You say it is wrong, but your broker says it is cheaper

I am working with a company that had a serious concern about their business insurance policy. The owner of this company partnered up with the owner of another company to buy the building that they occupy. While this is a fairly normal and straight-forward practice, their broker just didn’t seem to get it.

The client told me that the broker established the policy as such: Tenant Company “A” operating as building owner. The problem (in this particular scenario) is that tenant company “A” is a self administered company with no operating interest in Building owner’s company – they only supply the funding for the building owner. Conversely, the building owner’s interests in any of its tenants lie with the landlord –tenant relationship and the mortgagor/mortgagee (since the building owner was funded by tenant company a & b.

Complicated? Yes a little – but it basically comes down to this: Does your insurance broker really understand? The relationships that you form can seem complicated but once you explain it all to your trusted broker, they will figure out how to incorporate them within your insurance policy correctly and accurately.

Anyone can slap a policy together but can they really sell it to the underwriters. I have written in prior articles that an insurance policy is basically made up around 2 features – insuring against property loss and liability loss. Many underwriters (this is a generalization but in conversation I find it to be truer than not) typically have not been out in the field; they have not visited the commercial neighbourhoods and certainly have not interacted with businesses such as yours. They need a broker to understand, interpret and communication the nature of the business they are about to insure.

As a business owner, manager, CFO etc, you will require advice & service that is timely, accurate and relieves stress. You have to feel comfortable knowing that the advice that you receive makes sense to you. Is your broker listening? Does it feel wrong?

A common theme in my articles focuses on being proactive – take charge, get that policy evaluated by someone else (yours truly can help!). Discuss your concerns, present the whole picture – in the end it will save you from a lot of wasted time and money.

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