LW: A broker represents the insured. An agent acts of behalf of another party (the insurance company). Where an agent generally places the majority of their business with one large carrier, a broker places business with multiple carriers.

JF: “Broker” generally refers to an agent who represents the client. An agent is technically thought to represent an insurance company.

LW: I actually have experience in both the broker and agent fields. I think it is “six of one, half dozen of the other.” Brokers generally have access to more insurance companies, allowing them to shop several different markets and comparison shop. Agents have one primary carrier they work with. When you are placing the majority of your business with one carrier, this, at times, can afford you more competitive pricing and underwriting flexibility.

JF: I don’t think most people are aware of the difference unless you are in the real estate business. I have heard the terms used to mean the same thing, a seller of products.

LW: Many brokers or agents will direct their clients to an 800 number and remove themselves from a claim situation. I believe it is fine to refer the client to an 800 number as long as you make the client aware that if they should have questions or concerns regarding their claim, you are there to assist.

JF: There was a time when an agent took a significant role in assisting clients with claims. Because of the privacy issues today, it has become more difficult to be helpful.

LW: Individuals should begin with developing an understanding of their personal insurance needs such as auto, homeowners or renters, life and health. Business insurance is much more complex and definitely should be analyzed by a professional with commercial insurance education, experience and knowledge.

JF: Most people start with whatever is required, such as auto and homeowners insurance. In the order of importance, each purchaser has to buy according to what they perceive to be the greatest exposure. In other words, what loss would create the most financial hardship for the business or the family? Most people think of health insurance because an uninsured loss could wipe out future earnings. Others may think of life insurance to protect their families. The most neglected product that protects all of the above is disability insurance. If you are sick or hurt and cannot work, you will not be able to pay the premiums on the other insurance you have, and can potentially lose everything. Early in my career, I heard the remark that whatever risks you do not transfer to an insurance company are being self insured. It turns out to be pretty simple math.

LW: An “apples to apples” approach is best in comparing products. ABC Company may be cheaper than XYZ Corporation, but are you getting exactly the same product and coverages? I do not believe this business is all about coverage and pricing, though. I feel a client needs to trust their representative and feel comfortable with the product and service provided. It is up to the representative to educate the client on their particular policy coverages and what they are paying for.

JF: Transferring risks to stable, financially sound insurance carriers helps reduce the possibility that the product is inferior with hidden limitations. Having a knowledgeable, experienced agent to explain the provisions and make recommendations that are appropriate and cost effective is also a plus. Friends and business associates are great sources of referrals to find the right fit for your industry and needs.

LW: A deductible is an out-of-pocket expense the insured pays prior to the insurance company paying. The credits applied for deductibles vary by company and product line. An individual may not save that much by switching the collision deductible on their car insurance from $250 to $500, but a business may save a substantial amount by switching their deductible from $250 to $500.

JF: Deductibles for health insurance start at $250 and go to as high as $10,000 plus. Higher deductibles can have a significant influence on price. Many companies today are considering higher deductibles to save money and implementing health savings accounts or health reimbursement accounts to cover the first dollar expenses.

JF: Waiting periods generally refer to when a benefit begins; for instance, a long term disability policy will not begin payments until a policyholder has been disabled for a specified period of time such as 30 or 60 days. Most all contracts will have excluded items (“the big print giveth and the small print taketh away”). I encourage my clients to look at exclusions first. Even though exclusions are fairly standardized, it eliminates misunderstandings about what they can expect from their policies.

LW: Business interruption, loss of business income, loss of rents, etc. all indemnify an insured for an actual loss of income during a restoration period. If an insured should suffer a fire loss, it could be months before they are back in business. These types of coverage help the insured maintain their business until they are again operational.

JF: Key Person insurance is a life insurance policy on a key employee that has the employer named as the beneficiary. The proceeds are used to help the company find and train a replacement. Long Term Disability replaces lost income on an individual who cannot work due to an injury or sickness. Both of these products are valuable to an employer, because a business can recover quicker from the loss of a valued employee and the long term disability protects an employer from being in the position of having to decide how long they can pay a top-level executive who is disabled. Transferring the risk after a 30 to 160 day wait solves the problem for them.

LW: General liability coverage is designed to protect your property or assets if you are deemed liable for an incident that resulted in bodily injury or property damage to another party or parties. Umbrella coverage extends your general liability coverage beyond the limits of your basic policy at a set amount of coverage. Errors and omissions (insurance) is generally applicable to anyone that gives advice, makes recommendations, designs programs, etc. All businesses are unique and each should be analyzed by an insurance professional to determine which coverages are required to best protect a business or individual. At times, all of the above are recommended; other times, only one type of coverage is necessary.

JF: In North Carolina, a business with one employee is entitled to group health insurance as long as they can provide proof that they have a viable business.