Most people only think about insurance when a loss, injury, or accident has occurred. This is the time you need financial assistance the most. Your insurance company should come through for you by helping you get treatment and restore your life. After all, this is what you pay them for.
But what if you don’t do your homework in getting the best insurance coverage available? Unfortunately, you may be left with bills you cannot afford. The time to find the best insurance for your needs is before such a loss occurs.
When buying insurance, there are a few steps you should always take. You’ll want to comparison shop, look for discounts and services, and consider an agent. Also, find a plan you can afford and upgrade later; be truthful with your chosen insurance provider; keep in mind that coverage is not automatic, and update and re-evaluate your policy when necessary.
Here are seven things to remember when finding the best insurance coverage for you and your family.
Getting the best insurance coverage at the best price requires some research and comparison shopping.
Use unbiased insurance ratings such as the ones from S&P and AM Best to see what consumers have to say about insurance companies.
Ask about available discounts and services, consider using an insurance agent, and be truthful and accurate when comparing quotes.
If insurance is too expensive, go for minimum coverage and update later. Be sure to re-evaluate coverage at least once a year.
- Comparison Shop
You depend on your insurance to protect your family’s assets and financial wellbeing. But you can’t trust your family’s future to just any company without checking it out first. Insurance rating organizations can help with this. Some of the top ones are AM Best, Weiss Ratings, Standard & Poor’s, Fitch Ratings, and Demotech, Inc.
Insurance comparison shopping is not as difficult as it once was. You don’t have to interview different agents to find the best value. By using comparison websites, you can look at many quotes side-by-side. That way, you can compare similar packages.
Some people stick with a preferred provider, no matter the price. There is nothing wrong with this. But if you are not loyal to one company, you may find it useful to compare providers and costs. You might be able to get a similar policy for much less elsewhere.
Many of these sites will also allow you to buy coverage right from the website. There are many insurance comparison shopping websites available. Some examples are NetQuote, SelectQuote, and Compare.com.
- Look for Discounts
Raising a family is expensive. No one wants to pay more for insurance than they have to. One way to make sure you are getting the best deal possible is to find all available discounts.
There might be hidden discounts not readily seen on a website. There may be others that agents tuck away for in-office-only clients. You can ask to see all discounts and the qualifications for receiving them.
One common discount is a multi-policy discount. There also may be discounts on safe driving, homeownership, or safety devices.
Cut-rate insurance prices often mean cut-rate customer service and coverage. This is not to say that highly-rated insurance companies cannot offer affordable insurance rates. It also doesn’t mean that companies with lower rates are not able to offer competitive coverage and services.
Be sure to check out the company’s record with the Better Business Bureau (BBB), American Customer Satisfaction Index (ACSI), or J.D. Power & Associates.
- Consider an Agent When Buying Insurance
Insurance agents are associated with a certain provider. They are also known as captive agents. These agents own their business; naturally, they are trying to create income while generating business for the provider. Agents are more convenient than dealing with the provider. That’s because there is someone to answer your questions.
A captive agent is one who only represents one company; they will only offer you the policy options from the company they represent. Brokers and independent agents work with many companies and have more options.
You might be able to get better coverage with an agent in person. While it’s possible to call the insurance provider or purchase insurance online, working with an agent might be better for your circumstances.
Keep in mind that independent insurance agents and brokers often represent many different companies. This gives them access to more offerings for comparison than a captive agent.
- Remember: You Can Upgrade Later
There may be times when your financial situation prevents you from getting the coverage you need. But insurance minimums are generally very affordable. You should always purchase the minimum coverage required by law by your state. Even minimum coverage can keep you from paying out of pocket.
Once you are able, you can upgrade your policy to include a more comprehensive coverage package. It doesn’t hurt to give your insurance agent a “target premium.” This would be an ideal price you would be willing to pay for coverage. For instance, Progressive offers a feature called the “name your price tool.” This allows you to get the coverage you need at a price you can afford.
- Tell the Truth
When you apply for insurance coverage, your coverage and premiums are based on the information you provide. But what if you can get cheaper insurance by stretching the truth?
Don’t do it. Saving a bit of money is not worth the risk of having your policy canceled for getting caught. Often, the company will not outright cancel your policy. But, they will likely contact you for an additional premium required to maintain coverage once the rates are adjusted. In a worst-case scenario, your claim could be denied if the insurance company uncovers the discrepancy. Depending on the severity of the misinformation you could also be reported to various insurance clearinghouses for fraud, which will make it more difficult to get insurance in the future.
- Know That Coverage Is Not Always Automatic
If you buy a new car or add new structures to your property, they may be automatically covered for a time. Normally, you have a specific time frame, perhaps 30 days to contact the insurance company and let them know of your purchase. This could be more or less depending on your insurer.
The same goes for trading in your vehicle. The coverage will transfer to your new vehicle, but only temporarily unless you alert your insurance company. Check with your insurance agent or company for the specific notification requirements of your policy.
Any changes in your life should be followed by a call to your insurance company or agent. This ensures you have the coverage you need.
- Re-Evaluate Your Coverage
At some point, you may have a big life change such as a move or a marriage; or you might have children. When this happens, your insurance coverage needs will change. Even if you’ve had no major life events, it is still worthwhile to do an annual policy check-up to make any changes.
Finding the best coverage to protect your family doesn’t have to be difficult. Use all the tools and resources available to make finding the right coverage a smoother process.
Allstate Insurance Renter’s Policy:
Allstate Insurance has been providing insurance products to its customers since 1931 and many of you may recognize the company as the ‘good hands people,’ as relayed in its popular television advertising campaign. The company is the largest personal lines insurer that is publicly-held in the United States.1 It has a comprehensive line of insurance products, including a renter’s insurance policy featuring customizable policy options and offering attractive discounts to policy holders.
AM Best insurance rating organization rates Allstate Insurance with an “A+ Superior” rating as of July 2021.2 The company is also a Fortune 500 company and has annual revenue of $50.6 billion in 2021.34
Customer Service Ratings
According to customer surveys by Insure.com, customers gave Allstate a five-star rating. Of the Allstate customers surveyed, 90% would recommend Allstate. Allstate was given an overall satisfaction rating of four stars. The highest ratings was for customer service (4 out of 5 stars). Allstate received a 4 out of 5 rating in the value for price category. (All of these ratings are as of June 2021.)5
Allstate Insurance Renter’s Policy
If we lived in a perfect world where accidents never happen, you wouldn’t need protection for your personal belongings. However, since accidents do happen, you should know that your valuable personal contents in your rented home or apartment may not be covered under your landlord’s insurance policy. For adequate protection for your contents, you should buy a renter’s insurance policy.
The renter’s insurance policy available through Allstate provides these standard coverage options:
Personal Property Protection: This is protection for your personal valuables such as furniture, electronics, clothes and other valuable personal items.
Reimbursed Living Expenses: This option will allow you additional living expenses if your home is uninhabitable due to a covered loss to cover the cost of temporary accommodations.
Liability Protection: This protects you from being sued if someone is injured while at your rented home or apartment.
Guest Medical Protection: Provides medical payments to anyone not living with you who is injured at your residence.6
Discounts include a multiple policy discount and a “55 and retired” discount.7
Getting a Quote
The Allstate website is very helpful and user-friendly in explaining coverage options and offering you the ability to get a quote online. To obtain a renter’s insurance quote, you begin by entering your personal information including name and address, date of birth, telephone number and your email address (optional).
Next, you provide information about how long you have lived at the residence and how much renter’s insurance coverage you need. You will need to provide information about any past property insurance coverage you have had and any claims within the last five years. The company also wants to know if you operate a business out of your home.
You should keep a record of your valuable personal items to verify their worth in the event of a claim. Allstate offers a home inventory tool called Digital Locker, and also a mobile phone application that will help you access and record a history of your personal items.8
Once you have your renter’s insurance quote, you can choose to save it while you do more comparison shopping or you can continue with the purchasing process.
Pros and Cons
Excellent financial strength ratings
24/7 claims service online or by telephone
Attractive discounts including multiple policy discount
You can buy multiple lines of coverage through the same company
Customizable coverage and deductible options
If you visit an Allstate agent to receive a quote, you will not have the ability to comparison shop as Allstate agents are captive agents, meaning they only offer Allstate insurance products.
Some discounts and policy options may not be available in all states.
If you wish to receive a quote for a renter’s insurance policy or to learn more about Allstate and its insurance products, you may visit the Allstate Insurance website or call 1-800-ALLSTATE (1-800-255-7828).
What Is a Captive Insurance Agent?
A captive insurance agent sells coverage from a single insurance company.
A captive insurance agent sells coverage from a single insurance company. A captive agent may own their local agency and may work as either an independent contractor or employee.
Should you buy insurance from a captive agent? Before doing so, it’s important to understand how they work, potential advantages or disadvantages, and the differences between a captive agent and other types of insurance salespeople.
What Is a Captive Agent?
A captive agent agrees to sell policies from only one insurance company, and potentially its partners. However, it’s unlikely that you’ll hear the term “captive agent” when looking over an agent’s website. In everyday language, they may be agency owners or be referred to as “local agents.”
Captive agents are usually independent contractors, although some may be employees with medical and dental benefits. A captive agent typically earns a commission for every new or renewal policy they sell, and some may also earn bonuses.
Alternate names: Local agent, exclusive agent
How Does a Captive Agent Work?
A captive agent can offer quotes on coverage from their carrier, but they can’t get you a quote from another insurance company. However, they typically have in-depth knowledge of what their insurance coverage can—and cannot—provide, so they can make sure the policy is a good fit for your needs.
Often, these agents have a brick-and-mortar business that customers can visit or call to buy insurance. Customers might be pointed toward these captive agents through the insurer’s website, or find it on their own through advertising or by driving past the office.
Captive agents are often expected to hit specific quotas set by the insurers.
What’s the Difference Between Captive, Direct, and Independent Insurance Agents?
In general, there are three types of insurance agents: independent insurance agents, captive agents, and agents who work directly for a particular insurance company. Here’s a look at the differences between them.
Independent Insurance Agent Company or Direct Insurance Agent Captive Agent
Definition An insurance agent approved to represent and sell an insurance company’s products An employee of the insurance company who sells its policies An insurance agent who exclusively sells one company’s policies. Usually an independent contractor, but may be an employee
What they sell Policies from multiple insurance companies Policies from the insurance company that employs them (and sometimes affiliates) Policies from one insurance company (and perhaps affiliates)
How they’re paid Receives a commission from the insurance company Receives a base wage or salary and may also receive a commission or bonuses Receives a commission from the insurance company
Insurers that use this approach Progressive, Erie Insurance Amica, USAA State Farm, GEICO
In general, the primary difference between independent agents and captive agents is the number of companies they represent. The difference between a direct agent and a captive agent is that the direct agent is likely an employee who works in a call center or remotely for the insurance company. In contrast, a captive agent often runs their own business through a brick-and-mortar office, though they may also work remotely.
Pros and Cons of Captive Agents
Represent name-brand recognized companies
Local knowledge and support
Limited coverage options
Customers are tied to the insurer, not the agent
May not be able to provide specialized coverage
Represent name-brand recognized companies: Major insurers like GEICO, State Farm, and Allstate use captive agents, so you’ll be insured by an established company. Of course, you should also research online reviews before choosing an insurance company.
Local knowledge and support: A captive agent is often part of your community, so they are likely familiar with your area and any local needs or potential hazards. Connecting with a captive agent near you is also a good choice if you wish to support a local business and establish a relationship you can rely on as your insurance needs evolve.
Personalized service: A captive agent should ask you questions to discover your potential risks, discounts, and coverage needs to make sure they tailor your policy to fit your situation. However, remember that they can only offer policies from a single insurer.
Limited coverage options: Captive agents only represent a single carrier and can’t give you quotes for coverage from other insurance companies, so you’ll have to shop around on your own.
Customers are tied to the insurer, not the agent: Your captive or local agent may leave the insurance company to start their own independent business or go to a competing insurance company. In this case, you’ll likely remain a customer of the original insurance company unless you change insurers because your captive agent doesn’t own their “book” of customers. In contrast, an independent agent works with you no matter which insurer you end up selecting from their represented carriers.
May not be able to provide specialized coverage: A captive agent may not offer specialized coverage if you have a unique situation—for example, a DUI on your record. If you require a type of insurance (such as health or business) that’s not provided by their insurer, the captive agent can’t offer it.
Captive insurance agents represent a single insurance company and can only provide customers with coverage from that company.
Captive insurance agents may be known as local agents or agency owners, and often have brick-and-mortar locations.
Captive agents may include the insurance company’s name as part of their business name.
Frequently Asked Questions
Which insurance companies have captive agents?
Some insurance companies sell only through captive agents and direct sales, while others also sell their products through independent agents. Examples of insurance companies with captive agents include Allstate, GEICO, and State Farm.123
Who has ownership of renewals, the insurance company or the captive agent?
In most cases, the insurance company owns the right to your policy. This means if your captive agent leaves the insurer or closes their exclusive agency, you can’t continue working with them—you’ll likely be assigned to another agent. If you hope to follow your agent to a new insurance company or their own independent insurance business, you’ll need to choose a new insurance policy and change insurers, and then cancel your current policy.
How do I become a captive agent?
To become a captive agent, you typically need to:
Have access to enough funds to start a business.
Become licensed to work as an insurance agent.
Take training with the insurance carrier.
Pass a financial and background check screening.
How can I tell if an agent is captive or independent?
Often, a direct agent will have the insurance company’s name in their business title, such as “Jane Doe—(Insurance Company Name) Insurance Agent.” You can also research an agent on state licensing websites to see which companies they represent. An agent who is appointed to provide insurance through only one carrier is usually a captive agent.
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Insurance Agent vs. Broker: What’s the Difference?
When you start the process of buying insurance, you’ll likely have to decide whether to work with an insurance agent or a broker. But you might hesitate to choose one over the other because you want to get the best deal, coverage, and customer service with your policy. Generally speaking, agents work as salespeople on behalf of specific insurance companies, while brokers offer more generalized insurance services to consumers, in relation to agents, insurers, and underwriters.
To help you feel confident in choosing the best fit for your needs, we’ll go over the differences between these two types of insurance professionals.
What’s the Difference Between Agents and Brokers?
INSURANCE AGENT INSURANCE BROKER
Client Sells policies direct to consumers on behalf of insurance companies Acts as liaison between consumers and insurers, agents, or underwriters, with loyalties to each
Payment Receives sales commission from insurers (and sometimes contingent commissions) Receives commission from insurers and brokerage fees from consumers
Scope Works with specific companies Broad access to full insurance marketplace
Insurance agents are salespeople who help consumers find and buy the insurance products they need, including auto, home, life, or other insurance policies. Agents are appointed by insurance companies to sell insurance products and perform services for both insurers and their policyholders.
Insurance agents who work exclusively for one company are known as “captive agents,” while those who work for multiple insurers are called “independent” agents. In general, captive agents sell more personal lines, like home and auto insurance, than independent agents, who focus more on commercial insurance. One of the biggest differences between captive and independent agents is that the latter have legal ownership of access to policy renewals. Captive insurance agents may not, and are usually employees of an insurance company or independent contractors.1
Insurance brokers function more as liaisons between the consumer and the insurer. They represent you in dealings with the insurance provider or underwriter, and may provide additional services depending on your needs. The broker’s responsibility is to find the insurance coverages you need for the best policy premiums, terms, and conditions. They may work through other brokers or agents, or directly with an insurance company to find a policy that suits your needs and budget.
Compensation and Commission
Insurance brokers may receive compensation for their services through commissions paid by the insurers or reinsurers they work with (typically 7% to 15% of the total premium) and through broker fees charged to consumers for services provided.2
Insurance agents may also receive similar sales commissions from the insurers they represent. But they are more likely to get additional compensation, called “contingent commissions,” by meeting specific criteria (similar to a performance bonus). Insurance brokers used to receive contingent commissions as well, but it’s no longer common practice.3
Contingent commissions aren’t tied to specific policies, and agents don’t know how much they’ll get—if anything—until the underwriting year closes.
Scope of Services
Traditionally, insurance agents represent the insurer, and brokers represent the client. What an agent can offer you depends on the coverages provided by the companies they work with, whereas an insurance broker can consider many insurers to find the best policy for your needs.
Insurance brokers also have greater access to the wider insurance marketplace, since they aren’t committed to working with specific providers and products. They may be experts in certain sectors, industries, or risk types. Brokers not only assess the insurer’s product but the insurer as a whole, looking at its financial stability, customer service, claims-paying record, and more.
Roles and Functions
However, the lines between the roles of insurance agents and brokers aren’t always so distinct, and many consumers see both agents and brokers as their representatives. Indeed, brokers sometimes have agreements with insurance companies.1
Both types of professionals assess risk, offer policy coverage suggestions, provide a selection of choices, are involved in the claims process, and act as your representative in dealings with the insurer. Consequently, consumers typically see agents and brokers as intermediaries between their need to transfer risk (such as potential car accident expenses) and insurers accepting that risk.
The commonalities that exist between the functions of agents and brokers may be why some states assign agents and brokers the same “producer” license, as opposed to separate “broker” and “agent” licenses. Both types of insurance professionals must be licensed in the state where they do business and meet the state rules and regulations overseeing their activities.4
Insurance brokers can ask for quotes and policies from insurers and submit applications on your behalf, but they can’t bind your coverage or provide an insurance binder on behalf of the insurance company since they aren’t an insurer.5
Which Is Right for You?
An insurance agent may be a better fit if you already have a policy directly with an insurer and want to bundle your coverage with other types of insurance. You may also prefer an agent over a broker if you want to compare quotes by yourself and speak with an agent to answer questions or complete your policy purchase. An agent might be more helpful as well in instances when you’re looking to be matched with coverage available from a particular insurer or group of insurers.
Insurance brokers are suitable if you want to compare coverages and prices throughout the insurance marketplace, and are looking for impartial recommendations on the best insurance policy for you based on your needs and desires. If you are having trouble finding a specific type of insurance, such as home insurance for high-risk homes, brokers may have greater ability to scan a wide range of options. Keep in mind that while agents won’t charge additional fees, you’ll potentially be paying a broker’s fee for the extra services you receive.
The Bottom Line
In general, insurance agents represent the insurance company, and insurance brokers represent you. You may not notice much of a difference when speaking with a broker or agent, as both provide similar services, such as evaluating coverage options or helping you file claims. One notable difference in how each operates, however, is that insurance agents work with one or more specific insurers to match you with the coverage, while insurance brokers comb through relevant insurance companies on the market, screen them, and present the ones that are the best match for your needs. (For this extra work, brokers may charge you a fee.) Both agents and brokers are licensed and regulated by state laws, and receive commissions from insurance companies.