Social media and your business insurance - on the surface there’s no connection. But, you may be surprised how they can be intertwined and how social media can affect what you’re paying for your business insurance (workers’ compensation, general liability insurance).

For some small businesses, social media is a great tool for them to amplify their reach, build a community around their brand, and connect to their customers. For others, it may feel like a necessary evil. Either way, an estimated 77% of small businesses in the U.S. use social media for business functions (marketing, communicating, customer service, etc). No harm, no foul if you’re using social media for your small business - you should be!

Insurance Underwriting

Simply using social media doesn’t impact your business insurance costs. So what does? First, it’s important to remember that the insurance underwriting process is all about trying to understand the risk of the business requesting insurance so that the insurance provider can price it properly. If they price it too expensively, it won’t be purchased. If it’s priced too inexpensively, the claims will really hurt.

As such, the underwriter needs to really vet the business. They need to not only understand operations, but what your employees do, to properly assess the business and its risk. Why? Well, the riskier the employees’ assigned duties are or the riskier the environment for guests/clients, the more likely there is to be a claim. Fair enough.

Social Media and All Existing Means

Insurance companies gather information in many different ways. The primary way is just asking you to provide information about your business. Insurance is a contract and a certain degree of trust is required, so if they want to know something, they just ask. But, they wouldn’t be doing their due diligence of assessment if they stopped there. It’s not that you’re dishonest, but you aren’t always looking at risk in the same way an insurance provider is. Insurance is getting smarter and more efficient, and strategies like 3rd party data sets and public information are used more and more when evaluating a risk. You know what’s public information? Your social media channels.

Your Social Media Betrays You

One element many businesses forget about is social media. Your social media is a public window into your business and its operations. You post stories, photos, and video about your business. The good news is you control what you publish on your social media. The bad news is your social media can show an underwriter what you’re actually doing, and expose risk you or they may not have considered.

For example, if you’re a janitorial business that cleans offices, don’t post pictures of someone on a crane washing windows 20 stories up because it was a convenient stock photo. If you’re a landscaper that doesn’t really clear snow, don’t say you do in hopes up picking up some extra business. If you don’t do something, don’t say you do it or show pictures of you doing it. I know, it sounds like a good strategy to make your business seem bigger, or more experienced, or more accommodating. However, the trade-off can be that it could cost you more for insurance or even disqualify you from coverage.

What to do

The “fix” is simple. When using social media (or even your website), honesty is the best policy. If you do something, it’s great to say you do. But if you don’t do it (or not exactly), or are trying to look bigger than you are, resist the temptation to overstate or imply that you’re doing more than you actually are. You don’t want to pay more for insurance, or make it harder to find coverage for your business because you added a picture to your social media that isn’t really representative of what you do. Don’t be afraid of social media - use it to your advantage for business growth, community building, and customer service. Really, it just comes down to being aware of the potential insurance consequences of what you put on social media. But, now you know better and you’ll avoid the landmines!