When considering how to get business insurance, it can be confusing whether you need an insurance broker. In some instances, you may be able to get your commercial or business insurance without using a broker. However, the process can be pretty complicated.
This article will look at what a business insurance broker does and how they can help you save money and time when getting insurance for your business.
A business insurance broker is a professional who serves as an intermediary between consumers and an insurance company.
With the help of a business insurance broker, it can be much easier for business owners to find a policy that best suits their needs and budget. This is because business insurance brokers represent consumers, not insurance companies.
They also have access to multiple insurers and can shop around to find the best deals and most suitable plans to meet your needs.
With a strong understanding of your business insurance needs and their insurance experience and industry connections, they can make the whole purchasing and renewal of insurance process much smoother.
How Does an Insurance Broker Get Paid?
In most cases, an insurance broker is paid a commission from the insurance company once they confirm your insurance policy. This fee is usually a percentage of the total cost your business pays for the policy, and the cost is already built into the price of the insurance.
Of course, while brokers can save you time and money, you may also need to pay a business insurance broker fee for their services.
However, very often, these additional fees or costs can be offset by the savings you will gain by purchasing their recommended insurance plans.
Is it Better to Use a Broker for Insurance?
While using a broker isn’t necessary to purchase business insurance, it can save a lot of time in terms of research and negotiating with insurance carriers.
Business insurance brokers are usually best suited for business owners who have more complex insurance needs.
For example, many small business owners require several different insurance policies and often don’t understand what insurance is needed for their industry and type of business.
When Should You Use A Business Insurance Broker?
If you are considering working with an insurance broker for your business, here are some of the reasons to consider it:
- You have a lot of employees or subcontractors working onsite
- You need to understand better the details of your policy, such as exclusions and limits
- You are new in business and need advice about which type to get
- You want to shop around with multiple insurers
- You prefer a personal relationship with someone who knows your background and coverage needs.
Insurance Brokers vs. Independent Agent
Insurance brokers are sometimes confused with independent agents. This is an easy mistake to make as both work with multiple companies and earn a commission for their clients’ insurance policies.
However, one significant difference is that independent agents make their money entirely from commissions.
Independent agents typically represent insurance companies rather than only the people buying the policies. In contrast, insurance brokers represent the buyer and work independently from the companies whose policies they offer.
While independent agents work with more than one insurer, they have contracts with specific companies and can sometimes be limited to selling certain policies, unlike brokers.
On the one hand, this limits your insurance options to those companies. On the other hand, independent agents may know more about the companies and policies they represent than brokers who deal with many insurance carriers.
Keep in mind that you can still shop around yourself even if you’re working with an independent agent or insurance broker.
Often you can begin by using an insurance comparison tool to understand the base costs and rates from multiple companies.
However, once you begin to look at multiple insurance policies, it can be wise to work with an insurance broker who can help you streamline the process and save money.