Believe it or not, there are a few steps you can take to make your car insurance shopping experience better.
Most folks like to do business locally even if they prefer online shopping over bricks and mortar shopping. We believe that there should be a method to the madness and in this article, we’ll reveal how to find an auto insurance agent near you that will offer great rates and outstanding service.
We’ve written in previous articles how your vehicle and drivers can greatly affect your insurance rates but we should also consider the agent or agency when looking for car insurance that delivers the best value at a reasonable price.
Let’s get a few things out of the way before we go any further:
- There are two kinds of agents that you can deal with. One is called a captive or captured agent who typically represents only one company (State Farm, Allstate, and Farmers) and their allegiance will always be to that one company. The other one is called an independent agent or broker who represents many auto insurance companies and their allegiance will always be to the customer rather than the company.
- We recommend that you contact an independent agent near you (either online or by phone) and then call the State Farm, Farmers, or Allstate agent to make a complete comparison.
- You also have the option of using an online insurance platform like Gabi, The Zebra, or QuoteWizard, but you will likely get a call back from an agent since these online platforms may or may not be an insurance agency in your area.
Going forward, we want to drill down into the different kinds of quoting platforms and agents so you’ll better understand just who and what you’re dealing with.
What’s the Difference Between a Broker and Captive and Which is Better?
It’s important that you understand the difference between an independent agent (broker) and a captive agent.
Independent Agent (Broker)
An independent agent is a self-employed licensed insurance agent who sells insurance from an office or online and represents many companies and many products. Since the independent agent is not contracted with just one company, they can offer car insurance shoppers with many more selections than a captive agent.
Most independent agents are multi-line agents which means they sell multiple lines of insurance like personal lines (auto, home, renters, motorcycle, etc.), commercial lines (business insurance, commercial auto, workers’ compensation, etc.) and life and health insurance. Shopping with an independent agent will be as close to one-stop-shopping as you can get.
A captive agent typically represents only one insurance company and any subsidiary companies that fall under the flagship brand.
For example, a State Farm agent cannot represent other insurance companies without the express approval from State Farm Headquarters. State Farm agents, although self-employed, sign a lengthy contract that spells out what they can and cannot do while they are representing State Farm. In fact, the agent’s contract even spells out operational things like the colors of and in the office, the size of the signs in the windows, and which employees they can hire.
Captive agents like State Farm or Allstate agents must go through regular rigorous audits and perform at an acceptable level or risk having their contract voided. They are self-employed but not their own boss.
The Top 10 Reasons to Choose an Independent Agent for Auto Insurance
Here are the top 10 reasons to shop with an independent agent near you for auto insurance (in no particular order).
Save Time and Money
An experienced independent agent (broker) will know each of the insurance companies they represent like the back of their hands. They will know which carrier will offer the best solution for your set of circumstances and they can rate (quote) your business instantly using software that can rate and underwrite each kind of policy you need.
Most independent insurance agents sell personal insurance and commercial products, and a lot of them also offer financial products like annuities.
There are a lot of folks looking for car insurance that are small business owners and the independent agent can handle your personal and business insurance with one visit rather than having to deal with multiple agencies.
More Choices for Tough Situations
Using a captive agent typically means that you must fit in the company’s underwriting box. This means that if you have a driver in the household with a tarnished driving record or unacceptable claims history, you’ll likely be automatically put in the state’s high-risk pool with super-high premiums.
The independent agent will have more options and can find a company with liberal underwriting where it won’t charge an arm and a leg to get coverage.
Alternatives if your rates Go Up
If you purchase your auto insurance from an independent agent and the company has a rate increase that you believe is unreasonable, your broker can always place your business with an alternative company that offers a more reasonable rate.
Insurance carriers can also change their underwriting guidelines that could cause your policy to be non-renewed. If this happens at an independent agency, they will know ahead of time and begin looking for a different company that will accept your business.
Expertise and Familiarity with Many Carriers and Many Products
Although a captive agent will know their flagship carrier’s products inside and out, their knowledge is typically restricted to their flagship carrier and its limited selection of products.
An independent agent who represents multiple companies and multiple lines of business typically has a broad level of expertise across the industry. Whether you need auto insurance, financial products, or commercial products like professional liability, they will have the personnel on hand that is knowledgeable about other products or they will personally be able to help with all your needs.
Some independent agents specialize in a particular line of insurance but the majority usually offer multiple lines so you don’t have to spread your business out over multiple agents or agencies.
Special Circumstances are not a Problem
For consumers who have special circumstances and are in need of specialized insurance, independent agents are more likely going to be responsive. For example, if your home is under a “land contract” rather than a typical mortgage, an independent agent can respond. Or, if you own a very old mobile home on a ranch, they can respond to that as well. With a captive agent who offers cookie-cutter insurance policies, they usually cannot think or go outside the box for coverage.
“Trust but Verify”
Since an insurance policy is a promise to pay in exchange for a premium, you should certainly to business with an agent you trust who represents companies you can trust. You may feel like you prefer to do business with a flagship company like Allstate or Farmers because they are well-known brands, but you should also know that you can check out your independent agent very easy by going online and you can ask them for a fact sheet about the carrier they are recommending which will show the company’s financial stability ratings. There are many insurance companies with great rates and outstanding service that you may not have heard of because they don’t advertise on national TV but that shouldn’t disqualify them from consideration, especially if you are considering business insurance as well as auto insurance.
Independent agents put their Clients First
Since independent agency contracts are much less restrictive than captive agent contracts, your independent agent will represent your needs first and foremost. Independent agents are also consumers and as time goes by they will weed out any companies that continually disappoint the agent’s clients. Independent agents understand that the auto insurance companies they represent must have competitive rates and outstanding service or the agent-client relationship will be short-term. This is especially true when it comes to claims and customer service provided by the carrier.
Unfortunately, captive agents have little recourse if their company’s claims department offers unsatisfactory claims or customer service. The captive agent would be unwilling to terminate the only company they represent.
Television Advertising is not an Indicator for Best Auto Insurance Companies
Although consumers are bombarded with television advertising from companies like State Farm, Allstate, and Farmers, these companies are rarely ranked in the top five car insurance companies. According to Trusted Choice, a marketing association for insurance agents, the top five car insurance companies for 2019 are Travelers, Acuity Insurance, Erie Insurance, Grange Insurance, and Nationwide; most of which are represented by independent agents rather than captive agents.
Do business with an agent instead of a toll-free number
Certainly, it’s quick and easy to buy auto insurance online or over the phone but doing so rarely allows the consumer to build a trust relationship with the person who sold them the policy. When you do business with a local independent agent, you can build a trust relationship that can last for decades with an individual who cares about your business and the community you both live in.
All of us have heard the term “locally sourced” when it comes to food products and certain services, doesn’t it make better sense to do business with an insurance agent who is near you so you can see them in person and know what kind of person they really are? If this is important to you, buy your insurance agent from someone who is near you and wants to maintain a long-term business relationship.
Why would an insurance Agent want to be a Captive Agent?
Insurance companies like State Farm, Allstate, and Farmers do a lot of recruiting. They are continually looking for agents to replace agents who decide to go independent or retire. These companies are chosen by many agents for different reasons but the most popular reason is start-up capital.
For example, a newly licensed insurance agent will typically work at a local agency to learn the business and build relationships with the carrier or carriers he or she represents. Once they feel like they’re ready to strike out on their own, they’ll need to have the start-up capital to open an agency.
Property and casualty insurance doesn’t offer large commissions like life and health insurance so insurance agents must rely on renewals year after year to make a profit. New agents that are short on start-up capital either put off opening an agency or they partner with a company like the ones we’ve mentioned to get assistance with start-up capital. This assistance usually amounts to help with rent, employee expenses, and marketing expenses for a defined period of time (3 to 5 years) until the agency begins to earn enough renewal commissions to support itself.
Many new insurance agents mistakenly assume that these captive carriers are the cream of the crop until they discover that many of these companies are sued more by their agents than their policyholders. They typically believe that it’s more important to represent a well-known brand than it is to be the best agent on the block.
If it’s important to you to buy your auto insurance from an agent near you, whether you shop with a captive agent or an independent agent, make sure you check out their credentials and check the internet to find out what people are saying. Certainly, not every review on the internet is truthful. In fact, bad reviews are often posted by disgruntled employees and sometimes great reviews are purchased, but if you’ll disregard the really bad ones and the really good ones, you’ll likely have a clear picture of who to do business with and who to drive right by.