Metro Articles

Choosing the right insurance

Nathan Smith Sunday, November 1, 2009

Step 1 - Choosing a Broker/Agency
It's important to understand that most insurance carriers will only work with one broker to produce one quote. Once a carrier receives an application, all other brokers will be blocked from that carrier. When choosing a broker, it's best to make a choice based on the company's experience, quality of service, and how comfortable you feel with them. Filling out out dozens of applications and call back forms can actually be counterproductive. If you wish to change agents, you will have to send the carrier a Broker of Record letter (BOR) to strip the old broker's access and hand it over to another agency of your choosing. This takes time, usually 5-10 days. Doing some homework such as checking out their website and googling them will give you a good sense of what their strengths and weaknesses are. Call them up, talk about your business, and review their application or quoting process.

Not every agency is the same. Some are small and service- minded, while others are large, "niche market", and/or "me-too" oriented. Each have their advantages and disadvantages. Ask yourself, "Does the broker take the time to talk to me and answer my questions?", "Does everything make sense and feel right?"

Step 2 - Applications
Provide a fully completed and accurate application. Depending on your industry and coverage desired, applications can be as easy as a two minute phone conversation or as complicated as gathering dozens of important corporate documents and hand-writing lengthy applications. As mentioned above, shooting out too many applications to several brokers could result in frustration later down the road because most independent brokers have access to many of the same markets. Of course, a second opinion is always a smart business decision because any one broker can't be all things to all people.

A lot of work has to be done to shop and obtain quotes. Your risk has to be "sold" to the right carriers, usually on an individual basis. Make sure the agent knows if you have a website. Other company material such as brochures and resumes can really help in the classification of your business, and help get a good carrier on board.

Step 3 - Binding a Quote
A commercial insurance policy can have a lot of hands in the pot - from you (the insured), to your retail broker, to the carrier, to a wholesaler, and all the underwriters in-between. Not that this is all bad. An independent broker represents your company, and your company alone. The system is designed to have your best interests in mind, not the carriers. It's the independent agency's job to go to bat for you when there's a discrepancy, a problem or a claim. Often, a wholesaler will act as a middle man between an agent and a carrier. If you work directly with a carrier, you rely on their service department which has the company's own interests in mind.

By the time you recieve quotes, you should have a good idea as to what is going to be the best fit for your company. After making a payment and signing any proposal documents, your quote can be requested to be bound. Since a full copy of your policy takes a while to produce, request a certificate of insurance for your files once a policy number has been issued.

As in any profession, insurance is an evolving industry with changes happening frequently and sometimes discreetly. Do your best to understand how your policy works, how your agent operates, and how the ongoing needs of your business are being met.

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