If you have ever purchased insurance you no doubt have played your own version of poker. It always inevitably feels like it’s you vs them and you can’t show them the Ace up your sleeve for fear they might pull the royal flush on you and hike your premiums to the moon and back!

If you are thinking “I have never done this” then you aren’t being honest with yourself!

With this article, I aim to give you a few more Ace’s or at least knowledge to know when you get an insurance quote.

1) Personal Information matters to the quote!

So many people get so frustrated when a premium changes due to their address, date of birth, personal driving history, or lack thereof, and a multitude of other factors that are considered when shopping personal and commercial insurance. So be aware that the nicer area you live the better your rates will be. The longer you go without switching carriers, having accidents, and getting tickets, the better your rates will be with carriers you might be getting quotes from. Even how good your credit is can affect your insurance score and ultimately how risky the carrier sees you.

2) Revenue and Payroll affect your premium

In commercial insurance, your revenues, payroll, and employee count all affect your premium. That doesn’t mean lie about those numbers to keep them low so you can pay less premium because surprise audits are common in commercial insurance to verify your payroll and revenues through tax returns and this could stick you with a huge bill at the end of a year which could ultimately cripple your company. BUT….on that same note, if you are a start-up and have no idea how much money you will make that first year in business it’s best to be conservative because paying more in insurance isn’t going to help you grow or be in business a year from now and to be optimistic and say you will make a $150k the first year is likely a stretch so keep it conservative. Normally it’s a good number to start with around $75,000 to $100,000 for a new business owner if they are in a business with high transactional values like a realtor, contractors, sales of high-end anything or vehicles. If their average sale is going to be $10,000 or more in revenue it’s a fair estimate to use $100,000 and assume they are good enough to close 1 transaction a month.

3) Shopping around actually works

Now normally, as an insurance agent, I would caution all my clients on shopping carriers as most carriers are now punishing people who have shorter tenures with previous insurance carriers. Some even go as far as disqualifying accounts if they don’t have at least 2 years prior insurance with the same carrier. BUT…if you are seeing large rate increases from your current carrier that are 15-20% / year I would say you might be getting taken advantage of and a second opinion is merited. My general rule of thumb for my clients is if I see a 10% -15% increase I have a conversation with the client and if it gets to 20%+ I will shop for them and come back to them with possible alternatives at a lower rate or tell them I shopped for them and there was nothing better at this time as far as price is concerned.

4) Captives have to pigeon hole you into things that might not be in your best interest

This one is going to get me some grief and I know it but hey I will say it anyway. Captive agents are pigeon holing the majority of their clients into a product that may or may not be the best thing for them and selling it at a higher price because they have no other products to compare it to and are sold on the fact that they are worth the extra money because they provide better service. I can say this because I was a captive at one point and until I realized what I was doing to my client I had no idea I was doing it. For years I worked as a “good neighbor” agent and sold policies that were sometimes double the price of my competitors because “my service was better”. Now lets be clear I do believe my offices have been better about personal service and having annual reviews and overall just working harder for the clients but when it truly comes down to it we all offer 24/7 claims and roadside, we all answer our phones, we all reply to emails, and the one true thing that I did better was communicate with my clients about annual reviews because it was pounded in my head by my previous employer when I was a financial advisor. At the end of the day, I was packaging up a dream and selling them silver marked as gold but I had even fooled myself into thinking it was gold.

As an independent agency now I know what other carriers’ strong points are and what is best for the client because I have worked with multiple carriers and have seen them shine and fail in areas. If you are reading this you are likely with a captive agency because they capture the lion share of the market so this paragraph might make you mad or hit home for you and this is your moment of realization that this paragraph is completely true.

You cannot do what is best for 100% of your clients if you only have one option for them and you control 0% of the claims decisions and pricing determination on such product. It is impossible. You have to have multiple options to present to make sure you are serving your client fully and most agents do not want you to know this!

Now that I have stated all this I have to tell you that this is all my own opinion. Having held several positions in various companies I feel I am well informed of what is out there but obviously have my own personal biases in places that I have tried to keep out of this. The above statements are not advice that I am giving but my opinion and tips that might help you get better rates, see fewer headaches in your insurance program, and overall help you be a better consumer. I hope it helps!

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