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Having adequate and appropriate commercial insurance coverage is critically important for any business, regardless of size or industry. Commercial insurance helps protect businesses from a wide range of risks and threats that could severely impact operations and profitability. Some common risks include:
- Property damage from events like fires, storms, floods, etc.
- Liability exposures if a customer gets injured on the business premises
- Employee injuries requiring workers’ compensation benefits
- Loss of income due to disaster or other business interruption events
- Cyber threats such as data breaches, hacking attacks, and viruses
- Commercial auto accidents involving company vehicles
Understanding the Role of a Commercial Insurance Agent
A commercial insurance agent plays a critical role in helping businesses secure the right insurance coverage. The main responsibilities of a commercial insurance agent include:
- Gaining a comprehensive understanding of the client’s business operations, assets, risks, and insurance needs through detailed discussions and risk assessments
- Educating clients on coverages available for commercial risks like general liability, commercial property, business interruption, workers’ compensation, cyber risks, professional errors and omissions, and more
- Comparing policies from different insurers to present the business owner with the best insurance options that align with their budget and risk tolerance
- Serving as an advocate on behalf of the policyholder when processing claims and ensuring the best possible outcome
- Conducting ongoing policy reviews to ensure adequate coverage as the business evolves
Skilled agents build trusted relationships with their clients over time by providing expertise in risk management and insurance-based solutions. They play an integral part in helping businesses protect against losses.
Managing risk is critical to a business’s success. Explore how the NEC Insurance team helps businesses create a customized insurance framework.
Factors to Consider When Choosing a Commercial Insurance Agent
Selecting the right commercial insurance agent is key to obtaining adequate, cost-effective coverage. When looking for an agent, key factors businesses should consider include:
Experience and Expertise
It’s vital to work with an agent well-versed in commercial policies with extensive expertise regarding business exposures and insurance carriers. Warning signs of an inexperienced agent include:
- Limited knowledge regarding coverages needed for your industry
- An inability to explain exclusions, sub-limits, and other policy specifics
- Vague responses to questions or an overreliance on generic, pre-packaged solutions
Experienced agents will discuss risks and scenarios unique to your operations to ensure tailored solutions.
Quality of Customer Service
As the business owner’s representative, the agent should provide top-notch service. Consider:
- Responsiveness when filing claims and clarity around the next steps
- Proactive policy reviews and risk management guidance
- Ease of contacting the agent and availability to answer questions
Policyholders should feel confident and supported throughout the insurance lifecycle.
Range of Products and Insurance Carriers Represented
Work with an agent who has access to a wide range of commercial carriers and insurance products. This increases the likelihood of obtaining coverage that matches unique risk transfer needs. Ask potential agents:
- How many insurers they represent for commercial policies
- Whether they can procure specialty commercial products like E&O, EPLI, cyber, etc.
- If they have experience with your industry’s exposures and required coverages
Greater choice allows agents to make optimal recommendations to safeguard your business.
The Process of Securing the Right Commercial Insurance
With the help of a reputable agent, your business can secure sufficient coverage with the following steps:
1. Understanding the Insurance Needs of Your Business
The first component of securing comprehensive commercial insurance tailored to your company’s risks is conducting an exhaustive evaluation of the business, including:
- All locations/buildings and property therein
- Key exposures based on operations, products/services, industry
- Revenues, payroll, vehicle fleets used
This information allows the agent to identify areas of risk and assemble a tailored suite of insurance policies aligned with mitigating the exposures.
It’s also imperative business owners have a clear grasp of their own risk tolerance, as higher limits or lower deductibles translate to higher premiums. Striking the right balance is key.
2. Evaluating and Comparing Insurance Proposals
Reputable agents will leverage the insights gleaned in the needs assessment to put together insurance proposals for consideration. When comparing proposals, key factors include:
- Comprehensiveness of coverage/gaps
- Policy limits/deductibles
- Exclusions and restrictions
- Overall premium costs
- Insurer financial strength ratings
- Loss control/risk management services
Analyzing how each proposal addresses vulnerabilities, protects assets, and aligns with risk tolerance and budgetary needs is critical.
How do you verify the credibility of a commercial insurance agent?
Verifying the credibility of a commercial insurance agent is an important step before selecting one to represent your business. Here are some tips:
- Check their insurance license status through your state’s Department of Insurance website. Licensed agents will be registered in the state(s) where they operate.
- Ask for references from current or past business clients and contact them. This can give insight into the agent’s responsiveness, expertise, and trustworthiness.
- Look into their professional certifications, which require ongoing education and ethics training.
- Search online reviews and ratings for the agent. While not fully reliable, consistent negative feedback should raise concerns.
- Meet with the agent in person if possible. This gives a chance to assess their professionalism and communication approach.
How much does it cost to hire a commercial insurance agent?
There typically is no direct cost charged by an insurance agent to represent a business client. Instead, independent agents earn commissions from the insurers based on the premiums paid for the policies they sell, while captive agents work for one insurer and receive salaries and performance incentives to sell that company’s policies. Additionally, brokers earn commissions and may also charge service fees for the expert advice and service they provide.
While working with an agent directly does not cost extra, it’s important to consider how an agent might impact overall premiums. Consider:
- An inexperienced agent may fail to secure optimal coverage suited to your risks and operations.
- Going through different channels like independent agents, captives agents, brokers or direct-to-carrier can influence policy pricing.
- Less reputable agents may churn policies unnecessarily or upsell inadequate coverage.
How often should a business review its commercial insurance coverage?
It’s recommended business owners meet with their commercial insurance agent or broker at least annually to review and update their insurance coverage. More frequent reviews may be needed when making major changes to business operations, assets, inventory, or number of employees, entering new markets or geographies that may alter regulations or exposures, or after filing an insurance claim to assess how policies performed.
Choose NEC for Your Insurance Needs
Don’t leave your assets unprotected—NEC Insurance is here to guide you through every step and ensure you have the comprehensive coverage you need. Whether you have personal, health and life, or business insurance needs, connect with us today to start working with a dedicated agent who will tailor your insurance strategy to fit your unique needs.
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