Choosing a Commercial Insurance Agent

You took the plunge and opened a business.  You may be just starting out, or have been in business for awhile.  Now, your hearing about agents, brokers, carriers and agencies and aren’t sure which you should choose for your business.

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.

Commercial 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.

Brokers usually have a full range of coverage for businesses and may have specialists in their firm.  They may also offer services like safety education, safe driving education and the more.

The larger your business is, the more important you should consider using a broker.

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.

If you have a small business, just a few employees, a couple of vehicles, and in a standard or low risk business segment, its fine to use an agent who specializes in business coverage.

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.  Your state department of insurance can also be a great resource.

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Your Relationship With Your Commercial Insurance Broker

Setting expectations in your commercial insurance broker relationship

Value is a word often bantered around in the commercial and personal insurance advertising.  Just what is value as it relates to the commercial agent providing your business with insurance coverage today?  Are you receiving the value of a good trusted advisory relationship with your agent?

There is no magic wand to wave and produce the ideal agent or broker for your business.  An engineer’s business insurance needs will differ from a retail store’s insurance needs and a veterinary clinic’s insurance needs.  Instead, let’s turn the focus on what you feel you need to achieve value from your commercial insurance professional.

First, we suggest at least an annual review face to face.  An annual review isn’t, “Here are the latest premiums, sign here.”  Instead, you should expect a review of your business, what’s changed, and what has changed with your insurance agent.  Depending on the type of business you have, the risk your business carries, and how fast your business is growing or changing, we also recommend a quarterly or bi-annual update phone call.  More or less contact needs to be determined by you as the client.

  • Is your agent or broker genuinely interested in your business and not just the commission?
  • Have s/he recently toured your facility and inspected the equipment they are providing coverage on?
  • Is your business out growing your agent?
  • Are you and your company relegated to a junior staffer except at renewal time?

The bottom line is to set an expectation of what you want from your business insurance professional and then get mutual agreement when moving forward.  Your commercial insurance agent should be one of your most trusted advisers and not just a transaction.

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Information Determines Direction

The right commercial insurance coverage is determined by the information.

Trying to determine coverage without the help of a licensed insurance professional is like to defending yourself in superior court. It’s important to talk with your commercial insurance broker often and meet at least annually. Here’s how to simplify and maximize your time and efforts in determining the proper coverage needed for your business. Save time by being prepared. This list of information and documents you want to have available when you meet with your insurance broker:

Address(s) information

  1. Copies of all leases and landlord information
  2. Construction and building types
  3. Square footage / floors
  4. Additional locations where employees may be contracted

Vehicles and types of equipment

  1. Make, models and color
  2. Mileage and title(s)
  3. Vin numbers
  4. Titles and registrations to any trailers and road equipment.
  5. Approved drivers list with drivers license information

The Owners, Officer’s and employee information

  1. Names
  2. Spouses and children
  3. Addresses
  4. Date of birth
  5. Social security numbers

Financial information

  1. Bank records
  2. Cash flow/Profit and Loss statements
  3. Loan documents
  4. Present insurance declaration pages
  5. Attorney and CPA contact information

Having this information ready and available is not only going to save time when meeting your insurance professional, it serves as a great review for your business.

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The Difference Between an Agent and a Broker

Now that you’ve gone into business for yourself, you’ve heard tell of insurance brokers and insurance agents. But you’re not clear on which one you should using.

An insurance agent is an insurance professional who represents an insurance company in the capacity of an intermediary. The agent may be captive, which means he represents a specific insurance company, or the agent may be an independent, meaning he represents more than one insurance company.

Suffice it to say that the agent’s responsibility to the client is administrative.

Insurance brokers work as independents who offer an array of products. A broker has a different kind of  license, and it usually requires a higher level of industry certifications and education than the licensing an agent must have

Usually, a broker’s standard of accountability to the customer is higher than the standard of an agent.

A broker has the duty to analyze and determine what scope of coverage your business needs. Further, a broker generally charges higher premiums and/or administrative fees in keeping with such an increased level of expertise.

Generally speaking, the larger your business, the more essential the knowledge and guidance of a broker becomes.

If you work in a high risk industry, or if you have a large number of employees, or vehicles, it makes good business sense to to use a broker rather than an agent.

If your business is small with few employees and a low risk or standard risk industry, an agent would work just fine for you.

As we always caution, you would be wise to amass  as much information as possible before you decide whether you need to go with a broker or an agent to make the best decision.

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