When searching for insurance, it is important to understand the terminology. In this article, we will break down one of the most basic insurance terms: “insurance carrier.”
For those who work in or around insurance, the distinction between an insurance broker and an insurance carrier is quite clear. However, for those who are not exactly familiar with insurance coverage policies can be daunting to understand.
What is an insurance carrier?
An insurance carrier is a financial resource behind the coverage offered by an insurance policy.
An insurance carrier might issue policies itself, or may use a Managing General Agent (MGA) or other underwriters to evaluate and manage your policy. In the second case, the carrier may hire the MGA, who writes the policy on behalf of the carrier.
It is the policy’s issuer who charges the premium and pays for damages and lawsuits protected by the policy. In exchange for a premium, the insurance carrier agrees to compensate the insured for any injuries that happen during the policy period.
Some insurance carrier companies also offer loss control services to help companies avoid claims. Nonetheless, the primary distinction between a broker and an insurance carrier is that the insurance company bears financial risk, whereas the broker provides advice and services the customer.
How does an insurance carrier work?
Many insurance carriers list their insurance policies online. On the same day, you can visit their website, request an instant quote, configure your policy, and make an initial payment. The other option is to purchase insurance from a carrier-employed agent. Some insurance carriers also have local offices where brokers can meet with potential customers in person.
When you meet with an agent, they will advise you about how much coverage you need, whether you need to buy endorsements or qualify for any discounts. The agent will measure your final quote and prepare your policy documents using that information, as well as some personal information. When you sign the contract, your coverage begins as soon as you make the first payment or designated date.
If you need to make an insurance claim, you’ll be assigned an underwriter representing the insurance carrier who can decide how much money you are due depending on the severity of the loss. The payment you receive is made directly from the insurance company, not by the underwriter or the agent.
When you work with an independent agent, the agent may negotiate with the insurance company for you to get the best deal. If you have a claim, the independent agent will help you get the most coverage for your claim.
Insurance Carrier vs. Provider
You can also hear the word “insurance provider” to describe the firm that manages the claims. The terms “insurance carrier” and “insurance provider” are the same; there is no distinction between them. Both words refer to the organization that is financially responsible for the insurance policy.
Insurance carrier vs. agency
An insurance agency is similar to a retail store, where the insurance carrier is the provider of the items available on the shelves. The following are the primary distinctions between the two:
1. Responsibility: The carrier is in charge of claims, pricing, and the general operation of the insurance plans. Whereas the agent is in charge of marketing the goods and assisting policyholders with questions and concerns.
2. Premium collection: Insurance agencies accept the premiums on behalf of the carrier. The carriers typically do not accept the premiums directly.
3. Policy changes: Any policy changes are initiated and approved by the insurance carrier, not the agency.
3 Things To Look in an Insurance Carrier
Many people falsely believe that all insurance companies are the same, and they look for the lowest rates for the least amount of coverage. After all, they don’t expect to use the coverage anyway, so what are the chances that this will happen?
Unfortunately, injuries and collateral damage do occur, mainly through no fault of your own. And, if you need to contact the insurance company to help cover unforeseen losses, you’ll want to know that they’re capable and willing to assist.
For instance, look for three things when it comes to select an insurance carrier:
1. Financial Background: Make sure that the carrier is financially sound, with prudent investments and sufficient capitalization. Consider the company’s years has been in operation and how stable its management is. What is the most straightforward way to assess an insurance company’s financial stability? Just look for insurance carriers’ AM Best ratings, the leading financial rating service provider to the insurance industry, by obtaining a performance report.
2. Best Offers: Check to see if the insurance provider provides customized plans for your specific needs. Many businesses will want to be “all things to all people” but will fail to fulfill the unique needs of their customers. Your carrier should provide coverage at a reasonable price. You get what you pay for, just as for other types of goods, and you should be mindful that the lowest price might not be the best value.
3. Claim Service: If you need to contact an insurance carrier in the event of a loss, claims support is critical. Any insurance purchase should predicate a company’s willingness and determination to provide timely competent claims service.
Where to Find Information
If you have purchased your policy on your own or through a large national corporation, you are most likely familiar with the company’s name from catchy jingles and television advertisements. Even if you bought your policy from a smaller firm, you must know the name of your carrier.
For example, suppose you purchased insurance from an independent insurance agency and do not have their direct contact details. In that case, you can expedite a claim if you know your insurance carrier off the top of your head. It would be helpful if you need to contact the customer service department of your insurance company.
You can find your carrier’s information in a variety of ways, including:
1. Declarations page: The documents you get from the insurance provider outlining your coverage, restrictions, and other policy information.
2. Proof of insurance: The cards that your carrier sends you over mail to validate your coverage.
3. Call your agent: Lastly, your agent will be able to provide you with any details you need about your carrier.
The Bottom Line
If you’re looking for insurance, you’ll be buying it from an insurance carrier, which is just a company that offers insurance. Depending on the company you select, you may purchase the policy online or deal directly with a carrier-employed representative to find the right policy and customize your coverage.