As a business owner, what do you look for in an insurance company? The first answer for many small business owners will be the cheapest price. In these dicey economic times, that line of reasoning is understandable. However, there are many pieces to the commercial insurance puzzle and price is just one of them. Here are a few other components that you should give serious attention to.
- Comprehensive coverage that is tailored to your type of business. For instance, if you are a restaurant or a distributor of perishable goods, it’s imperative that your policy has spoilage coverage. If you’re a manufacturer, it could be a good idea to have contingent business income coverage in case there is a major loss to one of your suppliers. If you are a contractor, you might want to think about blanket additional insured by written contract coverage. Is there a coinsurance clause on your property coverage? If so, you could be penalized in the event of a loss if the property values are underinsured. Agreed Amount coverage, or waiving of the coinsurance clause, will eliminate the property coinsurance penalty.
- Claims Service. Protection when you experience a loss is why you purchase insurance, but, unfortunately, you often don’t know what you’ve bought until a claim occurs and then the “rubber meets the road”. Evaluate how your current and prior carriers have responded to your claims in the past. How fast did someone call you back after reporting your claim? Were the adjusters fair and knowledgeable? Were follow-up phone calls returned promptly? Talk to some of your friends who are in the same business and find out what their experiences have been.
- Automation. Can you report or check on the status of claims online or via your mobile phone? Can you make premium payments online or via your phone?
- Loss Control. Does the carrier have experienced loss control engineers that will assist you with hazard controls and help you keep your loss experience favorable? The better your experience, the more competitive premiums you will attract.
- Financial Stability. What is the AM Best rating of the carrier? Some mortgagees will not accept a carrier that is rated less than A. If a carrier is rated A (Excellent) or better, they are making sound financial decisions and should be in a position to pay your claims. Take a look at the tenure of the owners as well. A company that has been owned by the same group for a long time is often more stable than one that has just been purchased.
- Agent. This may be the most important factor to consider. Are you dealing with someone who is experienced and knowledgeable about the exposures that your business needs protection from? What about the agent’s relationship with the carrier? Commercial insurance is often not cut and dry. An agent with a solid relationship with a carrier could get more underwriting consideration than one that doesn’t write much with the carrier. What about the support staff that the agent uses? Ask about their experience because a lot of times that is who you will be talking to after the policy is bound.
Price will always be one of the key factors when you make your final decision but remember that old adage “you get what you pay for” and make sure that the other pieces are in place. Sometimes superior service and coverage may be worth an additional cost.