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Is your Insurance Broker a Trusted Advisor?

Just as the construction industry is an ever changing environment, so is the industry of insuring it. Long gone are the antiquated ideas associated with obsolete construction techniques and materials and so goes the business of insuring your innovations. As a business owner, you depend upon the best and the brightest to guide your company in the right direction. In addition to your estimators, consultants, accounting department, and project managers, having the right insurance professional on your talent set is a business necessity.

As a savvy consumer, you need not be reminded that the standard “off the rack” insurance product is not one size fits all and may not be best suited for your business needs. It is easy to forget, though, that the same can also be said for the individual who sells that insurance product. Insurance agents and brokers may seem to have the same essential qualifications, in that each has successfully completed his or her state’s licensing procedures; however, the blanket statements regarding the credentials of the insurance industry end there. Insurance is a service industry in which experience, ethics, and exposure are paramount and are necessary for creating your superior insurance portfolio.

So how can you identify whether or not the individual you choose to service your insurance portfolio is actually doing you a service? Here are some questions you can ask to help evaluate your broker’s service strengths and opportunities:

  • Does your broker recognize your voice when you call? If not, you are not talking with her enough! Understanding each individual’s propensity towards risk tolerance and/or aversion is an essential component of being an effective insurance professional. If your broker does not know you or anything about you or the corporate climate you’ve created, how can she possibly fashion an appropriate insurance portfolio to best suit your needs?
  • Does your broker know your business? It is overstating the obvious to say it is vitally important that your broker understand the intricacies of your highly specialized trade, but what does that mean? Have you ever taken your broker on a job-walk? Has she seen the materials and equipment used to create your work product? Has she seen your yard and shop? Although sometimes she may need your assistance, a good broker wants to understand what exactly a hydrographic surveyor, for example, does from the time he bids a job until its completion.
  • Does your broker read your contracts? More importantly, does she understand the contracts and can she get them revised if necessary? There is a bevy of unusual, unique and down right difficult insurance specifications circulating the construction industry at increasing frequency. A well versed broker should gladly proffer her professional advice and guidance. In addition to checking for any potential compliance issues, your insurance broker should be the biggest advocate on your behalf when negotiating the removal of burdensome, unnecessary, or inaccurate insurance language from contract specifications. An insurance broker is certainly no replacement for an attorney, but is undeniably an invaluable asset when communicating with a project owner who has outdated, unattainable, or economically unfeasible insurance obligations written into his contract.
  • Does your broker have experience representing contractors of your caliber? Seasoned insurance professionals know the market place and know the products available within in that ever changing marketplace. Additionally, they have formed long lasting relationships with insurance underwriters, surety companies, and risk managers. Both are evidenced in a broker’s work product as a sign of her capabilities. A good broker has a firm grasp not only on what coverages are available and by what means, but also on how to attain that which is necessary. A broker unfamiliar with firms of your type or size may not be able to accurately identify potential gaps in coverage or assist you in identifying potential exposures.
  • Is your broker an innovative thinker? The construction industry, as a whole, is unique. Likewise, the methods of insuring construction professionals can be equally unique. There are some insurance coverages that you are required to carry and, like it or not, you must make that purchase. Insurance, however, is not the exclusive method of transferring and mitigating a risk. A broker of distinction should be able to recommend quality means of reducing or eliminating a risk, either in conjunction with or in lieu of an insurance policy.
  • Does your broker speak your language? Insurance nerds, ourselves included, have been known to speak a unique language that can sometimes be complex and nonsensical. A good broker can effectively and accurately translate the lingo and help demystify what exactly an “11-85” or a “waiver of subrogation” is and why your equipment is scheduled on an “inland marine” policy. Your broker chose insurance as a profession and should understand and respect that you chose otherwise!
  • Most importantly, do you have confidence in your broker? Your insurance broker should be considered a trusted and loyal member of your team, one who uses her experience and knowledge to help guide the future success of your business.

Other factors you might consider include broker compensation, performance guarantees, the broker’s customer service team/support staff, the broker’s reputation, and her level of professionalism. Our list certainly does not encompass all means by which to evaluate your contractor-broker relationship. We hope this brief guide is a helpful introduction to the fundamental and reasonable expectations you can have of your broker. The right broker is one who you can rely upon to be a trusted professional who takes pride in the products and services she provides, someone whose name you speak without pejorative undertones. Your broker provides critical protection of your assets by way of insurance; do you trust your broker will perform?

Cathy Skeen is a principal of Excel Bonds & Insurance Services, Inc. in Sacramento and has been a valued member of the insurance industry for over 30 years. She and her partner, Dave Garese, founded Excel Bonds & Insurance Services, Inc. in 1995, and the two have been members of many boards and committees within AGC of California. Brooke Skeen earned a bachelor’s degree in Risk Management and Insurance and has worked at Excel Bonds & Insurance Services, Inc. for over nine years. She is currently on the Young Brokers and Agents Committee of IBA West, a trade and political advocacy association of independent insurance brokers.