Insurance companies? Agents? What’s the difference?
Policyholders often confuse their insurance company and their insurance agent. Why wouldn’t they? They call a number or visit a website and after some research and comparison they get their insurance policy. Whether they deal directly with the insurance company or transact through an insurance agent they still end-up with a similar product.
So, what are the differences? Consumers generally have three options from whom they purchase an insurance policy from:
Direct writers: undoubtedly the biggest pushers of the bundled discount, direct writers are insurance companies that sell their policies directly to the consumer (e.g. GEICO and Progressive.) These large, mostly publicly-traded companies spend millions of dollars on marketing and have a business model that requires them to focus on volume and efficiency. To get an adequate return on their marketing expenses they need to get the maximum amount of premium dollars for every policy holder.
Captive agents: like a business franchisee, captive agents are local business owners who partner with a national company and can only write policies for that company (e.g. Allstate and Nationwide.) This business model is successful because the local captive agent gets the benefit of a national marketing campaign and other resources provided by the insurance company, while the company gets the benefit of a local distribution system that provides better customer service and relationships than a company call center.
Independent agents: are local business owners who partner with multiple insurance companies and can write policies with any company they are appointed with (i.e. Shove Insurance.) These small business owners need to differentiate themselves by high levels of customer service and by offering specialty coverages that direct writers and captive agents can’t offer. Independent agents build their business by forming relationships with their customers and rely on referrals and word-of-mouth because they don’t have the resources to match the marketing budget of direct writers or captive agents.
So why chose an Independent Agent?
Customer Service: as mentioned above, independent agents rely on superior customer service to differentiate themselves from their competition. Independent agents can’t compensate for a lack of personal service with fancy commercials and marketing campaigns. While a lot of focus is geared towards the speed and price of an insurance quote, little consideration is given to what happens when you have a claim or a question about your coverage. Independent agents provide you with a local person who can talk to and assist you with your insurance needs.
Shop local: supporting your local economy is important, independent agents are your friends and neighbors and actively support your local economy too. Independent agents place an emphasis on giving back to their communities: they sponsor fundraisers, volunteer and donate to local charities. Many independent agents also serve as board-members of local non-profits and participate in other civic service activities.
Local knowledge: insurance requirements are different in every community. Even in a small state like Rhode Island, there are many nuances between a policy written in Providence county and Newport county. A local independent agent understands these differences and can provide a policy that considers all the local variables that can affect your coverage.
Choice: while direct writers and captive agents can only provide insurance policies from one company, independent agents have many options available to provide you with the best policy at the best price. When your policy comes-up for renewal, there are few options when a captive company or direct writer decides to raise your rates or cancel your coverage. Insurance rates change all the time, independent agents have access to multiple companies so if the company you were with last year is not the best company this year we can make a change for you. You don’t need to call a new provider every year to shop your policies, we can do it for you.
Specialty coverage: independent agents offer options for policies that direct writers and captive agents just can’t write. While others might try to shoehorn you risk to fit into their product offering, independent agents have the knowledge and the experience to find you the proper coverage suited for you or your business.
Long-term savings: many direct writers and captive agents entice you to switch with low up-front pricing but saving a quick buck can cost you in the long run. To achieve savings many direct writers and captive agents sacrifice coverage and customer service. Wasting time on hold with a call center only to find out that your claim is not covered is an expensive result of cut-rate pricing. Instead of just providing you with an instant rate, independent agents will take the time to get to know your risk exposures and provide you with options of coverage so you can understand what you are paying for, what’s covered and what is not.
Insurance is complicated
Don’t leave it up to chance, choose an independent agent to guide your through the process. When it comes to protecting your home, your car, your family and tour business, an independent agent is your Trusted Choice. Contact us today to get a comprehensive review from a local agent you can trust.