Purchasing insurance over the phone from a 800 number or from a web site seems fast and easy - right? What happens if you have a claim? Who do you call for advice? Who do you call when your rates go up? These are some key points to think about.

The first thing I would like to touch on is price. This makes up a large part of a decision on where to purchase insurance. This is a completely reasonable concern. I have already mentioned how an independent agent will compare rates from several companies to find you the best value, but now lets look a little deeper than the all mighty dollar. What happens if you purchase a insurance policy and 6 months later your premium increases by 20%? With an independent agent you would simply need to give him/her a call and they can locate the problem or look to see if a different company may be a better suit for you. With a Captive company such as American Family, Allstate, State Farm, Farmers and many others - if your rates go up there is not much you can do about it. Your only option is to find a new company with better rates. However, along with the new company comes a new agent or new 800 phone number for you to call and they may not even be located in the same country as you. With an independent agent you can simply change companies and keep doing business with a agent you know and trust. In some cases a captive agent or a direct writer may be cheaper. If this is the case you may want to look at how much money you are really saving. All companies will take rate increases at some point. So you can safely say that your rates will go up. In many cases they will go up a lot. If you are with an independent agent they can simply roll your policy over to another company. To sum it up even if you are paying a little more initially with a independent agent, in the long run you will probably still save money.

Did you know that if you call your insurance company directly to ask about a claim they will immediately start a new claim just to talk to you. Even if they do not pay anything out to the customer, a claim has still been filed. This may seem harmless but it is not. What happens is that now if you choose to look at moving your insurance to another company it will cost you money. All other insurance companies can see this claim and may cause you to pay a higher premium. The company that started the claim generally does not surcharge for a $0 claim through them. This helps your current company keep you on the hook by having the cheapest rates. A good agent will talk with you and give you the options before speaking with the insurance company.

Now lets take a look at the difference between an Independent agent and a Captive agent (sometimes referred to as a "direct writer"). The difference in part comes down to the signed contract between the agency principle and the insurance company. I captive agent in most cases is an exclusive agent of one insurance company. This means that their first responsibility is to the company not the customer. I know, I was a former captive agent before I decided to change my agency over to independent. An independent agent is not an agent to the company. Their first priority is their customers. It really boils down to the terminology used in the agency contract written by the insurance company.

The last subject I would like to touch on may be the most important of all. Knowledge of insurance. This is where having an agent can be very important. When you purchase a policy from a 800 number or web site, do you know what you are really buying? Do you know what is covered and what is not covered? There are many questions that you should ask. Not all policies are the same and not all companies are the same. By not asking the questions you may be leaving yourself liable and leaving your family at risk. In my point of view - there is reason that agents are required to have license to sell insurance and that reason is knowledge. Insurance companies have a lot of money and therefore have a lot of clout. In my view that is the only reason they are able to sell insurance directly on a web site. It simply is not safe for you or your family. In summary. Unless you are very knowledgeable in the insurance industry, you may want to consider purchasing insurance from an independent agent.

Article used with exclusive permission
by James T Wolfe
United States Insurance Facts
01/10/2007