Buying Insurance: Independent Agents vs. Buying Direct
The counter-argument is that an agent brings you certain advantages, particularly that they provide you with an experienced guide who can help you get the right amount of insurance, and can take the time to understand your unique needs. Because their income depends on providing good service to you, they are more helpful and caring than someone on a phone bank in another state (or country) who gets reprimanded if they average more than 5 minutes per call.
There are two types of agents and the two carry different advantages.
The first is the contract insurance agent. This is an agent that represents one insurer exclusively like a State Farm agent or an Allstate agent.
The second is the independent insurance agent. This is an agent that has ties with a number of insurers and can sell you a policy with any of them.
The thing that contract and independent agents have in common is that they want to build a relationship with you. Getting new customers is one of the biggest business costs for any business, whether insurance agents or major corporations. So they don’t just want to get you in the door and sell you a policy for 6 months or a year. They want to make you a customer for life if they can.
Still, some are better than others and you need to make sure that any agent you choose makes you feel comfortable. You shouldn’t ever feel pressured or intimidated. If you do, walk away. This isn’t the agent for you.
It also doesn’t hurt to ask friends for recommendations, in fact that’s a good way to go. Some articles will tell you to ask the agents for references so you can talk to their customers, but which agent will give you the names of random customers? Most will have already asked their references if it’s okay if they use them as references, and they’re only going to ask the clients they know like them enough to do that for them, so you’re almost guaranteed a biased review from the references they provide. If you ask around among friends and co-workers you trust, you’re much more likely to get a recommendation you can trust.
The “advantage” an independent agent can offer you is that if you want auto insurance, they can get 10 quotes from 10 companies and try to find you the best combination of price and service. The independent agent makes it his or her business to know the companies they represent inside and out, know the advantages and disadvantages, and provide you with both a good big picture view, plus details where you need them. On the other hand, you may end up getting recommendations to go with companies that aren’t exactly household names.
Even if you like and trust your independent agent, after he or she has recommended two or three companies, go investigate them on the ‘net.
A contract agent can only get you a quote from their exclusive insurer, but it’s usually an insurer you know like Allstate, State Farm, etc. While they can’t offer you the range of choices the independent agent can, they know all the options their insurer offers inside and out and can really fine tune that insurer’s policy to your needs.
In the end, unless you know insurance inside and out, don’t buy direct. You may think you’re saving money, but you could end up making costly mistakes. Have brief meetings with three to five agents, with at least one of them being independent, and take the time to get a feel for them. Do they ask you questions? Do they take time to find out what you need before telling you what you need? Are they relaxed? Do you feel comfortable with them?
Narrow it down to your top two in terms of confidence in them and confidence in the companies they represent, then ask them to give you a quote. Then pick the best.
Having a good insurance agent is like having a good plumber or a good mechanic. You’re not going to hang out with them every weekend, but you know they’re going to look out for you when you need their services, and that’s a valuable thing indeed.