With Scott Orn

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Scott Orn

Scott Orn, CFA

Jeff Samuels of Founder Shield - Insurance for Startups

Posted on: 11/03/2016

Jeff Samuels

Jeff Samuels

VP of Sales - Founder Shield

Jeff Samuels of Founder Shield - Podcast Summary

Jeff Samuels of Founder Shield joins us to talk Insurance for Startups. We discuss General Liability, Errors & Omissions, Workers Comp, and Benefits. It’s an episode designed to answer every possible question a startup could have about Insurance.

Jeff Samuels of Founder Shield - Podcast Transcript

Scott Orn: Welcome to Founders and Friend with Scott Orn at Kruze Consulting, and today I have a guest Jeff Samuels from Founder Shield. Welcome Jeff.
Jeff Samuels: Thank you, Scott.
Scott Orn: So Founder Shield does insurance for startups. They are a provider we use all the time. Really nice web interface. Awesome people. They are one of the Kruze Consulting’s go to partners. So I wanted to have Jeff on to talk about what Founder Shield does. Talk about what startups should look for in insurances. There’s all these different kinds. There’s Worker’s Comp. There’s General Liability. There’s Errors and Omissions. All of the stuff. We’re going to go through all those topics so that you folks know what kind of insurance your startup needs. Makes sense?
Jeff Samuels: Makes sense. Sounds good. Cool.
Scott Orn: So tell a little bit about yourself. How did you get into insurance business? How did Founder Shield start?
Jeff Samuels: I’ve been in the tech business for the past 10 years. I started really more in the affiliate market so I did a lot of Adage and C work which transitioned into mobile technology. I’ve worked with mobile app developers. Really great company called Branding Brands, where we were building e-commerce apps for companies like Sephora, Crate and Barrel and Ralph Lauren. The next company I worked at was a business called Xtify, which was hyper location based push notification. So super niche business. Ended up being acquired by IBM, which was fun and definitely a learning experience for any young entrepreneur to be part of an acquisition. We were a team of about 14. Pretty significant acquisition number. Amazing learning experience. One of the things that they told us at immediately as IBM was when you’re acquired you either stay there and have a career for 30 years, or you’re an entrepreneur at heart and you get the bug and you leave. That was totally me. I took what I needed to learn for about a year and a half. Meanwhile my father, back in New York has always been in the insurance business. Always chirping, ‘This is a great industry. You should get involved.’ I wanted nothing to do with it. I’m a tech guy and I loved those startups base, and the innovation for me was just not there. P a g e 1 ǀ 13
Scott Orn: Is that because you hadn’t gotten into it? Because the way we approach accounting is like that. If you look on the outside it is super boring, but we can get the coolest things ever. because we’re implementing all the new cool tools. This sounds like a really dark thing to say, but we’re on the cutting edge for startup in accounting. These boring industries can sometimes be really exciting.
Jeff Samuels: I think it changed for me once I got my license and once I got more ingrained in the business. The reason why I made the transition from IBM to Founder Shield I met Benji and Carl, the two co-founders about 4 years ago, while I was doing some consulting work on the side. They and I were at a co-working space called the Alley which funny enough we’re in the New Alley in New York City today. I met Benji and Carl in passing. They said, ‘We’re doing insurance for tech startups.’ A light bulb went off in my mind. I said, ‘This is a brilliant idea.’ These guys were aggressive, too. They were sitting at the entrance of the co-working space. They were in soliciting companies, but they were basically making their presence known. And it stuck with me. When I was ready to make a change from IBM, I reached out to Benji and Carl. They were two people. They had just hired a marketing person named Samantha Ruben. It was the perfect time for a VP of Sales to come on. So that was my shot at leaving IBM and going back to the startups phase. Funny enough, it was in insurance. But once I really got into the thick of it, you really see the interesting part of the business which is learning every intricate detail that a startup has - their fund raising, their cap tables, their projected revenues for the year, their competitors; their clients; where their vision is. Because you need all these pieces to [inaudible 00:04:10] different policies.
Scott Orn: I also suspect you see what could go wrong. At some level that’s one of the values we provide, and I think you guys are the same way. The companies that come to us have a good idea where they want to go and what they want to do, but they don’t know what could go wrong and so we keep them on the rails. And I think you do to0. I came to you and I asked what kind of insurance these guys need. You’re the guy who keeps our clients on the rails in terms of insurance. You make sure we don’t mess anything up.
Jeff Samuels: Well, that’s the goal Scott. Obviously the venture capitalists like the VC, the Angels, people like Kruze Consulting are doing a great job of providing that kind of feedback and recognition that , ‘Hey, insurance is something that you need to take seriously.’ Obviously, for many entrepreneurs there’s a stigma there. People don’t really want to talk insurance. I think part of the reason why we do so well in the startup space in the ecosystem is we understand that, and we are former startup people. But we also know that when you’re starting to see some meaningful revenue, you’re closing enterprise P a g e 2 ǀ 13 clients, you’re raising capital - you have something that you need to protect. And that’s really where we step in and founders and entrepreneurs are ready to talk insurance and really hear what we like to say.
Scott Orn: I like it. We are the major referral source to you guys, I’m sure. Maybe you’d talk about and go through the things a startup needs to think about when getting insurance, and then we can slowly get into different buckets of insurance. As you said in your previous conversations, there are things you need to protect, there are things you need to worry about. What are those things you need to protect against? Who do you need to protect?
Jeff Samuels: The rule of thumb, specially for software businesses is whenever you’re live, whenever you’re consuming data, whenever you are having real costumers test your products there’s a risk there. Doesn’t mean that’s the exact moment you should have a policy in place, but soon after it’s really a matter for us. A lot of times young companies come to us and say, ‘Hey, we have our first enterprise deal.’ This happens, I can’t tell you how many times a day but in emails from a mass of companies. ‘We just landed a massive deal that have this section in our contract for insurance requirements. What the hell does this mean? How do we go through this? What does all this mean?’ Basically what we do is provide feedback. We help companies negotiate the insurance sections of the contract.
Scott Orn: I didn’t know that. That’s awesome.
Jeff Samuels: A lot of time you’ll see large businesses have a boiler plate contract and they will request $25 million in cyber liability limits. Meanwhile the contract is maybe a $20,000 contract or [inaudible 00:07:06] concept. So we like to help out and figure out is this within reason? Are these coverages actually applicable to the business in the service that you’re selling? That’s a lot of what the first conversation is, ‘I have a contract. I’m trying to close this client. What the hell do I do?’
Scott Orn: It sound like one of the trigger points is closing a big enterprise customer. They are going to require General Liability, or what kind of insurance is that?
Jeff Samuels: It really depends on the business. It’s usually what we call our Bootstrapper Package, which is our General Liability, Commercial General Liability, Errors and Omissions also known as Professional Liability, and then Cyber Liability. It’s not definitive. It depends on the type of company, and who they are doing business with. If you’re talking about a SaaS or an e-commerce, big data company a lot of times you’re going to see those Errors and Omissions, Cyber Liability, General Liability P a g e 3 ǀ 13 requirements which we can help guide and provide feedback. What does this mean and what’s the right way to get a policy in place to cover these things.
Scott Orn: I’m familiar. We have all this stuff too. There’s one other trigger event that I see quite a bit and that’s moving into a space. Like the landlord requirements. What does the landlord usually require?
Jeff Samuels: For co-working spaces and if you have your own small office or a shared space, usually General Liabilities require the basic insurance definition there like bodily injury and property damage of third parties, which basically means if you’re a staff worked company and you’re moving to a space, obviously the risk is low. What we want to protect is if you have clients, if you have investors, partners coming to the office - your basic slips
and falls: Protecting the property in the office.
Scott Orn: Or raising lunch party, you’re going to need this.
Jeff Samuels: You spill beer on your Maple Pro. That sort of thing. That’s your property coverage. So it depends on the business. General Liability gets more interesting for companies in the Internet of Things space, for example. It may be a hardware company. That’s when Products Liability is more of the relevant coverage within General Liability. So it always depend on the business but you’re right Scott, for companies starting out for moving into new offices General Liability is usually the basic requirement. We also see that with PEOs - for companies like TriNet, back in New York we do a lot of work with a company called Justworks - and a few other PEOs; they usually required General Liability to get their programs moving as well.
Scott Orn: I didn’t know that, interesting. So General Liability is protecting basically third parties that come to your office ad use your products and things like that.
Jeff Samuels: That’s correct.
Scott Orn: Then can you talk about Professional Liability and Errors and Omissions? At Kruze Consulting we’re a special kind of corporation. We’re an accounting corporation regulated in California. We have that, and it’s a very specific kind. But maybe you’ll talk about your standard startup, what are they looking at there?
Jeff Samuels: Sure. Actually when I explain Professional Liability also known as Errors and Omissions, I use this similar example which is Founder Shield is a professional organization. We’re licensed insurance brokers. So by law we have to carry Errors and Omissions. For doctors it’s their medical malpractice. Same thing with lawyers. So it’s really any professional service that has an expertise in a certain area, that is delivering their P a g e 4 ǀ 13 product and their customer is making financial or any sort of business decision based on that. That’s going to be to what they’re covered just for. And if there is any sort of financial damage; damage to the brand or business that would be a quintessential Professional Liability claim. Where it gets interesting for Silicon Valley, Silicon Alley, when you look at SaaS companies , big data companies with any software business on Errors and Omissions, Professional Liability is going to cover the platform related issues. So if you have your typical statement of work and they say, ‘Whatever your terms are to buying this contract between the business and the client.’ Founder Shield is going to deliver X results to Kruze Consulting by you working with us. Same thing with the SaaS company. You’re going to be able to have these type of analytics on a monthly basis and you’re going to have 99.9 % up time. If there’s any outage in that platform, or if there is any downtime where there is damage to their customer because of that, that would be a quintessential Professional Liability claim. Really interesting the underwriters in the tax base have gotten a bit more savvy, which is good. They understand SaaS companies now. They’re getting more hip to technology. They also understand that Cyber Liability and the data goes hand in hand with the platform.
Scott Orn: How do those intersect? To recap real fast, a SaaS company and consumer internet company actually does need Errors and Omissions, theoretically because they have an agreement with their users or their customers to provide a certain level of service or a certain kind of service, and if they violate that they could be on the hook.
Jeff Samuels: That’s correct.
Scott Orn: That’s really helpful. I didn’t know. Okay, how does Cyber Liability which we also have , how does that interact with the Errors and Omissions?
Jeff Samuels: Today the underwriters are combining the policies. There are a lot of grey areas. If there is some glitch in the platform, and information gets hacked as well. Is it a cyber claim? Is it a Professional Liability claim? So the underwriters - to mitigate their own risk basically tied both policies together.
Scott Orn: So that they don’t have to fight over who’s doing what or—
Jeff Samuels: Right. And I think it goes hand in hand, if the platform fails then there’s a good chance that there’s going to be a sensitive PII that’s breached there. So from a coverage perspective the language has gone a bit broader, which is good because more things are covered. Founder Shield in a brokerage job is to make sure you’re getting paid for those claims. P a g e 5 ǀ 13 There’s a significant grey area. So because the policies are combined together. It’s a little bit easier to get things covered. It’s not a He-said She-said. This is Professional Liability, this is cyber. It’s, ‘This is your technology covered. You should pick this claim.’
Scott Orn: That’s very, very helpful. There’s a couple of other kinds of insurances that I want to talk about a little bit later.
Jeff Samuels: Yep.
Scott Orn: Vanessa is actually the one who found you guys . We had dealt with a lot of insurance brokers, who didn’t understand startups. We would have these long and drawn out conversations. It was very painful and took a lot of time for us, cost our clients money - which we didn’t want to do. Then we found you. When you approach a startup you talk about certain packages you have and things like that. Can you talk about how you diagnose a startup? And how you determine where they fit in your packages? Why those packages are set up the way they are?
Jeff Samuels: In a nerdy way, this is my favorite part of the job. You’re doing assessment. This is where we get the information. Who are your clients? What is the software? Where do you guys see yourself going within the year? Because that’s the policy period of your life policy. Getting those imperative details to get a full snapshot of the business. And that helps us diagnose. A lot of time decides in the contract who is buying your software. Based on the 2000 plus other clients that we’ve worked with, we make a diagnosis based on similar businesses and similar policies that we have in place. It’s something us at Founders Shield truly believe in. We consider ourselves a fintech company. We’re very much in the technology space. You need that human element. You need to have the risk explained. From just a basic conversation it’s going to be very hard for us to know everything. So it’s good to have that phone call, that in person coffee or meeting to really diagnose the business ; understand the risk that both entrepreneurs and Founder’s Shield see. Then we’ll go into what coverages make sense for that business.
Scott Orn: That makes perfect sense. The way we usually work with you guys is also a differentiator, because we couldn’t find other brokers who do this. We actually would fill out an online form on your website and it’s customized. It says, ‘These are the things we are looking for,’ which actually is great because we can put something in action very quickly. Then you guys give us feedback really quickly. It’s a nice tool. Kudos to you guys, and thank you for that.
Jeff Samuels: Thank you. P a g e 6 ǀ 13
Scott Orn: So you guys get the information and go like, ‘Okay, this might be a fit for the Bootstrapper Package or another package or another package.’ Is that basically how it works?
Jeff Samuels: We have a proprietary application which Benji Markoff our CEO and Carl Niedbala COO do a phenomenal job of scouring the market looking at the top 20 - probably even more applications from companies like AIG, and Travellers, and Hartford, and TNA. What are the imperative questions that they ask on their form? Where is the fact that we can cut out to make it faster and easier? We basically have that form that feeds into our CRM. Then we have the ability to export that data in a more efficient way to our underwriters and carriers. I’m sure you’ve read it. It creates more of a smooth process in terms of gathering data from the client, then transferring that to Founder Shield, digesting that and then out to the underwriters. Every time a form comes in, myself and the team - everyone on the sale side - review all the forms. We have a specific task in our CRM that we’re qualifying the deals. So we read through thoroughly. We make suggestions on the limits that should be looked at. The carriers that we should also take a look at and take quotes from different coverages that are needed. Some coverages that maybe the client did not think about. Usually if we did not have a conversation previously, we’ll reach out and set something up. After the application’s filled out we make sure we have that conversation. Do the diagnosis and get it out into the market.
Scott Orn: And just to make sure everyone understands the terminology, the carriers are basically the insurance companies - the way that us normal humans think of insurance companies. The underwriters are people at the carriers determining how much risk this is and what we should charge. You also mentioned a couple of other terms; limits. Can you talk about limits? Because this is a question I ask every time I talk to you, and all of our clients ask us. What are limits, and what should they be for a startup?
Jeff Samuels: Great question. Limits are the total amount of coverage for your policy. Usually for most policies the minimum limit is a million bucks. So a lot of our companies and Kruze Consulting company started a $1 million. General Liability - important to know usually the minimum requirement you’ll see is $1 million per occurrence and $2 million in aggregate. It’s basically the amount of coverage you could potentially need for the year. So we’re looking at things such as projected revenue, size of your contract, length of your contract, projected sales overseas and in the US. So it gives us the basis to say, ‘Okay, this company is projecting $2 million in the States. It’s not exactly linear every time, but based on the vertical up they’re in, based on their clientele we will make a recommendation on the amount of coverage they need for that year.’ P a g e 7 ǀ 13
Scott Orn: Don’t you also ask about the number of employees and things like that? I remember that for my application.
Jeff Samuels: Yes. Employee headcount usually comes into play. General Liability; it’s important, it’s not one of the determining factors. Worker’s Comp; the employee head count is usually more relevant as well as employment practices liability which is basically coverage HR related so your hiring, firing, discrimination, harassment and that sort of thing. So yes, Worker’s Comp and EPLI are the two coverages that employee head count is important.
Scott Orn: That Worker’s Count - we’ll talk about that later. In terms of the million dollar limit and per occurrence, meaning some of the slips and falls in your office twice in my two months of hire, you’re covered on both, right. So would you recommend $2 million on an insurance worth a $1 million per occurrence or what’s the magic number there?
Jeff Samuels: It’s a hard question, because it depends on the coverage and the company. General Liability for a lot of our mutual clients is again the minimal limits, because the risk is a lot lower for self-worked businesses who are in a co-working space or shared space. A lot of time we’re looking at the E&O and the cyber limits. But to me your self-worked business is your most important coverage, and it’s going to continue to be, no matter how large you scale. That’s really going to be the crux of ‘This is the product that we’re selling and this is the coverage that’s going to protect the product that what we’re selling.’ Often times even if the company is its infancy, I will recommend $2 million or $3 million limit to start because they’re a fintech company. So they are working with a lot of financial data and there’s a larger risk there than a typical 6-month old startup.
Scott Orn: What’s the ballpark dollar amount? Like a million dollars or $2 million in General Liability and –?
Jeff Samuels: GL is always based in projected revenue, square footage of the office and then again if it’s a hardware business products liability comes into play there. I’d say for co-working spaces, a team of 10 people who may be working at 1500 bucks could be less for GL. Even though Cyber is going to be a bit more easy to predict. We see at the $1 million limit, which is the minimum, pricing is anywhere from 1500 on the lower end to about 56000 on the higher end per year per million. It’s usually based on the vertical and especially for the E&O and cyber. It’s really important to have the right protocols when it comes to your data. So encrypting your information, making sure you have the right procedures. Terms and conditions tend to be massive especially if it’s a market place business, because that really outlines who’s liable for what. So a lot of time the underwriters would request the terms and conditions to add that that as another piece when they go to price out a cyber policy. P a g e 8 ǀ 13
Scott Orn: That’s a good point because sometimes people ask before they sign our engagement letter. They’ll want to take out some of the stuff of our engagement letter. Most of the stuff that they want to take out is actually mandated by our insurance company. So I chuckle and I’m like, ‘What? I’ve got better things to do than mess around with the engagement letter anyways. But just so you know, I can’t change this because our insurance company mandates it. I can’t void our insurance.’ Which actually is great because it ends our conversation very quickly. But people don’t always realize that the insurance company dictates a lot of the terms and the term we get to play by.
Jeff Samuels: I think it’s important. In legal and obviously accounting and finance and insurance usually working like that. So it’s not so much that the carriers are saying, ‘These must be the terms.’ If you have a great law firm and you have favorable terms and you’re protecting your business, if you’re a market place business and you’re saying whatever’s sold on the website and the vendor has to have their own insurance and cover their products and adhere to these certain protocols - those sort of things go a long way and often save young companies a lot of money.
Scott Orn: So your basic recommendation is a $1 million or $2 million as General Liability, a couple of million dollars as E&O and cyber the company’s pretty much set. In a real quick talk up that’s your baseline Bootstrapper Package, right? Then when do we go towards the [inaudible 00:24:00] comes into play?
Jeff Samuels: The next two other packages are used for guidance. It’s not you need every single one of these packages. Usually if you’re in the Bootstrapping stage you need General Liability, E&O, cyber. The next stage is the Venturer stage as we call it. Maybe you’ve raised a little bit of money, which means you’ll be looking at General Liability, Errors and Omissions, Cyber and now Directors and Officers comes into play, as well as Employment Practices Liability. Directors and Officers and Employment Practices Liability is also known as Management Liability when they are grouped together, similar to E&O and Cyber. Do you know, again for our friends and staff in New York, this is the one that’s going to come up as the Venturer capitals all of the time. If you’re raising money and it’s significant money which from both of our cities it is - they’ll require you to get Directors and Officers.
Scott Orn: To protect the board member or to protect the fund? Who are we protecting?
Jeff Samuels: That’s a good question. It actually protects both. First and foremost it protects all of the directors and officers. Basically the CEO level people in that business. But also it extends to the investors. It does things like protect your personal assets, let me call it Side A coverage. There’s also coverage in there to protect and cover the business in any legal setting if the company is sued. Also for a fintech company and businesses like Kruze and Founder P a g e 9 ǀ 13 Shield who are working in regulated industries there’s something called Side C coverage which basically protects a business if you’re sued from a government entity like FINRA or SEC or something like that. In Fintech companies, again super important. D&O is usually there because A there is capital and B because there in that specific space.
Scott Orn: That makes total sense. We do Series A and Series B companies a lot. I don’t It’s 50-50 whether they have D&O or not. I’m not sure it’s because the board member care or don’t care. There’s always this other feeling among board members. They feel like they can withdraw from the board very quickly, and get out of the losses. I’m not a lawyer, and I don’t even know if that’s valid or not. But I’ve seen it happen throughout my career I’ve seen board members dropping from there. Are they excused from the losses that way, or is it just harder to get them?
Jeff Samuels: I would say Founder Shield and a traditional insurance brokerage would say, ‘Absolutely not. They’re still going to be liable and responsible.’ I would say the same. I think we understand that budgets come into play, and usually that’s a big piece of what I do. Working with $10,000 for the year. This is phase one. If we get into phase two these are next coverages that are relevant. D&O is super important. I can’t answer from the legal standpoint, if that board member would be able to excuse himself from the lawsuit. Usually, in New York at least we’re seeing a lot of D&O policies because the investors want to protect themselves and they understand that they might be a bigger asset than the business at that point. The business is still young so they might be more at risk which is why they sometime require it from their investment.
Scott Orn: They are a bigger target.
Jeff Samuels: Exactly.
Scott Orn: This is super helpful. You touch on Worker’s Comp. Pretty much every company needs that Worker’s Comp. Can you explain why and what Worker’s Comp does for you? By the way we’re just rolling through it. You can go to Founder Shield or you can email us. There’s tons of information on the internet. We’re trying to do the greatest hits here. So everyone, I will literally send you this podcast when you have these kind of questions. But yeah, Worker’s Comp why do we need it what does it cover?
Jeff Samuels: Worker’s Comp - similar to General Liability - what it’s going to protect? It’s basically the part of injury to property and damage from third parties. Worker’s Comp protects your own employees. A lot of what we do - both of our businesses are software in the tech space. People are not necessarily on a construction site all day. But it’s super important because Worker’s P a g e 10 ǀ 13 Comp is state mandated, so depending on the state that you’re operating in and the businesses incorporated in. There are different laws. California, for example is notorious. They have difficult employment laws for the employers.
Scott Orn: It’s favorable to the employees.
Jeff Samuels: Exactly. So companies specially in the On-Demand and market place space where they are using a lot of contractors, it gets pretty grey. It’s an interesting time for insurance.
Scott Orn: All the time. It’s a question of does this Worker’s Comp cover the contractors?
Jeff Samuels: Yes. It’s always going to come down to are they working four weeks of work, five days a week, 9 to 5 or whatever that day is for that business? Are they doing things like a normal employee is doing? The reason why it’s a hot button issue- the reason is if they are covered by the Worker’s Comp and not by the health and benefits package, it’s a problem.
Scott Orn: There’s a discontinuity there. You’re basically asking
the question: Are they employees? Are they covered? Your saying on one hand, ‘Yes, my Worker’s Comp does covers them,’ but on the other hand you’re saying, ‘I’m not going to cover them for the benefits.’ Which doesn’t make sense.
Jeff Samuels: Which is tough for the On-Demand economy.
Scott Orn: I have to say that we have a lot of those companies and they are all switching to full time. They’re not messing around with it. I think Uber got through the window, but it feels like that window is shut.
Jeff Samuels: From what we’ve seen, there’s a couple of different solutions. Carl Niedbala, our COO recently wrote a really awesome blog post on it. So I definitely recommend people checking that out. There are a couple of different options. The best and cleanest way is to make them employees. The problem there is from a scalability perspective. It’s hard, especially if people are doing deliveries of your furniture. We see a lot of that except in New York. Should those people be covered as full time employees? I don’t know. It’s a tough thing. But Worker’s Comp is basically the coverage that will cover an employee if they are injured on the job. Disability usually goes hand in hand with Worker’s Comp. Disability is the coverage that if you are severely injured and you cannot come back to work. That’s a coverage that locks that with Worker’s Comp. Worker’s Comp is basically short term injury or an ailment that you can take care of and then you can come back to work. That would be a Worker’s Comp policy.
Scott Orn: Big startup hubs like all of our clients need it. San Francisco, [inaudible 00:30:53], Santa Monica, New York - everyone’s getting it. This is something we get a lot of questions on. Why do I need Worker’s Comp? How do I get it? What’s the process or the quoting? How do people make this quote? P a g e 11 ǀ 13
Jeff Samuels: Worker’s Comp is based directly on your payroll. It’s pretty linear.
Scott Orn: It’s super linear. It’s almost like a formula.
Jeff Samuels: Exactly. When you start it’s usually your cheaper policy, but as you scale up your staff it can get more expensive, specially depending on the state. But again it’s usually state mandated. Certainly recommended to check with your teams lawyer on the local laws there. But it’s based directly on your payroll. That’s usually the deciding factor.
Scott Orn: So you basically look at what a payroll is for a given month, and you project out and then the company buys a policy for a 6-months or a year. There this process for you at the end of that time period. You go back do a quick audit, and make sure you have had enough insurance. If not you get the true out. Like we got $100 rebate last year, because we overbought.
Jeff Samuels: Insurance companies do provide a discount or a pro-rated benefit if you over estimate. So if say, ‘I’m going to do a $100 million in payroll,’ and you do a $100,000 million you’re going to be compensated at renewal. You don’t have to worry at every single hire. Or if you fire somebody you don’t have to ‘Do I have to update my broker?’ You can. But usually at the end of the year it’s audited. Another important piece I did not mention before - definitely based on payroll, but it’s also based on the type of work you do.
Scott Orn: Great point. We’ll talk about that in a little bit.
Jeff Samuels: We’re assuming software businesses where we’re all in the office, on phones, on laptops. If you’re one of the On-Demand companies, and you’re moving stuff; you’re transporting goods; you’re delivering foods; you’re biking. If there’s a real physical risk - especially New York City construction workers. Worker’s Comp is very expensive and very difficult. So if we’re looking outside of the traditional tech startup space that’s got guys working it’s important to realize the vertical. It’s important to work with your broker to make sure you guys are the business as categorized correctly. That’s a big piece. That’s where you can spend a lot of money and you can save a lot of money if you’re categorized correctly.
Scott Orn: That’s a huge. We had a company that 3 x than normally and it turns out that they got a lot of people in the field. But it’s way more expensive. So maybe let’s do a quick recap and you can tell all the folks where they can find you online.
Jeff Samuels: Sure.
Scott Orn: Maybe do the quick recap on different kinds of insurance so that would freshen everybody’s mind on this.
Jeff Samuels: You got it. So Imperatives, General Liability, Errors and Omissions also known as Professional Liability, Cyber Liability. P a g e 12 ǀ 13 Once you raise capital you’re thinking about Directors And Officers coverage as well as Employment Practices Liability - that’s usually at about 10 employees you start thinking about that. And then your Worker’s Comp, depending on that state laws but usually that’s during the first go around. It’s always important to have a conversation with your broker. Hopefully it’s Founder Shield, but whoever you’re working with make sure they have a full understanding of your business, who are you working with, the risks that you foresee and get their opinion on your limits. That’s the best way to make sure you have the right coverage. Again for Founder Shield, we like to phase it out. So Phase 1 looks like this. Phase 2, you should be adding these two coverages, and really think about that growth in the business. Insurance is a long term thing. You’re buying it to protect your biggest asset which is your business. It’s something to take seriously. If you do it right and you find the right broker you should be in good hands.
Scott Orn: And then where can everyone find you?
Jeff Samuels: You can find us at You can always give us a shout. team@foundershield. My email is Also at Kruze Consulting you guys can always go to Scott and the team over there.
Scott Orn: He’ll give you Jeff’s email. You guys have a good blog. You have a good tool for doing the application which I really like. I think that’s why you guys are super responsive. It’s awesome.
Jeff Samuels: Appreciated likewise. Hopefully continuous collaboration with both companies. I’ve really enjoyed this. Hopefully we’ll talk to some cool clients.
Scott Orn: Well Jeff, thank you so much for coming by. I really appreciate. This may have been a bit like eating your vegetables here and getting a lot of refreshments, but these are the questions we get. Every day I get one of these questions. I’m so glad you came by. Thank you so much. I’d say your passion for insurance is there. I can totally see it. I hope it comes across in the broadcast.
Jeff Samuels: It’s not just the coffee, but I appreciate the time Scott and it’s good to be in San Francisco.
Scott Orn: Alright Jeff. Thanks, man. Take care. P a g e 13 ǀ 13

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