Questions to Ask Your Agent about Small Business Insurance
When shopping for small business insurance, it is crucial to find the right small business insurance agent. A well-experienced agent who is familiar with small businesses such as yours will not only save you money, but will also ensure that you get all the coverage you need in your specific areas of risk. In addition, a good agent will prevent you from purchasing unnecessary insurance and having redundancies in your policies.
After you have collected names of recommended insurance agents, you are ready to make appointments. During the consultation, you will need to provide your relevant information to agents so they can develop a quote. You also need to come prepared to ask the right questions. Asking these questions will not only provide you with information, but it will also help you gain confidence in the agent and determine whether he or she is trustworthy and knowledgeable in your business field.
Important questions to ask a small business insurance agent include the following:
Which types of business insurance are recommended?
The agent should be able to describe a commercial property policy and a general liability policy. In addition, if you have employees, the agent should mention workers’ compensation, which is required by law. Also, he or she may mention health insurance options for your employees as well as insurance that relates specifically to your type of business, such as professional liability insurance or commercial vehicle insurance.
The agent may recommend a Business Owner Policy (BOP), which packages a liability policy with a commercial property policy for a more reasonable premium, and may suggest customizing the BOP to meet your company’s needs.
What is not covered under the policy?
The agent should also mention that certain perils not named in the policy will not be covered unless you purchase comprehensive property coverage. For example, in the case of flooding, your property damage would not be covered if your policy only includes fire and theft.
In addition, the agent should explain that a basic policy may not cover business interruption. You will need a separate policy to protect you in the event that, for instance, your office is burglarized and has to be shut down for a week because of the loss of equipment.
Also, if you are considering professional liability insurance, some policies do not cover court fees, so be sure to ask the agent about this potential risk.
What is the customer complaint rate?
The agent or broker may have some complaints filed against him or her, which should be disclosed since they are a matter of public record. Although a few basic complaints against an agent may not be worrisome, any administrative or ethics charges are definitely a red flag. If this is the case, then it is recommended that you select another agent or broker.
In addition to asking about the agent’s complaint rate, it is also important to check online with your state’s Department of Insurance to ensure that the agent has a current, valid license. The department can also verify the agent’s claims regarding complaints. Records of any complaints, administrative discipline, or ethical violations are listed along with licensing information.
How can I reduce risk?
While you cannot eliminate risk completely, it is crucial to find an agent who is knowledgeable about the specific ways to reduce business risks. The agent should describe ways to transfer risk, perhaps by leasing property or equipment rather than owning it, and also make sure your warranties are filed and customized to protect you.
The agent may also mention creating contracts for customers in order to transfer the risk to them. For example, if you own a medical spa, it is recommended that you have customers sign medical release forms before performing cosmetic procedures.
In addition, it is important to consider any property risks and create a plan to reduce those risks. For example, if your property is in a flood plain, the agent can provide information on how to minimize flooding risks for your business.
Small Business Insurance Directory