One of the most difficult areas of starting a new business is choosing the insurance. Not only do you need to obtain the correct types, but you will also need to choose the best policies with enough coverage and at a reasonable premium. When starting to find insurance, many people begin with the same agent that handles their personal policies, such as home and auto. Many people overlook the fact that insurance is a product. Just like buying something as simple as shampoo, you will want to review all of your options and compare products. Different companies specialize in different kinds of insurance and offer different policies with different annual premiums.
Insurance can be obtained in several different methods. The first is directly from the insurance provider, known as direct insurance distribution in the industry. Rarely, is this the best option for buying insurance because they will only offer policies from their company. Their policies may or may not be suitable for your business’ needs, and the company may not compare policy coverage to any outside insurance you currently have. This could result in coverage duplication and extra costs.
The second method is from an independent agent and is commonly known as captive insurance distribution. This agent sells only one company’s policies. The benefit of this is that have a contact person who may be knowledgeable and provides you with more customer service than an insurance provider. Similarly to working directly with the insurance provider, this agent will only be able to provide you with insurance from their insurance affiliates. That insurance provider may or may not offer the coverage that is best for your specific needs or with a premium that is optimal.
Your last option, and typically your best, is to go to an insurance broker, known as an independent agency system. The broker usually has several insurance providers that they work with. They will be able to provide you with more insurance options than an independent agent and with the same personalized customer service. They will also be able to objectively analyze your insurance policies to ensure that there is not a duplication of coverage.
