by Jacob Hadad, Director of Wesfair Agency, CPA
When purchasing insurance, or any service for that matter, it’s important to understand who you’re dealing with and where their primary responsibilities reside. The same applies when establishing a (hopefully) long-term relationship with an insurance professional you’re entrusting to help protect you and your family against life’s risks.
Before we begin, ask yourself this question: Would you rather work with a person who is representing you or an insurance company?
The answer seems obvious, however there’s a strong possibility the person you think puts your interests first, actually acts on behalf of their company before you.
So, who can you trust? Here are two types of agents you’ll want to be familiar with:
Meet an Exclusive, or “Captive,” Agent. This type of agent represents one company and will only be able to offer you that one company’s products. A Captive Agent has the authority to act on behalf of the insurance company they represent and bind the company to an insurance policy (which is one of the benefits to dealing with such an agent). Sure, being able to call an agent and get car insurance within minutes is great. However, this type of agent offers no comparisons in price, coverage, or market knowledge, so you’ll likely be sacrificing flexibility and the power to enter a contract that is most suitable for you and your family.
Meet an Independent Agent or Broker. This type of agent or broker represents clients to multiple insurance companies. They have the flexibility to create a solution specifically designed to meet a client’s individual needs. They can compare pricing, show differences in coverage and claims experience, and have options available to move clients when they’re unhappy. Because they fully understand the market, and take the time to know your needs, they often have the right solution, and at the right price.
No client is the same, nor are their risks. Typically, an independent agent will spend time learning about you and your unique needs. In doing so, they can put together an insurance policy that has the proper coverage you need listed throughout the entire policy, not just what you see on the first two pages—the only two pages of a policy that a majority of our clients use to compare policies and prices. An independent agent spends time ensuring that the entire legal document behind the policy summary is right for you, which is where all the hard work comes in to play. That legal part includes warranties, representations, endorsements, riders, and exclusions (oh my!), all of which are equally important when the day comes that you actually need to use your policy.
Most direct sales insurance companies spend tons of money on catchy commercials, and in turn, clients sign up for insurance company friendly contracts bound online or over the phone. Sometimes you don’t even have to talk to someone! And, while this can be great, and often preferred, you’ll want a more personal relationship with a human agent once you realize how complicated the paperwork is. Don’t believe me? Grab your policy, all 100 pages, and ask that phone number from the catchy commercial to explain the language to you.
Choose your agent wisely!