What to Look For in an Insurance Provider

When choosing an insurance provider, it's important to distinguish between the insurance company itself and the insurance agents. These are two different processes, and there are different questions you should ask in each case.

Insurance agents

Insurance agents

are essentially commissioned salespeople who work for specific insurers. As a result, they may not always offer the most competitive policies. Critics of agents believe that they cannot be objective about insurance products. Others insist that the only way to find your way through the myriad of insurance options is with the help of a good agent. Just keep in mind that some are more helpful than others.

Here are some questions to ask when interviewing an agent:

• How long have you been in business?
• How are you compensated?
• Which insurance companies do you work with?
• What insurance carrier do you do the most business with?
• How much clout do you have to resolve a tough claim or coverage dispute?
• Which insurers specialize in covering my type of business?
• Do you have errors and omissions coverage? (Otherwise, you may have no recourse if an agent makes a mistake.)
• What are the industry segments you serve?
• Who are your top clients?

If the agent is unwilling to answer, or seems bothered by these questions, find somebody else.

Insurance companies

Ask an agent the following questions about individual insurance companies:

• What is its reputation for paying claims?
• What is its financial rating? (Less than B+ rated companies should be regarded with caution. However, these lower-rated insurers are often the ones willing to compete for small business insurance.)
• Has it been in and out of the market, or is it a long-term player?
• Can it provide loss prevention services?
• Can it offer multiple-year policies? (These will often save your company money.)

If you ask even half these questions the next time you look for business insurance, you will be well ahead of the game.