Should I Buy Home Insurance Through an Insurance Agent or Direct From the Carrier?
In today's digitally empowered world, the option to buy insurance directly from the carrier may be tempting. However, you might be sacrificing coverage for convenience. Without the knowledge and experience of an insurance expert, comparing coverage, understanding policies, and filing claims could turn into a hassle down the road. To make sure your home and most-valued possessions are fully protected, we recommend working with a home insurance expert. Take a look at the advantages of working with an expert vs. figuring it out by yourself.
Local insurance agents have extensive knowledge of particular risks in your neighborhood. For example, certain areas are prone to wind, hail, flood, or other natural disasters that are difficult to assess and explain when you buy directly. Additionally, carriers can carve out certain coverages in order to make the price seem more affordable, when in reality you are sacrificing coverage.
Agents know which policies are most suitable for these localized risks and have industry knowledge that helps policyholders in many other ways.
- Comparison shopping – Independent agents familiar with multiple carriers can compare policies and prices to match you with the best options in your area. Comparing quotes on your own can be a frustrating and time-consuming process, often taking over 5 hours to complete. The online maze of home insurance shopping looks something like this:
To skip the maze you can use Young Alfred as a shortcut.
- Product expertise – Agents understand the details of home insurance coverages and the need for personalized policies that cover particular risks. Those who choose to buy directly will have to research each provider and policy type individually to find the coverage they need. As a starting point, you may want to read up on the following coverages (many of these are not included by default with most online carriers):
Contrary to popular belief, consumers don't save money on premiums when buying direct. Brokers and agents have experience choosing appropriate coverage levels and know how to keep premiums low by avoiding claims. Despite the rise in direct-buy insurance options, over 90% of homeowners still pick an agent.
The Illusion of Saving Money
Some customers believe agents cost more because the carriers have to pay them a commission for the sale. What they miss is that insurance companies who choose not to use agents ALSO pay a lot, but it comes in a different form: advertising. In most cases, insurance carriers pay $500-$900 per customer in advertising if they sell directly online. GEICO spends $1.3B on ads each year and State Farm over $600mm. We know who gets the bill...
So really, if you use an agent, your insurance company is paying the agent a commission instead of paying the advertisers (Google, Facebook, Cable TV) an advertising fee. These fees can often be interchangeable.
Best Value for Price
Brokers and agents are experts when it comes to creating policy plans for specific risk profiles. Since independent agents are familiar with more than one carrier, they can help you find the most comprehensive coverage for the lowest price. Your insurance agent works for you, not for the insurance company, which makes them your advocate throughout the lifespan of your policy. Additional ways your agent can maximize the value of your coverage include:
- Keeping up-to-date – Your agent will make sure your plan stays up-to-date with local building codes and regulations. Additionally, your agent can inform you when a more affordable policy becomes available.
- Multi-policy discounts – If you're looking for multiple coverages such as life, auto, business, or home insurance, an agent can offer attractive discounts. When buying direct, you rarely get the same savings.
On average, individuals who bundle their home and auto insurance save over 16% on premiums. Savings will vary from state to state. For example, Florida has the lowest average savings of 6%, while Mississippi has an average of 23%.
At Your Service
Those who purchase insurance directly may not be fully aware of coverage and cost details that can lead to future complications. An agent, on the other hand, will provide extensive consultation on all information regarding your policy, premiums, and exclusions. Policyholders can expect quality service and support for the following:
- Claims assistance – Your agent will handle your claim promptly and assist you throughout the process to ensure you receive compensation. Those who buy directly from the provider will have to call the insurer and speak with a representative who works for the carrier, not for you.
- Data security – Personal data is typically well-protected with an insurance agent. However, if you buy directly, your inbox could quickly fill up with additional product and service advertisements that you don't necessarily need.
- Changes and Requests – Agents can quickly and efficiently process document requests, policy changes, and complex inquiries that save consumers time. These requests can be more challenging to manage at direct-buy companies, where customers are often directed to large and impersonal call-centers or forced to make changes on an app.
About 5-6% of homeowners file a claim each year. An insurance agent will work to put your best interest ahead of the insurer and make sure you aren't filing a small claim or a claim that will certainly be rejected. Note: even if the insurance carrier rejects your claim, it still goes on your record and can affect your future insurance premium or ability to purchase/renew your insurance.
Choosing an independent insurance agent gives you a champion ready to fight for you. You'll receive personalized support for all your questions and service needs. The automated, self-service options of direct-buy companies can make it tricky to get the assistance you need when it matters the most. Skip the maze and use an expert to find a home insurance plan that fits your specific needs.
At your service,