Insurance Broker or Insurance Company - Who does what?

Broker v CompanyOur nonprofit clients are sometimes confused by the various people involved in creating and providing their insurance program. They aren't quite sure who does what and when to call the "Broker" or when to call the "Insurance Company." It seems like it should be simple enough, but it is insurance, after all...

BROKER

Your "Broker" is the individual (along with an associated brokerage like SteelBridge) that provides professional advise on the coverages you need and how they work.   Brokers help you to understand the risks that your organization faces and creates a nonprofit insurance program to best mitigate those risks.  Additionally, they provide education about the coverages and products available.

Your broker will secure quotes and policies on your behalf from an Insurance Company. They gather information from their clients, including the information needed by the Insurance Company to quote your insurance. This usually includes a review of current policies and coverages. Once the Broker has the necessary information, they will provide that information to one or more insurance companies to secure quotes. At the completion of the quoting process, the Broker provides the client with a quote or quotes and pricing and coverage explanations. At renewal, the Broker provides an opportunity for the client to provide updated information that may affect their policy or premium. 

Lastly, the Broker provides ongoing customer service with policy changes and proof of insurance to third parties. Importantly your Broker also acts as your advocate should you have trouble with a claim or other issue. Should the need arise, your Broker should also be able to explain the coverages in your policy in an uncomplicated and straight forward fashion.

INSURANCE COMPANY

The Insurance Company is the entity that provides the insurance policy and associated coverage. They are responsible for defining what is covered and how. Once you (the client) decide what coverage you want (i.e., General Liability or Property Insurance, or a package of coverages), the insurance company provides pricing based on your particular situation. The insurance company may look at your payroll, how many employees you have, your annual revenue, and what types of services you provide. Once they have the information on your activities, the Insurance Company will determine your insurance policy's pricing based on your particular situation and how your activities could potentially lead to a claim. Any changes to your insurance policy once issued are facilitated by the Insurance Company.

The Insurance Company also handles all claims. As they have entered into a contract (an Insurance Policy is a kind of a contract) with you to provide the coverage, they are obligated to pay claims based on your policy's provisions. If you have any type of Liability policy, the insurance company may also provide for your defense in a lawsuit as well as pay damages.

The insurance company will usually also handle the billing and collection of premiums on your insurance policy. These types of policies are called "direct bill" policies. If you have a "direct bill" policy, all billing inquiries should go directly to the Insurance Company.

Most insurance companies do not encourage direct interaction with their policyholders outside of billing and claims issues. In most cases, if you contact the insurance company directly, they will refer you back to your Broker.

 

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