Business insurance is one of the most important tools utilized in any risk management strategy designed to protect the financial health of a company. By purchasing business insurance, corporate risk shifts to the insurance provider. The challenge is to identify all the risks that your company is exposed to and then to rate them according to the likelihood that they will occur at some point in the future. Once you identify those risks and rate them, then you can shop for business insurance designed to specifically protect your business from the higher probability risks, or the risks that could potentially bankrupt your company if you are unprotected.
The Language of Business Insurance
Licensed carriers are typically cheaper than surplus carriers. Whenever possible, it is preferable to go with a licensed carrier. Unfortunately, they do not accept every industry type and can be very discriminating about which companies they are willing to insure. Surplus carriers insure companies that do not qualify for insurance by licensed carriers.
A bigger issue to consider is how a company is rated in terms of financial stability. Any insurance premium is too expensive if the carrier does not pay your claim or the company goes out of business at an inopportune time. You can access information from independent rating agencies to see if a particular carrier is stable. If a provider has lower than an A- rating, then keep on shopping.
Hire a Competent Unbiased Party to Evaluate Policy Provisions
Unless your company is large enough to have an in-house attorney with an expertise in insurance policies, then it makes sense to hire a Certified Insurance Counselor to help management evaluate the details of an insurance policy. There are often huge gaps in coverage that can leave a company financially vulnerable if they miss some of the fine print designed to provide loopholes for the insurance company so they will not have to pay potential claims. It is important to keep in mind that inadequate insurance coverage defeats the purpose, so choosing wisely is critical for business risk purposes.
Select a Business Insurance Carrier with Extensive Business Experience
There is a legitimate reason for hiring specialists when you need expert advice. This is especially true as it relates to insurance. The insurance agent or representative that sells family insurance is probably not the best person to give advice about complicated business insurance options. It is highly recommended that you evaluate a company based on their area of expertise. Before wasting time talking to an agent, find out the percentage of business insurance the company sells.
Business insurance represents an important purchase for any business. For many small and medium-sized companies, it makes sense to consult with a third party to get some help in evaluating insurance options. Selecting an insurance carrier with a top rating is very important.
The author writes on a regular basis for Inspire Insurance Solutions and takes an interest in small business issues and risk management topics. Her published articles include several topics covering Texas Business Liability Insurance Issues and more specifically, Austin Business Liability Insurance options.