Purchasing business insurance is complicated – especially knowing which types of insurance and levels of coverage are right for your company.
The point of an insurance broker is to help you decide which types of insurance you need, find insurance companies and policies best suited for your business, and negotiate competitive rates on your behalf.
Navigating the insurance landscape to find thorough coverage at a low cost requires guidance, and a business insurance broker can handle that research and legwork for you. Companies can save time, effort, and money by finding a broker or adviser to give you the information and coverage you need.
In this post, we discuss what a business insurance broker does, why your company needs an insurance broker, and how to find the best ones.
What do insurance brokers do?
To find the best insurance and benefits, many companies use a broker or advisor who knows their businesses’ specific needs and can get the best coverage at the best rates.
Insurance brokers help your business find insurance policies best suited to your specific needs, and manage those policies through tasks like renewal and claims.
Brokers work with multiple insurance companies, so they tend to have broad options for policy offerings and key benefits. And because brokers work on your behalf, they generally charge a commission and/or fee for their services.
Brokers are typically paid commissions by the insurance companies based on a percentage of the policy’s premium cost. But they are not contractually obligated to sell certain policies. In this way, insurance brokers avoid incentive systems that could disadvantage their clients.
An insurance broker’s primary objective is to represent businesses to find appropriate coverage for the best value. Brokers research coverage options, conditions, limits and costs across multiple insurance companies, and then recommend a policy that best fits your needs.
Their job is to help clients understand their liabilities and how those risks can be managed through proper insurance coverage. In doing so, a broker eliminates your need to learn about different types of insurance and requirements, making it easier to determine the insurance that will work for you.
Brokers can also take on consultant (or advisor) roles, providing ongoing services to help determine if policies should change, assist you with compliance, and help submit claims and receive benefits.
For example: If you are concerned about what would happen if an employee is diagnosed with a long-term illness or gets injured on the job, an insurance broker can ensure your healthcare benefits plan addresses each potential liability. If such an event occurred, they could help process your claim and explain what your policy covers.
Some insurance brokers focus on specific industries or types of insurance, while others provide advice on many different business insurance topics. For example, brokers specializing in property and casualty insurance help businesses find coverage for risks like natural disasters and lawsuits, while brokers focused on Group Life and Health, will review and procure coverage that is best for a company benefits plan.
Why does my company need an insurance broker?
Using an insurance broker to understand your coverage options and purchase the right policies, you can protect your assets and employees against legal claims and other damages.
These sorts of incidents can and will happen. Between 36% and 53% of small businesses face litigation in any given year, according to the SBA, making this coverage a must for any owner.
In most cases, you are legally required to purchase certain types of business insurance, such as workers’ compensation, disability and unemployment insurance. Small businesses searching for policies must also consider additional insurance coverages tailored to your state and your specific operations.
The quality of your business insurance policy matters, but shopping and comparing policies on your own is difficult. Many companies find value in paying an experienced professional to find the right policy, insurer and price to suit your needs.
A good broker or advisor will understand insurance policies as they relate to your business and will present options for tailoring your coverage – maximizing protection and minimizing cost. Unlike agents, who represent one or more insurance companies, brokers represent your business and can solicit price quotes from multiple insurers.
High-quality brokers often can negotiate lower rates for clients based on their history and relationships, as well as the amount of insurance that they are purchasing.
Licensing requirements, coupled with experience in their field, also make brokers well suited for business owners with complicated insurance needs. This is especially true if you need several policies or a Business Owner’s Policy (BOP) to manage your business’s specific risks and liabilities.
Even with commissions and fees, you may spend less overall using an insurance broker. In fact, often, a broker is able to provide savings.
How do I find an insurance broker?
There are about 413,000 insurance brokers and associated businesses in the U.S. as of January 2021, according to IBIS World. But how do you find the right insurance broker?
Researching coverage terms and prices – and seeking advice from the right insurance experts – will tell you what makes the most sense for your business and lead to the best policies.
Every state has an agency keeping track of insurance companies, agents and brokers operating there. Though time-consuming, you could visit your state insurance regulator’s website to check a broker’s licenses, inquire about complaints or disciplinary action, and see how long they have been in business.
But there’s a quicker way to find even more information about brokers. You can find these qualified insurance brokers at Mployer Advisor, a free broker marketplace that allows employers to compare brokers, consultants, and advisors in one place.