and I was in a situation working with a company where working with a traditional broker and traditional insurance company where they were like you know we don't understand why you don't have that much revenue. They just didn't understand that we were in a startup mode and fundraising and it was like wait what like this is you know there's nothing wrong with the business. The business is at the phase that it's at, it's just smaller and so connecting with you is such a breath of fresh air to be like oh okay someone who understands the stage we're at can help us find policies that fit where we're at so you've been my like speed dial contact since then being able to have you on the show multiple times or anything it's just so helpful and this is a way for us to just talk about on the show and provide some value and get ahead of some of these things because with insurance you know you and I have talked about before we often think of insurance when it's too late of like oh shoot I didn't have insurance for that or you know sometimes we're prompted by insurance when you're getting set up with a retailer or distributor and they ask for your certificate of insurance and you know they require certain minimums of coverage and you have to provide that certificate and then that prompts okay I need to get insurance but then it's like what does it mean the policy documents are so long and it's just a lot to navigate so for today's conversation I wanted us to kind of talk about that beyond that certificate of insurance like once you have your initial like general liability insurance set up which getting the right setup for that is really important and we cover that a lot of that in the episode we recorded previously so today I want to dig into kind of some of the more specifics insurances that you might not think of besides getting that certificate you send to people so I wanted to hear from you when I talk about kind of like beyond the COI certificate of insurance what do you first think of you know these are areas or gaps that you often see clients be proactive in or end up having to be reactive in because they didn't have a solution in place.
Danielle - Yeah so that's a really great question and it's an interesting thing I think that there are a lot of considerations beyond the certificate but I think a lot of people are very focused on the certificate because that is the thing that is between them and getting on shelves signing with distributors so I totally get that the certificate or a COI is simply just a proof of coverage so it is a snapshot that shows third parties I have insurance and this is the information about the insurance that is in force what's in the policy though the details that where the rubber meets the road is not represented in the certificate so in the event of a claim you hope you have a really good policy but that is like you said covered in a different episode about whether or not the meat and potatoes of the insurance policy are even good beyond the certificate and what these retailers and distributors are going to be asking for. I thought we could talk about two areas so directors and officers liability or D&O and then inventory insurance which is most properly called stock throughput these are less understood areas of insurance programs for startups that are really important for different reasons.
Jessi - Yeah that's super helpful I love both of those areas because I think inventory is something that's easy to forget about that that even that that is an option for insurance and then directors and an operator's insurance like is an interesting area because again it's often something that maybe you're prompted to when you're fundraising and maybe it's within your term sheets or something that investors are requiring you to have that insurance but like what does it mean so I'm curious if you can start us off on the fundraising side like if a brand is is going to eventually fundraise if they're thinking about fundraising can you talk about when they should start thinking about that policy what does it mean what does it include just a little bit more info about it.
Danielle - Yeah absolutely so I know a lot of brands are interested in fundraising at some point and they should consider D&O part of their future if that's the case a lot of folks are bootstrapping which is really awesome I love to see it but for those that are considering fundraising D&O is a very important piece to think about it is a policy that specifically covers the individual directors and officers of the company in their capacity as such so you know that's a that's a mouthful what that means from a practical perspective is that you're running a company you're making decisions every day that impact said company if you've raised funds and you're using other people's money in those decisions and those shareholders come back and allege that you mismanaged the funds or you made x y and z decisions that were detrimental to the company this is the policy that protects you from those allegations or lawsuits but in a nutshell do you know policy protects you from shareholder claims of mismanagement it's a very broad policy we typically see that these types of claims come at transactions so acquisition IPO bankruptcy or maybe another round of funding and a good D&O policy is really intended to protect the individuals the board and the entity in terms of when brands need this or when founders should be thinking about this or if they need this it really depends it depends on a specific situation it depends on your tolerance for risk if you're doing a round of friends and family fundraising i suppose it depends on how risk-averse you are and who those friends and family members are how likely are they going to bring a claim against you any sort of funding that is you know angels seed institutional funding i would say definitely you want to think about this and be prepared that like you said Jessi at certain points or certain fundraising levels like series a for sure it's going to be required by investors there is not a one-size-fits-all rule of thumb here so it's best to chat out with a broker and understand where the risk lies from a very technical perspective your risk with discussing and the fundraising and the decisions that you're making really start at the time that you start fundraising so what you don't want to do is wait until you know raise money on in 2023 let's say and then wait until two months before you sell the company and then buy the D&O because the decisions that you made prior to that would not be insured so you do want to think about this early it doesn't necessarily mean you need to buy it right away but don't wait until you've got a transaction happening to think about behind this.
Jessi - Yeah that's that's a really good point and so basically just to kind of put it in you know other terms it's protecting you as the business owner so if you have an investor who say they decide that you have mismanaged the funds somehow or they don't agree with the decision that you make some you know some extreme protection this basically means that your personal assets and funds like aren't at risk because they're like hey you owe me xyz amount because that's what it cost me as an investor because you're mismanaging my money but then it's also protecting the investor which is why it's required because then if they lose their money because someone did mismanage it and that person doesn't have the funds to pay them back or the business doesn't then the insurance kicks in and can protect their investment.
Danielle - That's exactly right so this policy protects the individuals and their personal assets when they are individually named in a lawsuit and the reason that investors like to see the D&O policy is that it is a vehicle for them to collect if and when something goes wrong they want to know that there's a little bit of a backstop.
Jessi - Yeah that makes sense and the terms you know directors and officers because those terms are often really used in startup world like does that just cover anyone who is in a leadership position does it cover like who you put on your state documentation like who's your secretary of your company or whatever like i'm curious how broadly that term applies.
Danielle - Yeah that's another really good question so first it depends on the policy every policy has its own definitions but the ones that i have reviewed and seen and sold and negotiated all are very broad i haven't seen any that specifically list any directors and officers they are not specifically scheduled on a policy most of the time the definition is employees interns even so anyone that works at the company would be included on this policy it does not limit it to people specifically named or in the bylaws or anything like that.
Jessi - Okay that that's really helpful and if you are fundraising and you know for example that you do want to get a D&O policy like how soon should you like reach out to your broker to get that set up because like you said if you want it to start to be active so that it's covering everything in time so how long does it take to find you know find the right policy how much time would you allow for kind of you know finding the right fit from a price and go over all the details.
Danielle - Yeah so the underwriting process itself doesn't take very long it depends on how quickly you want to move if we get completed information and you want to move very quickly it can be a matter of days maybe a few weeks but i would say that having a discussion with your broker about what your fundraising plans are and what that looks like what the specifics look like when are you closing the rounds how much are they who are they from those types of things should be discussed and determined when is D&O a priority for you but if you already know that D&O is a priority i budget you know two to three weeks for a very comfortable time frame
Jessi - Nice that's super helpful. Yeah is there anything else you wanted to add on D&O before we kind of switch gears into inventory.
Danielle - No i don't think so i say it's it's not as scary as it sounds i mean none of this is right yeah and i would say don't be afraid to talk about it you know i think sometimes the folks have this fear that if they talk to an insurance broker and they show any interest in something they're going to be forced to buy that particular thing and that's not always the case don't be afraid to be educated on these things and toy with the idea of is this important to me or is this not it might not be today and that's totally okay but i would recommend having this conversation if you're interested in fundraising.
Jessi - Yeah no that's awesome i'm really glad that we included this section on this because i from my background with some you know startups that have raised money i just think that it's such an important policy to think about and have on your radar even if you're not ready to buy it yet just to know that it's going to come down the road and know what kind of does i really appreciate you you know explaining that a little bit to us and in words that we all understand because it like you said it's really it's really intimidating yeah on the inventory stock throughput side can you explain to us a little bit more about like what this covers and then we can kind of dig into some specific instances where it might cover but just kind of a recap of like what this does what we're trying to protect and the you know the value that it that it brings to to the startup world.
Danielle - Yeah so inventory insurance this is something that comes up a lot in my conversations with founders and it can feel very complicated you know supply chains are inherently have a lot of moving parts knowing how your ingredients and your inventory your finished goods are all insured and where and by whom and to what value takes a little bit of digging in to your particular risk so firstly i've said it before during our last discussion and i will say it again startups don't need everything right away there are different points at which brands should consider various insurance policies general liability is the most important piece of the puzzle to get right away that covers third party claims of bodily injury most distributors and retailers as we've said are going to require this of you so that really does literally open doors however you know i think it's important to think about your inventory and how or if it is insured this is a confusing area for a lot of my clients i typically spend a fair amount of time going through this as i start working with folks so i'll start with just defining it so inventory insurance can be called a few different things ultimately it is a property policy of some sort you can ensure inventory in a variety of ways and there are more robust or more skim ways of doing that so you can ensure your inventory on a standard property policy a cargo policy or what is called stock throughput which is basically a combination of the two a stock throughput policy is one that has two coverage parts cargo or property in transit and location coverage for property sitting still at various locations such as 3PL or co-mans the beauty of this policy there are many beauties of this policy but one of them is that it ensures your goods at any point in the supply chain and it eliminates the gaps in coverage that exist at particularly loading and unloading because that's where a lot of claims happen what we don't want is multiple insurance companies multiple parties being involved and pointing fingers in the event of a claim so for instance one insurer says well we were at the warehouse the truck wasn't moving it's not our policy another insurer says well it was on the truck so it's not our policy you can see how that can get pretty messy and frustrating the stock throughput policy is designed to ensure your property from a to z right and if there has been direct physical loss or damage to the property so think storage containers or pallets crushing other pallets or storage containers perhaps infestation that depends on the policy spoilage if there's a failure of refrigeration of fire at a warehouse or on a truck which we've seen or maybe theft so there are a number of ways that this policy is or can be very robust particularly compared to the other option which is a standard property policy which i'll get to in a moment but spoilage is one thing to think about do you have a shelf stable product do you have ingredients that are subject to spoilage if temperature what we look at when evaluating a brand specific needs is what happens to each of the ingredients or finished product while it's subject to different temperatures so for example a former client of mine had a finished product that was shelf stable but they had it was a canned beverage with real fruit juice in it the fruit juice the raw materials that went into the finished product was not shelf stable so we needed to add spoilage coverage for the incoming shipments of the raw materials to the co-man even though their finished product was shelf stable so we want the policy to cover you know those losses another piece of the robust nature of this type of policy is the valuation this is where i would say property policies very much differ from stock throughput policies valuation of your product so most property policies ensure property at replacement cost and i've even seen some that are at actual cash value which is not good for most brands it's advantageous to ensure your finished goods at selling price stock throughput policies take the selling price into consideration and you have a choice to ensure at selling price or at invoice cost or at replacement cost but it gives you some control over what you want to buy what matters to you how do you want to be reimbursed if you do have a loss another thing to think about is catastrophe losses or cat losses as we call them things like flood earthquake wind property policies exclude cat losses like flood and earthquake you have to buy those separately stock throughput policies can include these causes of loss and they often carry higher deductibles and there are regionally maybe some limitations but it's designed to be a much more comprehensive policy in that way.
Jessi - That's super interesting because so much of the cash of a startup is tied up in inventory yeah and so to have a separate insurance policy that's basically covering what your cash is all tied up in makes a lot of sense like because i think to your point about you know shipments and in transit i even think about the times that i've like tried to file a claim with you know a freight forwarder freight carrier or something like that and it's always so complicated and it's just like you're trying to prove everything and then at the end of the day you just spent hours trying to get you know a couple hundred bucks and so i'm curious like from thinking about like the freight in transit like how do you evaluate that part of like you know buying insurance for an individual load versus having like a stock throughput policy like how do you think through those you know where it makes sense if you have a stock throughput policy that does that mean you don't buy individual insurance policies when you're booking an LTL load for example.
Danielle - Yeah so this is this is part of what i get into with clients and figure out first of all what are their shipments look like some of my clients do just one or two maybe three big production runs a year maybe it's worth it for them to just buy the insurance per shipment because there's not going to be that many throughout the policy year or the the calendar year even it may be cost effective to buy your own annual policy and not be paying for the insurance per shipment and then you know the other thing aside from cost is is really control over whether or not you're getting good coverage i think product valuation is key here the fact is that if you rely on third parties for ensuring or protecting you it means that you're giving up some control over whether or not that policy is even enforced or has been renewed maybe it cancelled for non-payment was it a comprehensive option in the first place you really don't know what the other party has deemed inappropriate policy for them or for you and i can almost guarantee that you would not be getting selling price on your finished goods through someone else's insurance policy because there's virtually no way for the underwriter on the other end of that to underwrite for your product.
Jessi - Right yeah yeah that makes sense and kind of adjacent to that would be like 3PL warehousing so if you're using a 3PL or an external warehouse is this something where you check like do you ask a 3PL to send over their insurance you can kind of identify if there's gaps does this like kind of double over anything that they have and you add you know you add the that warehouse to your policy i'm curious about how when you use external warehouses owned by other people how that fits into the policy.
Danielle - Yeah so this is a really common one my advice on that first and foremost is look at your contract which sounds you know pretty simple but more often than not i find that they're not only not insuring my clients goods but they're requiring my client or the or the brand to carry their own insurance on the inventory when and in the same rule here applies even if they are offering some insurance or guarantees to what degree and oftentimes when they are responsible or say yes we will reimburse you for x amount of losses it's a certain dollar amount per unit or per pallet that the client is getting and it almost never would be would make the client whole so is it something maybe but would it be properly insured likely not and there may be exceptions to that but i haven't seen them yet so i would just recommend that folks look at the contracts and determine who is responsible here and and what happens if there's a claim what how much money would i be owed if the other person is responsible.
Jessi - This makes me think about transit to distributors as well and I'm curious if you know or have run into for example if a big distributor is coming and picking up at your facility and you've documented what you loaded on your truck and then you get a charge back that says hey we didn't receive a whole pallet does this kind of insurance help in those kind of instances as well or is that kind of a separate thing that you handle with your distributor?
Danielle - So that's a good question I would say probably it's a separate thing you're handling with the distributor theft could be an issue here it sounds like somewhere along the line there was a mistake made or a miscommunication but if there's evidence of direct physical loss or damage to the goods meaning there's evidence that there was theft or there's actual damage to the goods then yes this could this could certainly apply but errors in taking inventory or you know product not being where it should doesn't sound like a stock throughput claim to me but of course it totally depends on what the specifics are.
Jessi - Yeah for sure yeah I was just thinking about those distributor things that sometimes come up and I'm curious too that brings up like what kind of documentation and I'm sure there's good documentation practices in general for these types of claims but what does this actually look like practically for you like if you have one of these policies and you want to be able to file an effective claim so like what things do you think through is it taking pictures is it you know having your files in order like what sort of things should you have good records of to make sure that you can effectively file a claim since you're paying for a policy like this.
Danielle - Right yeah that's a really good question so with all claims insurance we really like to know the who what when where why right as much as you can give us the information about what happened when it happened how much is subject to it who was involved and it absolutely yes pictures a lot of times the insurance company may want to see samples of the product I did have a client who had a claim of crushed containers and they deemed their product unsellable and an inspector came out to review the product and inspect random cases to see was this in fact unsellable even though it wasn't visibly crushed from the outside so yeah maintaining some of the product itself and not necessarily moving it I know that can be kind of hard because you know warehouses or ports or wherever the product is they need it they need to move it right it can't just sit wherever it is forever but getting the insurance company or your broker involved as quickly as possible to understand what the best practices are with regard to dealing with product or disposing of it is really important but I would say definitely document all of the you know specific details the who what when we're why with pictures is is really helpful.
Jessi - Yeah for sure because yeah I think of freight deliveries in particular where you get something a box is crushed or opened and you're not going to be able to use it and you know maybe you find out or you were sending it to someone and like a day later you find out oh yeah we didn't receive that whole pallet one of them was broken and we just threw it away and I'm like no pictures like sign the bill of lading that says that it wasn't all received or something you know but it's hard to do in the moment like it's so hard to remember but that documentation is also key to have later so that you can yeah actually draw on these policies that you have put in place totally I feel like another question within this inventory piece is for folks that their inventory fluctuates a lot like what do you advise them as far as like deciding kind of how much inventory to have insurance for because it may change a lot throughout the year do you ensure for the highest peak of the year is that too expensive how do you talk through you know how much to ensure for at a given times.
Danielle - That is a question I get a lot and you know ideally you want the policy limit every policy has a limit property and liability so for property policy you want the limit to reflect the most amount of product you would have at any given time so for brands where this they are highly seasonal and that limit fluctuates dramatically you don't want to be paying for insurance at a million dollars worth of insurance somewhere where sometimes when they have 20,000 what we ask for with very seasonal products where there's a lot of variability in the amount of products they'll have at any given time what we want to do is look at the average amount and then the maximum amount what we do is we give that to the underwriter so that it would be you know it is more risky from an insurance perspective to ensure a company that has five million dollars worth of stock all year around at this warehouse versus one that has five million dollars worth of stock for one month of the year and then five hundred thousand for the rest of the year right because likely if there is a claim the maximum that would be there would be closer to the average than it was the highest so underwriters take that into consideration and they price it accordingly so what we do when there is a lot of fluctuation is really just paint a picture for the underwriters to understand what this business looks like and price it in a way that reflects the true risk but the you know the short answer is you want to choose the highest amount of goods you'd have at any given time because that's how much insurance you would need if you had a claim at a time when you had that amount there.
Jessi - Right yeah that makes sense i'm wondering if i feel like in the past you've had some really good scenarios to walk through like to help kind of make this more concrete do you have some scenarios you could walk us through of either some claims or some losses i think that would be really helpful.
Danielle - Yeah i do um we've seen a number of claims or concerns from our clients over the past few years with regard to inventory it's one of the more frequent conversations that we have i think you know especially with the pandemic the supply chains were just a total mess um i think a lot of people were feeling that so one of our clients had three claims in a roughly six month period of time none of which were their fault and the issues were largely in transit and at ports so they had crushed containers that was mostly it there was one that was infestation they did have stock throughput policy and they were fully reimbursed up to the limit of the policy for that so while claims are never fun this one was a good outcome because the losses were fully insured we've had a number of clients that have had leaking cans this is probably half a dozen folks have come to me about this that one is tricky because it really depends on what happened well all property losses depend on what's happened but sometimes this is an issue with the can not being an appropriate fit for the beverage that's inside of it um what we look for and that's really not my expertise but what we look for is has there been direct physical loss or damage to the product if not then that sounds like a manufacturing issue and something that needs to be rectified and troubleshoot there but if there has been direct physical loss to the product then that would potentially be an insured loss another thing that typically comes up or has come up with a few folks is product that tastes off or the texture is off something isn't quite right with how it tastes and i've had questions from folks around spoilage that scenario is not an insured loss that scenario is likely a manufacturing issue as well so product that just doesn't taste quite right or it doesn't come out the way that you wanted it to that is not insurable under this type of policy that is something that needs to be dealt with with the manufacturer again there has to be direct physical loss to it and the spoilage coverage more often than not but again you have to really read into the policy that you're considering is coverage when your product spoils because there was a mechanical failure of some sort of temperature control so again if you have shelf stable ingredients and shelf stable products then spoilage would really not apply here so there are you know a number of things that we see clients struggling with some are insurable some are not insurable it depends on what the situation is and there are a number of ways to ensure your property some are really good some are not so great ways not everyone needs a stock throughput policy right out of the gates many don't there are some advantages to adding property to your existing general liability policy if that is available there is sometimes some transit coverage that can be thrown in on property policies i wouldn't say that they are extremely robust options but not everybody needs this level right away but i would say that knowing the landscape of options available to you and knowing the limitations of certain types of policies is really important and understanding what's available to you how your needs are going to change over time is also important and so that you can make a decision that you're comfortable with and that you made because you knew all the information that was relevant to you.
Jessi - Yeah absolutely i think just knowing that down the road is your business has more shipments or more external warehouses this may be on your roadmap maybe you don't need it now but maybe you can have the conversation with your broker now and ask about property coverage because maybe that's enough for you so yeah there and i definitely want to talk more about how to find the right broker to work with on all of these things because i think that's super important but i wanted to see is there anything else in the stock throughput category that you wanted to talk through specifically before we kind of jump into how to find the right person to help you navigate finding a policy??
Danielle - I think that covers it for stock throughput you know i think that that yeah it can it can be a complicated project to sort of figure out who ensures my product and how do i figure out the limits and you know just sort of working through it all but again i think supply chains are complicated and so that that process is is sometimes necessary.
Jessi - Yeah one last question i guess that prompts me thinking about how we've had an exceptionally hot year here in the united states and we're talked a lot about shelf stable i was thinking about how i've seen more with manufacturers saying you know hey then we know i know the thing we manufacture for you is self-stable but like i need you to sign a waiver that you're going to pick this up using a refrigerated truck because this you're just because your product shelf stable doesn't mean that it should be you know 110 degrees or 150 degrees inside the back of a hot truck are you seeing the the temperature pieces and the seasonality like even when you're dealing with shelf stable these considerations still come into effect where you need to be thoughtful about how insurance might not cover it getting really hot but it still might spoil your product so you're going to need to make the appropriate arrangements.
Danielle - Yeah this is coming up a lot and i think we're in a moment where if from an you know the insurance industry is addressing this what i'll say is spoilage coverage has to be specifically underwritten so the underwriters look at on on this type of policy anyway you don't want to stock throughput policy the underwriter will ask questions about your product they will ask questions about the transportation so you have to show that you are caring for the product from a temperature control perspective what wouldn't be possible is having a shelf stable product that you don't control the temperature for right because it's shelf stable and you don't maybe use reefer trucks and then getting the spoilage coverage the the underwriters are not going to ensure that what they want to see when they're offering coverage for something like spoilage is that you're doing what you can to mitigate spoilage from happening in the first place so that that piece has to be there so i'd say that for folks who have a product that's shelf stable and doesn't you know in your in someone's home required to be refrigerated but they are worried about their product being damaged some way from extreme heat while in transit you may want to look into getting a refrigeration truck and you know i understand that there's a cost associated with that but again from an insurance perspective the underwriters would need to see that you're doing that in order to offer insurance for it.
Jessi - Yeah that makes sense and on the flip side of getting frozen too i've had a truck get stuck in a blizzard shelf stable product but it still froze it to a way that when it thawed right it had spoiled and so you know yeah now i'm like okay do you know if there's going to be a blizzard then we're going to send it in a reefer
Danielle - yeah we saw that and i think it was what march 2021 in Texas
Jessi - yeah so yeah that's very interesting well that's all super helpful and i think all of this highlights that having the right person to talk through this is really important because you've mentioned a lot how you can act as the go-between with the underwriters how the people that are underwriting your policy and coming up with what it's going to look like are really important but most of us are not equipped to talk directly to an underwriter and that's where having a broker can come in so can you talk us to a little bit about how do you find the right broker like what should someone look for like obviously we're going to talk about how to connect with Amelia risk and that's something that i highly recommend is you know finding a good broker partner but for you if someone's like this seems really interesting like i made this great connection at a show or something are they the right broker for my business what would you talk them through as far as making sure that that broker is the right fit for their business.
Danielle - Yeah great question i have a lot of thoughts on this obviously so first i would say there are a lot of one size fits all off the shelf products out there that and if i could shout one thing from the rooftops it would be to steer clear of these types of policies that are designed to be sold to everyone without a consultation with a broker to understand your unique risks i don't love when i hear people advocating for simple and fast and transactional ways of obtaining insurance not that those things are not ideal we all want simple and fast but ensuring your supply chain ensuring your product getting the right insurance for you can take a little bit of review particularly on the inventory stuff property insurance is very nuanced and supply chains can be complicated getting good insurance that will make you whole in the event of a loss is it might take a conversation or two and i don't think that that's a bad thing selling policies on making it simple for a client is doing a bit of a disservice in my opinion and again not because i don't also want simplicity but because doing it right might mean digging into the details so i strongly recommend that folks work with a specialist in this space and that means someone who's both a specialist in the insurance industry as well as the cpg industry so you want someone first and foremost that understands insurance work with a broker who has relevant commercial insurance expertise and experience and secondly one that specializes the in the industry that you're in and can understand your business insurance brokers are not created equally and some have more experience and insurance knowledge than others my recommendation is to find that out by getting on the phone with them and having a conversation and understanding what they do best and how they do it and will i like working with this person typically if you have a phone call think you know you you have kind of a gut on on that as far as how it feels to talk to them and did you get your questions answered do you feel like you understand this process for you and your brand better and then once you find someone that you feel you know knows what they're doing you feel like you'll have a good working relationship with them move forward with exclusively that broker i know that that sounds counterintuitive because people want to go get as many options as possible and i think that's a good idea to do on the broker level but not on the quote level you know long story short it gets a little bit muddy on the back end when you have multiple brokers involved so you definitely want to do your due diligence on your broker relationship and then let that broker go represent you to all the insurance companies that they can
Jessi - Yeah that's a really important point about do your shopping for your broker first and then have your broker help you do your shopping for your insurance policies doing both at the same time because yeah it's confusing because then multiple people could be pinging the same insurance company and underwriters saying hey write up a policy for this company and they're like wait who do i write this up for.
Danielle - And the brokers get blocked. So what happens in that case is the first one that got to that carrier is the broker that gets to quote it so you might have the right insurance company with the wrong broker you might have the right broker with a less than ideal insurance company because it was first come first serve and oftentimes what you end up with is a bunch of different quotes a bunch of different brokers with different formats for their proposals saying this is the best option for you and now you're kind of back to square one because you don't really know how to compare these brokers proposals against one another it can it can get a little bit messy so i definitely recommend the due diligence process on the broker load i would ask them to get on the phone and ask through all of your questions
Jessi - Yeah absolutely like you said you can learn a lot from that intro call i mean i've unfortunately spoken with brokers that you know wouldn't even weren't even willing to get on the phone they're like don't worry about it i've got your insurance i'm like but i have questions and like you know i'm too busy and i'm like you know they're like your policy is fine i'm like that doesn't make me like help me sleep at night like i want to be able to talk through things or when someone's just like hey sign this policy it's good and i'm like well can we talk through what it means for my business and so right being able to have someone you can ask your questions to and that you're comfortable asking your questions to and talking about you know insurance you might need down the road without feeling pressured to have to purchase anything that you're not ready for is really important.
Danielle - Yeah and i think you know i had a mentor many years ago tell me you know insurance brokers get paid on transactions not on time so that's why it might be difficult to have these lengthy conversations with some folks because they want to sell the policy they want to get the sale and i am not trying to be cynical here there's a lot of wonderful people in my industry and there are a lot of wonderful brokers that will talk to you so go find the ones that will talk to you because there are those out there.
Jessi - Yeah for sure well speaking of those a great one that we know and are talking to right now tell us a little bit about what it looks like to work with Amelia Risk how you know how do you generally start an engagement with folks um you know what does it look like to talk to your team and then is it best to you know reach out via the website how do people get in touch with you if they want to have a conversation.
Danielle - Yeah so uh not surprisingly i like to start off with a phone call uh with everyone to better understand i like to hear about the product from the founders or the you know whoever i'm talking to with the brand from their perspective i ask a lot about the product i ask about the strategy of the business i get to know things and i determine based on that what i sort of think is important for me to be thinking about and talking about them but then i really want to know what's what's going on right now that this is coming up and what are your specific needs and questions around this because i might have an idea of what i think you should have but i think you have an idea of what you should have too so that's kind of the first step i've had very few very few times where i would take on a client without first having an introduction call it has happened but it's not very common and so in order to reach me you can do a couple of things my email is [email protected] that's a m e l i a r i s k you can go to our website and contact us there you can email me or i'm also a part of the Startup CPG slack community you can send me some dms i'm very active in that community so i you know in kind of monitoring conversations and i respond pretty quickly so if that is the easiest way to find me then that works yeah.
Jessi - That's great yeah i was going to mention that you're very active in the slack and that's a great a great way to find you and i would just add for a client from a client experience perspective because you kind of noted that how you know people are always looking to save time on these pieces and how saving time on setting up a you know out of the box policy really fast without talking to someone isn't the place to save time but your team has found other ways to save time with really automating some of the you know you fill out information and then it rolls over into the next form that you fill out or something like that once you're getting into the actual policy side so i know i was impressed and have been impressed with your team's use of technology to kind of make things smoother on the back end and i really appreciate that compared to some other insurance experiences where it was like hard to get the policy set up and not a lot of talking about what it included and then it was still clunky to get it set up and you've made it you know you help people find the right policy and then you help use technology to kind of make it smoother to actually get everything all signed and all the the t's crossed and i's dotted and everything.
Danielle - Well thank you yeah again we are we are really focusing on technology that helps make your process and our process easier but not technology that reduces your options you know and and streamlines you to one thing i think it's really important that as a broker we can still do our job and take your business to multiple insurance companies that we deem fit and see what those responses are so it is you know it's a pretty old industry there are some really awesome disruptors in the space making brokers software tools a little bit better but we don't want to distill down the options and the policy to something that is very quick and easy thing to get but doesn't cover a whole lot and reduces the client's options
Jessi - Yeah for sure yeah you do a really good job of striking that balance so i'll make sure to include the links to the website your email all of that in the show notes so that folks can go find there and then you know again find Danielle in the Startup CPG slack community that's a really great way to connect this has been awesome i i really appreciate you taking the time to walk us through some kind of complicated topics and i think i love that we're going to have this in our library for folks to be able to refer to as they navigate these topics so just really appreciate you coming on the show today thank you so much i i love it and i really appreciate the opportunity to chat with you and it's always super enjoyable this episode was sponsored by Amelia Risk thank you for listening in today i'm so honored you join me for this conversation and i love hearing from you all with feedback suggestions or if you just want to say hi at podcast at startup cpg.com or you can find me on LinkedIn if you liked this episode we'd love for you to share it with a friend or colleague subscribe so you don't miss future episodes and maybe even leave us a five star review on apple podcasts if you aren't yet in our slack community of founders and experts we'd love to see you there you can get the free invite at startup cpg.com and find all our other awesome resources there like webinars databases the blog the magazine and virtual and in-person events and if you found yourself rocking out to our intro and outro music which i do every single time make sure to check out the Super Fantastics on Spotify it's the band of our Startup CPG Founder Daniel Scharff. I’m Jessi Freitag your host and producer and on behalf of the whole team at Startup CPG thank you for being here and see you next week