Small businesses should shop for insurance. Check with your profession's trade or industry groups, which frequently have arrangements with underwriters to provide economical insurance to the group's members.
In the absence of a trade group, you may want to work with an independent insurance agent, or broker, who is familiar with your type of business. You have two choices: exclusive agents, known as direct writers, and independent agents. A direct writer sells policies for the insurance company it exclusively represents, whereas an independent agent represents many insurance companies. A direct writer may be able to get you a better rate, but you will be limited to the specific type of insurance that their company sells. An independent agent will give more personalized service and will be able to put together a package that specifically fits your business needs.
An agent should take the time to analyze your operations and coordinate all types of insurance coverage. They should be willing to obtain quotes from several companies to see that you obtain the most affordable coverage possible. And they should make sure that the insurance company offering the policy is solvent.
When selecting an agent here are some qualities to look for:
- Good References
Ask for references from other businesses, your banker, accountant, and lawyer. - Good Credentials
Find out if the agent has any professional education and training credentials, and advanced insurance designations such as the Chartered Life Underwriter (CLU), chartered Property/Casualty Underwriter (CPCU), Chartered Financial Consultant (ChFC), of Life Underwriter Training Council Fellow (LUTCF). Also, is the agent a member of any professional organizations, such as National Association of Insurance and Financial Advisors (NAIFA). - Knowledge
The agent should be able to provide you with up-to-date information on new product developments. - Trustworthiness
Above all, your insurance agent should be someone you trust, either through recommendations from people you respect, or from your own knowledge of the person. You should be able to communicate with the agent and get the answers to your questions in language you can understand.
You should also look at the companies the agent represents. Are the companies financially sound? What are their financial ratings from major ratings organizations like A.M. Best, Standard & Poor, and Moody.
Price should not be the lone reason for choosing an agent or company. You also need to consider the products available and the service of both the agent and the company. Your personal knowledge of both the company's and the agent's reputation for good service is a significant consideration.
