Contractors, Taken Advantage of by Insurance Agents

U.S. Contractors are taken advantage of by their insurance agents at every renewal and new business submission. Why? Majority of Insurance Agents are lazy and their contractor clients take whatever their agent puts in front of them.

Anyone who purchases insurance products from an independent agent should demand quotes from multiple carriers. That’s the agent’s job, to shop the risk with several carriers to find the best choice and the best value. That is what the contractor is paying for, someone who has an understanding of his operations in order to make sure the coverages applying for are appropriate for the contractors exposure. How does the contractor know if he getting a good deal if he has nothing to compare? It’s like going to a used car lot and the salesman asks what you want. You say a sedan. He says here is the sedan for you. Give me a check and I’ll give you the keys. You say thank you and drive off the lot, down the road, get home and realize it is not the car you really wanted. Too late, you drove it home.

As an Independent Insurance Agent in Arizona who specializes in construction trades, and someone who was a construction contractor for the past 15 years, I was taught that it is my duty to my client to find the best insurance policy through the outlets I have access to. That does not mean I shop an application to 3 out of 5 carriers and pick the one I think is best for my client. It is not my job to make insurance purchasing decisions for my clients. They are paying the premium, not me. They are the ones that have to live with themselves if they made a bad decision. My duty is to present my client as many quotes as I can obtain, explain them to my client, discuss the pros and cons of each one and let my client decide which policy is best for his needs. That does not always mean the least expensive policy will be selected or the most expensive will always be declined. During my 15 years as a contractor, I never had an agent bring me more than one quote. That was all I had to choose because that’s what the agent told me I needed or it was all I could get due this reason or that reason.

I have learned it is best to let the prospect/client make the purchasing decisions. Put the pressure on them to decide what is best for their company. They are the ones who are responsible for making the premium payment. It is my job to assist them in finding the carriers and assist in making an informed, educated decision about how best to protect their largest asset and income source. Once they decide, it then takes the pressure off me if they are unhappy with their selection in the future. I reassure them, at renewal, we can take a look at the other carriers I have access to for a better fit. I left my door open for possible future problems with the contractor’s selected carrier. “You are not pleased with the claims handling of XYZ Company, Mr. Client. Do not worry. I will help you get through this rough process and then begin looking at other options for you.” When I come back with 4 other options, the same process starts all over again. I will make the presentation outlining the pros and cons of each carrier and let him decide which one is best for his company’s needs.

When I present a client with 3-5 quotes, he knows I have put some work into this process. I did not take an application, send it to 3 companies, pick the one that pays the highest commission with the highest premium and make the contractor believe that I worked so hard getting this one quote. “By the way, this is the best quote I could find based your credit, claims experience, exposure, etc.” Hogwash! I show my client the commission on each quote so he knows I am an above-board Insurance Agent not sitting in his office taking advantage of him.

Contractors need shop for insurance like they shop for any other product. Obtain as many comparable quotes as they can within a reasonable amount of time. Have the agent(s) clearly explain the differences between all the quotes and carriers. If the contractor feels an agent is not being forthcoming or is unable to explain his products professionally, the contractor should take the time to find another agent. It is not just the policy a contractor is purchasing. He is also purchasing the agent through a commission. If the contractor is not comfortable with the agent, get rid of the agent.

The same goes for the agent. I feel it is important to have a comfortable yet professional relationship with my clients. If I feel I am being taken advantage of or a client is slow making his payments, I tell him, at renewal, to find a new agent because I do not feel we have a working relationship conducive to our business goals. If the contractor feels I have met his expectations or, especially, exceeded his expectations, he asks what we can do to keep the relationship and how we can make it better. At that point, I notify him that he is on a probationary period for the next year and if he does cooperate with any of my requests, I will not submit his renewal application next year. Amazing how well contractors respond.

A contractor purchasing an insurance policy is no different than anyone else who purchases any product in a store (not so much online). When we shop for anything, we want choices. We want to feel we made the best decision based on all the factors presented to us. Commercial General Liability Insurance is no different. Why should Contractors, or any business owner for that matter, settle for less in purchasing a Commercial General Liability Insurance policy than he would if he purchasing a television for his family? A few quality choices lead to better decision making no matter the product.

David Barnett, Sr. Vice President-Commercial Division
520.908.7866
david@bbtimail.com