It’s no secret that businesses need commercial insurance. But, navigating insurance for businesses can be a tricky task. It might be tempting to go with a friend or family member who is an agent to make the search easier.
If you want to find the right commercial insurance for your business, you’ll have to do a little homework. Researching your options when choosing a commercial insurance broker will help you make the right decision.
Here are 12 questions to ask a commercial insurance broker that can help you find the right broker for your company’s needs.
1. Are You an Insurance Agent or a Broker?
Insurance agents and brokers who specialize in commercial insurance, help businesses obtain commercial insurance at a reasonable price (also known as a premium). Commercial insurance agents and brokers must be licensed in their respective province, and comply with all provincial regulations.
What is an Insurance Agent?
An insurance agent is a professional who sells insurance products for one or more specific companies. The agent helps customers navigate their company’s insurance products. An agent works for and on behalf of an insurance company.
There are two types of insurance agents: captive agents and independent agents. A captive agent represents one insurer. An independent agent typically represents more than one insurer. Both of these agents work on a commission structure and get paid once you make a transaction.
What is an Insurance Broker?
A professional who represents the customer in their search for insurance is an insurance broker. An insurance broker works closely with clients to research the types of coverage, conditions, price, and terms and then makes a recommendation to the customer based on their needs. A broker works for and on behalf of the customer.
The insurance broker’s primary responsibility is to their clients. Insurance brokers do not represent insurance agents and must hand over the account to the insurer or an insurance agent to complete the transaction.
2. Are You Independent, or Owned By an Insurance Company?
When you purchase insurance through an insurance agent, be sure to ask if they are an independent agent or owned by an insurance company (also known as a captive agent).
A captive agent can only sell insurance policies from one company. On the other hand, an independent insurance agent is contracted to work with several different companies and can sell insurance products from multiple insurers.
There are benefits to working with a captive agent and an independent agent. Let’s examine some of them closer.
Benefits of a Captive Agent
Major insurance companies such as Farmers and State Farm use captive agents to sell their products to customers. These agents are experts on different insurance services, policies, and add-ons.
When you work with a captive agent, they will work with you to find a commercial business policy that fits your needs. This can be an easy way for a first-time commercial insurance customer to get coverage.
Captive agents have the support of their major companies. Many of them have an office and staff to help them keep track of documents.
Captive agents are motivated by customer service and make commissions off each sale of an insurance product. These commissions tend to be low because they also make a base salary. They also receive support from their company for advertising and hiring costs.
Benefits of an Independent Agent
Independent agents partner with several insurance companies and choose specific products to sell from each insurer.
Many consumers like working with independent agents because they provide more options than captive agents. Independent agents have more options and help customers decide which plan is best for them.
They're responsible for the cost of their office space, employees, and advertising. The commission percentage of independent agents is higher than captive agents, but they only get paid when they make a sale.
3. What Is Your Expertise and Experience?
Some commercial insurance brokers specialize in a specific industry such as hospitality or real estate. Others may focus on a specific type of insurance such as property insurance or workers’ compensation.
Be clear about what you are looking for, and talk to brokers and agents about your business’s needs. An agent or broker with limited experience is not necessarily a bad thing. Get to know your agent or broker before you make a decision based simply on their number of years in the business.
4. Does Your Staff Have Professional Designations or Accreditations?
Just like the letters MD follow a doctor’s name, insurance agents have special designations and accreditations. Most people are not familiar with the acronyms of these designations. Here are some examples of common commercial insurance designations, and what they stand for.
Just like the letters MD follow a doctor’s name, insurance agents have special designations and accreditations. Most people are not familiar with the acronyms of these designations. Here are a few of common commercial insurance designations, and what they stand for.
CIP - A Chartered Insurance Professional is the starting point for many in their insurance careers. A CIP understands the standard of excellence and professionalism needed in the insurance industry. A Chartered Insurance Professional has taken rigorous exams that put their knowledge of insurance to the test.
After an insurance agent or broker completes the CIP examination process they may choose to get further specializations in the field that meet their career goals.
CAIB - A Canadian Accredited Insurance Broker, or CAIB, is a professional designation given by the Insurance Broker's Association of Canada. This accreditation signals that your broker is not at the beginning of his or her career. This is a difficult designation to obtain and it is highly prized in the industry.
To pass this exam it helps if your broker has real-world experience in the industry. Not everyone is able to obtain this accreditation but if one person at your insurance broker's office has it, you know you are in good hands.
CRM - A Canadian Risk Management designation is given to risk management professionals who have a wealth of knowledge about risk management of businesses. This is a globally recognized accreditation. The U.S. and other countries have a very similar designation.
Insurance agents or brokers who have a CRM destination after their name demonstrate a professional commitment to knowledge in the field that goes above and beyond the standard insurance education.
Ask your insurance agency or broker if their staff has any special accreditations of designations that could be specific to your business or industry.
5. What Resources Do You Have?
Ask your brokerage firm if they are a local or national firm. If your business is only conducted in the local community, you may want to stick with a local insurance broker. However, if your business is nationwide, you will need a broker who knows the laws and regulations outside of your local community or province/state.
Get to know the team of your local or national brokerage. Make sure you know who will handle your account.
6. Do You Offer Multiple Quotes and Coverage Options?
Independent insurance agents and insurance brokers have the upper hand when it comes to offering multiple quotes and coverage options for your business. Captive agents are locked into working with a single big-name company.
Sometimes the company will be able to offer different coverage options, so it is a good idea to ask.
However, with an independent agent or an insurance broker, they shop various companies to find a personalized solution for your business. This can include multiple quotes from different insurance companies.
Each insurance company will more than likely also have multiple coverage options for you to choose from.
Ask your insurance broker or independent agent for their opinion on each of the coverages. Since they do not work for the companies, they can provide an unbiased opinion on the companies and your options.
Keep in mind they do get paid when they make a sale. However, these types of agents and brokers rely heavily on customer service and word of mouth for their business. Be sure to ask if there are any additional insurance broker fees when you purchase from an insurance broker.
7. Do You Have References From Clients?
Most insurance companies will happily provide references from customers. Checking a company’s references can help you understand how a particular agent or brokerage firm works with their clients.
Look for past clients who have a business that is similar to the size of yours, and is located in the same area. Ask if your insurance company has represented other clients in your specific industry too.
Ask the references how often they hear from their agent or broker. Are they happy with his or her service?
Most companies only list happy customers as references. It is a good idea to check online as well for references and reviews. See if these match the general tone of the references provided by the company.
8. How Long Does it Take For You to Respond?
Some agents are very engaged and will respond to any situation or question within hours. Others may take longer. Ask your insurance company this question to get an idea of how they handle customer questions or issues. This will help you know how they'll handle if you need to file a claim.
If this is the first time you are purchasing commercial insurance, you may want an agent or broker who is a little more hands-on with their customers. Captive agents generally go above and beyond to reach out to customers, while other insurance agents or brokers may be a little hands-off.
Choose the company that you think will work best for your company and your commercial needs.
9. Do You Provide Any Ongoing Service Commitments?
Some insurance companies provide their customers with ongoing service commitments. These commitments can range from the experience of the staff to the years the company has been in business.
These commitments will provide peace of mind to customers letting them know the company has dedicated professionals working for them and that they are not closing their doors anytime soon.
Ongoing service commitments may discuss the flexibility provided to customers or the various countries and jurisdictions the insurance company works with.
It’s a good idea to ask about these commitments upfront before you purchase your insurance policy.
10. Can You Provide a Personalized Policy For My Business?
Small business owners are required to purchase several different types of insurance for their businesses. You will need to protect your company’s assets, your employees, and your property.
No two businesses are exactly alike. That’s why your insurance company needs to customize a policy for your specific business.
A good insurance broker or agent can sit down and explain what insurance is required by law, and what insurance will benefit your company. Sometimes, additional coverage that isn’t necessarily required by law could help your business in the long run.
Other times, it may be best to just buy the insurance that is legally required. An agent or broker can offer guidance and advice on a personalized plan for your company. They will do so by assessing your business’s potential for risk.
11. What Does My Commercial Policy Include?
After an insurance agent or broker has helped you narrow down your options to a few specific policies and coverage options, it is important to ask what is included in each policy. This will help you make the best decision.
Insurance policies are extremely complicated documents. Insurance agents and brokers have the upper hand here because they read and write policies daily.
It is up to you to have your agent or broker sit with you, and walk you through the policy. Most agents and brokers are happy to do this for you.
You should feel satisfied with the explanation, and understand your policy before you make your first payment.
12. How Much Will it Cost?
When your agent or broker walks you through the policy, one of the things that needs to be discussed is cost. Make sure you understand how much your policy costs, and when you need to pay.
You can also ask about brokerage fees or commissions earned by the agent or broker. Get full disclosure of exactly what your premium will be before you leave.
Choosing a Commercial Insurance Broker
I know it sounds like a lot of work to choose a commercial insurance broker, but you will be very happy you did your homework if you ever need to file a claim.
Krywolt Insurance is here to answer any questions you may have about commercial insurance and our policies. Contact us today and let one of our agents personalize a plan that is right for your business.