Some key points to consider while selecting an Insurance Carrier for your Hospitality Venture.
Most insurance companies sell their products through agents, rather than directly to the public. Some companies use agents that represent them exclusively, while others use independent agents. These independent agents may represent several insurance companies and can be a real asset in selecting the best policy at the best price. The premium rate, however, is set by the insurance company, and generally, it cannot be changed by the agent.
An insurance agent does not provide insurance. The agent merely represents the insurance company that underwrites the actual insurance policy. When you buy an insurance policy, it is critical that you purchase it from a credible insurance company, and not just from an agent who is an effective salesperson.
If an insurance company is to protect against risk, it must have the financial capability to pay any and all claims you are held responsible for during the coverage period. The last thing you want is to buy an insurance policy, then relax, believing you have coverage, only to find out after a claim has been filed that your insurance company does not have the assets to pay the claim. It is important to remember that if your insurance company will not, or cannot, pay a claim, you will be held responsible for payment.
Insurance companies are rated based on their financial capability to pay claims. According to analysts, the stronger the rating, the more financially solvent the company is projected to be. Rating categories vary based on the organization doing the rating, but generally use either an A1, A, A2, B1, and so on, system, or an AAA, AA, A, BBB, and so on, system.
Today, it would be difficult to justify purchasing an insurance policy from an underwriter with a rating of less than A2 or AA. It is best to buy from those companies that have achieved a rating of A1 or AAA. Ratings can be verified by contacting the rating companies directly. A.M. Best and Standard & Poor ’ s are two such companies. Alternatively, you can contact your state ’ s insurance regulatory department. It can also provide you with a list of complaints filed against the insurance companies for failure to pay claims in a timely fashion or to act in good faith. This is information you need to know before you buy your policy.