Should you use an Insurance Broker for your business?
In this day of online living, purchases for all kinds of goods and services are just a click away and it may seem tempting to seek out your own insurances for your business or personal needs. But this does not necessarily result in cheaper or better insurance cover.
Insurance brokers are professional advisors who are trained in both insurance and risk management. At their core, they work for you – the client – and not for the insurance companies. A good insurance broker will ask relevant questions and seek to keep up to date on your business needs. They will also keep up their education in new products and cover in the market, ensuring you have the broadest choices available to you.
When you purchase an insurance policy, you are essentially entering into a contract with the insurance company. Whilst the concept of utmost good faith is of paramount importance to the contract, it is probably true that the average purchaser of insurance will not have the level of knowledge of the contract terms that a skilled professional such as an insurance broker will have.
Traps in Business Insurance cover.
There are many traps that an inexperienced person can fall into– particularly for a business, however, this can apply to all kinds of insurance policies, including home and motor. Two areas that can cause major complications, and ultimately financial hardship in the event of a claim, are underinsurance and gaps in insurance.
The ramifications of underinsurance are often poorly understood but in broad terms, an insurer will penalise a policyholder when claiming for damages if it is discovered that the insured misstated or misunderstood the value of what they were insuring.
The insurer can reduce the amount payable by the percentage of the underinsurance value (whilst there is a more complex formula for calculating this, in simple terms, if you stated your contents were worth $100,000 when they were worth $200,000, the insurer will deem that you have underinsured by 50% and may only pay out 50% of any claim made). The benefits gained by the insured in savings in their premium may seriously come back to bite them at the time of a claim.
Gaps in insurance are exactly as they sound – it is easy to overlook particular risks when placing insurance and it can take a skilled professional to ensure all relevant risks are taken into consideration. For instance, a business pack policy may sound comprehensive, and cover you for theft of your contents and even your cash, but it may not cover theft by an employee. You may need a specific policy to cover this if it is recognised to be a risk to your business. Cash businesses such as cafes/bars etc. are clearly susceptible, but theft from employees can occur in many creative ways including through illegal transfers of banking, tampering with invoices etc.
Insurance policy wordings contain exclusions and conditions. Exclusions specifically exclude cover for particular risks, and conditions may impose on the policyholder certain obligations under the insurance contract. It is imperative that these are understood by the policyholder as the policy will not cover them for such exclusions, or if the conditions have not been met. A broker is a specialist and is trained in the intricacies of the policies – the terms and conditions and the benefits and most importantly the exclusions. They will be able to advise when it is better to use a combination of insurance classes to provide the broadest cover and optimize any claim outcome. This can be a difficult area to navigate for an untrained person.
What a good Insurance Broker will do.
A good insurance broker will identify when there are alternative ways to manage particular risks. For example, a small business that operates in a largely cash environment may wish to cover their cash held on the premises in the event of theft, which can attract a costly premium.
It may be more cost effective to have the cash removed more frequently, or encourage a move to electronic transactions. A broker is trained to identify risks and recommend ways to manage those risks, including but not limited to insurance.
Possibly one of the greatest advantages of using an insurance broker is in the unfortunate but very possible event of a claim. Your broker will assist you in compiling any information required, will lodge the claim on your behalf and will be your advocate in getting the claim settled in the most satisfactory way. Many times it is the packaging of the information in lodging the claim that determines how quickly and successfully it is settled.
Further, a broker is able to identify when settlement offers are inadequate and will liaise with the insurer on your behalf. Where a claim has been completely refused by an insurer, they will be able to advise you on the accuracy of the refusal, including the option of taking the matter to AFCA (Australian Financial Complaints Authority, previously y the Financial Services Ombudsman) to have the matter adjudicated.
About Logan Insurance Brokers.
Logan Insurance Brokers have been providing insurance and risk management advice for over 50 years. We have a portfolio of business clients from the sole trader to the large corporate. The knowledge and expertise of our team is something we are truly proud of. Please make sure to give us a call so we can assess your business insurance needs.
Would you like to discuss the options for your business or personal insurances?
Logan Insurance offers online applications or call us today on 1300 787 789.