How to Choose the Best Business Insurance for Your Company
November 30, 2017
How to choose the best business insurance for your company? The following criteria are all important:
- Contractor insurance experience (years, if not decades, of protecting contractors)
- Industry affiliations (membership in local trade associations)
- Client references (from other companies like yours)
- Value-added services (loss control, audit prep, registry services, etc.)
- Good working “vibe” and business expertise
Read more about each of these points below.
In a soft market where competition is fierce and margins are thin, opportunities to control business costs are always worth exploring. Unfortunately, for some contractors, misassumptions around putting their insurance out to bid can lead to an expensive case of inertia. Firms stick with their agents because they have no major complaints, and because letting things ride seems like a lot less work.
Under the right circumstances, however, seeking a competitive quote for your business is often a profitable decision. In addition to a lower premium, a fresh candidate may bring risk management recommendations or claims management advice that will drive savings in the long term. Even when your loss history is something less than flawless, a good agent can help illustrate your complete company narrative, including any loss prevention efforts you’re making now, and your big-picture profitability for underwriters.
Here are some factors that should go into your selection process, when seeking out the best business insurance options:
Contractor Industry Affiliations
You can’t be all things to all people, and neither can insurance agents. Just like your business has a target customer profile, good insurance agencies focus on a specific sector for their commercial insurance offerings. As a result, they can play an active role in industry trade groups (like the Massachusetts Association of Landscape Professionals, the Associated Subcontractors of Massachusetts, or the Utility Contractors Association of New England), while staying abreast of local marketplace news and regulations. Ask your local trade group about its insurance agency members. This is a good place to develop your short list.
Contractor Insurance Experience
You can weed out a lot of ill-suited candidates just by examining an agency’s client list. Do you recognize any of the contractor testimonials they publish? How do these companies compare to yours, in terms of size and services offered? Sometimes it’s nice to be the big fish in a small pond, but not where insurance advice is concerned. (Shortcut tip: visit the agency’s website, and look for a specialty page that pertains to your industry. Our site, for example, shows that our agency focuses on MA contractor insurance, landscapers insurance, brewery insurance, and a few other core segments.
Experience should also come into play when evaluating an agent’s relationship with prospective insurance carriers. Agents that deliver low premium volume or misrepresent their accounts don’t have much clout to negotiate on your behalf. In fact, under-producing agents can actually get “fired” by a carrier, which could result in the non-renewal of your policy. Ask the agent you’re inviting to quote how long he or she has placed accounts with Carrier X, if the carrier has ever canceled a policy mid-term, or if he or she has ever been terminated as the agent.
Best Business Insurance Client References
Now it’s time to explore how well the agency is serving companies like yours. Even in an informal quoting situation, don’t be shy about asking for references. If possible, request to speak with more than one person at the referring organization. The owner, for example, may be happy with the bottom-line savings he’s netted, but the operations manager may be underwhelmed by the timeliness of certain service requests. Think of all the people in your organization who will interface with your insurance agent, and get their questions answered, too.
Personality Fit and Your Insurance Partner
You probably have one or two business associates who drive you crazy—guys you avoid like the plague. You can’t afford to have a relationship like this with your commercial insurance agent. You need to trust you’re working with someone who puts you at ease, and lends to comfortable conversation. So don’t rely solely on an online quote or a series of email exchanges. Pretend you’re hiring a new employee; pre-screen potential agents with a phone call, if not a preliminary, face-to-face meeting.
Business Expertise beyond Insurance
Your insurance agent can’t replace your CFO or CPA, but if he’s a veteran to construction, he’ll have valuable insights on things like field costs and job cost accounting, which can overlap with insurance decisions.
Here’s an example: when you bid on a project, your labor costs should include field crew and labor expenses like taxes and insurance. If you don’t create separate job accounts for each project, you won’t be able to accurately attribute costs or gauge the profitability of different ventures.
Commercial insurance should provide more than just a safety net in case something goes wrong. Today’s commercial insurance agents have tools at their disposal to effectively lower your risks and prevent loss events from happening in the first place. Need help outlining or disseminating your safety policies? Your insurance agent should raise his hand before you have to ask.
Safety Analytics and Insurance Savings
It’s all well and good for an insurance partner to make safety recommendations. A true partner will attach your initiatives to actual data points that can be tracked and evaluated. So if you’re spending more to recruit, vet, and hire safer drivers—for example—you should know the exact return you’ll yield for fewer inspection violations and fewer collisions.
So, Should You Be Shopping for a Better Business Insurance Agent?
A few things to keep in mind when rethinking your insurance partner: shopping for a new agent isn’t something to do every year. It’s also not a great tact for keeping your agent “on his toes.” If you’re curious about savings opportunities, start by asking your current agent to present some alternative carriers.
If you’re still not satisfied, or if you have other concerns about your agent (i.e. subpar service, failure to improve safety programs), it’s time to look elsewhere. At least four months before your account is up for renewal, call one or two agencies for an unofficial quote (unrecorded, no inspections).
When seeking formal quote comparisons, remember your incumbent agency has a slight advantage over others who may bid. Newcomers will be blocked from getting quotes from any carrier your agent negotiates with… unless you provide written permission via an “assignment” form letter. Giving this permission is a smart way to compare apples to apples when your account is formally out to bid. Got questions? Don’t hesitate to call us at 508.339.2951. Good luck finding your best business insurance agency!