What is the best business insurance company?

Identifying the "best business insurance company" is, in some respects, a personal determination. That is, business owners with different insurers have had different experiences with them. The relative happiness of an insured with the insurer often arises from claim experience and customer service in the event of a loss. Promptness, efficiency, and at least the perception of fairness in handling claims greatly influences the insured's feelings about the insurer.

Often, customer service in the claims process is an important part of the services of the person or entity that sold the insured the insurance. This is especially true when that person or entity is an "agent". An agent is often considered to be a representative of the insurer, rather than of the insured. Therefore, the agent's actions may reflect more closely upon the insurer than that of a broker. A broker is often considered to represent the interests of the insured (the buyer of the insurance), and therefore may be thought of as "once removed" from the actions of the insurer.

Another important aspect in choosing an insurer is its financial strength. Stated otherwise, insureds must be concerned with the claims-paying ability of the insurer. This is especially true in commercial lines of insurance when potential losses can be quite large and the insurer is required to pay out sums. This is usually not a problem if one claim is made at a time, however that is not how insurance works. Instead, the insurer insures many entities, so odds are that many claims will occur at or about the same time.

It is hard for the average buyer of insurance to assess financial strength, but there do exist several entities that specialize in those assessments. Two of the most prominent are A.M. Best and Fitch's, each of which have measures of financial strength and rate insurers according to those measures. Licensed agents and brokers use those ratings, among other factors, to recommend insurers to prospective insureds.

Many insurers use essentially similar policy "forms" for issuing commercial insurance. A policy form is the basic written contract which defines the insurer's and the insured's duties and responsibilities, and specifies the amount of insurance coverage available, the premium to be paid by the insured, and duration of coverage. Differences may exist between insurers as to options offered, such as automatic inflation-related increases in the basic coverage amount. Some options result in an increase in premium.

Finally, it is critical that insurance be obtained only from an insurer licensed to transact business in the state in which the insured is located. Insurance is regulated by the individual states, and insurers that wish to transact business in a state must generally undergo a rigorous examination by the regulator. The examination is especially concerned with financial stability, but also with the character and abilities of the principals and officers of the company.

In contrast, there frequently come to the market companies that have not gone through the regulatory process and which are not licensed. This often happens when legitimate insurance of a particular type is difficult to obtain due to market conditions. These are usually scams which are established merely to accept premiums and which have no intention of paying claims. Recent incidents of this type of scam have been in the workers compensation insurance market.