What Business Insurance Carriers Won't Tell You

Business insurance carriers are in the business of providing protection for you and your business. The products they provide insure you against loss due to theft, damage and liability, as well as meet the needs of your employees and owners. There are many uses for the different type of insurance and as a consumer, you need to be educated and watchful of any exaggerated claims or failure to disclose certain information that could influence your purchasing decisions.

Buying Too Much Insurance

One concern that arises with some unscrupulous insurance agents and brokers is the selling of more insurance than what is necessary for your business needs. The purpose of insurance is to indemnify or restore to its original value those who feel the financial hardship due to a loss. For example, a business that loses $3 million in inventory due to a warehouse fire may have business casualty insurance that will pay a benefit to compensate them for the loss.

The insurance agent’s role is to assess a fair value for the asset being covered and provide the appropriate amount of insurance. Because your cost or insurance premium is based on the amount of coverage, an agent may be tempted to inflate those numbers under the guise that the true value of your property should be based on some future potential value. This is a way for the insurance agent to charge you more money and increase their commissions and is illegal in many states.

Purchasing Costly Additions

Agents who sell group benefit insurance such as group life and group health may add additional coverage as a value-added benefit. The most common type is group accidental death and dismemberment coverage. These plans pay an amount that is based on accidental death occurring or the loss of limbs due to an accident.

What they fail to tell you that in many instances, accidental death may be covered by your group life plan in the form of a double indemnity benefit. What double indemnity does is provide an amount that is twice the death benefit payable in the event of an accidental death. Having this provision in a group life plan eliminates the need to purchase an additional plan that essential funds the same loss. Reading the policy language and asking questions may help save you premium dollars down the road.

Factors That Go into Pricing

An agent may provide you pricing or premium information that is based on costs associated with another region of the country or type of industry. This is false and misleading because the factors that influence the pricing of your plan are based on your experience, or the experiences of similar companies within a specific geographical area.

Receiving information about a quote that ends up being substantially higher than what you were led to believe is a practice called “bait and switch.” It is illegal and can lead to an insurance agent’s suspension or termination.  You should always ask the source of any quote that you receive for your business insurance needs and request that any such information be provided in writing.

The majority of individuals who maintain an insurance practice do so with the utmost integrity and ethical consideration. Your best weapon against being misled or have certain information omitted is education and awareness as an insurance consumer.

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