Surfing For Cover
These days, just about anything you want to buy is available on the Internet-and business insurance is no exception. But is cyberspace the best place to purchase such an important product? The answer depends on exactly what type of insurance you're buying and how much you know about it.
Buying insurance on the Net has its advantages, says Craig Smith, COO at Fred A. Moreton & Co., an insurance brokerage firm with offices in Salt Lake City and Boise, Idaho. However, while buying insurance online can save money and time, he says, you don't have the same access to expertise and advice you have when dealing with an agent or insurer directly. "Every business has its own complexities, its own areas of exposure, even if it's in the same industry as another [business] down the street," Craig says. "The job of the broker is to sit down and adequately evaluate specific needs and exposure."
If you have basic insurance needs, for example, or if you're a very small operation or an independent contractor with limited exposures-you may be well-served by purchasing your coverage over the Internet. Also, this isn't an all-or-nothing proposition; you may opt to purchase some types of coverage online and others through traditional channels, or you may use the Internet for research purposes to help you become better informed no matter where you ultimately choose to buy.
That's an alternative offered by eHealthInsurance in Sunnyvale, California. Company CEO Gary Lauer explains, "Health insurance is a daunting buying process. There are a myriad of products and plans, and the decision matrix is very complex." He adds that his customers can go online to learn about their various options and apply for coverage electronically-but, at any point during the process, they can communicate with live agents by phone, e-mail or online chats.
What should you consider when buying insurance online? "The rules you use in the offline world are the same rules you should apply in the online world," says Lauer. Keep the following points in mind:
Know what coverage you need, and be sure you make price comparisons based on the same coverage. If, for example, you're looking to replace an existing policy with coverage purchased online, have that policy in front of you as you shop.
Be sure the company is licensed and stable. Just because the particular insurance product you want is available on the Internet, that doesn't mean the company offering it is licensed to sell in your state. You should also check out the carrier's financial condition and reputation. Contact your state insurance commission for assistance.
Consider your responsibilities if you don't buy adequate coverage. When you buy insurance on the Internet without consulting a broker, anything you're not covered for is a loss you'll have to take. If you go the traditional route and purchase insurance based on a broker's recommendation, it will be the broker who absorbs that loss. "That's why brokers carry errors and omission insurance," says Smith. "If we overlook some-thing, if there's a gap in coverage, we're responsible for that."
Keep privacy in mind, especially when it comes to health coverage. Security is a critical issue when it regards health insurance online, considering the possibility of hackers obtaining confidential medical records or accidental disclosure of information to unauthorized parties.
A major drawback to shopping for insurance on the Net is there could be a particular product that's especially appropriate for your company's needs, but you're not aware of it. Smith says a key part of a broker's job is to keep you informed when such coverages are developed and offered. "These coverages have come to the forefront because of litigation around the country. And a business owner might not even know to be concerned about them," he says.
Of course, you can always shop on the Internet and buy in person. Using Web sites to gather information and obtain a few quotes will help you make better decisions when you meet with your broker.