Before your company purchases business insurance, investigate the insurer. The proliferation of both online and fraudulent "street" insurers makes it necessary to investigate your proposed insurer. This is not a difficult process and should be performed by your insurance professional. However, small businesses and start ups may be searching for business insurance on their own and must take the step of investigating potential insurers. An ad in the paper or yellow pages, a website, telephone number, or convincing sales staff does not make a business insurer a valid business insurer.
ALWAYS Check With Your State Department of Insurance.
Your state has a department or agency dedicated to regulating insurers that do business in your state. Insurance companies are primarily subject to state regulations and must be licensed, listed, chartered or otherwise registered and legitimized by your state.
It is very easy to investigate your insurer either online at the state's website or by a simple phone call. Find out if the insurer is a real insurance company and if it is allowed to do business in your state. Ask if the insurer is allowed to sell the specific insurance you are buying. Ask and compare addresses on file with the state and the one you have been given.
Review Ratings and Financial Stability
Insurers are rated by various rating organizations for their financial stability and ability to cover and pay claims.by various rating services such as A.M. Best or Standard & Poor .
Often you can review these ratings online or check with a local library. Each ratings service is different and they are not always reliable (think, A.I.G), but ratings services are the best way we have right now to rate the strength and security of an insurer. Fly-by-night insurers will be rated accordingly or not at all.
Seek out Multiple Quotes
Some business insurance is offered by only a few insurers. Other types of business insurance are widely available and many insurers offer that coverage. It makes sense to seek out multiple quotes because you can compare rates, but also because the insurers know legitimate competition from frauds.You can ask for quotes and ask whether another insurer's quote is legitimate. I know this from experience in shopping for professional liability insurance. My current insurer listened to me complain that their premium quote was much higher than one I had received from "ABC Insurer" (a pseudonym)." I was then told that "ABC Insurer" was not licensed in my state and that several lawsuits were pending against the insurer for failing to pay claims. I would not have known that otherwise.