It’s no secret how I feel about insurance. It seems like everyone has their hands out when it comes to getting a little piece of the action. From auto insurance to health insurance, homeowners insurance, business liability insurance, life insurance, death insurance. I mean, is there anything that we do or own that doesn’t require some sort of insurance?
Now, don’t get me wrong. There have been several occasions that having insurance has saved my butt from a particularly expensive endeavor. I’ve been in a couple of fender benders; some were my fault while others weren’t. I’ve had a car stolen from me and I’ve loaned a vehicle to someone who subsequently totaled it. My daughter’s dirt bike was totaled along with half of my roof when a really big tree fell on them AND I am an extremely accident prone person who could not handle my medical bills without my somewhat decent health insurance. But that doesn’t mean that I have to like paying for it.
I usually have a few money saving tips or tricks for buying a whole host of things, but when it comes to buying insurance, I have only one. Get an insurance agent.
How A Good Insurance Agent Helps Cut Insurance Costs
What I’m sharing is based on my own experience, so your mileage may vary. But one of the things that I learned early on in my insured life is to befriend a local insurance agent. This is the person who, if they really care about you, will make sure that you have the kind of insurance you need, only as much as you need, and will keep you insured with a company that will actually pay you. This person will work on your behalf if you experience an unfortunate situation.
I have worked with my current insurance agent for the past ten years. She knows my kids’ names and what candy they like. She knows my husband’s business, probably better than he does. She regularly asks me about how my day / month / year / life is going, and is genuinely interested in what I have to say. It’s not so much that she has nothing better to concern herself with, but that she is simply an agent that believes that looking out for her clients’ best interest will repay her tenfold in commission.
Here’s what I mean.
It’s my insurance agent’s job to make sure that I am covered against loss no matter what I may face. It’s just like how you would consult a lawyer for legal concerns, a butcher for the best cuts of meat for your July 4th barbecue or your doctor when it comes to your aches and pains. My insurance agent knows immediately that any changes in my life might necessitate a change in my coverage. She knows that she must keep me covered without over-insuring me and costing me money. She must listen diligently to everything I tell her and sift through all of the extraneous information in order to mine out the important stuff.
Did I say that I went for a motorcycle ride this weekend? Does that mean I’ve bought a motorcycle? If so, my car insurance won’t cover it, so she’s going to need to put together some quotes for motorcycle insurance. Did I tell her that I bought a new car? House? Got pregnant? Had a kid? Got married? Divorced? All of these things come into play when making sure that I am covered.
For her efforts, she retains my business year after year, reaping the commissions, building her business and benefiting from one of the best methods of free advertisement: word of mouth!
So, the reason for this not-so-eloquent ode to my insurance agent is for me to express that when it comes to insurance, cheaper isn’t always the best choice. Insurance is one of those topics that I would seriously advise you to seek professional help with before making a purchase. If you choose to do this on your own, you may be left paying way too much for a policy that is essentially worthless for your situation. Find an insurance agent you trust and let his or her expertise navigate you through the complex tangle of insurance products and select the one that is right for you. Not only will you save money in the long run, you know that your assets are as protected as they can be and you and your family will be as protected as you all can be from an expensive loss.
Created July 12, 2010. Updated July 27, 2012. Copyright © 2012 The Digerati Life. All Rights Reserved.
{ 11 comments… read them below or add one }
A good insurance agent can definitely be a real asset when you have one that really cares and puts your needs above commissions etc. For those who prefer to shop around and not be tied to a specific agent, then gaining knowledge is key. For example, understanding the financial strength of the company (e.g. AM Best rating), pricing levers (miles usage), qualifying discounts etc can help you get the most value and security for your money.
Your point “when it comes to insurance, cheaper isn’t always the best choice.” is a great one, especially with these new marketing ploys aimed at designing insurance to fit your budget. We must keep in mind that the actual coverage matters.
I recently changed insurance agents and policies because my rates were being raised by 60%, and I had no claims. I ended up getting a better policy for less money. It pays to do your home work. Don’t let companies just jack your rates up with out giving another company a chance get your business. Let them compete.
If you have a good insurance agent, they should be able to find the absolute lowest rate that any company offers.
While I agree in part with this article, it is good to have an agent. That agent should work for you and get creative to help you save money, while also ensuring you have proper coverage.
However, if you go with an agent from any of the name brand companies, there is only so much they can do. They do not set the rates, their parent company does and they are only a seller of that policy. If you go with an independent agent, he has several companies he can pick from when quoting you rates.
There are insurance companies you may not have heard of because they do not advertise like the big boys, but they are still good companies. Just do your research. I switched my house and cars from one of the big boys to a lesser known company I felt comfortable with and saved about $500 per year.
I’ve saved thousands from tips you have shared along with other personal finance bloggers. You might want to have another post on getting the best insurance quotes via the internet. If a person is willing to put in the time, can’t you do really well on the net? Also, maybe get an insurance agent for a few years to learn the ropes and then do the internet in the future.
Great post…but be sure you choose a licensed pro to avoid another car insurance scam from hatching.
It is 100% great to have the insurance agent on your side. One thing you have to remember is that these people have families too and are trying to make commissions so just ensure that you paint the correct picture for them so you know it is a win – win relationship.
Insurance Companies always concern me because I am always afraid that after paying my premiums for coverage that when it comes time for a claim, they may try to deny me. Having a good relationship with your insurance agent is a great, but if it comes down to an issue of coverage that will cost the company, I think the agent, while he or she may like and know you, may have a conflict of interest. In this case, its nice to have someone on your side, but it may not protect you in the end. I say, make sure you know your rights under your policy and don’t rely entirely on the relationship. Treat the relationship as gravy on top of your rice, I mean, rights!
It’s important to consider the difference between a “captive agent” (represents ONE major insurance company such as Allstate or State Farm) and an “independent agent” (represents multiple companies).
There are many excellent captive agents out there, but ultimately they are employed by the insurance company. Their products are designed to fit the needs of a significant percentage of consumers, but none of them are one-size-fits-all. But most of these agents are taught to sell the their policies to every possible buyer, regardless of the price. To be fair, a lot of captive agents are ignorant of how their pricing stacks up against the competition, especially companies that aren’t captives!
Independent agents don’t work for an insurance company! They work for their customers! They usually have at least three carriers to offer and many have five or more. A good independent agent will show you quotes for multiple carriers and help you choose the one that best fits your needs.
Thanks for the informative post. I completely agree that going with an agent is a smart move for the long term. Our needs are always changing as well as what we need to protect. Whether it is adding a new member to the family or changes to our net worth. One point to consider is looking at an independent agent who has access to a multiple level of products from many different companies.
I totally agree with you. The only probelm is in a large city, finding that agent that actually cares about you isn’t easy. I had an agent with a large Insurance company and he evidently sold his agency to someone else and didn’t bother to let us know. We received a letter from the new agent. Not good in my opinion. Needless to say, we went hunting for a new agent.