Introduction to Small Business Insurance
Brokers and Agents
Broker – Functions more as a liaison between the consumer and the insurer. They represent you and work to find the insurance coverage you need.
Agent – Sells policies direct to consumers on behalf of insurance companies. Some agents are “captive” meaning they represent one insurer and others are “independent” and work for multiple insurers.
NOTE: Oregon now uses the term “producer” to describe the party licensed to sell, solicit, or negotiate any insurance product in Oregon.
Policy – The insurance contract between the insurer and the policyholder which determines the claims which the insurer is legally required to pay.
Business Owner’s Policy – A policy that may offer several insurance products rolled into one. It must include commercial property and commercial general liability coverages; and, it could include other benefits as outlined in the contract..
Craig Vattiat (00:00):
So digging into small business insurance as a business owner, you manage your risk every day. And insurance is one of the most important risk mitigation tools that you have. You’ve worked really hard to build that business. And so having the right types and amounts of business insurance coverage is gonna protect you from that significant financial loss due to those unforeseen circumstances. For a lot of folks, they might get their required insurance in place. And then just don’t think about it until a problem happens and, and it’s needed at that point. And unfortunately it’s at that point that we find that we, we thought we were protected, but we weren’t, or we just didn’t protect ourselves to the extent that we needed to. So the primary message today is this talk to your insurance agent every year, let them know of any changes to your business and have them review your coverage with you. They can help you to assess those risks and better understand your current coverage. They can also help you to identify coverage gaps and offer options for closing any gaps you might have. So your business can be adequately protected. And if they don’t provide satisfactory service and answers to your questions, then keep in mind that you can shop around for somebody that will.
Craig Vattiat (01:30):
So taking a look at how to consider how to select an agent, um, for something as important as insurance like any big purchase, it’s important to shop around for an agent, uh, that will support you. And there’s a few ways that you can do this. Uh, one is that you can check our website again, dfr.oregon.gov to see if a company and agent are licensed. So that’s definitely the first step. And then you can also check our website for complaint history for insurance companies, not agents themselves, but insurance companies. You can, you can check that complaint history. Um, one big recommendation is to really ask others in your industry or in a related industry to provide recommendations. Do they understand your business and the risks that you face? So look for someone with experience, ensuring, you know, others in whatever field that you’re in, that’s gonna be a great way to find an agent that’s gonna best understand your business because they work with other similar businesses like any other service, you know, ask yourself, do they take the time to ask questions to learn about your business?
Craig Vattiat (02:43):
Do they take the time to listen? Um, and so look for those characteristics and then also ask the agent for any references that you can contact. You know, you wanna check to see, uh, if they’re gonna be able to provide service and, and hear from those other consumers that have worked with that agent really important distinction is to understand the difference between an agent and a broker. So Oregon law collectively calls them producers. They are able to sell insurance, but to understand the difference a broker represents you and can shop around among different insurance carriers for you. Whereas an agent either represents a one insurance company or a few insurance companies. Okay. So they, again, work for those. They directly represent those insurance companies. Now there’s a difference between types of agents. So there’s what are called captive agents and they just work for one company. So they’re gonna work for a single insurance company and just sell insurance products for that company. An independent agent is gonna be able to represent multiple insurers. So consider the different types of agents again, brokers. Um, and, and think about maybe which one might be more beneficial for you to work with. So working with a broker can, again, shop around around multiple insurance companies to find a policy or set of policies that might work for you.
Collin Gabriel (04:15):
So, Craig, can I ask a quick question on that one? Yeah,
Craig Vattiat (04:18):
Collin Gabriel (04:19):
So with a, with a broker, uh, I think it sounds to me like that’s more of like, if I’m kind of new to this, this is someone who can help me kind of parse out what my business does and what might be appropriate to have, you know, based on some of that information. Um, and then an agent is mainly maybe if I’m a bit more experienced and I’m with a larger corporation, or maybe I’m looking for more advanced policies that cover minutia, uh, you know, associated primarily with my very special niche business, something like that, that would be more appropriate. Um, I, and I know that maybe you may, or you can or cannot answer this, but would, um, smaller, newer businesses kind of have a, a better shot going with the broker just till they get their, their experience in the, in the game. Is that maybe your recommendation?
Craig Vattiat (05:06):
Well, I think the that’s good question, Collin. I think the main benefit of working with that broker is they’re gonna be able to shop around at multiple insurance companies and keeping in mind the different policies that you might be looking for. So they might be able to direct you to an insurance company that does have the specific policies that you, uh, need for your business, uh, because not all insurance companies are gonna be able to offer the same exact types of products. So that might be an advantage there and going with that broker, but then yeah, working on the, you know, once, once you actually need to sit down with whichever insurance company you do ultimately choose, then you’re gonna need to have that conversation with that, that agent or company, because some insurance companies might not, might, you might be able to purchase directly from the insurance company and not work with an agent, but, but working with that agent is gonna be the, the benefit there is that you’ll be able to ask questions, get answers so that you can really tailor your insurance to your business’ needs. Okay.
Craig Vattiat (06:09):
Yeah. So if you do make, uh, if you decide to make a change in your insurance provider, it’s really important to make sure that you have that consistent coverage in place. And again, shop around before that policy expires. If you currently have business insurance and you decide to work with a new company that new agent or company might ask to review that previous policy, this previous policies or coverages, and that can be helpful for them to kind of better assess your needs and then provide you with the options that, uh, can satisfy those needs. So this kind of breaks down some of the major types of insurance that we’re gonna go over today. And some types of insurance are gonna be required while others are gonna be optional. Um, your insurance needs are gonna depend on a number of factors. So do you have a physical location for customers to visit?
Craig Vattiat (07:07):
Do you have employees, do you have company vehicles and any other requirements that are specific to your profession? Um, many insurance companies offer what’s called a business owner’s policy, or you’ll see the abbreviation B O P, and that combines a number of different coverages into one package. Now that package is going to be different from insurance company to insurance company, but it’s generally gonna include general commercial liability insurance, and also, uh, what’s called business interruption insurance, which we’ll discuss a little bit later. So ask your agent about what coverages are included in that business owner’s policy. And also keep in mind, they’re gonna be able to sell coverages separately as well. So if you need a specific type of coverage, then they should be able to add that on. So that’ll allow you to choose again, the policies based on the specific risks that you face. Some insurance is gonna be required like workers’ compensation. Um, if you have employees and some are, are optional, so again, your agent should help you to consider those needs and match them to the, the appropriate insurance products. So take time today to consider, you know, where might a loss originate from, and then ask yourself, you know, or ask your agent what would cover that potential loss.