We’ve talked about insurance a bunch throughout our course and the rest of our content. We’ve covered liability insurance, contingent cargo insurance, and of course your surety bond. But how do you actually go about obtaining these policies? We get asked this on a weekly basis, so it’s time we explore this with you all.
Our advice on this topic is pretty simple and straightforward, work with an insurance broker. That’s right, a broker using another broker! The concept and access to the market is precisely why brokers add value in all sorts of industries. Think of it this way, when a shipper needs a truck, they don’t always just call one trucking company hoping to get a truck. They use freight brokers because freight brokers give them access to the entire market with just one call. The same applies to insurance.
Insurance agents for companies like State Farm or Geico can only sell one brand of policy, their own. Insurance brokers, just like freight brokers, act as an intermediary between the customer (you) and the underwriting insurance company. There’s tons of insurance companies that actually underwrite policies for freight brokers and you’ve probably never heard of most of them. That is why we recommend you work with a trusted insurance broker to get your access to this market of providers.
A good insurance broker will assess your needs as a freight broker and provide you with options to the companies that will underwrite your policies. Beyond that, they can re-shop the market for you each year to make sure you’re overpaying for a policy. Since they are experts in the insurance world, they’ll help you pick a policy that fits your budget and your customers’ needs.
So, how do these insurance brokers make money? They will typically earn a commission for placing you with one of the insurance providers. You don’t pay this fee, so the price you are quoted for your policy is an all-in price. You’ll usually find yourself paying less through a broker than you would if you went straight to a big company like State Farm. Why is that? The big companies that you see advertising on TV have massive marketing and advertising budgets. Guess who pays for those budgets - it’s the folks that buy their policies. This is exactly why a less-known insurance company doesn’t need to charge as much. They get a lot of their business from brokers and don’t need to market directly to you as the consumer.
Things to Consider
Lastly, there are some final things I want to highlight about insurance brokers. First is that not all brokers are the same. It’s just like freight brokering; some are good and some aren’t. Insurance brokers should earn your trust and your business. If you don’t feel like you’re being taken care of the right way, it might be time to interview some new insurance brokers to see if they might be a better fit for your needs. Second is to make sure you understand what your broker can do for you on the fly. If you need a policy adjustment or something special for a customer of yours, can your insurance broker quickly assist you? Lastly, there’s some insurance policies that have minimum premiums, meaning you’ll still have to pay a set minimum amount even if you cancel the policy early, and a good broker should be advising you of the risks of these on-the-fly decisions. It’s the broker’s job to add value to you as their customer in addition to just providing you with access to the market.
So that’s it. Just like brokers add value in the freight marketplace, insurance brokers do the same just in the insurance world. If you’re looking for more content on insurance products, check out all of our other content and you’ll learn all about surety bonds, contingent cargo, and much much more.