Avoid Bad Insurance Brokers

An insurance broker is an insurance professional that works on behalf of the insurance buyer, rather than for an insurance company. They are independently employed and work on a commission.

When searching for a qualified broker there are several basic steps you should take to ensure your are doing business with a reputable company.

Interview Several Candidates

Since your broker will be working for you, conduct interviews of your broker much like a job interview. Ask the broker why he or she is the best choice for you and how they can make your insurance purchases.

Get References

Obtaining references sounds like a simple task, however there are some important considerations. First, you should place references into two categories. One category includes those references that you are able to obtain from people other than the broker, and the second category includes references that the broker gives you. The reason for this is that the broker will naturally only provide you with references of past customers that will speak favorably. While this list is easier to get (you merely have to ask for a list) it is of less value than the first list. This is because the first list should be compiled from aquantances, business associates and others that may know of this broker. The value of the first list is that it will be made up of honest opinions, which has not been compiled by a "filtered" list of references.

A.M. Best

When a broker makes recommendations regarding insurance carriers, you can check the ratings of those companies. Ideally, a good broker will suggest highly rated companies. A. M. Best is an U.S. based company that issues financial ratings of insurance companies. These ratings are based on an insurance company's ability to pay claims. While there are several scales that the company provides, the basic scale most pertinent to the purchase of an insurance policy is as follows:

1. A++, A+ (Superior)
2. A, A- (Excellent)
3. B++, B+ (Good)

If your broker provides you with poorly rated companies to work with, you may want to look elsewhere.

Get Printed Proposals

A printed proposal spells out detailed information and eliminates questions as to what the proposal includes and does not include. If your broker hesitates or delays in getting the written proposal to you, or worse yet if he pressures you to pay any money before a written agreement is signed, beware as this is not a good businss practice and you may the broker may be trying to take advantage of you.

Deal With a Broker That Listens

Be sure your broker understands your concerns and responds appropraitely to questions. If your broker cannot or will not answer your questions, it is unlikely that he has your best interests in mind.

If You Own a Business

If you are seeking business insurance, talk to vendors and competitors about insurance brokers. They will be able to provide solid, unbiased opinions about the brokers they may deal with.

Of all these techniques, qualified referrals are the best and most accurate source of information and qualification of your next insurance broker.