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Are You Shopping for Price or Value for Your Commercial Insurance?

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ICCF Commercial Insurance Price Versus Value

According to the U.S. Small Business Administration, there are 28 million small businesses in the country.

Most — if not all — of these businesses need commercial insurance, which includes property, liability and workers’ compensation and covers businesses in the event of a disaster, lawsuit or other incident that could pose a threat to their long-term operations.

But if you own a business, how do you find the right commercial insurance? For many of our clients, it boils down to a question of price versus value.

Price Isn’t Everything

Most business owners are concerned about their bottom line — and that’s understandable. However, in the world of commercial insurance, pricing isn’t everything. In fact, it’s hardly a factor when it comes to protecting your assets.

Pricing is related to the coverage you buy.  As a commercial insurance agent, I can make your price anything you want it to be — but that may come with less coverage than you actually need. Too many people start with price when comparing insurance quotes or policies. If a client comes to me and says “I got a quote that is $500 less,” I immediately start to investigate why that is. Normally, there is something buried in the policy that caused this. Maybe it’s a higher deductible, a lower limit, the wrong exposures or maybe it includes an exclusion that is important to the client.

Don’t Be Fooled by Quotes

Some agents won’t tell you why their quote is cheaper — they just sell on price. Too often a client falls for it and ends up actually buying less coverage. But is it worth the lower price?

You should ask yourself: Can I live with that exclusion? Does it really matter that the carrier with the lower premium has a lower financial rating — or maybe no rating at all?  Am I comfortable with a higher deductible and paying more out of pocket for a loss? Do I really understand the coinsurance penalty, which your insurance can use to reduce the amount of your claim payment if you purchased less coverage than you actually needed? A good rule of thumb to avoid this is to get coverage equal to at least 80 percent of your assets’ replacement value.

Prioritize Value

Never make a decision based on price alone. Here at ICCF, we often give clients a comparable chart with what they have and what they are comparing. We list the important items that they should review and match them side-by-side. Every carrier’s quotes look different and there is no easy way to compare, so this process is critical to getting you the right insurance. It’s rare that competing insurance programs are similar.  The term “apples to apples” doesn’t’ exist in the insurance world, so this is why you need to determine your risk profile and what risk you’re willing to accept.

Like I previously mentioned, we can make your premium as low as you want — but you’ll have to factor in what coverage you want left out and what exclusions you want to add. Making the right decision is key, because you aren’t simply buying insurance, you’re buying a tailored risk transfer program to protect your assets.

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