Insurance is a commodity. You can buy exactly the same coverage for exactly the same rate from any number of insurance providers. Which is not to say that all insurance policies, or for that matter, companies, are the same. Before you buy any insurance from any carrier, consider the following factors.
Is the insurance carrier financially stable?
Look for a carrier that is rated at least A+ by A.M. Best, a company that specializes in examining every insurance company from a financial standpoint. Any insurer with a lower rating should be avoided.
What is the company’s reputation for claim service?
Do they tend to pay claims quickly, or do they systematically deny as many claims as possible. Go to a major search engine and try “name of company, sucks” as your search criteria. Virtually every company will have unhappy customers, but if your search criteria generates multiple hits, you might want to avoid such a company.
Once you’ve narrowed down your list to two or three insurance carriers, the question to be answered is the method of purchase. Do you prefer to buy online or through an insurance agent? Buying online is generally less expensive because the cost of customer acquisition is generally lower. Buying through an agent gives you the advantage of getting knowledgeable advice from someone who is an insurance expert.
If you choose to go through an agent, there’s the question of whether or not to use what is called a “captive” agent or an independent agent. A captive agent works for one insurance carrier, and assuming you have checked out that carrier and like what you’ve found, there is no reason not to go with that carrier.
On the other hand, if you don’t want to do all the research and legwork ahead of time, consider using an independent agent. Unlike captive agents, independents represent a variety of insurance carriers. They can tailor coverages, rates, payment schedules, and more, choosing a carrier that is the best fit for each individual customer.
In many ways the insurance industry is at a crossroads and how people buy insurance is undergoing a revolution. Buying online is so easy to do, one school of thought says that agents are on the way out. Much as travel agencies were put out of business by the Internet, many argue that the future of insurance is online.
On the other hand, there is really nothing like working with a trusted adviser who can steer you in the right direction and help you avoid expensive problems in the future.