Buying auto insurance or homeowners insurance direct from the insurance company is easier than ever. Modern technology enables you to contact your insurance company when it is convenient for you. In the 21st century, is there any need for a local agent, working 9 am to 5 pm weekdays, in an office close to you? What’s the benefit to you? What do insurance agents do for you?
In my opinion, most agents are not worth paying more for your insurance.
The argument made by insurance agents is the personal service they provide is worth it. Buying home or car insurance is not like buying groceries at the supermarket. Applying for insurance is like applying for a loan: insurance companies have rules and you need to qualify for the insurance. How insurance works, and the coverage options available, can be confusing for the average consumer to understand.
Having a good insurance agent working for you can help you understand and buy the coverage you need, get all the discounts you deserve, prevent problems, and fix any problems when they do occur. The trouble is there are very few agents doing these things for their customers.
It’s not because there are few agents competent and caring about their customers. It’s because insurance agents don’t work for you, they work for themselves and the insurance company. Although many agents want to provide you with the best service, they have to put their needs ahead of yours in order to stay in business, or be successful.
Having a personal agent is rarely a bad thing, but its not worth paying a lot more for your insurance.
Fortunately, insurance companies paying commissions to agents are not necessarily more expensive than insurance companies selling direct to the public online. Get price quotes from all the leading insurance companies to find the best price for you. You can save $100s. Some insurance companies charge twice as much as others, for the same coverage, so its worth it to search for the best rates.
When shopping for auto or home insurance, first consider the insurance companies with the best price. Use the information on my website (see the link below) to evaluate the customer service of the insurance companies with the lowest prices. You may choose the best priced insurance company with a local agent. But some insurance companies with great reputations for customer service, like Amica & USAA, don’t have local agents.
Here is why I think it’s not worth it to pay more for having a local, personal insurance agent:
Insurance agents often fail to get you the insurance coverage you need at the best price.
The worst offending agents are the agents who don’t review your coverage options when you buy an auto insurance policy or homeowners insurance policy, or when you make a policy change, like adding a car.
An agent once quoted a price for my auto insurance without discussing the coverage I wanted. I had to ask about the coverage, and the agent quoted me a $1,000 deductible for Collision coverage on my car, when I had a $500 deductible. Had I bought his insurance, thinking I was saving money, when I was really getting less coverage, I would have been very upset when I had a claim.
However, there are many agents doing a good job of reviewing your coverage options. Yet there is still a problem. Many insurance agents represent one insurance company, and can’t offer you the coverage you need because their insurance company does not offer it.
Here’s one example:
If you buy a new car, owe more on the loan than the value of the car, which is not unusual due to the great amount of depreciation on new cars once you drive them off the lot, you should buy gap coverage, which covers the difference between the loan amount and the value of the car, if it is totaled.
Yet some insurance companies do not offer gap coverage, or may not offer it for leased cars, when other insurance companies will offer it on leased cars.
Agents don’t discuss your need for coverage they can’t sell you, if that means they will lose your business. You may need a coverage your agent’s company does not offer, but you will never find out about it.
This matters even more with homeowners insurance, where an insurance company not offering a coverage, available from another insurance company, can cost you tens of thousands, if not hundreds of thousands of dollars, by not covering a claim.
Independent insurance agents have an advantage regarding coverage, because they represent several insurance companies, and they can choose the insurance company with the most appropriate coverage for you.
But even if your insurance company offers a coverage you need, it is very likely your agent will not mention it.
When I reviewed a customer’s insurance policy, or when I was selling an insurance policy, I tried to be very thorough in explaining the coverage available and what is not covered. But no agent, or customer, has the time to review all the options available.
When you contact an agent for a home or auto insurance quote, the agent has to collect the information needed to qualify you, quote you the correct price, and discuss your coverage. Although the agent will include and discuss all the “important” coverage, agents rarely invest the extra time to get the information from you to determine your insurance needs.
For example, you may be buying a house in your name alone, where you and your longterm boyfriend or girlfriend will live. Much of the furnishings are jointly owned, or owned by your significant other. Your unmarried (unless you are in civil union) significant other’s property is not covered unless your agent includes them as an “insured,” if the insurance company allows it. Many agents may never discuss this with you. You may find out the hard way much of your personal property is not covered when you have a claim.
Your home could be subject to an expensive clean up, if your sewer or drains back up into your home, which you may have to pay for yourself, since your agent did not think to tell you about buyng the additional water back up coverage.
Most agents want you to be happy with your coverage when the unexpected happens. But your agent has no legal responsibility to make sure you bought the coverage you need.
The personal service offered by insurance agents does not even mean you will get the best price your insurance company can offer you.
If your agent is concerned they are going to lose your business, because they know you shop your rates once a year, or their insurance company recently had a large rate increase, they will most likely look at your policy to make sure they are getting the best price for you.
But if your agent knows you are a loyal customer, or does not think you will shop for better rates, your agent is not going to spend their time reviewing all their customers policies to make sure they are not missing any discounts.
Agents are paid a commission which is a percentage of the insurance premium. The more expensive your premium, the more money your agent makes. If your agent does not think they will lose your business, they are not going to spend a lot of their time looking for ways to reduce their income. Your agent usually isn’t deliberately charging you a higher premium, but they have no incentive to find ways to lower your premium.
Customers can depend only on themselves to make sure they ask the questions, and spend the time needed, to make sure they get the proper insurance coverage, and not over pay for it.
Using my website, and reading my blog, can give you the information to help you work with insurance companies and agents to get the coverage you need. Shopping your auto & home insurance once a year can make sure you don’t pay too much for it.
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