When purchasing insurance coverage for your law firm, you may hear many different names thrown around. Hearing these different names and trying to understand the intricacies of insurance can become a headache and leave you with several questions:
It can become even more frustrating when you’re not exactly sure who your insurance company is. Many people often confuse the insurance agency and the insurance carrier (or company).
After working at Protexure Insurance Agency for 7 years, I’ve had the opportunity to work with thousands of lawyers in the process of purchasing insurance. I often heard lawyers using the two terms insurance agency and insurance carrier interchangeably. However, they are in fact two different things.
Insurance agencies and insurance carriers play different roles within the insurance industry and they will provide services to you differently. Therefore, it is important to know the difference between the two and what roles they play in your journey to securing and maintaining insurance coverage.
So, what is the difference between an insurance carrier and an insurance agency and what implications do each of them have when choosing your coverage?
The insurance carrier may sometimes be referred to as the insurance company. You may not interact with your insurance company a whole lot, certainly not more than your agent, but you should become familiar with your carrier.
In a nutshell, the insurance carrier provides you with your actual product – your policy. The insurance carrier is responsible for underwriting or establishing the underwriting criteria.
If you have a claim, the insurance company is responsible for handling the matter. They would also be responsible for paying out on the claim.
For those reasons, it is important to choose a carrier that has a strong policy and also has a sound financial rating. Information about the carrier’s financials and their ability to pay on claims can be found on various rating websites, including AM Best.
Chances are most lawyers are more familiar with their insurance agency (and specific agent) than their insurance carrier – understandably so.
Insurance agencies are typically responsible for most day to day interactions with the people they provide coverage too. Agencies and their agents are responsible for writing new business clients and maintaining an insurance company’s renewal book.
In addition, they are your first point of contact for customer service-related matters, questions about the policy, binding coverage and more.
Agencies are not responsible for handling claims directly, however, Insureds typically report claims to their agent first who then may convey the information to the claims department.
In some instances, you can think of an agency as a “middleman” between you and the insurance company.
Some agencies represent one carrier only while others represent more than one. Likewise, certain agencies may have different availability of other insurance products, such as employment practices liability insurance, workers comp, cyber liability, etc.
Protexure Insurance Agency, Inc., for example, offers coverage through a couple of insurance carriers for both accountants and lawyers professional liability. We do have options for various products such as cyber liability and Business Owners Policies.
While we primarily offer coverage through a couple of carriers, other agencies may work with only one or many. It is best to discuss with an agent which carriers they have access to and what products they can offer.
This might be one of the trickier questions and it might take some time to figure out who you want to work with. However, this is the benefit of using an agency for your insurance needs.
Insurance agents, particularly those who specialize in lawyers malpractice insurance, are very knowledgeable on the marketplace and will be able to get you the appropriate coverage for your law firm.
Since you most likely don’t have the time to research every carrier and all of the provisions of their policies, agents are there to help. Agencies can tell you the advantages/disadvantages of one carrier over another. Likewise, if you have a specific need as it pertains to your law firm, they can tell you which carrier has the ability to cover that work.
When considering which agency to work with some important questions to ask would be:
“How long have you been in the business?”
“How many carriers do you represent?”
“Do you specialize in placing a certain industry?”
“What variety of coverages can you offer besides my primary LPL?”
Overall, it is important that you have a feeling of trust between you and your agency. You need to be comfortable that they are offering you the best options available for your firm.
It is important to understand the distinction between an insurance agency and an insurance carrier and what functions both have. When purchasing coverage for your law firm, the most important thing to consider is how well the insurance carrier suits your firm’s unique needs and whether they are a reputable carrier.
Other factors such as malpractice insurance cost, limits of liability, and areas of practice also play an important role in choosing your insurance provider.
Finding the right policy in regards to coverage and price may be challenging, but with an experienced agency/agent who you trust by your side, they will certainly be an invaluable asset in securing proper coverage for your law firm.