Is It Better To Buy Insurance From An Independent Agent Or Online?

Independent agents are not directly affiliated with one insurance company but are licensed to sell policies from multiple companies. Captive agents are only affiliated with one insurance company and only sells their policies. There are several advantages and disadvantages related to buying from an independent agent. Many people like the ability to have someone to call that knows them in the event of an accident or claim as opposed to a 1-800 number and an anonymous customer service person. There are other advantages and disadvantages of using an agent.

Independent agents are customer focused

When you buy insurance from a captive agent representing one company, you will only be able to compare products from that one company. Captive agents may still understand your insurance needs and can recommend the appropriate coverage levels and products you'll need, but your still bound to that one company and may not be getting the best deal for your specific situation.

Independent agents have multiple products from, in many cases, dozens of different companies. They may be more customer focused in that they represent you instead of one company and can help you find the appropriate products for your needs. They may be more in tune with each company's underwriting characteristics and how you may be viewed from a risk perspective. Some insurance companies may have stricter or looser underwriting standards when it comes to your individual risk level. For example, you may be a driver with a ticket and/or other moving violations. If you go with one company for your car insurance, then you may be going with a company that has a higher surcharge for your particular violations and you'll end up paying more. An independent agent may know of other products from lesser known insurer's that may be cheaper for your particular situation and could save you more money.

Some disadvantages of independent agents

There are a few disadvantages of working with an independent agent. They typically receive less support since they are not directly affiliated with a major company. This means that they have to "know their stuff" and self educate in order to keep up with current trend and products in the marketplace. You need to know that your independent agent is well informed and can help you find the right insurance. Independent agents, however, are typically members of national insurance organizations and keep up to date by attending conferences and training through these organizations. Ensure that they are members of the Independent Insurance Agents & Brokers of America (IIABA).

Another disadvantage is that they have a tendency to work with lesser known companies. Some may like the familiarity of larger better known companies, however, the companies they typically work with have solid financial ratings. Be sure your agent checks with AMBest to determine the financial rating of any companies you buy from through them. Bigger isn't always better or cheaper when it comes to insurance.

Online or Independent Agent?

When you do a search on major online insurance quote sites, many times the companies that will show up in the quotes you receive are only the major's (Geico, Progressive, State Farm, etc.). You may find a good rate through the site from one of these solid companies, however, you could also be selling yourself short in that you aren't getting rates from the smaller to mid-sized insurance companies from which to compare as well. These companies typically rely on independent agents and word of mouth in order to find business.

When you include independent agents in your search, you may find out that he or she could save you more than the rates generated for you on the major search sites. The rates you may get from the "majors" also have a tendency to be understated "teaser rates" to get you to switch and then they slowly raise your rate at each renewal up to the rate that they really want.

Where can I get quotes from independent agents?

If you are shopping for insurance and want to compare rates from BOTH independent agents and major online insurers, then we recommend Insureme who allows you to compare several rates from dozens of major, highly rated insurers such as State Farm, Met Life, Allstate, AIG, and more. One unique aspect of their quote service is that they also include independent agents in the mix. They can give you quotes to compare to the majors as well. The quotes are free and it only takes a few minutes on their secure website.

This should not be considered financial advice which can only be given by a qualifed financial professional. We suggest you consult with a qualified financial planner and/or insurance professional who is most qualified to consult with you regarding policy decisions. Many factors are involved in your policy premium some of which may not be mentioned in this article. We are an affiliate of the Bankrate Insurance Network.

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