307: Protecting Your Childcare Business: The Ultimate Guide to Insurance with Samantha Phillips

You’re in for a treat with this episode of "Childcare Conversations"! Kate and Carrie sit down with insurance specialist Sam Phillips, who shares her hard-earned wisdom on protecting your childcare business. From why bundling insurance isn’t always your friend to decoding tricky policy terms (think: insurance made as easy as a Tinder swipe!), this episode is packed with practical tips. Sam’s real-life stories and her Childcare Insurance Playbook make insurance feel a lot less overwhelming. If you want to feel confident and prepared, this chat is a must-listen! 

Follow Sam to learn more! https://www.facebook.com/samthesparklyone/

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Transcript

Kate Young (00:49)
Welcome back folks. We are so glad that you are joining us for today's conversation. As we start the new year, a lot of folks are doing a lot of reflection and kind of figuring out, did I do things right? ⁓ Over the course of January, you'll be hearing episodes about tax strategies. ⁓ We're gonna talk today about insurance. ⁓ You'll get...

all kinds of ⁓ different perspectives in the month of January. And we are really excited about this month's guests. But before we get too far into telling you what's happening in January, we're just gonna have a conversation about today. And so today's guest is Sam Phillips. ⁓ Carrie and I have known Sam for several years. And although we've had other insurance folks on in the past,

One of the things that really struck Carrie and I hearing Sam talk at a conference in December was some ah-hahs that were like, that makes so much sense. Why has nobody said that before? And so Sam, I'm going to ask you to A, tell folks a little bit about your background, how you ended up here and how you ended up with childcare as one of your focuses. And

kind of ⁓ what sparked our conversation and then we'll go into, well, just that, a conversation.

Sam Phillips (02:15)
That was a lot to unpack. Okay, so let's start. I'm probably gonna forget halfway through once I start talking all of the four things you just gave me to talk about. So let's start with who am I? What's my background? How did I get here? ⁓ I've been insuring childcare providers for, let's see, my son is about to be 15, so 15 years. And I actually came to this industry. I am a specialist in early childhood programs, but I came to this industry

Kate Young (02:17)
Thanks.

Carrie Casey (02:17)
Yeah.

Sam Phillips (02:44)
After not being able to find childcare for my son, ended up down the street, took a pay cut to start at this little insurance agency. didn't even know existed. I'd never even heard of it. But it was right down the street from a preschool. And after being on a waiting list forever, we finally got in. I loved the location because it gave me access, closer access to my kids. I was not spending an hour one way in traffic every day. But what...

got me down this path of teaching and educating. ⁓ I liked the concept of insurance. I knew nothing about it when I started. I took a receptionist role and literally knew nothing about insurance. And that was a problem for me because I'm a Y girl and I would annoy the crap out of the people in the office because I was constantly asking them questions and they're like, why do you keep asking us questions? Like just do the work, but I need to understand. Like why? I need to understand what I'm doing.

But more importantly, I needed to understand what we were selling. Like what was our job there and what does general liability mean? What does professional liability mean? And so I would go home and I would highlight this policy verbiage and look it up and research it and try and figure out how to explain it in a way that made sense to me. And then eventually,

Kate Young (04:01)
You didn't have a chat

GPT!

Sam Phillips (04:03)
No,

didn't have a chat GPT and I actually I'm told all the time now that I have a knack for explaining things in a way that makes makes it make sense and I think it came from me doing so much research in the very beginning trying to make it make sense to me. ⁓ So ⁓ my while I was working at this agency my son had an injury at his preschool.

And the director actually called me and she was very calm and mild-mannered and like to the point that I didn't think it was an emergency. I actually finished my email because it didn't sound like an emergency. She didn't sound panicked. Mom guilt, instant mom guilt when I saw the gash in his forehead when I went to pick him up. ⁓ But it was, that ended up being a traumatic experience. He needed stitches, the numbing cream didn't work.

It took multiple staff members, including my husband, holding him down to stitch him up because the numbing meds didn't work. And all I could do was hide in the corner and plug my ears and eyes and pray that we both got through that moment because he's screaming on this table like for me to rescue him. And I can't stop that. ⁓ Anyways, that whole ordeal was terrible. And when I eventually took him back to his preschool, and you know, the director had been great. She'd been following up with us, checking in on him.

But when I took him back to his program, asked me and I kid y'all not, I felt like a deer in the headlights and I have no idea how long I stared at her in silence, just in disbelief. But she asked me, our insurance cover this? And she knew I worked at the agency. The agency I worked at actually insured his preschool and had insured his preschool for almost 20 years. And it just blew my mind that we were right down the street and they had no idea if their insurance would cover that.

Carrie Casey (05:40)
Huh.

Sam Phillips (05:50)
That just became the start of this brainchild for like, there's a serious lack of education in the industry on the topic of insurance, specifically for childcare programs. And that kind of set with me for several years before I realized, first I felt like I had to gain some confidence. I didn't know more about what I was doing. I had ⁓ to do the work and learn all the things. And then after I did, I started creating content and information to teach people about

the things that I had learned and the things that I was continuing to learn as I went. And so that's how I, that's how we've crossed paths because y'all seen me out and about teaching all the things. And then what else did you want me, the one thing that I said that you wanted me to unpack. So while I was speaking last week, one of the things that I had mentioned that Kate and Carrie thought was just a brilliant perspective was,

Kate Young (06:36)
Hahaha!

Sam Phillips (06:49)
the concept of splitting up your insurance policies and not just splitting up your insurance policies by the different types of coverage you need, but also by if you're a multi-unit owner, if you have separate legal entities for each of those operations, splitting up your insurance by the different legal entities. So you have one set of policies.

Kate Young (07:10)
But Sam, we see all the commercials and the commercials always tell us that we save more money when we bundle.

Sam Phillips (07:17)
You know,

they don't insure childcare businesses ⁓ or see the opposite of that, right? You know, we are seeing ⁓ so many companies that are exiting childcare and just choosing not to do it at all anymore. And that's continuing to be a thing. I'm still seeing red flags that a couple of the insurers that are, they're like one foot in, one foot out already ⁓ that are

still in the industry right now. And one of the reasons for that is because providers aren't taught to, you're not taught insurance strategy. I used to be an agent that would say, let's bundle this because it made sense, right? Uncomplicated billing and Lord knows billing is already a nightmare enough with insurance companies because they're stuck in the stone age. But that's a whole nother rule, save that for a different day. We're seeing claims become more and more,

Carrie Casey (08:08)
Yeah.

Sam Phillips (08:14)
frequent situation and that is not helping providers find or keep their insurance. So one of the things that absolutely breaks my heart is hearing somebody tell a story that their insurance got dropped after they filed their first claim that was really a bogus claim and they've had insurance for 20 years and have been great paying clients and never had any issues and all of a sudden they're getting a non-renewal or they didn't have the claim experience and got a non-renewal. The problem with that when you bundle your coverage

is you lose everything. If it's all bundled together, if you have a liability incident, you lose your property, your auto, your abuse coverage. If you have an auto incident, you lose your property, your general liability, your abuse, your umbrella, you lose all the things. So.

Kate Young (08:57)
Okay,

so I know you're saying words that I actually understand, but not everybody does. So let's break down the part that I found fascinating, right? So what Sam is saying is that most of you have a vehicle. So your vehicle should be on its own policy. If you are the building owner, your building should be in its own policy under its own LLC or its own corporation.

Sam Phillips (09:01)
Thank

We call that Lesser's Risk.

Kate Young (09:25)
So hopefully, hopefully

you've already got an accountant and a lawyer who've talked to you about that. So that's a separate episode. So, so you've got your, your building insurance, you've got your automobile insurance, and then you've got your liability insurance for the business. And then you've got abuse insurance coverage, which we also know that not everybody, like that's been, we've had episodes on that specific topic.

Sam Phillips (09:31)
Okay.

Carrie Casey (09:31)
Ha ha ha.

Sam Phillips (09:43)
Mm-hmm.

Kate Young (09:53)
So hopefully you also have that coverage. If you're not, I want to know why call Sam. ⁓

Carrie Casey (09:57)
And also

your accident insurance. And you might have one or two of those bundled, but don't have all of them bundled is what Sam is saying. Because if you have an accident policy for a kid who trips and gets a big old stitch in their forehead, that should not be going on your general liability. That should be going on the accident insurance. Please don't.

Sam Phillips (10:25)
Yes.

Carrie Casey (10:26)
put that under your general liability.

Kate Young (10:31)
So you gotta love it when technology has a mind of its own. And so we are back. You probably have a little bump in your recording and that is okay. So we were talking with Sam Phillips about the different types of insurance. And I think one of the things that was coming out from that conversation is that a lot of times we aren't educated as business owners on what types of policies we use

for what purpose. So Carrie was giving some examples of don't use your property insurance for this type of claim or whatever. And I think the one thing that like popped in my head and Sam, tell me if I'm right. If you are a business owner or even more a director listening to this episode, before you file any insurance claim, call your broker.

and have a conversation because I know that one of the things that came out a few years ago was people who were having catalytic converters removed from their vans and they were submitting it against their policies, which again were bundled and they were losing coverage over really fairly small claims percentage wise of what you're covering. so,

Talk to us a little bit, if you are a director or an owner listening, why should your insurance agent maybe be the first call? And what would be things to think about or to ask? And when do you call?

Sam Phillips (12:06)
Okay, also a loaded question and lots to unpack. You always start with your agent, right? They are your supposed to be your trusted advisor. If you don't feel like you can trust them, you probably need a new one, but it's your agent's responsibility to know for any given situation, which insurance policy would be the

Carrie Casey (12:09)
Yeah

Sam Phillips (12:26)
In the case with the auto, one of the things that started this conversation was needing to split that apart. There are still a few companies that the auto is bundled with everything else. So in some circumstances, you may not have a choice but to turn that into the same company that carries the rest of your coverage, your liability, your property. But when it's separate, Progressive, Berkshire Hathaway, for instance, those are two companies that ensure childcare.

transportation vehicles and they'll do it on a standalone basis meaning it is its own policy. So if you did have a catalytic converter stolen which happens all the time that is hands down the most common claim at least for autos. ⁓ Your broker would be able to tell you you know this is the company here's your policy number here's the link or phone number to call and report that claim so that you're not just looking through this list of ten different companies and names and trying to figure it out on your

most people.

Carrie Casey (13:23)
And are there

times that it makes sense to, even though you have insurance, to just self-insure, to just go buy yourself a new catalytic converter?

Sam Phillips (13:33)
It depends on your circumstances obviously and some people are a little bit more risk tolerant than others. The one thing I would say don't ever use your auto insurance for, we live in Texas, right? There is road construction literally everywhere. The amount of chips that I get in my windshield, the amount that I have in there right now until they come in my line of sight, because we all know it doesn't impact you until it's in your line of sight. But that is one thing I have had.

providers canceled over because they submitted so many windshield chip, like in their, in your windshield, glass chip claims. I had one guy submit six of those in a year. And so they're small. I mean, three, $400. But it was the claims frequency thing that became an issue. So when you look at what your deductible costs and usually those windshield chips, like they're not,

they're not subject to a deductible because they're relatively small. But if it's something that your insurance company might cancel you over, at that point you have to chat it out with your agent and decide, is this worth, if I submit this potentially $350 claim and have insurance pay it versus paying the $350 myself and potentially lose my insurance over paying the 350 and not losing my insurance. You've got to make.

the choice that you feel like is the best for your business, but there are claims and it also depends on what your policy says. mean, are certain letters of representation are not formal lawsuits. So with certain policies, ⁓ it might be worded in a way that you have to report anything and everything that might give rise to a suit to your insurance company. But with other insurance policy verbiage, you may not have to.

Again, you have to rely on your agent to know exactly what the policy says and ⁓ what your requirements are and whether or not you have to report it or can pay it yourself.

Kate Young (15:36)
Okay, so you've used a term interchangeably, I think, or maybe there's differences. And so I thought it might be worth having a short discussion because I've heard the term broker and I've heard the term agent. And in my head, they're two different things. ⁓ And so for folks who are listening, hopefully they also know that they need to go find a specialist ⁓ who specializes in child care. And again, depending on even the size of your child care,

Carrie Casey (15:36)
Okay.

Kate Young (16:06)
enterprise because if you've got 17 that's probably still a different type of insurance coverage than if you've got one or two locations or you're running out of your house.

Carrie Casey (16:17)
Or,

yeah, I was going to say, or you're a home based program because we have a fair number of the home based programs that listen as well.

Kate Young (16:24)
well, in multiple states, because we know that that just gets even more of a reason. So again, hopefully you've had a conversation with your accountants, your attorneys, your tax strategy folks about the fact that you have all of these set up as separate entities. So if you've got three locations, I'm hoping you're running six different businesses. But again, that is a separate podcast. So.

Carrie Casey (16:46)
So is there a

difference, Sam, between an insurance agent and an insurance broker and which one do people need?

Sam Phillips (16:56)
Yes, but people that don't work in insurance do use them interchangeably. So to y'all, an agent and a broker might be the same thing. From our perspective, we are insurance agents. I'm an insurance agent. To me, an insurance broker is the, that's my intermediary between an insurance agent and a surplus lines company. So for the admitted market, which are the companies that

we used to always be able to get insurance from. Those are like the first tier ⁓ group of insurers that you want policies from. They typically have less exclusions, they have broader coverage, the premiums tend to be more affordable. That's what we find in the standard market. There's hardly anything left in child care, or hardly anything left in the standard market for child care. So as agents, we have to reach out to a broker that gives us access to an additional tier.

of insurance companies called surplus lines. ⁓ An insurance broker, wholesale broker, wholesaler, ⁓ those are all terms that you can use interchangeably for them too. But from somebody that works in insurance, when we hear broker, what that actually means to us is that is our go-to person to be able to access the additional companies that we can't get to on our own because it requires a separate insurance license. It requires a surplus license.

Kate Young (18:17)
Okay, so then

I have an even bigger question because in my head, the companies like y'all who are not a single company, so you're in other words, you're not a state farm or you're not a nationwide, in my head,

Sam Phillips (18:20)
Okay.

Carrie Casey (18:32)
Not a captive

agent. That's the phrase. Not a captive agent.

Sam Phillips (18:37)
Not a

captive. We're independent agents.

Kate Young (18:39)
Okay,

so that's the phrase that in my head was a broker. So really they're independent agents, not necessarily brokers. So you need to make sure.

Sam Phillips (18:48)
Yes, independent agents have access to multiple

insurance companies. They're not loyal to just one or they don't just have to sell one like your state farm or farmers.

Kate Young (18:58)
Okay.

All right. So that's important. So in other words, if you're listening and you notice that, yes, you may have multiple coverages, but if they're all also all with State Farm, that kind of defeats a little bit about what you were talking about earlier on the first half about separating out the different types. Would I be correct in making that assumption?

Sam Phillips (19:19)
Yes, because with a company like State Farm, you're really only gonna have a package option, so they're not gonna have the ability to piece it out. And on that, so here's another reason that that was me saying that was more of a foreign concept. It requires so much work to separate insurance by operation and by different types of policies.

easily four times the amount of work. So it's not something that most agents want to do, but it's in the best interest of the client with where the market is right now. So if I can separate out the policies and know that my clients stand a better chance to hold on to that coverage for longer than they would if I kept it together, I'm gonna do four times the amount of work because it's what they need. It's not fun,

Kate Young (20:07)
Well, what a, I mean,

but, just the, like, like I said, to me, this was an aha moment because even if I just think about, and I'm just going to break it into three bundles, even though I know like there's five or six different ways to separate it, just separating out car property and liability was such a, like an aha, because we knew that there was already some issues with folks with again, property damage, depending on where you are in the country. Sometimes if you've got,

catastrophic one in a 100 year issues, people were losing their coverage because of that flood or that hurricane or that freeze warning and busted pipes in the South. You we knew that there were people who were, they're like, that's an act of God. Like I have no control over that. And they were losing their policies where I can see the real advantage of the building company having its own

Sam Phillips (20:47)
I'll stick it.

Kate Young (21:05)
policy very separate from the business. so hopefully if folks get nothing out of this episode one, you look for an episode coming soon, Carrie and I'll have to find this person, but an attorney or an accountant who talks about why you need to have all your businesses separated. So Carrie, please make a note.

Carrie Casey (21:25)
Okay. I can, I can do it.

Or maybe we can find somebody who, you know, suffered because they didn't. And so this is what happened to their business because they did not separate all of their business entities into different aisles.

Kate Young (21:36)
Maybe they want, maybe that's one of those like

the black, you know, like they're just the silhouette on the.

Carrie Casey (21:43)
The, the, the black

silhouette. Cause they don't want anybody to know that they did a dumb. Okay. ⁓

Kate Young (21:47)
They did a no-no.

So Sam, if you know any no-no's, share it with us off the podcast. So, that's kind of scary. Okay. So anyway, so hopefully you've gotten a couple of tips and hopefully that makes some clear. So Sam, if somebody has more questions, I mean, obviously in our show notes, we're going to have a way for folks to get in contact with you, but

Sam Phillips (21:56)
long list.

Carrie Casey (22:00)
Yeah.

Kate Young (22:15)
Maybe they don't live near Texas or maybe they just want to know be more knowledgeable before they pick up the phone and call their insurance agent because this is just like something they're totally foreign with. Do you have a resource perhaps?

Sam Phillips (22:27)
So I am the greatest resource. You can always pick up the phone and call me. But our website is full of information, especially about the childcare insurance crisis right now.

Kate Young (22:36)
I don't want your website!

What's that other thing that you have? That pink thing! No, no, no, the pink thing! The sparkly book!

Sam Phillips (22:39)
The narrative, that's the narrative template. The pink. ⁓

Y'all, I'm not used to being an author. Look, I wrote a book.

Carrie Casey (22:53)
Ha ha ha ha!

Sam Phillips (22:54)
I keep forgetting that I wrote a book. Yeah, the Child Care Insurance Playbook talks about ⁓ the different types of coverages. There's a whole chapter on controlling the narrative and how to approach insurance companies for your renewal. And there's a whole chapter on insurance strategy, how to position your policies, how to structure those policies so that they protect your business for the long term and not just the here and now.

Kate Young (23:19)
And do you have insurance 101 vocabulary for those of us who are like, I have no idea what Sam is talking about.

Sam Phillips (23:23)
I

I do. There's actually a whole chapter called the decoder where I break down ⁓ in modern terminology, I break down insurance terms and language that the agent might use and give them to you in a fun way that is, trust me, y'all will understand. I think at one point I'm referring to something as like a Tinder swipe.

Kate Young (23:42)
Eheh

Carrie Casey (23:42)
Ha

ha!

You

Kate Young (23:46)
Yeah,

I'm not swiping nothing, okay

Carrie Casey (23:51)
Yeah.

Kate Young (23:52)
No, Carrie, what would you like to say?

Carrie Casey (23:55)
I'd like to say that ⁓ knowing your insurance and insuring your business correctly is one of those big important things. As the director, if you're not the owner, you need to not just go, ⁓ I have the insurance in the binder that goes with me when we do a fire drill. We had a car accident. I'm gonna immediately, please call instead the contact

person at the bottom of that insurance binder that you have in your notebook. Don't just immediately do what you would do with your home insurance. Have a conversation with your owner or your board of directors before you make that call. You have to be much more conservative with this than you had to a couple years ago. I hope we conveyed that pretty well in today's conversation.

⁓ So if you learned something today in this show, share it with someone else who needs to know and make sure you're following this podcast on your podcast player of choice and get in contact with your agent or with Sam. We have Sam's details in the show notes before and we'll talk to you in a few days. Bye guys.