Why Having Multiple Agents Bid for Your Insurance Is Not To Your Advantage
We receive numerous calls every day from truckers looking to discuss their insurance programs. Most of our conversations are from truckers looking for ways to reduce their annual premium. And, most times we discover they’ve also spoken with a handful of other insurance agents as well.
It’s a common misconception among truckers that having multiple insurance agents work on a quote, the better (and lower) your insurance premium will be. After all, isn’t competition healthy? Well, yes … but mostly, no.
Few businesses depend so vitally on their insurance programs as the trucking industry. So, while we understand the cost of insurance can be high, focusing your efforts on this one factor should not always be the end result.
Why You Need Insurance
The regulations and compliance concerns for trucking organizations can seem daunting at times. The government regulatory body: Federal Motor Carrier Safety Administration (FMCSA), has strict guidelines on the necessary, mandatory, insurance requirements a trucker needs in order to legally operate on our Nation’s highways.
Failure to comply with these mandatory requirements can lead not only to multiple fines and penalties but also to a complete shutdown of your business. The FMCSA stipulates the following insurance minimum requirements for most truckers:
- Public Liability Limit: $750,000 – $5,000,000, depending on commodities transported; $300,000 for non-hazardous freight moved only in vehicles weighing under 10,001 lbs.
- Cargo Insurance–$5,000 per vehicle, $10,000 per occurrence
Note – these are mandatory limits to satisfy the FMCSA. However, most shippers will not trust you with their cargo if you do not meet higher standards of insurance coverage limits. Typically this includes an increase Public Liability limit of $1,000,000 and an increase of Cargo Insurance limits to $100,000. Each shipper may have additional coverage requirements you’ll need to consider as well. This not only protects the shipper, but also protects your business. Increase insurance limits can provide the comfort in knowing that a claim for losses will be adequately answered.
Just Give Me Your Best Price
In their effort to reduce insurance costs, motor carriers think that bidding their insurance policies with multiple competing agents will deliver the cheapest insurance premium. However, as we’ll explain, this is rarely the wisest thing to do.
The Traditional Way
Unfortunately, here is how a lot of trucking companies handle their renewal: they will go on the Internet and find 3-4 trucking agents to quote their renewal. They submit all the required information and wait. Weeks pass with no response. A few weeks before the policy expiration, an agent calls and says that he is “blocked” from accessing markets due to a prior submission from another agent. You sign an Agent of Record letter, however, the insurance carrier cannot release the quote because there are differences between both agent’s submissions. The agent emails or calls you for additional information. And then you wait again.
A few days before your policy expires, you miraculously receive multiple quotes. Now you need to decipher and compare each quote to be sure you’re getting the coverage you asked for at the beginning on this process. In the end, after a nerve-wracking bidding frenzy, you get coverage 2 days before your renewal. The kicker – your renewal rate is higher than what was promised to you! Sound familiar?
Details Make Difference
Trucking companies make a common mistake, they look at insurance as a commodity. They try to compare prices of what appears to be the same policies. Multiple agents competing on an account implies that buying insurance coverages can be comparable to buying office furniture. It can’t.
Securing coverage for a trucking fleet is a complex process. There is no such thing as exactly the same insurance policy and there is no “magical” coverage that pleases everybody. For example, if two underwriters quote “cargo”, though the word is the same, there may be significant differences in coverages. One policy may exclude certain commodities and have major coverage limitations, while the other policy may broaden coverage with custom endorsements.
Less Competition May Not Mean Better Choices
You may not notice it, but the number of the trucking agents is getting smaller every year. Just like any industry, mergers and consolidations become the norm. While the exact numbers are unknown, there has been a notable reduction in the number of experienced trucking agents in the past few years.
In turn, the insurance market is becoming less competitive. Some insurance companies are unwilling to write trucking companies at all, others only specialize in certain types of commercial vehicles and specific operations. Nowadays you might not find enough insurance companies to support multiple agents competing for your insurance.
The Nature of the Insurance Market
There is also a hidden risk when multiple agents are bidding for your insurance policy. Insurance companies can refuse to provide a quotation for either agent or it can offer a “weak” quotation. The insurance market, just like you, is busy and underwriters are reluctant to participate in “practice quoting”. Choose your agent wisely and allocate or assign markets, whenever necessary.
If you are not satisfied with the way your current agent is handling your program, don’t give them a chance to quote your renewal. Do your due diligence and find, at most, two qualified agents specializing in trucking insurance to present your business to assigned insurance companies.
When you use the services of multiple competing agents you increase the amount of work on your end and tend to lose more time than necessary. You need to contact each agent and submit all the necessary documentation. You need to make sure that both brokers receive exactly the same information in the form of questions and answers.
When you receive multiple quotations, you need to take the time to review each quote and try to decide which one is a better fit for your company. As insurance professionals, this is our job and we, at times, find it extremely difficult to compare quotations. There’s too much at stake, don’t go it alone.
If the pricing differs substantially, you need to find out why. If one policy is a lot cheaper, it may exclude some coverage you were unaware of. It may also be a quoting mistake and rated incorrectly. If a policy is rated incorrectly, the error may only become apparent if you have a claim and the insurance company declines coverage.
If you are completely satisfied with your current insurance provider, trust them to handle your renewal. Do not engage other agents – you will be hurting your chances to get good renewal terms.
If you are not happy with your current provider and decide to “bid your insurance”, do your due diligence and prequalify the prospective agents you want to work with. Ask questions about their relationships with underwriters, trucking experience, safety service offerings, and customer service standards. It is in your best interest to have no more than 2 competing agents for your renewal.
We recommend that you market your insurance renewal every three years. In the event of dramatic changes in your company’s operations or size, you can shorten this timeframe.
If you’re interested in talking with us about your upcoming insurance renewal, please contact us. We are one of a handful of agents who only handle trucking insurance.
We can provide the following types of truck insurance:
• primary liability
• physical damage
• motor truck cargo
• occupational accident
• workers compensation
• general liability
• broker bonds
We can provide trucking insurance for:
• owner/operators or fleets
• local, intermediate, or long-haul operations
• dump trucks, straight trucks, or tractor/trailers
• hot shot operators
• container haulers
• agricultural haulers
• any other specialized trucking operation
Some coverage programs can include:
• Rates starting at $400/Month/Truck
• Mileage or Revenue Reporting Form
• 24/7 Access to Certificate of Insurance
• Profit sharing physical damage policies
• Complimentary DOT safety programs
• “A” Rated Insurance Companies