How to Select a Broker or Agent

The following are some tools and approaches you can use to help you select a broker, agent or other insurance advisor:
  • Ask other nonprofits in your area who they use to advise them and help them obtain insurance.
  • Ask about his or her experience with other nonprofits.
  • Ask about commission and/or fee structure. Does the compensation fit the level of service?
  • Is their office automated? i.e., How can you be sure that they will make timely submissions and payment to the insurance carrier?
  • Are they willing and able to arrange financing for you?
  • Are they courteous, and do they return phone calls promptly?
  • Are they willing to work with a loss control representative?
  • Do they have errors and omissions insurance?
  • What work will they do for you in the application process?
  • Are they willing to investigate new options for you?
  • Are they familiar with the insurance options available to nonprofits?
  • Are they willing to investigate the financial stability of insurance alternatives that may be available to you?
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Loss control — Analyzing hazards and determining a course of action to reduce the risk of loss while carrying out the nonprofit’s mission.

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Insurance — Traditional risk-financing tool used to transfer the financial hazard of risk. An insurance policy spells out what is or is not covered caused by all or specific perils (causes of damage or injury). Insurance is also a contract whereby an organization agrees to indemnify another and/or to pay a specified amount for covered losses in exchange for a premium. For many nonprofits, insurance provides the funds to pay for the nonprofit’s unexpected losses of people, property and income, while ultimately keeping the organization in operation.

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Broker — An insurance professional/intermediary who markets and explains insurance products to insureds and prospective insureds. Brokers are typically licensed by a state to place insurance on behalf of clients (individuals and organizations) with any number of companies, while others represent a single insurer. A broker technically represents the client.

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Agent — An insurance professional/intermediary who markets and explains insurance products to insureds and prospective insureds. Agents, like brokers, are licensed by state regulatory agencies. However, they are restricted in the marketing and placement of coverage to those carriers with whom they have a contractual relationship. Some agents have relationships with a number of companies, while others represent a single insurer. An agent, therefore, represents the company or companies with whom she or he has a relationship.

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