Should I Use a Business Insurance Broker to Help Me Find Cover?
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.
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What is the Role of Business Insurance Brokers?
Business insurance brokers play an important role in helping businesses find the right type and level of insurance cover. It's the job of a broker to act in the best interests of their client and provide expert tailored advice to help businesses find the insurance cover they need. Just like accountants give professional and impartial advice, insurance brokers aim to help their clients satisfy any insurance needs without being influenced by any particular insurance company.
Business insurance brokers are experienced in comparing and choosing the most suitable business insurance policies. They will be able to offer expert advice on the risks associated with your business, the property you own and your specific industry.
Brokers also have access to a wide range of business insurance policies and are adept at comparing the benefits and disadvantages of each one. They boast a specialised knowledge in technical jargon and insurance-speak contained in policy documents.
In short, the role of a broker is to ensure you end up with the right cover for your needs.
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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.
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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