Who is an Insurance Agent?

An insurance agent, also called an insurance broker in some instances, is the local representative of any number of insurance companies. A legitimate insurance agency must be licensed by a state board before he or she can legally sell insurance policies to customers. Generally, an insurance agent works as the local 'face' of a single insurance company, but occasionally an independent agent may work with different companies depending on their areas of expertise and coverage.

Most consumers interested in purchasing insurance coverage will only deal with a local insurance agent directly. He or she is authorized to present all of the coverage options available through the larger insurance company. Since part of an insurance agent's salary is based on commissioned sales, he or she will often offer 'one stop shopping' for all of the customer's insurance needs. An insurance agent may sell individual policies for car, home, life and medical insurance, or offer a package plan which incorporates a combination of these needs.

Insurance customers are required to make regular payments called premiums to the insurance company, so part of an insurance agent's job is to ensure compliance. He or she may send out reminders of an impending premium payment, or notify customers of any proposed rate changes. A good insurance agent may also keep track of any new developments in a client's life--a new teen-aged driver or a new home, for example. Clients may need to change their coverage from time to time, so an insurance agent will negotiate the new terms with the parent company.

Perhaps the most visible part of an insurance agent's job occurs during an actual insurance claim. Following a car wreck or natural disaster, for example, customers are urged to contact their local insurance agent as soon as possible. Claims for insurance benefits must be processed through an authorized agent who can verify the circumstances of the accident or disaster. A specialist called a claims adjustor may be sent out by the insurance agent to personally inspect the damage and calculate the value of the claim.

An insurance agent often acts as an informal arbitrator between the client and the parent insurance company. He or she may know the best ways to present a claim in order to elicit the most favorable settlement from the insurers.

Q. How Do I Insure My Customer's Property?

Many businesses temporarily hold their customers' possessions to perform maintenance services or repairs.

These types of businesses most commonly include dry cleaners, jewelers and other repair shops such as those who work on shoes, small engines (such as lawnmowers, weed-whackers or snow-blowers), TV’s and stereos, among others

A.

Items that a customer leaves with your business create a “bailment” - a transfer of possession without a transfer of title. As the bailee (you: the business taking possession of your customer’s property), you have a duty to protect your customer’s property by exercising reasonable care.

There are two types of Bailee policies to protect your customers’ belongings from damage or destruction by fire and other perils:

1. Less Desirable: Your customer can only collect if your business is negligent (or legally liable for the loss). Although this policy may save your business from paying for situations beyond your control (caused by a flood, for example), this situation can also lead to a potential public relations issue in which customers are dissatisfied regardless of who was at fault. Remember one of the first rules in business: the customer is always right!
2. Your customer is reimbursed no matter who was at fault for the loss. Although this second type of coverage cost a bit more, the good will it guarantees is often worth the cost.

As always, be sure to inquire with your independent insurance agent to assure you are purchasing the appropriate type of insurance for your business exposures.

Before You Hire an Agent for Your Commercial Insurance

Many small business owners make the mistake of placing their commercial insurance with the same agent they purchase their personal home/auto insurance from. A few potential problems exist with this decision.

Does Your Agent Have Commercial Experience and Expertise?

The personal lines agent may not have the experience necessary to address all of the important exposures that exist in a commercial business, vs. a personal household. These specialized commercial exposures include topics such as pollutant cleanup and removal, hired and non-owned auto, and business interruption.

Does Your Agent Have Access to More Than One Market?

Many personal lines agents are 'captive agents', who sell insurance from only one company. Often, a personal lines agent will place your commercial policy with the same company that provides your home/auto insurance, instead of a carrier that specializes in commercial coverage. Independent insurance agents, or brokers, represent several companies and are able to place insurance policies for their clients with the company that offers the best coverages to protect their individual businesses.

Multiple Choices = Better Pricing.

Having access to multiple insurance companies helps an agent to obtain the best coverage at the best price. When your agent is able to compare multiple policies for you, he can make recommendations on the pricing and the range of coverage features available.