Finding the right insurance agent can be just as important as finding the right doctor or dentist. Ultimately you’re going to put a lot of faith in this person and hope that they have your best interests in mind while looking out for your financial security. The more you have to protect, the more crucial this decision becomes.
It’s important to understand what types of insurance agents you have to choose from. In general there are three main groups:
- Online or telephone agents who work directly for the insurance company.
- Captive agents who typically represent just one insurance company.
- Independent agents who represent multiple insurance companies.
I would like to start by saying that I have personally sold insurance as an agent in all three groups and can attest that there are good and caring professionals from each one. While I recommend choosing an independent agent, each group may have advantages and disadvantages.
Purchasing insurance online or from a call center agent can pose several challenges. While more popular for personal insurance, I don’t recommend this method for purchasing business insurance based on the complexity of the coverage you may need. Unless you feel confident that you understand what coverages you need and how much coverage you should have, you’re taking some chances with this method because you will typically not have the advice and guidance of an insurance agent. Online and call centers profess to be quick, easy, and cheap and at times they may be one or all of these things, but without an insurance agent you are also without an advocate when it comes time to file a claim. Also, if you’re not happy with your renewal price you’re back to surfing the web or calling around as the process starts all over again.
The advantage of working with a captive agent is you have someone to advise you on coverage needs and concerns. A captive agent may focus mainly on personal insurance for auto, home, and life but could also offer some business insurance products. The challenge of this method is the agent traditionally represents only one insurance company. If you’re not happy with your renewal price or need a type of coverage they don’t offer, you’re back to square one and looking for an agent. A captive agent won’t be able to really shop the market for you each year. As a former captive agent, in order to address renewal pricing concerns I had to fall back on coverage reduction as a potential option for my clients. This was not an ideal solution, but I simply had no alternatives when price was an issue. In my experience, I have seen many captive agents make the move to becoming an independent agent because of their frustration with not having more options for their clients.
Independent agents represent multiple insurance companies and have the widest variety of available insurance products and services. While an independent agent typically represents multiple insurance carriers, they are not an employee of any one, and are there to serve as your advocate in obtaining you the right coverage at the best value. With an independent agency, you may find the added benefit of not just one agent but perhaps multiple agents specializing in your area of need but still working in tandem for you under one agency. These licensed agents may specialize in various areas of expertise from personal lines to particular business groups like construction, manufacturing, or food service.
I was reminded the other day of the important role an independent agent plays as your advocate in the event of a claim. An agent I know was working on a quote for a prospective new business client when the prospect suffered a loss. This prospect had purchased two separate policies from two different companies. The policy that related to the loss was purchased on a direct basis. It became clear very quickly that the prospect was in great need of a claims advocate. They had several questions about the loss and what to do. The direct company was trying to set up a time in a week or so for the adjuster to inspect the loss, but ultimately the insured felt helpless and unsure of what to do in the meantime. The independent agent received a one page e-mail from the prospect titled “HELP!” They were apologetic about bothering the independent agent, but had a list of questions and just needed someone to talk to. Even though they were not yet a customer, the agent contacted me to discuss the claim and the questions the prospect had. He then drove out to see them and tried to help explain their coverage and the claims process more thoroughly. I have no doubt that after this experience, this prospect will soon be a customer of the independent agent. It reinforced not only the dedication to helping people I have seen time and again from the independent agents I work with, but also what a critical role the independent agent plays as your claims advocate at the time of loss.
As I mentioned before, there are good, professional, and caring people from all groups. However, I’d like to make a recommendation to you for the New Year: if you don’t currently work with an independent agent, please take the time to reach out to one before your insurance policy comes up for renewal. I believe you will find the experience well worth your time. With the variety of independent agents available, the right agent is out there and ready to serve as your advocate for many years to come.
Have a happy and safe New Year!