WHY USE AN INSURANCE AGENT?
When you buy directly from an insurance agent versus the company directly, you get face to face interaction, working with the same local person each time and can build a relationship with your agent.
In today’s age there are plenty of “direct writer” insurance companies. These companies cut out the middle man by selling directly to you rather than going through the agent, or the middle man.
However, while you may think that you are saving money by going direct through the carrier, that typically isn’t the case. By dealing with with the insurance company directly, a consumer takes on the risk that they may not even be aware is there.
THAT WAS THEN
In previous years, insurance companies didn’t even sell to the general public. Rather their products were sold to you by agents who had to be a licensed professional to deal directly with you. Consumers paid the agent nothing because the insurance companies paid the agents a commission which was not added to the retail price.
THIS IS NOW
The agency system is still there and you can find hundreds of independent agents on Google.
The insurance agent is actually your legal representative to the insurance company. The agent is licensed by the state and carries them with fiduciary responsibility to be your advocate. The agent must put your interests first and over the insurance company. Even though the agent is paid by the insurance company, they actually work for you.
An independent agent does important things for you, that you may not realize.
- Independent agents are a one-stop shop for your insurance needs. An agent typically sells different types of insurance such as auto, homeowners, renters, business, etc. You can use them at no cost to yourself and they can handle all of your insurance needs in one place.
- Agents have the ability to quickly check prices and coverage with many insurance companies. Rates vary widely and independent agents can probably get you a better deal than you can get for yourself. Then can also get you insurance from a direct-writer, like you could get for yourself.
- Insurance is very complicated. It’s the agent’s business to understand it and make sure that you understand it as well. An ordinary consumer will benefit from having someone who understands the ins and outs of insurance and who deals with it for a living and can help advise them on the 50+ page contract they’re committing to. If there is anything hidden or surprises, a licensed agent is the one who knows what and where those are.
- Coverage doesn’t just vary in each state, it varies between carriers in the same state. Many carries use what is known as manuscript policy forms or contracts. These forms don’t use industry-standard verbiage and contains altered provisions that materially affect you in some fashion. Some unknown way if you do not have an expert adviser who is already familiar with the particular policy.
- If you understand insurance thoroughly, you can get caught up. The industry is regulated by the state and each state is different. If you move states, you’ll find that the coverage’s may look the same at first but once you inspect them closer things work a bit different.
When you go direct, you have no licensed, regulated insured agent acting on your behalf. You take full responsibility for your coverage decision and any mistakes made. There is no safety net.
Don’t get us wrong, there is nothing wrong with direct-writer insurance companies. However, if you deal with an agent there are certain services and protections you are going to get that a direct-writer insurance company simply cannot provide.