When you’re shopping for home insurance, the options can seem overwhelming and unlimited. Do you shop online? Contact companies directly? Use an agent?
Using an agent is one of the most common avenues to purchase insurance and many people find them to be beneficial. You can buy homeowners insurance without an agent, but they can be helpful especially when you’ve done your research.
Who are insurance agents?
The phrase “insurance agent” often conjures images of a single businessman in a small office in the center of town. While that may have been true in the past, the insurance industry has changed with the times and agents can be reached over the phone, online, and in person.
When shopping for home insurance, there are two types of insurance agents that you would typically encounter, which we’ve detailed below:
- Exclusive (captive) agent – Exclusive agents sell the products one insurance company–usually large national carriers. On rare occasions, they are employees of the companies they represent, but more likely they are independent contractors who are paid a commission. Their commission is a percentage of the total price of the policy and future renewals. Exclusive agents usually receive administrative and marketing support in addition to training from the company they represent.
- Independent agent – Independent agents sell policies for multiple insurance companies–typically smaller, less well-known carriers. They are not the employees of any company they represent and all of their income is based on commissions. Unlike captive agents, independent agents have the ability to shop around and present clients with multiple insurance options at different price points. These individuals do their own marketing, and in more recent years have developed a significant online presence.
What can an insurance agent offer me?
Price comparisons – As mentioned earlier, independent agents have access to pricing information for many carriers–including ones you’ve probably never heard of. Even if you ultimately decide to not buy insurance through an agent, it’s helpful to have a full picture of all of the options available to you.
Personalized service – Insurance agents often live or work in the same community as their clients. This knowledge of your environment can inform their advice to you about which policies and carriers to consider. They may also be able to provide reviews from previous clients about their opinions working with certain companies.
Advocacy – Insurance agents aren’t just people who sell you products and then you never hear from them again. They will often be the first person you reach out to when you are thinking about filing a claim with your insurer. They should work on your behalf to get your claim processed as quickly as possible. An agent may also advise you against filing a claim if they think doing so might not be in your best interest.
Discounts and bunding – Most insurance agents sell more than one kind of product. They can recommend multi-policy discounts and may know about less-publicized discounts that could benefit you.
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What are my other options for buying insurance?
You can always contact an insurance company directly either online or on the phone and get a quote from a salesperson. This may be a useful option if you think your policy will be simple and are not too price sensitive. If you want to shop around and do price comparisons, contacting individual companies directly is not an efficient way to do that. It would make more sense to use an agent in that case.
Some national insurance companies also solicit potential customers directly via email or direct mail with offers. With these offers, it’s possible to get home insurance without a salesperson or insurance agent. Again, however, these policies may not be personalized enough for every homeowner.
Should I work with an insurance agent?
Home insurance agents exist to simply the process of finding a policy that meets your needs. While you can do all of the work yourself, sometimes it can be a more troublesome process than it’s worth. When shopping for a homeowners insurance policy, you should use all avenues available to you to make an informed decision. This may mean working with an agent in addition to doing your own research.
If you decide to work with an agent, here are a few items you’ll want to discuss:
Factors that determine policy price – Every insurance company uses a different formula to price their home insurance policies. An independent agent should have some insight into this process and can steer you away from companies with factors that are unfavorable to you.
How easy is it file a claim – Insurance agents have first-hand knowledge about how easy (or not) it is to file a claim with a company. They may partially base their recommendations to you on this experience.
The number of insurers in your area – The growth or decline of the number of home insurers available in your area, can be a sign about how much a policy may cost. An independent agent may be willing to provide you with this information.