Understanding the Business Insurance Market
Arthur Hausman, SCORE 513 Counselor
There are principally two insurance networks available for the business consumer; the Independent Insurance Agent and the Direct Writer. Examples of the former are The Hartford, Chubb, Kemper, CNA: the latter, State Farm, Allstate, Liberty Mutual. The Independent Agent represents many insurance companies giving them the availability to choose the one company, or if necessary, several, best suited for your business. The salespeople are known as "brokers" and because they have no allegiance to any one company they become your buyer. With a Direct Writer you are dealing with a representative of one company and he is their agent.
What To Look For
Regardless of whom you choose it is recommended that the agent/broker you use have the Chartered Property & Casualty Underwriter (CPCU) designation. It confirms the agent has successfully passed a rigorous series of examinations that go beyond the standard State licensing requirements. Next you want to ascertain the "BEST REPORTS" insurance company rating, accepting only an "A+" or "A". This rating indicates the insurance company’s ability to pay claims based on historical and financial information.
Many coverages are similar for every business. You must insure tangible assets (furniture, equipment) as well as intangible assets (loss of income). Liability Insurance, including Products Liability, is a must if you are selling a product. For those selling a service, some form of Malpractice Insurance may be necessary. A good insurance representative must understand your business as well as you . By learning your operation, recommendations can be made to eliminate exposures entirely, thereby reducing the need for some insurance coverages.
Life, Health & Disability
If you are solely responsible for the success or failure of your business, think of the risks arising from death, illness or disability. Insurance is available to cover each contingency but there are many factors that have to be reviewed in making these buying decisions. Some Independent Agencies or Direct Writers may have a specialist in these areas, or you may want to consult with a broker that specializes in these coverages. The BEST REPORTS ratings and the Chartered Life Underwriter (CLU) designations are also important in making these buying decisions.