Many people are confused when they hear of commercial insurance brokers. They’re often mistake in that this means the same thing as an insurance agent. Nothing could be further from the truth. Most people will be approached by an insurance agent in a sales capacity. However, a commercial insurance broker is different. An insurance agent will work for one company. They will try to sell you everything from that one company. However, a commercial insurance broker will sell you policies from many different companies for you business.
The main goal of the broker is to work for you the client or business owner. For example, if you go to commercial property insurance brokers, they will not have restrictions over what they can offer you, just like a home insurance broker. Because they deal with larger amounts of money, they often have many insurance companies that are willing to bend the rules in order to get your business. Therefore, the broker creates a policy with you in mind and sends it to various insurance companies to be approved.
If this sounds confusing, imagine that you own a taxi company. You would not have individual insurance on each vehicle in your fleet. You would go to commercial auto insurance brokers. You would tell them everything about your company and how many vehicles you want insured. You would tell them about any specifications that are required by local governments. You would also tell them the nature of your drivers. The broker would then devise a policy that works for you and covers all of your needs.
Another example would be for large corporations. If you on a business that has many employees and customers, you will need insurance. Let’s say that you have 20 different companies and 20 different states. Some are retail stores and others are factories. It can be very difficult to manage this many stores and factories if each one has a multitude of insurance policies. It is much easier to make one payment to one company. This is what commercial General Insurance brokers are for. This way, you streamline everything into one payment. No need to hire a staff just for dealing with this one area of your business.
The largest commercial insurance brokers in America are well known to everyone. They may not know that this is what they do, but everyone has heard of insurance companies like AIG. In fact, they’re often incorrectly called insurance companies. They are more appropriately called commercial insurance brokers. If you are thinking about starting a business – which you obviously need before buying commercial insurance – you should consider setting up an LLC as a possible business entity.
You can check out our other insurance articles and guides here:
Finding A Car Insurance Broker