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There are many reasons for purchasing insurance. Whatever your reason, you probably already know that choosing the right coverage is not always a straightforward decision. It entails deciding on a protection plan that will have a significant impact on your financial well-being, and you must make the right choices to get the best value for your hard-earned money. However, this is not always easy because the vast number of options in the market complicate the process of choosing the perfect policy. You also must decide exactly how you would purchase the plan, which will affect other important decision for years to come.
Insurance companies usually sell their products through agents. Generally, the two types are captive and independent agents.
Captive agents are direct writers, or agents who work for one insurance company. They can only sell you the products of their employer. Therefore, you can expect that they will have thorough understanding of their products.
It is common knowledge that buying direct usually means getting a better deal than buying from a middleman. So, you might be thinking that purchasing insurance through direct writers would be the best choice in terms of value. But, in this situation, you have to go beyond that mindset. The next section discusses independent insurance agents in more detail, exploring how the “middleman” could bring you more value.
Before getting into their differences, let’s first look at how independent agents are similar to captive agents. Independent insurance agents are just as legitimate as agents who work directly for insurance companies. The rigorous process of becoming a licensed agent applies to both individuals. You can have the same confidence in an independent agent as you would in a captive agent because they are similar in the sense that they are licensed, regulated, and insured representatives. The agency system was set up to make sure that agents sell insurance with the customers’ interests in mind, not just those of the insurance company. They are required by law to adhere to specific industry standards.
Of course, this is important to know as a consumer. Now we ask, if both types of agents are looking out for their clients’ best interests, what sets each apart from the other? Let’s look at how independent insurance agents go beyond their captive peers.
In contrast with captive agents, independent insurance agents are those who are not tied to a single insurance company. This allows them to sell products from multiple providers, serving as your representative to these companies. So, how exactly is this beneficial?
Independent insurance agents serve as a one-stop-shop for your insurance needs. It’s not just the variety of the types of insurance they could offer (home, auto, life, etc.), but that they can offer quotes from multiple companies for each individual product. This saves you time, because instead of having to contact each company to weigh choices on your own, you have access to an experienced agent who can guide you along. It was mentioned earlier that direct writers are usually the ones expected to have expert knowledge, because they focus only on the products of their own company. However, there are many independent agents who can do just that. With a good work ethic, they will get to know these policies just as well.
Next, independent agents are cost-effective. With more options available, one can be sure that they are choosing a policy because it best fits you in terms of coverage and value, not because it is the only product available for the type of coverage required. Let’s revisit the “middleman argument” mentioned earlier. We suggested that you should not choose a purchase method based solely on this. It is not always the best choice, since you may be able to get better deals by working with an independent agent. For example, this article by Trusted Choice presents data on the vast amounts of money that well-known direct insurance companies have spent on advertising in the past. This means that these organizations may be allocating a lot of your paid premiums to hook more customers. With independent agents, you can get to know and explore companies that are less prominent, as they don’t spend a lot of their customers’ premiums on advertising. So, do not be discouraged from considering a middleman. Going direct also includes costs that may not even add any value. At times, going through the middleman could lead you to companies that focus on using your premiums for things that are of immediate benefit to you.
Apart from the more technical aspects of insurance, another valuable thing that independent agents bring to the table is how they serve you in a personalized manner. You can rest assured knowing that your unique needs as an individual will be taken into account. Think of independent agents as your neighbors. They live and work in the community they serve. This gives them an awareness of local issues that could affect policies, like flood zones and other hazards, for instance. Also, they may be more committed to you in the long-term. As your life changes over time, your trusted agent will help you adjust your policies to best fit your shifting needs. They can represent you via multiple insurance companies. If you decide to switch carriers or purchase updated policies, you can still retain your agent. These traits contribute to the working relationship you build with your agent, helping them to serve you individually.
At Omega Insurance Group, we believe that working with an independent insurance agency will best support your planning needs and guide you in making informed decisions. There is nothing wrong with going direct, especially if you have a policy you are eyeing from a specific company already, but there are a lot of advantages to opting for the alternative. Independent agents bring many benefits to the table when it comes to ensuring you get the most out of your insurance.
