Choosing an insurance agent: Check for license & complaints

Whether you buy your insurance from an agent, or directly from the company, you need to make sure your agent or company is properly licensed in your state to sell the type of insurance you are buying, and see if there has been any complaints or disciplinary actions against your agent or company.Don’t worry about this while you get quotes from all the leading insurance companies. But once you find the companies with the best prices and coverage for you, check their license & complaint record before you buy.

When you shop for insurance, some people switch to the first company contacting them with a lower price, at the time they receive the quote. I consider this a mistake. You might be missing out on a company with a much better price or coverage, by going with the first company to offer you a lower price. Don’t buy from an insurance company no matter how much you like the agent or the price, until you have shopped with all the leading companies, to make sure you are getting the best deal for you. At the very least, you need to research the agent or company before you buy a policy from them, to make sure you are not going to be the victim of fraud.

A common disciplinary action is an agent or company selling a type of insurance they are not licensed to sell. Sometimes, companies are allowed to do business in a state as a “non-admitted” company, which does not provide the same protections in your state as an “admitted” company, such as if your state has a guaranty fund to cover claims for the insurance company, if it were to become insolvent or bankrupt.

You should do business whenever possible with an admitted company in your state. Non-admitted companies are okay if you can’t qualify for insuring with an admitted company. But you never want to do business with an unlicensed company. Fraudulent companies or agents may take your money and not give you an insurance policy.

You don’t have to worry about the legitimacy of major insurance companies I review on my website, Like Allstate & State Farm, but even major companies can have disciplinary actions against them. For example, you can read my blog post about Massachusetts recently fined Progressive for misleading Massachusetts customers about its use of credit for rating auto insurance policies. It’s important to know about an insurance company’s disciplinary record in your state before you insure with them.

Before you buy insurance, this is what you need to do:

Check with your state department of insurance to make sure your agent or company is licensed to sell the insurance you need and has no complaints or disciplinary actions.

You can find your state insurance department web site here.

A common scam by a dishonest agent or a dishonest agency employee is to take money from you to start or pay for an insurance policy, and instead of sending all or any of the money to the insurance company, the agent or employee pockets your money. They may give you a temporary auto insurance id card, but your policy is never started or paid for. Though this happens, the good news is it does not happen often, and people who do it lose their insurance license when they get caught. But even a long-time, honest agent might be tempted to do this if they run into money problems, particularly if they have a hidden gambling or drug addiction.

To protect yourself, make sure you receive any new insurance policy from the company within 30 days of starting it, and make sure the full amount of all payments you make to any policy is properly credited to your account.

You can call your insurance company’s customer service department directly, and bypass your agent’s office, if you have suspicions.

Most billing problems, when they do occur, are not fraud, so don’t jump to conclusions until you are sure there is fraud involved. Actual fraud of this type happens, but it does not happen often. You don’t have to treat insurance agents & companies with suspicion, but use my website and your state’s department of insurance to make sure you don’t make a choice of a company or agent you learn to regret.

You can learn a lot about insurance, insurance companies, and insurance agents in your state from your state department of insurance.

For example, I used a state’s department of insurance website to check out an agency owner as a prospective employer. I found out he was not only new to the company he was now representing, but he was terminated by a prior insurance company. The termination could have been for something as harmless as not meeting sales production, or it could have been because he broke company rules or did something unethical.

Use the resources available to you, such as my website with it’s insurance company ratings, to make sure you avoid problems with your agent or company.

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