Most small businesses looking to buy general or professional liability insurance, have no idea that there's a difference between working with insurance agents, using a broker, or getting rate quotes online. But there is a big difference between each of these insurance shopping methods.
Both agents and brokers match small business insurance policies with individuals and businesses. Online quote sites streamline the process, sometimes by cutting out the middle-man altogether, or by matching you with a local agent or broker.
All three choices can result in you getting all the coverage your business needs, including general liability insurance, professional liability insurance, E&O, etc. But which strategy is the best choice for your small business?
First let's look at the differences, then you can decide for yourself which is a better choice for protecting your business properly.
An insurance agent in the U.S. is primarily a sales representative for an insurance company or for multiple insurance companies. They work for the insurance company, not for the insurance buyer. When working with an agent they are responsible for getting your paperwork done correctly. But it is your responsibility to make sure you're buying the right coverage for your business.
An insurance broker is a little different. In the U.S. insurance brokers need to be licensed. Rather than working for the insurance companies, they represent you - the business owner. They analyze your business and are responsible for putting together a plan to protect all facets of your commercial enterprise. For this you may end up paying a bit higher premiums or commission, but the extra security it provides your business may be worth it.
But what about online insurance quote sites? With the rising cost of commercial liability insurance the thrifty business owner needs to find ways to save money wherever they can. So if your business is very small with few or no employees, and your liabilities are limited in scope, you may want to cut the middle man out altogether, and get insurance quotes online.
There are many sites that now let you get multiple quotes from different insurance companies simply by filling out one form. You can also get business insurance quotes directly from many major insurance companies now. How much will you save by doing this? Some say you can save as much as 15% or more. That can turn out to be a significant savings depending on your business needs, and really small businesses can do a lot with that extra money. For instance, I've found examples of contractors paying as little as $500 a year for a general liability policy. Granted, these are low volume businesses in areas known for lower cost premiums. But compare that to the more than $3000 a MONTH that some busier contractors in other areas pay and you can see why shopping around for the best rate is so important.
Again, the decision to use an agent, a broker or shopping online for coverage, comes down to your particular business. Businesses with significant liability risks, property, employees, vehicles, etc., are likely better off with a broker, as the savings factor is probably outweighed by the added protection a broker can offer. However if you're a very small business with minimal risks, working with an agent or an online quote site may be your best choice, especially if you're willing to do a little research into what your specific needs and requirements are before shopping for your business insurance.
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