Finding the right insurance solution for your business can be a difficult task. With businesses facing a plethora of potential risks, there’s a huge range of insurance options available and the choice can be overwhelming. Additionally, how do you know if the policy suits your needs?
This is where a business insurance broker can help.
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What are the advantages of using a business insurance broker?
Why would you bother using a business insurance broker when you can easily buy cover yourself direct from the insurer? A recent study found that people who buy with a broker are more likely to be covered in the event of a claim.
There are several other reasons, including:
- They’re insurance experts. Do you know the difference between public liability insurance, professional indemnity insurance and business interruption insurance? How about the differences between the myriad other types of cover available? Your insurance broker does, and he or she can help you understand your policy options and find the cover you need.
- They can save time and reduce stress. You’re most likely too busy taking care of the day-to-day running of your business to have the time to fully understand the intricacies of different business insurance policies. But if you use a reputable business insurance broker, you’ll have more time to devote to your company.
- They provide step-by-step help. A good business insurance broker will guide you through the process of buying insurance from start to finish. After taking the time to understand your business and assess the risks it faces, a broker can then match you with a policy that provides suitable cover.
- They work for you. An insurance broker’s role is to work in the best interests of your business, not to benefit an insurer. This means their aim is to find the insurance cover that’s right for your business.
- They ensure that you end up with the right cover. If you take it upon yourself to sort out your business insurance needs, the risk of under-insuring or of paying for cover you don’t actually require is greatly increased. But with a broker on your side, that risk is reduced.
What are some industries that brokers can service?
Insurance brokers can help businesses across an extensive range of industries, including:
- Accommodation providers. From innkeepers liability and manager’s contents cover to equipment breakdown insurance, there are several key types of cover you need to consider.
- Architects. Professional indemnity insurance provides crucial protection when your mistake or negligence results in a claim from a third party.
- Cafe owners. A tailored insurance package for a cafe owner includes cover for contents and stock, accidental damage, business interruption, theft, machinery breakdown, and public/products liability.
- Conveyancers. Professional indemnity insurance is essential for conveyancers, and an insurance broker can help you tailor cover to suit your needs.
- Engineering and construction firms. Regardless of whether you’re a civil, structural, mechanical, chemical or mining engineer, professional indemnity insurance is crucial to protect you against claims that arise when you make a mistake.
- Management consulting services. Professional indemnity insurance can also benefit management consultants, helping you cover legal costs as well as any damages or compensation you’re required to pay.
- Financial planning services. From financial planners to superannuation advisers, a wide range of professions in this industry need professional indemnity insurance.
- Hair and beauty salon owners. An insurance broker can help hairdressers and beauty therapists make sense of the complex range of covers their business may need, including accidental damage, machinery cover, liability cover and more.
- Human resources companies. If you’re a human resources professional and you make a mistake or fail to exercise an appropriate level of skill, the financial consequences can be huge. The good news is that an insurance broker can help you customise a policy to suit your unique requirements.
- Information technology services. IT liability insurance combines professional indemnity cover with public/products liability cover, providing crucial protection for your business.
- Property valuers. Claims can be made against a property valuer if the worth of a home is disputed or if they fail to make sufficient enquiries about a property. Professional indemnity insurance is therefore a must.
If you think an insurance broker could help you find the business insurance you need, you can search for a qualified broker at the National Insurance Brokers Association website. You can also find out more about how to compare brokers in our handy guide.
What options can I get from a broker?
It doesn’t matter if you’re running the corner store or a Fortune 500 Company, all business involves a certain amount of risk, which is why there is a range of business insurance options available. These options include:
- Public liability. This covers any compensation you are legally liable to pay as a result of property damage or personal injury that occurs to a third party in connection with your business.
- Material damage. This covers you against damage caused by unexpected occurrences, for example fires or floods. Specific cover is also available for glass damage.
- Business interruption. This type of cover offers protection against loss of income if a business is unable to trade due to an unforeseen event. For example, if an earthquake or fire means your business is unable to run or is operating at a reduced capacity, business interruption insurance will provide cover for any resulting loss of income.
- Theft. This insurance covers you against the theft or vandalism of company equipment or property. Cover also allows policyholders to recoup money lost while in transit or while contained on the premises during business hours.
- Property. This covers damage to insured business properties by unforeseen events.
- Personal accident. This provides cover for the business should an accident occur that results in disability or death.
Learn more about the different business insurance plans available in Australia
How does a business insurance broker work?
A business insurance broker is an insurance expert who can help you find the right cover for your business. When you meet with a broker, they will first sit down and take the time to understand how your business works, the risks involved, and how you can find protection against those risks.
Once they know your business, your broker can then help you tailor a business insurance package to suit your requirements. A broker will help you understand the features of different policies, answer any questions you may have, and negotiate the best deal and customise cover on your behalf.
There’s a common misconception that brokers work for insurance companies. While they do partner with insurers, the reality is that they have a responsibility to help you find insurance that matches your cover needs. In other words, they work in your best interests to protect your business.
Why consult a business insurance broker?
Brokers have expert knowledge and a number of tools at their disposal to help make the process of finding business insurance much easier. This can help save you a whole lot of time, money and stress, freeing up your time to allow you to concentrate simply on running your business.
Insurance brokers are professionally trained and possess expert knowledge about all the traps and pitfalls of business insurance. They will take the time to understand just how your business works, as well as the range of risks you are exposed to. They can then use their experience and contacts in the industry to help you choose the right policy.
A good broker can take you through the ins and outs of individual policies, as well as give you access to a broad range of insurance providers. If you ever have to make a claim, having a broker on hand to take care of matters for you can greatly reduce the amount of stress involved.
Tips to compare business insurance brokers
In order to find the right broker for your situation, you could consider asking for proposals or expressions of interest from potential brokers. This can help you understand each broker’s qualifications, determine whether they are registered with ASIC and any trade associations and ascertain your point of contact with a company.
This is also a good way to gain information about the type of clients and the industries each broker usually works with, as well as the services they provide and if they have any experience with businesses similar to yours. Discovering how much they will charge you for their services is another important step.
Before you choose a broker, try to determine how compatible each broker will be with your business and whether or not you think they will be fully committed to getting you a tailored deal.
The National Insurance Broking Association (NIBA) offers a service to help individuals and businesses find the right broker for their needs. Visit the NIBA find a broker website for more information.
Why choose a broker over direct insurance?
There are a number of advantages and disadvantages to choosing a broker over a direct insurer, so whichever option you select will be based on the specific needs of your business.
The main advantage of dealing with a broker is that you have an expert on hand to help you find the right type and level of insurance cover. The specialised knowledge, years of experience and understanding of the industry as a whole that brokers can offer combine to make one very attractive package. Brokers can also offer you access to products from a wide range of insurers, meaning you have greater choice than if you buy direct.
Interestingly, insurance bought under advisement usually turns out to be cheaper than products purchased direct. This is because buying insurance through a broker allows you to tailor cover to your needs (so you don’t pay for things you don’t need), while direct policies are sold on more of a ‘one size fits all’ basis.
The main strength of direct life insurers, on the other hand, is convenience. It’s quick and easy to compare multiple quotes and policies online and policies are generally designed to be more simple and straightforward to allow easier understanding.
Of course, the downside of going with a direct insurer rather than buying cover with advice is that you simply end up with an inappropriate level of cover in place. This is the main reason why, even with the growth of the direct insurance market, brokers remain popular with those seeking business insurance.
FAQs about business insurance brokers
Q. What type of insurance can I get from a broker?
- A. According to NIBA, brokers place roughly half of all general insurance premiums in Australia every year, though they generally help to arrange commercial insurance. While a range of business and commercial options are most commonly organised by brokers, everyday products (for example home insurance or travel insurance) can also be purchased through a broker.
Q. Do I have to pay to use a broker?
- A. A large number of brokers receive a commission from insurance companies when they purchase a policy for their clients. However, others will charge you a fee for the service they offer, so consult your broker to discover their approach to payment.
Q. Will a broker try to push the products of one particular company?
- A. No. Because most brokers are not aligned with any one insurance provider, they can simply try to find the best insurance product for your needs. Brokers can access a variety of offerings from multiple insurers, which in turn means they should be able to find a policy that suits your situation.
Q. What questions should I ask a broker to see if they’re right for me?
- A. Ask a broker for details of their experience dealing with businesses similar to yours. Consider the qualifications they may have and the range of services they offer, as well as which individual would be your point of contact at each broking firm. Ask for references from previous clients, and look for a broker that will be compatible with your company.
Q. Can a broker help me make a claim?
- A. Yes, your broker can offer much-needed assistance when it comes time to make a claim. This can help take a lot of time and stress out of the claims process.
Possible traps from working with a broker
There are a handful of possible traps to avoid when working with an insurance broker. Make sure you are dealing with a qualified broker who understands the needs, risks and future plans of your business. It’s the broker’s job to match the right insurance cover to your business, so find a broker who is willing to take the time to learn about the ins and outs of your industry.
Also ensure that your broker offers clear and simple advice and involves you throughout the process of choosing insurance cover. Brokers are meant to help you and your business, so make sure you know exactly what you’re getting before you sign anything.
To ensure you get the right type and level of insurance cover for your business, engaging the services of a business insurance broker is a wise move. However, make sure you compare the services and qualifications of a number of brokers to ensure you end up with the right one for you.
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