Imagine you've started a new company. You need to buy business insurance and you want to ensure you obtain appropriate coverage. How should you proceed? There are several ways to buy insurance. For instance, you could buy policies online or secure coverage through a trade or professional organization. While these methods can be effective, many business owners prefer to utilize the services of an independent agent. Buying insurance through an independent agency offers a number of benefits.
One advantage of utilizing an independent agent is that he or she is a licensed professional. A licensed agent has many legal obligations, such as behaving ethically and acting in your best interest. Many states require agents to pass a licensing exam in order to sell insurance. The type of license an agent needs depends on the products he or she sells. For instance, an agent that sells property and liability insurance may require a property/casualty license. A license is generally valid for two years. To renew an existing license, an agent may need to fulfill state continuing education requirements.
You can verify that an insurance agent is properly licensed by contacting your state insurance department. Many states allow policyholders to check the status of an agent's license by using a lookup tool on the insurance department's website.
Choice of Insurers
Because independent agents represent multiple insurers, they can obtain quotes on your behalf from several sources. Insurance products offered by one insurer may differ in price and scope of coverage from those offered by another. Your agent can help you compare policies and choose the one that best suits your needs.
Independent agents are familiar with the insurers they represent. They know what types of businesses those insurers will accept. Your agent's knowledge of insurers' preferences can save you time and effort. He or she won't waste time submitting applications that are likely to be rejected but will direct your submission to insurers that want your business. If your agent isn't sure whether your business meets an insurer's underwriting guidelines, he or she can ask the underwriter directly before submitting an application.
It is important to choose an agent who is knowledgeable about your type of business. Some agents are generalists, offering basic coverages that most small businesses need. Others specialize in coverages for specific types of businesses such as contractors, farms or restaurants. The type of agent you need depends on the size and complexity of your business. If your business requires specialized or hard-to-find coverage, you may need an agent that has access to a surplus lines broker.
One benefit of using an independent agent is that you will get help filing claims. If an accident occurs, you can report the event to your agent, who will then notify your insurer. Your agent can help you fill out claim forms and can advocate on your behalf if problems arise. Agents are familiar with claims handling procedures and the amounts typically paid for various types of losses. After your claim is paid, your agent can tell you whether the payment amount seems reasonable.
Agents are trained in risk assessment. Your independent agent can review your business operations and help you identify its major risks. He or she can help you prioritize your risks and determine which are insurable. While many of the risks associated with operating a business can be covered by insurance, some are uninsurable or insurable at a high cost. Your agent can help you decide which risks are worth insuring.
For example, suppose you operate a business that could generate pollution claims. A standard general liability policy won't cover lawsuits alleging bodily injury or property damage caused by a release of pollutants that originate on your premises. Your agent recommends that you buy premises pollution liability coverage. If this coverage is too costly for you to afford, your agent might suggest alternatives. For instance, he or she might suggest risk management techniques you can employ to reduce your risk of losses.
Another advantage of using an independent agent that agents are familiar with the risks in your geographical area. For instance, agents in Florida are knowledgeable about sinkholes while those in coastal areas or near rivers are familiar with flood risks and flood insurance. Your independent agent can educate you about the risks in your region and how you can mitigate them.
Insurance is a people business. When you meet with an agent in person, you develop a personal relationship with him or her. Over time, your agent will become more familiar with you and your business and will be able to provide more personalized service. For instance, your agent may contact you when new coverages become available or when prices on certain insurance drops. Your agent will review your coverages prior to renewal and may suggest changes or upgrades. Many small business owners value this individualized attention.