Insurance companies that sell directly to the public using exclusive agents or their own employees, through the mail, or via Internet. Direct Writers.

5.08b Obtaining Insurance Coverage

Insurance companies that sell directly to the

public using exclusive agents or their own employees, through the mail, or via Internet.

Direct Writers

An Insurance Agent is a state-licensed professional who

represents an insurance company in selling and servicing policies. In most states, insurance agents are required to undergo

approximately 40 hours of passing classroom education for the type of insurance they are qualifying for to be approved to take the state insurance exam.

After successfully completing the state exam an insurance agent will need to take continuing education classes to keep her/his insurance license current.

Only insurance agents are allowed to sell and service insurance policies and only in the states they are licensed in.

Independent Agents

Running a small business involves a significant

investment. Business insurance protects your investment by minimizing financial risks associated with unexpected events such as a death of a partner, an injured employee, a lawsuit, or a natural disaster. Unless you are an employer, business insurance is

generally not required by law, however, it is common practice to purchase enough insurance to cover your assets.

If your business is an LLC or a corporation, your personal assets are protected from business liabilities; however, neither business structure is a substitute for liability insurance, which covers your business from losses.

The Primary Objectives For Obtaining Insurance

Coverage

Your state government determines insurance

requirements for businesses. Most states require businesses with employees to pay for

workers' compensation insurance, unemployment insurance, and state disability insurance.

Your state may require insurance of specific business activities. For example, if you own a car or truck and use it for

business purposes, you may be required to purchase commercial auto insurance.

Finally, your financial lender or investors may require you to maintain life, business interruption, fire, flood or other types of insurance to protect their investments.

The Primary Objectives For Obtaining Insurance

Coverage

Insurance coverage is available for every conceivable risk your business might face. Cost and amount of coverage of policies vary among insurers. You should discuss your specific business risks and the types of insurance available with your insurance agent or broker. Your agency can advise you on the exact types of insurance you should consider purchasing. General Liability Insurance

Business owners purchase general liability insurance to cover legal hassles due to accident, injuries and claims of negligence.

These policies protect against payments as the result of bodily injury, property damage, medical expenses, libel, slander, the cost of defending lawsuits, and settlement bonds or judgments required during an appeal procedure.

Product Liability Insurance Companies that manufacture, wholesale, distribute, and retail a product may be

liable for its safety. Product liability insurance protects against financial loss as a result of a defect

product that causes injury or bodily harm. The amount of insurance you should purchase depends on the products you sell or manufacture. A clothing store would have far less risk than a small appliance store, for example.

Sources of Insurance

Professional Liability Insurance

Business owners providing services should consider having professional liability insurance (also known as errors and omissions insurance).

This type of liability coverage protects your business against malpractice, errors, and negligence in provision of services to your customers.

Depending on your profession, you may be required by your state government to carry such a policy. For example, physicians are required to purchase

malpractice insurance as a condition of practicing in certain states.

Sources of Insurance

Commercial Property Insurance

Property insurance covers everything related to the loss and damage of company property due to a wide-variety of events such as fire, smoke, wind and hail storms, civil disobedience and vandalism.

The definition of "property" is broad, and includes lost income, business interruption, buildings, computers, company papers and money.

Property insurance policies come in two basic forms: (1) all-risk policies covering a wide-range of incidents and perils except those noted in the policy; (2) peril-specific policies that cover losses from only those perils listed in the policy.

Examples of peril-specific policies include fire, flood, crime and business interruption insurance. All-risk policies generally cover risks faced by the average small business, while peril-specific policies are

usually purchased when there is high risk of peril in a certain area. Consult your insurance agent or broker about the type of business property insurance best suited for

your small business. Home-Based Business Insurance

Contrary to popular belief, homeowners' insurance policies do not generally cover home-based business losses.

Depending on risks to your business, you may add riders to your homeowners' policy to cover normal business risks such as property damage.

However, homeowners' policies only go so far in covering home-based businesses and you may need to purchase additional policies to cover other risks, such as general and professional liability.

Sources of Insurance

Your insurance needs are unique, and that’s why it is important to consult with an Independent Insurance Agent.    Independent Agents are not tied to a single insurance carrier, so they have the flexibility to customize your insurance to meet your specific insurance needs. Here are some advantages an Independent Insurance Agent offers over direct writers, or online carriers:

An Independent agent typically has access to several different markets that will get you the right coverage at the best rate.

An Independent Agent typically has an office and a staff to personally assist you either over the phone or in person. 

With an Independent Agent you usually deal with the same customer service representative and agent who knows your account personally.

An Independent Agent can help advise you on a claim and assist with the claims process.

An Independent Agent offers you one-stop shopping for a full range of products—home, rentals, auto, business, life and health, etc.

An independent agency has a service team that is familiar with your account, even if you change insurance carriers.

Advantages Of Dealing With Direct Writers Versus Independent Agents.

Buying direct is more likely to result in a generic policy that is meant to suit the average driver

but may not include the special coverages you need to have well-rounded auto protection. Buying direct from a major insurance company does give someone “on the inside” to talk to

about your insurance questions. Independent agents rely on people just like you to earn an income, and usually more responsive to

your problems and questions. For brokers, your business is the difference between success and failure, and they are willing to go

a few extra steps to make sure that you are being served as well as possible. Before you purchase a policy, whether directly or from a broker, research the insurance company

by checking their rating with places such as the A.M. Best company. Ratings companies can give you an idea of the financial status of the insurance provider, and may

even give you early warning of companies that are going through financial problems. You can test the benefits of using an independent broker versus buying direct by using online

insurance quotes. Begin with a national insurance company, and get a quote for an insurance policy tailored to fit

your needs. Next, go to an insurance quote website that is operated by a broker company, and get a quote for

the same policy. When the costs are compared, you will almost always discover that the broker site is able to offer

you the same coverage at a lower price, because independent brokers shop around on your behalf, looking for the best coverage at the best price.

Disadvantages Of Dealing With Direct Writers Versus Independent Agents.

The difference between Group and Individual insurance

Group life insurance is typically offered as a benefit through your employer or membership in an association.

Group life insurance can fill some of your life insurance needs, but probably doesn’t meet them all. Most often it is an inexpensive way to supplement an individual life insurance program.

Group policies typically offer two or three times your annual salary in coverage – some or all of it paid for by the employer or offered as supplemental, employee-paid coverage. Supplemental coverage is relatively inexpensive at younger ages, but rates increase with age.

Factors that distinguish group life insurance from individual insurance policies include:Guaranteed coverage amounts

Under group life insurance programs a certain amount of coverage is often “guaranteed” – that means you won’t have to answer questions about your health or take a medical exam to qualify for the coverage.

For amounts of coverage beyond the guaranteed amount, you may need to answer a few health questions and provide some details about your medical history.

If the amount of coverage you’re requesting requires a medical exam, it’s typically a much simpler process than the full physical required for an individual insurance policy.

Benefits Of Purchasing A Package Of Insurance Policies Versus Individual Policies.

Group premium rates

Group insurance underwriters use what is known as an experience approach when assessing the risks involved with a group life insurance policy.

Rather than basing rates on an individual’s lifestyle habits and health factors, they group people together and set rates based on the risk of the group as a whole.

Administration and billing systems designed for groups The insurance company issues a life insurance policy to the employer or association – individuals

insured under the policy typically receive certificates of insurance, which outline their rights under the policy.

The insuring company or a third party administrator typically handles the details of who in the group is covered and for what amount and provides a customer contact center to answer individual insureds’ questions about their coverage.

Electronic funds transfer or payroll deduction Automatic billing options such as these make paying premiums painless. You don’t have to worry

about writing out a check every month.

Portable or convertible coverage When you leave the group for whatever reason you may be able to keep your coverage, without

providing proof of your good health, and pay premiums directly to the insurance company. Premium rates may be higher than those paid by active employees. If you lose eligibility for

coverage, you have the option to convert group coverage to an individual policy with the issuing company at the current rates for that type of policy

Benefits Of Purchasing A Package Of Insurance Policies Versus Individual Policies.

Increasing coverage Many group plans allow an increase in coverage following a family status change.

Often, there will be a certain amount you may increase by answering questions about your health or having a medical exam.

Sometimes increases in coverage are automatic, as when you receive an increase in salary. Consult your specific benefits plan for the qualifying family status changes accepted. Family status changes may include: marriage divorce birth or adoption death of dependent or spouse a change in employment status of an employee or an employee's spouse, such as the

termination or commencement of employment going from part- to full-time employment retirement a significant change in employee benefits the entitlement to benefits under Medicare of an employee or an employee's spouse Buying a home

Benefits Of Purchasing A Package Of Insurance Policies Versus Individual Policies.

Starting your own small business is full of challenges. One such challenge is ensuring you have the proper

insurance coverage before opening the doors. Whether you have one employee or 100, the law requires you to have certain types of insurance, according to the U.S. Small Business Administration. This is as much for your protection as it is for your employees'.

Workers' Compensation Insurance Workers' compensation insurance (commonly referred to as workers' comp) covers the costs incurred by

employees who are injured in the line of work. In return, employees give up the right to sue their employer. Coverage varies but often includes compensation for lost wages during recovery, medical care costs or a combination

of the two. You can obtain workers' compensation insurance through a variety of venues: commercial insurance companies, a self-insured basis or through your particular state's Workers' Compensation Insurance program.

Unemployment Insurance Tax All U.S. states require you to pay unemployment insurance taxes for your employees. As part of a federal

program, unemployment insurance pays cash benefits for some period to certain unemployed people. As a small-business owner with employees, you must pay toward the program, the amount of which can vary from state to state.

Your contribution often is calculated based on a percentage of your payroll. Employees and the government also contribute to the funds. Not all unemployed people are eligible, and laws can vary depending upon your state.

Disability Insurance Not all states require you to have disability insurance coverage, according to the U.S. Small Business

Administration. However, if your business is in California, Hawaii, New Jersey, New York, Rhode Island or the U.S. territory of Puerto

Rico, you must purchase disability insurance. This type of insurance provides temporary and partial financial relief to certain employees in the event they are

injured or sick. Unlike workers' comp, employees do not have to be injured in the line of work.

Describe Requirements Needed To Obtain Insurance

Coverage.

What to consider when buying commercial insurance1.    The types of insurance policies required

Some of these commercial insurance covers outlined above are mandatory in some jurisdictions. It is essential that you choose the right mix of commercial insurance policies that will sufficiently protect your business from the various risks - purchase the mandatory covers as per regulations, then complement that with additional covers that you deem fit.

2.    Where to find affordable commercial insurance3.    The cost of commercial insurance

The cost of commercial insurance will be determined by the kind of business you engage in and the level of risk that it is exposed to. Minimizing your exposure to the various risks is the best way to reduce the cost of insurance.

4.    Commercial package insurance vs. business owners policy (BOP) Commercial package insurance comprises of separate covers such as Crime, Umbrella,

Auto, General Liability, and Property insurance, which are specifically designed to cater to the needs of individual customers. BOPs, on the other hand, consist of a standard policy containing various covers that are not usually endorsed by customers.

5.    The process of purchasing commercial insurance

Identify Factors To Evaluate In Obtaining Insurance Coverage

Every business needs a good business liability

insurance policy to protect it from the many what-if scenarios that could put the business owner's livelihood at risk. A few examples of liability insurance at work include:

paying to defend a lawsuit, paying medical bills for a visitor injured on-site, and paying the cost to repair a car if a tree on the business's property falls on the car.

Without proper insurance, any of these instances would cause an expensive headache for the business owner and put the business in financial risk.

Demonstrate Steps For Obtaining Insurance Coverage

Contact a business insurance agent. Nearly every property and casualty

licensed insurance agent sells business insurance. If you don't feel comfortable picking a name at random from the phone book, ask

friends and family for referrals. A good agent will take the time to listen to your concerns and won't be pushy.

Work with the agent to identify the correct coverage. The agent will have some training in identifying the right amount of insurance to

carry for your business. Come to the meeting with some basic financial figures about the business; annual

sales, physical inventory, and net profit are all good numbers to come prepared with.

Having this information available is critical in determining the correct coverage for your business.

Apply for coverage. Once the agent has built you the proper policy, he/she will have you fill out an application for coverage and write a check to cover the premium.

Demonstrate Steps For Obtaining Insurance

Coverage