Insurance Broker vs. Direct: Which is Best for Buying Consultant Professional Liability (E&O) Insurance?
Advancements in technology have made it easier for businesses to get quotes for professional liability (often called errors and omissions [E&O]) insurance. Insurance companies can now offer clients “direct” quotes through their websites. There are some advantages to going directly to an insurance carrier for a quote.
However, there are also some pitfalls to this sales channel. Insurance brokers are another route consumers can take to obtain E&O insurance. Brokers offer some benefits that insurance carriers can’t replicate. This article will serve as a quick guide to help you decide whether you should contact an insurance broker to secure E&O insurance or obtain a direct quote from an insurance carrier.
Advantages of a Broker
Expertise
An experienced broker will take the time to ask questions at the outset of the process and anticipate issues, saving you time and money. Brokers typically have multiple insurance companies they can approach to obtain quotes for clients. This gives clients an assortment of options to match their business needs. Brokers are also usually experienced with companies in your industry, allowing them to advise you about which risks to cover and about how to manage risk to lower the chance of adverse events impacting your business..
Advocacy
If you need to report a claim, you may want to ask questions of someone other than the insurance company. A broker will be able to review the policy with you, advocate on your behalf, and guide you through the claims process. Claims advocacy can be a major benefit for policyholders, helping steer them through the often complex and difficult-to-understand claims process.
Advantages of Direct Carriers
Price
Buying E&O insurance directly from an insurance carrier can be the quickest way to obtain coverage if you need it in a pinch. By cutting out the broker, the insurance company saves on acquisition costs (i.e., the broker’s commission). The carriers can share these savings with clients while also making a little more profit themselves. If you’re looking for the cheapest coverage, direct to the carrier might be your best option.
Convenience
Advancements in underwriting technology allow you to answer a few questions and receive a quote from a carrier anytime, anywhere. Some insurance carriers have made it easier than ever to obtain E&O insurance after obtaining only simple information about the business. In today’s fast-paced world, where business leaders are already busy with seemingly a million tasks, direct access to instant quotes can be an attractive way to purchase E&O insurance.
Disadvantages of Direct Carriers
Energy
Direct quoting systems are only able to offer a single quote from one insurance company. If looking for multiple options, you’ll need to complete multiple applications, comparing the options on your own. This can be a cumbersome process that can take up precious time business leaders would rather be spending on something else.
Limited Underwriting Appetite
Direct-to-carrier policies often require the insured to fit perfectly in the underwriting “box” to be properly insured. If your business has any unique operations or needs, you may encounter problems. For example, if you’re strictly an accounting firm, you may be an attractive risk for carriers; but if you’re an accounting firm that also provides financial advising to some clients, you could fall outside the appetite of the carrier.
In Summary
E&O insurance is vital to any business that performs services for monetary compensation. Brokers and direct carriers each have specific strengths and weaknesses. In the end, it is up to you to choose a means of obtaining E&O insurance that best suits your business in order to cover you against adverse events that can disrupt your operations.