Starting up in California... need the basics.

[Slow Eddie]

Hello all. Cool forum. My wife has her own business doing paperwork and renewing permits for semi truck drivers that haul coast to coast. These guys usually come to her at the beginning stages of going solo because they need certain permits before they can start hauling for themselves.

They also need insurance at that point. We've been referring all of her clients out to insurance agencies and I feel that we are sending money out the window. That is why I'm here. We would like to start writing these policies ourselves and making a commission.

I've read the california insurance web site and its very confusing, or at least not tailored to someone not already in the business. From what I gather a business entity needs a license, as does each individual selliing insurance on behalf of the agency. But who exactly needs to $10,000 bond?

We've looked up the licenses for the companies that sell truck insurance, and they all posess fire and casualty licenses. I assume this is what we need. We plan on keeping this very speicialized, only offering commercial truck, general liability, and cargo insurance.

Also, how do I go about looking for insurance carriers that will let me sell their insurance? Do I need to have this set up before I get the license? What kind of software do I need for real time insurance rate quotes?

I realize this is alot of questions and I'm prepared for the wise ass replies. I can take it.

Thanks in advance. We're located in Bakersfield, California.

Eddie

 

[Frank Stastny]

GreenSky (Rick) is our resident expert on California, at least he is the one I would go to. Now, if you want to move to Missouri...

 

[GreenSky]

GreenSky (Rick) is our resident expert on California, at least he is the one I would go to. Now, if you want to move to Missouri...

Thanks for the pat on the back but I haven't done P&C for about 25 years.

The $10K is for a broker bond and is no big deal. Getting the license 1st is the trick. Again, no issue and as I understand it, you can do all the pre-licensing school on the internet.

Hope that helps.

Rick

 

[djs]

Hi

You will need your fire and casualty license. This will allow you to sell the truck insurance. You should probably pick up your health license as well, since much of your market is probably in need of some sort of health coverage. That's up to you, and can be added later.

Licensing requires 40 hours of instruction, 12 hours of ethics training, taking a test, and being fingerprinted. Not very hard, but the test does cover a lot of things beyond what you are looking to insure. Do some practice exams, the test will be easy enough.

The bond is easy. I think I pay $60 a year for mine, though mine is higher than the $10K required.

You'll also need E&O insurance. This will cost you some money. You might want to get a quote on this coverage to work up in your business plan, though it will be several hundred dollars a month for commercial inland marine coverage.

Once you have your license and E&O coverage, you can get appointed with someone to write the insurance. Depending on who you get appointed with, you'll need some extra resources as well. You'll have to be able to pull DMV reports for instance. Not hard, but some groundwork upfront.

Once all of that is done, you'll be able to start work. Sounds like you have a natural market, so you should be able to do well. Sounds like you are looking at low volume, high premium, high service type of business, which is great (except the high service part).

Dan

 

[GreenSky]

Yeah, what Dan said.

Rick

 

[Slow Eddie]

Hi

You will need your fire and casualty license. This will allow you to sell the truck insurance. You should probably pick up your health license as well, since much of your market is probably in need of some sort of health coverage. That's up to you, and can be added later.

Licensing requires 40 hours of instruction, 12 hours of ethics training, taking a test, and being fingerprinted. Not very hard, but the test does cover a lot of things beyond what you are looking to insure. Do some practice exams, the test will be easy enough.

The bond is easy. I think I pay $60 a year for mine, though mine is higher than the $10K required.

You'll also need E&O insurance. This will cost you some money. You might want to get a quote on this coverage to work up in your business plan, though it will be several hundred dollars a month for commercial inland marine coverage.

Once you have your license and E&O coverage, you can get appointed with someone to write the insurance. Depending on who you get appointed with, you'll need some extra resources as well. You'll have to be able to pull DMV reports for instance. Not hard, but some groundwork upfront.

Once all of that is done, you'll be able to start work. Sounds like you have a natural market, so you should be able to do well. Sounds like you are looking at low volume, high premium, high service type of business, which is great (except the high service part).

Dan

Dan,

You're spot on with your assumptions. Low volume, high premium. Its normal for clients of ours to pay $7-$10k per year for coverage. We aren't looking to get rich, just supplement our existing income. If we wrote maybe 1 policy a week I could be very happy.

In order to get our agency licence we don't need to be sponsored by anyone? I'm just trying to figure out the process. I'm not sure if I need to get appointted first, or if I can get my licensing ducks in a row and then solicit insurers to represent. We need an individual and business entity license I'm assuming.

E & O insurance is the coverage we need to protect ourselves in the event we make a mistake on our paperwork, correct? Is it state required per individual license or per agency license?

Also, where can I get information about pulling DMV printouts?

I appreciate all the help. This is something we really want to do.

Eddie

 

[djs]

You don't need to be sponsored to get your license. I think this was the old way of doing it, but not anymore.

E&O insurance is required by any carrier you write for. I don't know of any that will appoint you without it. You'll need it, though hopefully will never use it. For P&C, especially commercial, it will run some $$$$, be prepared.

Google 'instant california dmv reports', you'll find some sources. Some carriers may provide it as well (for a fee). I run them through one of my carriers, even if I need them for a brokerage with another carrier. It works. I have no expertise in setting this up, just know I sign a form every year to allow me to pull records.

Dan

 

[Slow Eddie]

Dan,

Once again I appreciate it. I'm starting to see the work flow now for putting this together.

License > Bond > E & O Ins. > Appointments > $$$$$

I've got another question for you. Since we are new to the business do you think appointments will be difficult to obtain? I'm assuming so because of our lack of experience and low volume. I can't see a company willing to let us bind policies on their behalf.

I was thinking maybe it would be better for us to be straight brokers for now, until we can gain enough experience to get appointments. I googled "insurance broker agreements" and from what I saw, broker agreements only required a valid insurance license and E & O insurance, where as appointments required experience and volume quotas as well.

The work flow I was thinking was gather information from the client, submit applications for insurance via multiple carriers (with whom we have broker agreements in place), gather the resulting quotes, and select the best coverage for the price. Is this normally how it works?

Thanks. I'm sure you guys get hit hard with alot of newbie questions every day. I appreciate the patience.

Eddie

 

[wildcat]

You will most likely need to hook up with a commercial broker who has Trucker lines. As a new broker in the bus, it will be almost impossible to contract with any competitive commercial lines. Even surplus lines carriers will need to see experience or an existing book of business. Find a local comm broker, they will be happy to split the commissions with you!