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When you’re a business owner, you have a lot on your plate. You’re worried about productivity, increasing revenues, HR issues, IT issues, and so much more (especially this year).
So we understand that you don’t want to have to spend much time or effort on your business insurance. Going out to bid for your commercial insurance and receiving multiple quotes at once probably sounds the quick and effective quoting process that you’ve been looking for, right?
Well actually, that might not be true, and if you’re not careful, going out to bid could potentially do you more harm than good.
We know first hand. At Berry Insurance we’ve seen some insurance bid nightmares, and as an agency who wants to provide accurate and thorough protection to our clients, it makes our blood boil.
We want to help you avoid some of the common bid mistakes we see so you can be sure you have the right insurance at the right price. Below, we’ll outline some of the potential issues that could arise from going out to bid, and give you some suggestions about what we think you should do instead.
Your quotes might not be accurate/up-to-date:
When most businesses go out to bid, they generally send out their existing business insurance policies for companies to provide a quote on.
However, if you do this, you probably won’t be getting an accurate, up-to-date quote.
When using an old policy, there is probably some information on it that isn’t accurate, especially if you’ve had the same policy for 5, 10, 20+ years.
The thing is there are A LOT of factors that go into quoting a commercial insurance policy. If your existing quote is missing vehicles, buildings, or has inaccurate exposures (for one, you’re not properly covered already), but you also won’t be getting accurate new business insurance quotes with the proper coverage.
This is also why it is important to be reviewing your business insurance policies regularly. For more information, check out this article: Why You Should Review Your Commercial Insurance Annually.
Agents may fudge information to offer cheaper premium:
Unfortunately you can’t trust everyone during the quoting process.
And if insurance professionals don’t have all the information they need, or just want to come up with a cheaper insurance quote to close a sale, they may not be completely honest during the quoting process.
One example we see a lot has to do with workers compensation payroll numbers.
When getting a workers compensation quote, you must indicate how much your payroll is, but also include a classification for each employee based on their positions. Some classifications will yield a higher insurance premium than others based on the risk of the job.
Unfortunately, we’ve seen some agents who will actually classify employees in a cheaper classification than they actually are.
So for example, if your total payroll is $1,000,000, one agent might classify your employees correctly and the other might not. The incorrect quote will likely be cheaper, so you would probably choose it without realizing it’s not even accurate.
This might sound great -- until you actually have a worker’s compensation claim and aren’t covered. Or during your workers comp audit when the mistake is uncovered and you have to pay all the money back in full within 30 days of the audit.
You might get unwanted quotes from under-qualified people:
If you’re a public entity, your bid will be advertised publicly. This means any person with an insurance license can see your existing insurance policy and provide you with a quote, even if they aren’t a specialist in your industry.
At Berry Insurance, there are certain industries that we are just not experts in, so we would never provide quotes for them, even if that did mean passing up on new business.
But not every insurance professional will be that honest or self-aware, so you may have some under-qualified people quoting your insurance. And if their quote is appealing enough, you may accept, but find you have an inaccurate policy not catered to your business and industry, and could find yourself not properly covered if you ever do actually have a claim.
If you go out to bid, do it correctly
If you do still want to go out to bid, you should make sure you’re taking all the correct steps to make sure you get accurate quotes.
A bidding process should be very detailed, so you will need to be sure to collect accurate up-to-date information about your business.
First, you will need to gather all of your current policies, along with 3-5 years of detailed loss runs for all carriers and lines of insurance.
You will then need to make sure all of your business information is up to date, including vehicles, statement of values, contractors, equipment, buildings/square footage/updates, exposures, employees, types of work you are doing, sales revenue and payroll/class codes.
You should put this information together in a formal bid packet to be used consistently with every agent/carrier you go out to bid with.
Ideally, you should also interview the insurance agents before allowing them to access your bid packet so you are sure they are a good fit for you. For more on how to pick the right agency and why not to get quotes with multiple agents, read this article: Why You Shouldn’t Get Massachusetts Business Insurance Quotes with Multiple Agents.
Or just do your research and find the best agency for you
Going out to bid might seem like a quick and easy way to get multiple quotes to compare from different providers, but if you’re going to do it correctly, it’s not actually quick and easy.
For the reasons we mentioned above, going out to bid for your business insurance might not actually be the right option for you.
There is more to insurance than the “best” price. You want your business to be protected by the right policy, and you want an agency or carrier who adds more convenience to your business operations -- not more chaos.
That is why we always suggest you do your own research and find a reputable insurance agency that’s right for you. Ask around your local business connections to see who provides their insurance. Do some online research and find an agency or carrier who has everything you’re looking for. We actually have a resource to help you know What to Look for When Selecting an Insurance Agent or Carrier.
And if you feel like it could be us at Berry Insurance but have some hesitations, check out this article Can Berry Insurance (a Small, Independent Insurance Agency) Handle my Commercial Insurance Needs?
