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Insurance Shopping: Why the Old-Fashioned Way is Better

Buying insurance online or using an agent of a company that relies heavily on advertising is not always your best bet. And its far from sure to save you money.

Ahh, online shopping … one of today’s greatest luxuries. You can save so much money by comparing prices for products or services online. You can even find "wholesale" prices on retail goods. There is no longer a need to have a "friend in the business" to help you find a great price. Right?

For most industries, especially the consumer goods industry, this is true. One can find almost any product online and compare the specifications and prices on the spot. And in theory, the same should work for insurance: Find a policy online, buy direct, eliminate the brokers, and you will pay a lot less for insurance. So why then, do many of the top insurance companies in the United States, still use brokers if they know customers can now buy a policy themselves? And doesn’t having a broker jack-up the price of a policy? Also, why do many of these companies not advertise? Don’t they know that the internet, advertising, and various media are on the rise? Why are they stuck in the old-fashioned way of doing business?

Many of the online companies that advertise on TV, radio, or print want you to think that by buying from them directly, you will be saving a lot since it eliminates the costs to pay an agent or a broker. What you may not realize is that these companies spend millions of dollars on advertising and need to recoup those dollars spent somehow. They also need to spend gobs of money to host a huge call center and pay customer service agents to try to help customers whose particular needs they are not familiar with. Although this mass-marketing and mass-customer service gets business in the door of a company, it may not always be in the best interest of the individual customer. 

Many of the better insurance companies, on the other hand, prefer to have a broker act as liaison between the customer and themselves. This is because the companies rely on independent, locally-based, friendly faces to service the customer by determining their specific needs and giving them personalized service. They want the customer to know they can call someone they know and trust and not simply a voice in a call center who doesn’t care for them personally. In this regard "having a friend in the business" may be more important in the insurance industry than it is in many other areas.

One of the least well known advantages of the brokering arrangement is in the form of lower prices. Because, their overhead is lower than companies that advertise, those that use brokers are able to pass on the savings to the customer. The companies utilize the proficiency of the brokers to look for desired target customers and are able to offer extremely low rates for those with good driving, claims, and credit history. 

Here are some other advantages for using a broker instead of buying online or using an agent:  

1- Only a broker is independent and not vested in a particular company. Other companies have realized that they need to be more personal. As such, they market themselves as having an agent thats on your side. In truth, the agent works for that company and only that company. A broker, on the other hand, is free to look out for YOUR best interests and advise you accordingly.  

2- A broker can advise whether an incident is of merit to make a claim. Many people don’t realize that if you are damaged due to the fault of another, you do NOT need to make a claim with your own carrier. But if you call your insurance company’s customer service center to find out if you should make a claim, guess what? You just made a claim. This adversely can affect your claims history and ultimately, your rates. 

3- A good brokerage can be a one-stop shop for all your insurance needs. They can insure all of your property and casualty needs including residential, rental properties, home, auto and commercial/business insurance. Many dependent agencies are limited in the insurance products they offer.

4- A broker does business with more than one company and can shop around for the best price from a number of different companies. An agent, who works for one company cannot say the same. At renewal time, this eliminates the need for dropping your agent and starting a brand-new relationship with another one.

5-  A broker can tailor-make your policy, look for discounts and ensure you have sufficient coverage without selling you coverages you don’t need. An insurance company call center will give you whatever coverages you ask them to. But how do you know what you really need and what you don't? More importantly, how do you know you are suffciently covered for all your exposures?

6-  Going with a broker doesn’t mean giving up the online experience entirely. Many companies offer the customer the convenience of setting up online billing and some measure of policy management. 

7-  Having a local brokerage makes the business depend on its reputation for great service. Brokers will advise people as if it were their child, spouse, or best friend since their reputation is dependent on how happy the customer is.

Bottom line? Use a broker, someone who is really on your side. www.Wealcatchinsurance.com

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

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