How do I choose an insurance company? This question is very popular amongst people who are shopping for insurance products as there are thousands of insurance companies out there from the big giants to the really small ones.
Insurance is an intangible asset and that is why it is better to be careful when shopping for insurance policies. A lot of people have got burnt in the past as a result of dealing with the wrong insurance company. In order to avoid this kind of scenario, it is better to take your time and do some proper investigation before settling for any insurance company.
Also, many people make the mistake of relying solely on the opinion of their insurance brokers. Well, that is not a bad thing entirely but you should be aware that most insurance brokers are after their commission, so they probably would just recommend the company that offers them the highest commission.
Therefore, the bulk of the work in choosing an insurance company is on you. You can ask your broker for quotes and recommendations but when it comes to selecting an insurance company to do business with, the major responsibility rests on you. Here are 10 factors to consider when choosing an insurance company for your business-:
Choosing an Insurance Company – 10 Factors to Consider
1. The company’s reputation
You should take time to investigate the company before committing to them. The internet has made it easier to learn anything you want about any company. Just look out for reviews about the company on the internet, you will be able to find useful information about the company’s track record.
The goal is not to find a company with 100% positive reviews; the goal is to look out for negative reviews and find out the nature of the problems those agitated clients had with the insurance company. If the company has problems with non-compensation of its policyholders, that’s a red flag that you shouldn’t do business with that company.
2. Legal Accreditation
It is also important to choose an insurance company that is government accredited and recognized. Such companies would stick to rules, regulations, policies and guidelines better than companies that are not.
3. Financial stability
This one is also extremely important. There have been cases where insurance companies failed and people had to lose their policies. This situation can be very ugly for your business. Therefore, you must investigate the financial stability of an insurance company before buying any insurance product from them.
A good way to do this is to get a copy of their current financial statement and look out for their profitability and growth rate over the years. You would also find a lot of resources online and online rating services that would give you a clear insight into the financial strength of an insurance company.
People now buy insurance online and that’s not a bad thing as it offers ease and convenience but you do have to be careful when buying insurance products online.
It is better to go with an insurance company with physical presence in your locality so that if things start to go south, you would know where exactly to turn to. Also, it is better to go with an insurance company that is licensed to sell insurance products in your state in case of a law suit.
5. Customer Service
You would also need to find out how well this company treats its customers. Do they provide prompt response to questions and enquiries? How fast do they solve customers’ problems? Are they customer service oriented? You may feel that these things are unnecessary but if you ever need to file a claim, you will realize just how important this could be.
Another thing worthy of consideration is the prices. Insurance companies offer different quotes therefore, you should look out for the company with the best prices albeit the best coverage. To find out which company has the best prices, ask for quotes from as many insurance companies as you can and then eliminate until you find the most suitable one for you.
7. Full disclosure
No hanky-panky games please! Always settle for an insurance company with full disclosure policy. Ensure that you know all the terms and conditions of the policy you are buying and all the dos and don’ts.
A good insurance company would be honest and open about its clauses and conditions but some insurance companies wouldn’t and then when you file a claim, they would come up with some clauses and reasons why they cannot pay claims.
Sometimes too, policy holders are guilty of not reading and fully understanding the terms of the contract before appending their signatures and fully agreeing to it. It is important to read the terms, conditions and clauses of each insurance product before entering into a contract and you should also get your lawyer to read it as well.
8. Suitability of products
The type of products the company offers is also worthy of note. Most insurance companies offer general insurance products like property, auto, health and General Liability Insurance policies but the type of insurance your business needs depends on the kind of business you do and the industry you operate in. Find out if the company has products that are peculiar to your business needs.
Buying insurance for your business means that you would be spending a sizeable amount of money; therefore you should go for an insurance company that offers discounts so that you would be able to save up on some costs.
10. Payment of claims
Lastly, you should find out how well this company pays insurance claims. Go for a company that is straightforward and does not give its policyholders too much stress when it comes to payment of claims.
Above all, buying insurance for your business should be do with utmost care and without rush. How much time and energy would you commit to buying your dream home? You should commit similar amount of time and energy into shopping for insurance for your business and when the time to pay claims comes, you would be extremely happy you did.