Business Insurance Over the Internet: What Are The Risks?

It’s a truism that times have changed, and likewise, insurance has changed, too. The era of purchasing your business insurance from Uncle Harold who lives down the street has passed, if it ever existed, and the World Wide Web is your new hometown. So, is buying Internet insurance so very different from getting it from a local agent with a “brick & mortar” shop? Are there greater security and confidentiality concerns with online business insurance applications? Is “Internet insurance” another term for scam?

The short answer to all of these questions is “no.” Business insurance companies have had to change the way they market their products due to Internet insurance, but the only significant change for you is that it's now easier to get information and far more convenient to communicate with potential business insurance providers. You still have to fill out forms and you can still ask representatives questions, but now you are able to do these at 3 a.m. while sitting in the comfort of your own home wearing your pajamas.

But don’t be tempted by the relaxing convenience to relax your standards. While purchasing Internet insurance is as safe as working with an “offline” business insurance carrier, no savvy businessman would entrust their livelihood to an insurance company without checking to make sure that company is reputable and sound. Just like when you work with an “offline” company, you must do your homework. You wouldn’t hand over your money to Joe’s Shady Alley Insurance Agency, so why give it to Joe’s Shady Internet Insurance Agency?

Start off by asking: Who are these Internet insurance companies? You’ll find many of the names are familiar. The major business insurance carriers have all gone online, and if you trusted them before, there’s no reason that should change. If the company is not familiar to you, then check it out. Is it licensed to do business in your state? How long has it been in existence? Are there any outstanding complaints or lawsuits? Does it have the financial reserves to back its promises? Are there any existing clients willing to give a testimonial? Essentially, be sure to ask the same questions of an Internet insurance company that you would ask any other company.

However, just because there isn't cause for greater concern when dealing with online business insurance providers, there are different issues you need to be aware of. Online communications and transactions provide thieves with new ways to steal your information and perhaps your money. While it's highly unlikely that your information will be hijacked en route by hackers, how much of your information the Internet insurance company keeps in databases connected to the Internet and what kind of security they have is an issue. The safest alternative is if they don't keep your bank or credit card information at all, deleting that information once they process an online payment and pass that information on to a bank. However, this may rule out automatic payments and is not the standard industry practice.

A high degree of encryption (128 bit) will help preserve the security of your information, but you may also want to determine whether the business insurance firm has a redundant firewall, if their network is monitored by an external security company, and if they test their system with simulated computer-based attacks. If a company takes these sorts of precautions, you can feel as secure doing business with them online as you would if you were handing them a form across a desk.