Having adequate coverage for potential risks in the course of doing business is essential for any company. Companies can purchase business insurance to protect themselves from many different types of losses, such as those involving their physical assets, their legal obligations to their clients, and the risks associated with their employees. We’ll go over who to get insurance from and where, but first, a brief overview of the business of insurance.
Business Insurance: Avoiding the Unavoidable
Although insurance is essential, many new business owners don’t give it any thought until it’s too late, and then they focus on the premiums rather than the coverage. Workers’ compensation insurance is mandatory in states where employers have employees. Everybody is aware that they need to have insurance against things like lawsuits, theft, fire, and natural disasters. The question is, how much money do they need to get started?
The type of insurance provider you go with can make a difference in this regard. Although insurance firms come in many flavors, they can be categorized into three basic categories.
Business Insurance: Direct Carrier
Allstate, State Farm, and Geico are among the big names in this industry. Captive agents are what they name their sales staff. They may be paid a salary or a salary and commission combination, but they are obligated to sell just the company’s policies. The fact that they exclusively represent one firm would make you assume captive agents don’t have much to offer, but you’d be wrong. The portfolio of choices available to direct carriers is vast. The insurance industry is highly competitive, as you might expect. They need to watch their budget carefully. Direct carriers often claim that their employees are more trained and more familiar with their products than those of their competitors, which helps them provide lower prices. Understandably, you may not always speak with the same customer service representative when you contact.
Business Insurance: Distributors That Operate Only Online
These websites, which are more of a method of delivery (virtual) than the traditional brick-and-mortar operations, compile estimates and make it easier to compare prices, even if you don’t get as detailed a quote as you would from an agent. The insurance industry will undergo profound change as a result of this. Millennials’ penchant for making purchases on the go has contributed to the explosive growth of the internet insurance market. In an industry where Geico spends $1 billion annually on advertising and State Farm spends more than $800 million, this is especially true.
Sometimes, no matter how much money is spent, a business just can’t make good on its promises. To give just one example, in March of last year, Google Compare gave up after trying to offer auto insurance for a full year. According to an article published in the widely read Insurance Journal, “Many believe that Google failed because it does not understand the insurance sector.” Nobody, not even Google, has figured out how to win at insurance yet.
Business Insurance: Independent Carriers
Independent insurance agents are the polar opposite of online and direct insurance carriers. Insurers like Safeco, The Hartford, and Travelers are just a few examples of the kind of organizations whose products may be sold through such outlets. In most communities, multiple agencies exist, each one representing a different carrier. They are independent mini-companies in their own right. The representatives can meet with you to discuss your company or new venture.
But wait, you object, you’re only interested in finding the lowest price and don’t care if somebody gives you a coffee. Keep in mind, once more, how intense the competition is. Your needs can be shopped around to multiple underwriters who will be vying for your business by the independent. Plus, everything can be seen clearly thanks to internet comparison shopping.
Then, when catastrophe hits, service is the final factor to think about. Those who have ever worked with an insurance company after a minor collision know that some are much more helpful than others. Choose someone you can trust so you can focus on other things.
