Selecting your commercial insurance agent can be as important as the insurance.
You may be just starting out, or have been in business for some time. It’s time to put all the pieces in place. You’ve heard about agents and brokers and aren’t sure which you should use for your business. Let’s break it down.
An agent will represent an insurance company as an intermediary. They may be captive, meaning they represent just one insurance company, or an independent, representing a number of insurance companies. In broad terms, the agent’s liability to the customer is administrative in scope. Since many agents are captive, make sure to interview and review what they have to offer.
Insurance brokers work as independents with a broad scope of products to offer. Brokers hold a different license which often indicates a higher level of education and certifications than those of an agent. Brokers in most cases have a higher standard of accountability to the customer. They have a duty to analyze and determine the scope of coverage required by your business. Often, a broker will charge administrative fees or higher premiums to help pay this increased level of expertise.
Generally speaking, the larger your business is, the more important you should consider using a broker. Large can be both revenue and or the amount employees If you have a large number of employees, a large number of vehicles and drivers on the road, or work in a high risk business segment, it probably makes sense to use a broker. Brokers often have industry expertise and more resources to put together a comprehensive plan. If you have a small business, just a few employees, a couple of vehicles, and in a standard or low risk business segment, it can be fine to use an agent.
As always, before deciding whether you will deal with an agent or broker, get as much information to make your decision. Other or similar businesses can offer insight, as can you trade organization or association and your state department of insurance.